UPM’s plan includes shutting down four paper machines within the next four-and-a-half months.
In addition to the Shotton machine these are: a newsprint line at Chapelle in France; an SC paper machine at Jämsä River Mills in Finland; and a coated mechanical paper machine at Kaukas, also in Finland.
This equates to 345,000 tonnes of newsprint and 460,000 tonnes of magazine paper, made up of 235,000 tonnes of SC paper and 225,000 of coated mechanical grades.
The machines will be permanently shut down, rather than mothballed.
The Shotton mill, located in Deeside, has two paper machines and an annual production capacity of 490,000 tonnes of standard newsprint paper grades, produced from 100% recycled fibre. It employs around 370 staff.
Workers at the plant were being informed about the proposals today. General manager David Ingham said it was too soon to say how many jobs were at risk. “Until the consultation period starts early next week we can’t say. The main priority today is announcing this to the workforce. It’s a difficult day.”
PrintWeek understands that around 130 roles are likely to go.
The machine slated for closure, PM1, is the original machine installed when the Shotton mill opened in 1985. A second machine was installed around five years later.
Ingham declined to give details about PM1’s capacity, but said the plant still had a viable future with just one machine.
Shotton supplies newsprint to UK national and regional newspaper publishers and printers. Some of its output is exported.
UPM aims to improve profitability by €150m (£119m) per annum through the wholesale changes, which also include centralising supply chain planning and order fulfillment in Germany.
Around 15 jobs at UPM’s Altrincham planning and fulfillment operation could go as a result, and consultation will also begin at that office next week.
The planned savings also include variable and fixed costs across all UPM business, the group said.
In a statement, UPM president and chief executive Jussi Pesonen said UPM planned to adapt production “to meet profitable customer demand”.
“We have achieved a turnaround in profitability during 2014. Nevertheless, the current operating rates are unacceptably low and the current economic environment is not promising tailwind for 2015. We also ensure savings without endangering customer deliveries in the structurally declining market.”
The restructuring costs involved are estimated at €80m and the group will also make write-downs of circa €100m.
One industry expert said the Shotton news had come as a surprise. “This is a significant reduction in domestic newsprint capacity that was unexpected, considering the investment that has been made at Shotton. It’s a big announcement and it will have an influence on how people think about the market.”
Helsinki-headquartered UPM had turnover of €10.1bn in 2013 and employed 21,000 staff worldwide across its forestry, wood, paper and biofuel operations.
“We regret the impact of planned closures on our employees who, even under considerable pressure, have been loyal and committed,” said Bernd Eikens, executive vice-president of UPM Paper ENA.
Both UPM and rival Stora Enso have made significant cutbacks in European papermaking capacity over the past two years.
“The irony is that some of the other papermakers are operating old machines that should have been closed years ago, but it seems like Stora and UPM are the only ones with the financial ability to close capacity down,” said a source.
One paper buyer, who wished to remain anonymous, added: “The bottom line is there had to be some more capacity closures and it had to be one of the big boys that did it. The smaller independents are hanging on hoping someone else will do it. UPM and Stora have closed some great machines, some of the machines that are closing are more efficient than those that are left.”
UPM Shotton is also the site of a materials recovery facility, which opened three years ago. This is a separate operation and is unaffected by today’s announcement.
UPM’s share price rose by almost 4% to €12.76 following the announcement.
