Norske Skog is to halt newsprint production from one of the paper machines at its Norske Skog Follum mill in eastern Norway.
“We are not getting adequately paid because of the excess capacity in today’s newsprint market,” explains chief executive Jan Oksum.
“This shutdown is the best way of reducing our capacity, and will improve earnings over time.”
Paper machine (PM) 2 at Norske Skog Follum is to be closed down on 1 July, and plans call for the production halt to last for the rest of this year.
In consultation with workforce, Norske Skog wants to pursue an extensive continuing and further education programme at the mill – not least to achieve a significant increase in the number of employees with a skill qualification.
“That will allow us to utilise the shutdown to develop expertise as the basis for improved productivity and enhanced competitiveness in future,” says Mr Oksum.
Norske Skog Follum has 520 employees. PM2 has an annual capacity of 130 000 tonnes of standard newsprint, and the shutdown will reduce production in 2005 by about 70 000 tonnes.
Unsatisfactory results were reported by Norske Skog for the first quarter of 2005. Although paper prices have risen, this increase has not been sufficient to offset higher costs for energy and other input factors.
In addition to the production shutdown at Norske Skog Follum, the company is planning to reduce its European newsprint output by a further 50 000 tonnes for the remainder of 2005.
“As one of the world’s leading manufacturers of newsprint and magazine paper, we must adapt our capacity to the sales volume which provides acceptable earnings,” says Mr Oksum.