The announcement is the latest in a series of large production curtailments made by the paper giant, which has faced increased market pressures from weak demand and overcapacity.
It plans to permanently close the plywood mill and sawmill in Heinola, Finland, the Kaukas plywood mill in Lappeeranta, and the further processing mill in Parkano, during the first half of 2010.
Weekend shifts in most of the plywood business area's Finnish mills will be discontinued and the organisation of office employees will also be streamlined, the company said.
If this restructuring is realised, the number of UPM workers will decrease by 870, of which 650 work in units planned to be permanently closed.
The restructuring costs will be approximately €44m (£39m), while €25m is expected to be invested in the expansion of the Savonlinna plywood mill and the development of the Kaukas sawmill.
Jussi Vanhanen, a member of UPM's group executive board and president of the engineering materials business group, said: "Centralisation and efficiency improvement create opportunities for profitable operations in Finland in the long term.
"The employee impacts of these plans are regrettable, but the current situation is unsustainable."
He added that the personnel cuts and closures are to "remarkably improve" the businesses' long-term cost competitiveness.
UPM's plywood business employs 2,450 staff in Finland, whereas its timber business employs 900.
