UPM Communication Papers has announced plans to end paper production at its Kaukas mill in Lappeenranta by the end of 2025.
The move comes in response to structural overcapacity in the global graphic paper markets and reflects the company’s continued efforts to streamline operations and remain competitive.
The planned closure of Paper Machine 1 (PM1) would reduce UPM’s annual coated mechanical paper capacity by 300,000 tonnes. Approximately 220 employees are expected to be affected. UPM’s other operations at the Kaukas site—including pulp, sawn timber, biofuels, and R&D—will continue as usual.
The decision is subject to the outcome of co-determination negotiations with employee representatives, in line with Finnish legislation.
“As digitalization and macroeconomic pressures reduce global demand for graphic paper, we must make tough but necessary choices to ensure long-term viability,” said Gunnar Eberhardt, Executive Vice President of UPM Communication Papers. “We are committed to supporting our employees during this transition.”
The company plans to shift its Finnish production of coated mechanical paper to the Rauma mill. According to Antti Hermonen, Senior Vice President of Operations, the reorganization is intended to improve asset utilization, production efficiency, and logistics.
If implemented, UPM will record restructuring charges of €78 million in its Q3 2025 results, including €35 million in cash costs and a €43 million asset impairment. The changes are expected to deliver annual fixed cost savings of €32 million.
UPM Kaukas currently manufactures coated mechanical paper and employs around 220 people. The site has long been part of a broader integrated industrial complex in Lappeenranta.
UPM Communication Papers operates 10 paper mills worldwide, producing a wide portfolio for printing, publishing, and office uses. Despite its shrinking paper business, the company continues to grow in areas such as renewable materials, advanced fibers, and decarbonization solutions.
