Finland lockout ends, companies continue restructuring

Related tags Packaging Pulp and paper industry

While Finland's costly paper mill lockout ended on Friday, some of
the country's larger manufacturers have been busy moving their
operations to lower cost countries.

Finland's Huhtamaki today announced it would close its rigid packaging operations in Göttingen, Germany by mid-2006. The production of plastic and paperboard packaging will be partly relocated toSiemianowice, Poland and partly to Nules, Spain. Göttingen's remaining release paper operations will be transferred to a plant in Forchheim, Germany, by mid-2007.

The company will also close a rigid packaging unit in Skelmersdale, UK by the end of 2005. Another four manufacturing sites will also be closed and relocated by the end of 2007, the company stated.

The measures are aimed at reducing the company's costs by €30m and the layoff of about 700 employees. The closures mark the second phase of Huhtamaki's two-year restructuring programme, which wasoriginally launched in December 2004. The programme aims to increase the company's international manufacturing sites as a means of cutting costs and increasing growth.

Huhtamaki​, based in Finland, is a manufacturer of consumer and specialty packaging with 70 manufacturing and sales units in 36 countries.

Meanwhile Stora Enso, another Finnish company, dismissed reports today that it will build a pulp mill in Russia. The company said the media reports were "premature and greatlyexaggerated" speculation, the Finnish News Agency reported. In a statement on Friday, the Russian natural resources ministry had announced Stora Enso was in talks on investing €1bn to build acellulose factory in Russia.

In addition to pulp and paper products the company makes liquid packaging boards, cups, cartonboards, containerboards, corrugated packaging, coreboards, cores, laminating papers, paper sacks, sackand kraft papers. It is one of the world's leading producers of consumer packaging boards with 82 per cent of its market in Europe.

Last week UPM, another major player in the market, agreed to sell part of a company division that makes labels. Like its competitors UPM has been buying and divesting businesses as it adjusts to amore competitive market in the paper and packaging industry. With the sale of Loparex, UPM will focus on developing its paper converting business on pressure-sensitive labels, radio frequencyidentification tags (RFID), paper packaging and insulation.

UPM is focusing its businesses on magazine papers, newsprint, fine and speciality papers, converting materials for labels and packaging, and wood products. The company has plants in 16 countriesand had a turnover of €10bn. The company's specialty papers are used for flour and sugar bags, high-performance sacks, fashion and carrier bags, envelopes and for flexible packaging. The company isthe third largest producer of packaging papers in Europe.

In August 2004, UPM sold Brooks Group, a Irish building material merchant, for € 213m. In September 2003, UPM sold its bulk container operations for a loss of €4m. In October 2002, the groupsold its packaging films business for a gain of €14m. During the same period the group made acquisitions amounting to €36m.

Finland's industry estimates the seven-week dispute in its pulp and paper industry was leading to losses of 40m euros a day. On Friday, unions and employers approved a new three-year work and paypackage. Finland produces about four per cent of the world's total paper output.

The conflict escalated and lockouts began on 18 May when firms shut out staff after weeks of wildcat strikes.

Related topics Processing & packaging

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