But demand from the food and dairy sectors remained strong, with the company targeting both industries as potential growth areas, Mats Nordlander, company EVP for packaging, told FoodProductionDaily.com.
Downsizing and €4m costs
Stora Enso announced today that its core and coreboard divisions in Finland, Germany, the UK and US faced “restructuring” as demand from the paper industry continued to drop. The overhaul would lead to 70 job cuts.
“In core and coreboard markets the main customer is the board and paper industry. Decreased demand for paper mill cores in mature markets has made the market situation tighter, and in the current financial situation the outlook is uncertain,” said Norlander.
The firm said it was also reducing its corrugated operations in Finland. It characterised corrugated markets as being “very local” and said that Finnish demand was around 15% below 2007 levels with “no signs of a sustained recovery”.
The move will result in 80 job losses and cost the company €4m in the fourth quarter of 2011. Temporary lay-offs in Finland were also likely.
Nordlander said there were no current plans to cut other production centres, adding that markets in Poland, Russia, Sweden, China and India remained strong.
Food demand holding up
A fall in demand for mobile phone packaging had contributed to the difficult Finnish situation but the packaging EVP said that that orders for food packaging – both in Finland and beyond - were still buoyant.
“In applications for materials relating to food packaging – in both cores and corrugated material – were have seen no shrink in demand,” said Nordlander. “On the contrary we see food and dairy packaging as an area for growth and we are developing new solutions and investing more in these areas. The driver for this restructuring is not coming from the food or dairy sectors”.
The company said it hoped the measures would slice approximately €6m annually off its overhead costs. The plans would be introduced during the first quarter of 2012 and completed by the end of Q3.