Finnish forest industry giant to shut down production sites

On June 17th, Stora Enso announced that it will be permanently shutting down paper machines; a chemical pulp, a groundwood production site alongside a sheeting plan causing the shutdown of the Veitsiluoto Mill in Kemi, northern Finland. The company at the same time says its paper and pulp mill in Kvarnsveden in Sweden might also be shut down.

Stora Enso is a Finnish pulp and paper manufacturer. The majority of the company’s sales take place in Europe although some go to Asia, South America and the United States too.

The company reports that they had arrived at this decision after unsuccessful consultative talks in Kemi and negotiations with staff representatives. The reported closures meant that Stora Enso will have to cut down their paper production capacity by 35% to 2.6 million tons per year and that the company’s annual paper sales would decrease by €600 million.

This subsequently means that the shutdown will reduce the company’s share of paper of its annual revenue by about 10 percent. Paper production will now stand for a little over 10 percent of Stora Enso’s total revenue.

550 employees will be laid off at the plant in Kemi, of which 80% were working in the paper division while the remaining 20% worked with Efora, a maintenance company overlooking the production processes. Approximately 28% of the layoffs can be carried out through pension arrangements, which minimizes the effects of the employment loss for those involved

Kemi is located in Lapland in the northern parts of Finland. Respectively, the area holds 25% of the total forests in Finland, making the timber business lucrative for the region. However, recent drops in the demand of paper have slowed the production benefits of timber products.

The chief executive of Stora Enso, Annica Bresky, stated that although the closure of the mills is extremely unfortunate for both the company and its employers, they were left with no other choice due to the rapidly declining demand for paper. She pointed out that the pandemic had further accelerated the pace of the dropping demand and that the two paper mills were producing at an unfavorable and loss-inducing overcapacity.

This comes after the company’s choice of converting another paper and pulp mill in Oulu, Finland into a packaging production site last year for the same demand-drop reason. €350 million was allocated to the Oulu mill conversion project, which resulted in 365 employees being permanently laid off and another 180 being directly employed.

After the shutdown of the two paper and pulp mills, the only other paper mill left standing will be located in Inkeroinen, Finland, which will be producing both coated and uncoated paper. Helsingin Sanomat reports that the closing of these two paper mills is the largest as of yet in Finish history.

However, not all is “black” in the Finish paper-production sphere. In February 2021 it was reported that a €1,6 billion investment decision taken by Metsä Fiber, another leading producer of pulp, sawn timber, bioproducts and bioenergy, to build a new bioproduct mill on the coast of Bothnia, Finland would result in the creation of around 1500 new jobs. Most of the new jobs will be in the forestry and transportation sphere.

This paper and pulp mill is expected to start operating in the third quarter of 2023 after a two-and-a-half-year construction period.