Material solutions company UPM – whose slogan is now ‘we renew the everyday’ – is closing more of its paper making capacity, its mill in Kaukas in Finland and moving production of coated mechanical paper in Finland to its Rauma mill.

UPM says it is addressing “structural overcapacity” in graphic paper markets and the need to ensure long-term competitiveness of its operations. UPM Communication Papers plans to end paper production at Kaukas in Finland’s Lappeenranta – reducing annual production capacity of coated mechanical paper by 300,000 tonnes – with the shutdown of PM 1 planned for the end of the year. Pulp, sawn timber and biofuels production, and R&D activities at Kaukas will continue as before.

Under local legislation, decisions on final plans rest on “co-determination processes”, but as planned, the move will affect 220 employees.

Executive vice president Gunnar Eberhardt says global demand for graphic paper continues to decline due to digitalisation, macroeconomic challenges and changing consumer habits. ““UPM is well positioned to grow in several segments,” he said. “The steps will enable a healthier capacity utilisation and support our overall cost structure and competitiveness in the global graphic paper markets.”

After restructuring costs of 78 million Euros (A$139 million) annual fixed cost savings are estimated at 32 million Euros (A$57 million).