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Stora Enso Streamlining, Structure Simplification Plans Could Cut 2,500 Jobs

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Earlier this year (on April 13) Stora Enso, Helsinki, Finland, announced plans to simplify and streamline its operations to focus its different businesses, simplify its operations, and enable greater focus on growth in value-creating businesses. The potential EUR 200 million annual Group fixed cost reduction from actual costs in year 2012 to second quarter 2014 run rate will include the earlier announced EUR 30 million streamlining of the Building and Living Business Area. All plans are subject to co-determination negotiations in the local units.

The EUR 200 million plans do not include any capacity reduction actions. In addition to the EUR 200 million, the effect of previously announced cost and capacity reduction actions between 2012 and the second quarter of 2014 will be EUR 75 million per year.

The company says that according to preliminary estimates, the plans could reduce its total number of employees by approximately 2,500, depending on the outcome of the co-determination negotiations and processes. The geographical split of the planned personnel reduction is as follows:

  • Finland 650
  • Sweden 750
  • Europe (excluding Nordic countries) 850
  • Outside Europe 250.

The cost-efficiency and rightsizing actions are being planned by each business area, group service, and function. The actions planned in the business areas include identifying process efficiencies in production units and services, and the potential to reduce and centralize mill administration tasks, and to simplify organization structures and reduce management layers in business area administration. The various business areas have reached different stages of their plans. For example, in the Building and Living business area, the plans have progressed well and most of the co-determination negotiations have already been concluded and decisions taken.

Group Services and Functions are rethinking their priorities, rightsizing, and simplifying structures, Stora Enso notes. Some will go through further strategic assessment to optimize the service level and approach.

"This new round of streamlining is understandably very difficult for our employees, who have already experienced several cost-saving programs in the recent past. However, we have to respond to weakness in the European economy, structurally shrinking markets in some of our businesses, and our poor profitability. We must face reality, and then try to support the employees affected by these plans in a responsible way. We have a strong track record in restructuring operations. Delivering on our savings targets will be yet another proof of our ability and agility to rightsize operations quickly to match future needs," says CEO Jouko Karvinen.

The one-time costs will be recorded in accordance with Stora Enso practice and accounted as non-recurring items mainly during the second and third quarters of 2013.


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