UPM-Kymmene closes two paper machines at Blandin mill in the US

Archive 8.1.2003 0:00 EET

UPM-Kymmene Corporation is closing its two oldest paper machines PM 3 and PM 4 at Blandin mill in Minnesota, effective immediately. The machines were originally built in 1931 and in 1963.

The age and productive capacity of the two machines mean they are no longer competitive, irrespective of future investment. The total production capacity of the two machines was 157,000 metric tons of coated groundwood paper. The Blandin mill will continue to operate its two newer machines, PM 5, built in 1975, and PM 6, built in 1989.

"Blandin is one of the leading coated groundwood paper mills in North America and both PM 3 and 4 have contributed significantly to the company's reputation as a quality publication papers producer. However, paper production overcapacity continues to be a business reality in North America and we need to focus on our most productive, most efficient, low cost assets," said Joe Maher, Senior Vice President and General Manager of Blandin.

UPM-Kymmene acquired Blandin Paper in 1997. Since then the Group has strongly invested in the complete overhaul of PM 6. After the closures, the paper production capacity at Blandin mill is 336,000 tons of coated groundwood paper. In addition, UPM-Kymmene owns a coated groundwood paper mill in Miramichi, Canada, with a production capacity of 450,000 tons on two machines. The remaining capacity in North America is technically advanced and the average machine size is well above the industry average. UPM-Kymmene will meet the needs of its North American customers with this modern and cost efficient capacity.

In connection with the closings UPM-Kymmene will book immediate write-offs of USD 90 million for 2002. In addition USD 30 million has been reserved for other closing-related costs.

The closures will lead to the reduction of approximately 300 of Blandin's 800 jobs. The effects of the resulting layoffs will be negotiated with the Union.

For additional information please contact:
Mr Markku Tynkkynen, President, UPM-Kymmene Magazine Paper Division,
tel. +358 204 15 0654
Mr Kevin Lyden, President, UPM-Kymmene North America, tel. +1 630 850 4979
Mr Joe Maher, Senior Vice President and General Manager, Blandin Paper Company,
tel. +1 218 327 6398
Ms Rebecca Theim, Director, Communications, UPM-Kymmene North America,
tel. +1 630 850 4990

UPM-Kymmene Corporation
Corporate Communications
January 8, 2003