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Finland's lockout could affect paper, packaging prices

27-Jun-2005

With the lockout of 25,000 workers at Finland's pulp and paper mills set to continue into July, fears arise of similar problems in Sweden and Germany and a hike in global paper and packing prices.

Finland's paper sector accounts for eight per cent of the country's gross domestic product (GDP) and 15 per cent of the world's total production of pulp and paper. The lockout affects some of theworld's largest paper and packaging companies, including UPM-Kymmene and Stora Enso.

In the latest news the Finnish Forest Industries Federation announced the extension of a worker lockout to 15 July after theFinnish paper union, Paperiliito , rejected a package of agreements proposed by a government-appointedarbitrator. The federation had accepted the proposals. The lockout began on 18 May after the union began a series of strikes over pay, overtime and outsourcing.

In a statement the industry association also said it had exhausted negotiations with Paperiliito and warned that jobs would be lost in Finland as companies would have to restructure and move plantsoutside of the country to meet growing global competition.

In response the union is teaming up with unions in Germany and Sweden to prevent work being transferred outside of Finland to lower cost countries. In neighboring Sweden the country's paper unionhas imposed an overtime ban at 16 mills in support of the Finnish workers. In Germany the paper industry is now attempting to get employees to agree to extend their working hours by two hours per week.

The European Mine, Chemical and Energy Workers' Federation (EMCEF) said it is investigating whether the real purpose of the lockout is to increase prices for paper products in Europe. If thefederation finds evidence of such collusion it will report the findings to the European Commission. German and Swedish paper and packaging workers are also in negotiations with companies over workinghours.

Last week UPM-Kymmene issued a statement estimating the company was losing €4m per day. Overall Finland is losing €40m a day from the lockout.

The union has now chosen a way, which will lead to a heavy restructuring in the Finnish paper industry," stated UPM's president and chief executive officer Jussi Pesonen. "The secondconciliation proposal would have given possibilities to develop the competitiveness of the Finnish units. The proposal would have given the mill managers and employees more latitude and preconditionsto agree on the reasonable organisation of local work."

The Finnish Forest Industries Federation began union-level negotiations with the Finnish Paperworkers' Union in February 2005. At the end of March the union declared an overtime ban. The federationthen imposed the lockout.

The proposal for a settlement would have given the paper workers slightly better increases in salaries and wages during the next two years than is required under Finland's employment regulations.The proposal would have shortened the annual working time. However the union does not agree with the federation's proposals on oursourcing some of the work they currently do.

Finland has 10 packaging mills. Eight of the factories produce corrugated board and two sheet board packaging material, mainly for local clients. There is also one milk packaging company. The millsoutput is mainly used for boxes, trays for yogurts and at this time of the year, packaging for vegetables and berries, said Anneli Laakso, the secretary general of the Finnish corrugated boardassociation.

Finland's packaging mills resumed production on 1 June after a two-week strike called in support of the lockout. The industry association had initially excluded the packaging mills from thelockout, but workers went on strike at those plants anyway, except for one mill that made milk packages.

The largest member companies in the Finnish Forest Industries Federation are Stora-Enso, UPM-Kymmene, M-Real, Metsä-Tissue, Myllykoski and Ahlström.

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