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Stora Enso Cuts Capacity, Jobs
September 13, 2008 By: Packaging online staff Official Board MarketsEurope’s leading paperboard maker, Stora Enso, Helsinki, Finland, will eliminate 1,700 jobs as part of plans to cut capacity to improve profits. The company is closing assets with poor profitability, amounting to an annual capacity of 600,000 metric tons of board and paper.
The consumer board division will maintain and develop its position as a global leader by further strengthening the competitiveness of its existing production units and seizing growth opportunities in new markets.
The aim is to grow in core markets by building on profitable customer segments and meaningful leadership positions. Board will strongly promote packaging concepts based on renewable wood fiber. The plan is to invest in healthy and strong units through productivity improvements, streamlining and specialization of mill operations.
Reducing Capacity—
Stora Enso plans to permanently close down the cartonboard machine at Baienfurt in Germany with annual capacity 190,000 metric tons of folding boxboard by the end of 2008, subject to local consultation.
The machine is planned to be closed due to persistent profitability problems caused by European overcapacity in folding boxboard, the strength of the euro and cost increases, especially for wood and energy, the company says.
The plan is to continue serving the mill's customers from the group's other board mills in Finland and Sweden. The sheeting service center at Baienfurt will remain in operation to continue providing a service to customers.
The company plans to permanently shut down board machine (BM) 1 at Imatra in Finland with annual capacity 170,000 metric tons of cupstock and liquid packaging board by the end of 2009. The company says the machine is unprofitable due to the strong euro and high wood costs. The plan also includes an overall streamlining of operations at the Imatra mill.
At Fors, Sweden carton board mill and the Ingerois, Finland, mill, the quality, capacity and productivity of the board machines will be improved and the sheeting capacity increased.
Stora Enso plans to permanently shut down Corenso's coreboard machine at Varkaus in Finland with an annual capacity of 100,000 metric tons by the end of 2008 due to persistent profitability problems. It is part of the company’s industrial packaging business area.
Of the 1,700 employees affected, 600 are in Germany, 550 are in Finland, 400 are in Russia and 150 are in other countries.
The company says it is preparing for rising costs and the expected end of imports of wood from Russia, which has been steadily increasing duties on wood exports. The country plans to raise duties from about $70 per cubic meter from the current approximately $21 next year.
About 1,450 employees planned to be transferred to a new joint venture company with ABB to provide maintenance services for six Stora Enso mills in Finland.
Provisions and write-downs of around $396 million will be seen in the third quarter and the plan is expected to boost annual profits by around $195 million by the end of 2010.
The company anticipates future growth opportunities in fiber-based packaging and selected paper grades.
“We continue proactively to build the future of the group,” Stora Enso CEO Jouko Karvinen says. “While taking the necessary steps to get through the ‘perfect storm,’ it is increasingly clear where the future growth opportunities for Stora Enso will come. We foresee a more focused group, with fewer product lines. We also see the need to have a stronger asset base in growth markets. We have a strong starting position in fiber-based packaging materials and are convinced that versatile fiber-based packaging will compete successfully with plastics and other materials made from fossil fuels. These factors provide sound growth and earnings potential.”
Stora Enso plans to streamline its administration in line with its more focused businesses.
Stora Enso’s plans were announced on the same day that another Finland-based papermaker, UPM-Kymmene, said it intends to cut 1,600 jobs during the next few years. That company expects to close two of its mills in Finland by the end of this year.
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