Another newsprint mill and one of three at another is set to close as UPM advances up its programme to cut production capacity.

The company says it plans to “adapt” its uncoated publication paper capacity to a long-term profitable customer demand, with reductions planned in Germany and Austria:

UPM Communication Papers will permanently close paper machine 6 at its Schongau mill in Bavaria, Germany – reducing annual capacity of uncoated publication papers by 165,000 tonnes – and accelerate the previously-announced shutdown in Steyrermühl by six months, cutting 320,000 tonnes of newsprint a year by the middle of this year.

The company says production on “cost-competitive” paper machines 7 and 9 in Schongau – as well as on UPM’s four other uncoated publication paper machines in Germany and Finland – is planned to continue with a total annual capacity of 1.8 million tonnes.

Employee consultation in Schongau starts immediately with the machine to be close as soon as it has been finalised. The plan affects the jobs of 35 personnel.

UPM says the COVID-19 years caused demand disruptions in the graphic paper markets, followed by a period of high inflation and unprecedented volatility last year. “Now that volatility is subsiding, the graphic paper market is returning to its long-term trend of declining demand which has characterised the industry for over a decade.

“The continued long-term decline in demand forces us to continue our efforts to ensure cost competitive production and that our assets are in efficient use in all circumstances. In a declining market, competitiveness in company operations is key to substantiating our long-term commitment to the publication paper market and to remain as a reliable partner to our customers.”

UPM Communication Papers executive vice president Massimo Reynaudo says the company “aims to handle the restructuring measures in a socially responsible manner” and will engage now in a fair dialogue with employee representatives.

In Steyrermühl, the closure brings forward “plans to ensure competitive production” at our remaining newsprint paper machines in Europe. This decision “will have no impact on the plans for the Steyrermühl site and its employees” but will result in a charge of 10 million Euros in its Q1 2023 results. The planned closure of Schongau PM 6, UPM will recognize restructuring charges of 26 million Euros as items affecting comparability in its Q1 2023 results. UPM says the planned actions are estimated to result in annual fixed cost savings of 13 million Euros.

Pictured: An upgrade of its bubbling fluidised bed boiler is part of recent investment at Schongau to meet new emissions targets