Stora Enso details 2,000 job cuts and mill closures in bid to reduce costs

Stora Enso has announced that as a result of recent cost increases it will put in place measures to "safeguard profitability", including laying off 2,000 members of staff and dramatically cutting its magazine paper, newsprint and pulp capacity.

The paper manufacturer will cut annual paper capacity by 505,000 tonnes and reduce its pulp capacity by 550,000 tonnes.
This will involve closing its Kemijärvi pulp mill in Finland and the Norrsundet mill in

Sweden. The sites carry annual capacities of 250,000 and 300,000 tonnes respectively and will close in the second quarter of 2008.

The cuts also mean the company's Finnish Summa Paper Mill will close while the magazine paper machine at Anjala Mill will be taken out of service allowing the site to focus on book paper production.

Stora Enso also plans to sell off its Kotka mills in Finland. The laminating paper business and the special coated magazine paper operations employ 650 people and will be sold to allow the company to focus elsewhere.

The company also intends to cut its administrative staff by 300 to just over 500.

As a result, nearly 1,700 workers will be made unemployed by the actions. The company's Finnish employees are expected to be hit hardest with a planned 1,400 job cuts, while the Swedish operation will likely lose around 300 staff.

The Group anticipates that as a result of reduced wood and energy costs and reduced personnel, Stora Enso will see yearly net improvements to costs of between £98m (€140m) and £112m from 2009.

Stora Enso chief executive Jouko Karvinen said: "These closures, production rationalisations and staff reductions, however painful, are crucial for Stora Enso to be competitive long-term.

"These intended actions are based on specific analyses of marginal costs in wood supply and asset quality, including future investment needs, optimisation of fibre flows between the Nordic pulp mills, and decreasing the overall use of fibre by reducing newsprint and magazine paper production capacity."

Karvinen added: "I am aware of the impact today's announcement will have on the affected employees and their families. However, we are acting to safeguard the future of Stora Enso and the vast majority of our employees. We will, together with the local authorities, proactively help the affected employees to find alternative employment."

Stora Enso currently employs around 44,000 staff across its international operations.
Source: printweek