According to Stora Enso, both Veitsiluoto and Kvarnsveden mills are loss-making, and their profitability is expected to remain unsatisfactory also going forward.

Stora Enso pulp mill in Oulu region. Photograph: Jyri Pieniniemi/Flickr

Paper giant Stora Enso will start co-determination negotiations with employees at its Kvarnsveden Mill in Sweden and Veitsiluoto Mill in the northern city of Kemi in Finland regarding a plan to permanently close pulp and paper production at both mills. The planned closures would take place during the third quarter of 2021 and affect directly 670 people in Finland and 440 people in Sweden.

One of the reasons for the layoffs, according to Stora Enso, is the over-decade-long declining demand for paper in Europe.

“This trend has further accelerated due to the pandemic, which has led to changes in consumer behavior. As a consequence, there is a significant overcapacity in the European paper market, which has resulted in historically low-price levels and challenged the cost-competitiveness of many paper mills,” the company noted in a statement.

According to Stora Enso, both Kvarnsveden and Veitsiluoto mills are loss-making, and their profitability is expected to remain unsatisfactory also going forward.

“This is heavy news for our company and our colleagues at Veitsiluoto and Kvarnsveden mills. Our people at the sites are very competent and have done their utmost during very difficult circumstances. Unfortunately, in the rapidly declining paper market, we need to adjust our production capacity to improve the competitiveness of our total paper business,” said Annica Bresky, CEO and president of Stora Enso.

The planned mill closures would reduce Stora Enso’s paper production capacity by 35% to 2.6 million tons per year. Stora Enso’s annual paper sales would decrease by about €600 million.

Stora Enso would continue to source wood in northern Finland and central Sweden, as the regions continue to be important sources of wood for the company’s operations.

Stora Enso will not take any action regarding the planned closures nor employee impact until the local co-determination negotiations have been concluded.

“Stora Enso’s decision is a hard hit to the employers and the city of Kemi. The Ministry of Economic Affairs and Employment of Finland will immediately take action to support the people and the area,” Prime Minister Sanna Marin (the SDP) said on Twitter.

Kemi is a town of about 20,450 inhabitants.