Rapid action is needed to restore competitiveness, dialogue will continue in the autumn

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The forest industries in Finland are in difficulties. In its report the working group on the future of the paper industry expresses concern over the future of mills, production and jobs in Finland. The working group notes that rapid action is needed to turn development and restore competitiveness.

Pulp and paper mills face and see the need for change in the industry on a daily basis. A total reform of the collective agreement must eliminate inflexible practices and productivity obstacles. New ways of operating must also be sought and the paper industry must be developed using a long-term approach. Preventing indispensable changes will slow down renewal, weaken competitiveness and accelerate the loss of jobs.

After the working group the Finnish Forest Industries Federation and the Paper Workers’ Union will continue their dialogue beginning in September 2006. The parties will also establish a dialogue forum in the paper industry to maintain the constant and open exchange of information on factors influencing change in the paper industry’s operating environment. Organizations representing other groups of workers in the paper industry and central organizations will also be invited to participate in the dialogue.

Total reform of the collective agreement as in the metal industry, productivity and degree of processing up, costs down

The level of productivity in the Finnish paper industry is still high, but the development of productivity has lagged behind competing countries in recent years. Improving productivity and turning development require willingness to change of all the parties concerned. The industry can take measures to renew operating methods, strengthen competitiveness and create better preconditions for preserving jobs. Matters already resolved in the existing collective agreement, such as the use of subcontracting, must be rapidly promoted.

The collective agreement in the industry should be reformed to meet current requirements according to the model in the metal industry, and reforms should be introduced at the beginning of the next collective agreement period. The goal of total reform is to remove productivity obstacles and inflexible practices, to adjust to the existing market situation and changes in it, and to simplify and clarify the collective agreement in order to avoid different interpretations. Occupational health and safety must also be improved in order to reduce absences.

Over the long term changes in the production and product structure and the development of new products with a higher degree of processing will strengthen the industry’s possibilities to succeed and help ensure jobs in the future.

In additional to internal reforms the working group recommends numerous measures connected to the operating environment. Among other things it is essential to create an internationally competitive concentration of expertise in the forest-based and related industries in Finland, to which companies and public actors must make a commitment. The electricity tax on industry should be abolished and the excessive effect of emissions trading on the price of electricity should be prevented. Appropriations to maintain the road network should be increased and trade barriers and competition-distorting aids should be eliminated. The annual increment of Finland’s forests should be increased from 80 to 100 million cubic metres by allocating state aids for this purpose.

Operating environment has changed, competitive edges in Finland have been reduced

The paper industry’s profitability has weakened during the past four years. The operating environment has changed as growth in production and demand has shifted to developing economies while demand for paper in Europe, which is the Finnish paper industry’s main market, is growing slowly. As a result of intense internationalization, investments are being made where growth and profitability conditions are best.

The working group expects the number of workers in the paper industry to continue to fall in future. Traditionally the paper industry has strived to manage job cuts using soft methods, but in the weak economic situation this is no longer simple or possible. Overcapacity in Europe adds its own challenges.

Investments and growth in Finland are limited by the distance to large and growing markets and the availability of raw materials at competitive prices. The price of energy, which has been a competitive edge, has risen because of emissions trading and the rising price of oil, which have increased production costs as well as transport costs for raw materials and products.

Additional information:

President Anne Brunila, Finnish Forest Industries Federation, tel. +358 9 132 6600

Briefing of the working group on the future of the paper industry 12.6.2006.pdf