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Metso to adjust its Finnish operations in response to structural change and weaker demand in the paper industry

Metso is to begin statutory employer-employee negotiations on personnel reductions and layoffs in several of its units serving the paper industry and in its paper production service business. Negotiations will cover approximately 4,100 employees at Metso's Finnish units serving the paper industry. It is estimated that reductions will affect a maximum of around 630 employees, with around 150 positions likely to be outsourced.

"It's very unfortunate that we are forced to resort to such drastic measures affecting our employees. They are essential to maintain our competitiveness and leading position in a rapidly changing business environment, however," says Pasi Laine, President of Metso's Pulp, Paper and Power business. "The negotiations that we are now initiating are aimed at finding solutions to this situation, together with our employees."

Personnel reductions are necessary because of the need to adjust the manufacturing capacity of Metso's paper business unit to the permanent structural changes that have impacted the business and weakened its competitiveness and profitability. The main factors here have been the ongoing reduction in in the demand for paper machinery, increasing demand for cheaper solutions, growing competition, and the downturn in demand for foundry products. The general climate of uncertainty in the global economy has also affected the paper industry's appetite for new investments.

"The gains made by new communications technologies have weakened growth in the consumption of printing and writing paper. As a result, the market for new printing paper machines has slowed, while the demand for more economical medium-sized board machines has continued. This global change in demand means that we must adjust our capacity not only in Finland, but also abroad, including China. The medium-sized machine segment is also of interest to smaller suppliers, which makes competition here particularly tough. We have to be able to produce cheaper, quicker, and more flexible solutions to survive in this market," says Laine.

The aim of the personnel reductions is to bring production capabilities in line with current and expected demand, and secure Metso's global competitiveness over the longer term. A lighter operational cost structure and greater flexibility is essential. Outsourcing some operations will also improve Metso's ability to adapt to changing workloads and focus on its core business.

"The paper industry will continue to be of great interest and importance to us as a business area, despite the slowdown in the printing paper machinery market. Board and tissue consumption is continuing to grow moderately, and Metso's vast installed base will offer us opportunities to further develop our service business. A lighter cost structure will enable us to compete more effectively in the marketplace," continues Pasi Laine.

Personnel reductions

The estimated need for reductions at Jyväskylä, Järvenpää, Tampere, Raisio, Juankoski, and Valkeakoski covers approximately 630 people in maximum, with around 150 positions likely to be outsourced. Negotiations will commence immediately and will affect all personnel groups. Reductions are expected to be implemented during the first half of 2013.

Temporary layoffs

The need for temporary layoffs will affect all personnel serving the paper industry at Metso's locations in Jyväskylä, Järvenpää, Tampere, Raisio, Juankoski, and Valkeakoski, approximately 3,500 employees in all. Negotiations will commence immediately. The exact number of reductions will be determined on the basis of the 2013 production situation and order book.

Targeted savings

The target is to achieve savings of approximately EUR 30 million in annual operational costs as a result of the negotiations. It is estimated that the cost reductions will be implemented in full as of the third quarter of 2013.

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