MercoPress. South Atlantic News Agency

Stora-Enso is closing three paper mills and cutting 1.700 jobs

The Finnish-Swedish forest products group Stora Enso reported Thursday a third quarter loss and announced plans to cut production by closing mills in Finland and Sweden which will mean the loss of 1.700 jobs.

On making the announcement in Helsinki the company said it had lost 375 million US dollars in the three months ended September 30 compared to a 252 million US dollars profit a year earlier. Net sales in the period edged up to 4.6 billion US dollars from 4.5 billion US dollars a year ago. The company blamed rising wood costs and a weakening dollar for the loss. CEO Jouko Karvinen anticipated that problems would continue in 2007 arguing that "these closures, production rationalizations and staff reductions, however painful, are crucial for Stora Enso to be competitive long-term. To wait in the hope of better times would lead to more severe actions in the future; we will therefore curtail production in the fourth quarter". The company will lay off about 10% of its work force in Finland, or 1,100 people, and close three plants, while in neighboring Sweden it will close one mill, cutting 300 jobs. Also, it plans to slash more than a third of its administrative staff worldwide, eliminating 300 jobs, mostly in Britain, Finland, Sweden and Germany. The Finnish government, which owns a 12% stake in Stora Enso, said Thursday it would allocate 15 million euros to help regions hit by the closures and job cuts. The closures will reduce annual production of newsprint and magazine paper by 505,000 tons and pulp by 550,000 tons, the company said, adding that it expected the measures to result in annual savings of up to 230 million US dollars by 2009. Union leaders and regional government officials criticized the company's loss-making investment decisions in early 2000, especially in North America. When Karvinen was appointed president and CEO in March, he announced a shake-up in the company, and last month said it would sell the US business for about 2.1 billion US dollars to New Page Holdings. This is half the price it paid for it seven years ago. "I'm new in the job, so I don't fully comprehend those decisions made seven years ago," Karvinen said Thursday. "But deciding to give up the North American operations means it will free up capital ... and we will be able to invest in other units." Helsinki-based Stora Enso is one of the world's largest forest product companies, with 44,000 employees in more than 40 countries. The group was formed in a 1998 merger between Finland's Enso and Stora of Sweden.