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The operating conditions of the forest industry in Finland came into focus on Thursday as Finnish forestry giant UPM elaborated on its decision to close down its hallmark paper mill in Kaipola, central Finland.

The business circumstances for the pillar paper industry in Finland are now “overwhelming,” said UPM President and Chief Executive Officer Jussi Pesonen in an open letter on Thursday.

The paper and forestry sector is one of the pillar industries of Finland. The closing of the Kaipola paper mill is a historic move as it is the last remaining plant in Finland producing standard paper for newspapers. The closing of the mill would mean the loss of 450 jobs.

Explaining the company’s decision, Pesonen said in his open letter that the procurement chain of forest fibre has been taxed more heavily in Finland than in the competing countries.

He also noted that in comparison to Germany, for example, industrial salaries are 30 percent higher in Finland, while working hours are shorter. Furthermore, he recalled that Finland had kept increasing the tax on diesel fuel, which impacted the transport of timber and wood products.

Finnish commentators noted that the demise of the Kaipola paper mill was accelerated by the steep drop in demand for paper caused by the COVID-19 crisis.

Both the UPM and its Finnish competitor Stora Enso reported that demand for paper during the second quarter this year had dropped to a third from last year. The UPM has reported a slight increase in demand recently, but the total demand in 2020 is expected to be 20 percent below the 2019 level.

Pesonen called on the Finnish government to draft a comprehensive industrial and labor policy that would support “profitable industries and new investments.”

However, Finnish Prime Minister Sanna Marin said Thursday on social media that each “unnecessary closure” of an industrial plant is a blow to Finnish society.

Union representatives noted on Thursday that the forestry conglomerates have been benefiting from Finland’s infrastructure and education system but they do not appear to appreciate it and they also have issues with the country’s collective agreement and bargaining system. The beginning of 2020 witnessed major strikes in the forest industry.

The closure of the Kaipola paper mill triggered worries and regret among Finns.

Pekka Lahteenmaki, an analyst at the business paper Talouselama, commented on Thursday that since the closing of the first paper mill in 2006 in Voikkaa, southeastern Finland, ten major paper mills have been shut down in the country. Earlier, Stora Enso has also announced its intention to close two paper production plants in Oulu, northwestern Finland, later this year.

Finnish-made newsprint has been a major export product, but from now on the country’s newspapers are likely to be printed on imported paper, Lahteenmaki noted.

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