Stora Enso bows before Asian onslaught
Stora Enso initially intends to cut 400,000 tonnes of production and shed approximately 2,000 jobs by the end of 2006, with a decision expected within the year on an additional slashing of capacity tonnes and a further 2,300 job losses. The company plans with the measures to save $482.7 million by mid 2007.
The paper manufacturer will sell six of its plants, reducing paper and board capacity by a further 530,000 tonnes and pulp capacity by 305,000 tonnes, with a further four plants to be placed under scrutiny.
Robert Eastmant, editor of industry bible Pulp & Paper Edge, attributes the developments to increasing competition from Asian paper manufacturers. “The market is very tight due the low-cost producers from Asia, so I'm not surprised that Stora Enso has taken steps to reduce capacity,” he says.
“In order to address the global issue of oversupply, manufacturers like Stora Enso need to reposition themselves to compete with the Asian markets, by looking at evolving into low-cost producers,” he says.
Jukka Harmala, CEO of Stora Enso, claims the moves are part of attempts to secure improved financial performance and long-term competitiveness in the company's main market of Europe.
“The two improvement programmes, Profit 2007 and Asset Performance Review, will improve the competitiveness of our European platform through continued development of core assets,” says Harmala.
Harmala has also indicated Stora Enso will be ramping its investment in new growth markets, a claim reflected in the news that the company has signed an agreement with Chinese board producer Foshan Huaxin Packaging. Subject to the appropriate regulatory approval, the deal will see the two companies establish of a joint venture in liquid packaging boards.
Foshan Huaxin Packaging has begun construction on a white lined chipboard machine with a production capacity of 250,000 tonnes per year, and Stora Enso plans to make modifications to the investment to allow it to manufacture primary-fibre-based products.
