Dispute over paper mill closure

In August 2005 the board of Norske Skog ASA proposed to close down its paper mill Norske Skog Union in Skien Norway, the result of which will be 380 redundant employees. Strong criticism from the trade unions, as well as from local and central politicians, has not led the management of Norske Skog to reconsider its decision.

The board of the Norwegian transnational Norske Skog ASA made a decision in August 2005 to close down one of its four Norwegian paper mills, Norske Skog Union in the town of Skien, Norway. Approximately 400 employees stand to lose their jobs as a result of the closure. The mill will according to the plans be closed in the course of the first quarter of 2006. A final decision will be made at the meeting of the corporate assembly in October 2005.

Norske Skog ASA is one of the largest paper production companies in the world, with around 13% of the global market for newsprint and magazine paper. The main rationale behind the closure in Skien is, according to management, a mismatch between production and demand on newsprint paper, which also in the long term will make its mark on the European market. The implication is an overproduction of newsprint paper in Norske Skogs factories in Europe. The decision to close down production in Norsk Skog Union owes a lot to the fact that it is a small mill with a relatively old production system. Management also argue that a closure of Union will enable Norske Skog to direct efforts at other parts of the company’s Norwegian activities.

The decision has received significant public attention, not least because the company has refused to sell or consider alternative production in the mill. Management soon rejected a bid put forward by two Norwegian investors. The mill in Skien is important to local employment, and a closure may also have detrimental effects on sub-supplying companies and other local industries. Thus local forces have mobilised in favour of a continuation of production at the mill, and national politicians are also involved. The Minister of Trade and Industry, Mr Børge Brende from the Conservative Party (Høyre), has gone far in criticising the board’s decision, and has also pledged support for continued production at the mill. The decision has also been met by significant criticism from the trade unions affected. Moreover, the leadership of the largest union confederation in Norway, the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO), have called for improved measures to prevent cost-effective companies being closed down.

Despite considerable criticism, the management of Norske Skog has not been willing to reconsider its decision. Instead, it has put forward proposals for measures to relieve the transition of those employees that stand to lose their jobs, and measures to contribute to employment creation in the region. Norske Skog intends to enter into discussions with the trade unions about different types of severance packages for the employees affected. In addition older employees will be offered work in other subsidiaries of Norske Skog in Norway, and will be given priority with regards to employment in connection with the dismantling of activities in Skien. Apprentices and other employees undergoing training will be allowed to complete these programs. The company have also set aside funds for a project to deliberate alternative production activities at premises of the mill in Skien.

This information is made available through the European Industrial Relations Observatory (EIRO), as a service to users of the EIROnline database. EIRO is a project of the European Foundation for the Improvement of Living and Working Conditions. However, this information has been neither edited nor approved by the Foundation, which means that it is not responsible for its content and accuracy. This is the responsibility of the EIRO national centre that originated/provided the information. For details see the "About this record" information in this record.