Other forestry companies jointly opted for development, only UPM decided to push the labor market situation into open conflict. The factories are standing and the euros are ticking, but in the end the way out is to be found, writes financial journalist Anni Lassila.
Forestry company UPM’s pulp and paper mills in Finland and the biofuel refinery have now been shut down for a month due to a strike by paper and electricity unions.
The Finnish economy is in a great mood, the prices of most forest industry products are at the peak of the business cycle, exports are pulling and all other forest factories are running as before.
Demand for the products is so strong that even without the strike, UPM’s mills would run at full capacity. Analysts have estimated that the company will lose about EUR 2-3 million a day in the strike, taking into account all the effects.
In a month, the company’s owners have therefore lost EUR 60-90 million. If the strike continues for another month, the losses will increase to 120-180 million euros.
So why are UPM’s mills standing? Is the trade union movement hardened by its old power to blame, or has UPM’s management perhaps made an error of assessment?
Where from is the strike really about? It all started with the forest industry announcing a year and a half ago that there would be no more collective agreements in the sector in the future. Agreements would be made between employees and companies.
The paper union said it would accept the company-specific agreement, but the union would still negotiate on behalf of the employees. Last autumn, Stora Enso and Metsä Group signed company-specific agreements based on the old paper industry collective agreement.
However, UPM announced that it would only agree to do business at a time. The company also stated that as the parties to the agreement change, the old collective agreement will not have a so-called after-effect. The new agreements would be concluded on a completely new basis.
In the absence of an agreement, UPM’s mills would comply with the new terms and conditions announced by the company at the turn of the year.
Read more: UPM’s Pesonen promised investments if a collective agreement arises and threatens austerity measures if the strike continues
This This is therefore particularly important for UPM, as it now has a unique opportunity to get rid of old contracts.
What will be agreed this time will be the cornerstone of all subsequent rounds of agreements. The agreement to be concluded now will remain in force until a new agreement is concluded.
UPM’s interpretation of the cessation of the after-effect may be legally correct, but was it still wise?
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This method of upbringing does not work in teens and especially in adults.
The company managing director Jussi Pesonen toured the factory locations before the end of the year, promising what will be known if employees agree to the contract model offered by the company.
The other half of the message was a warning. What would happen if no agreement was reached: there are paper machines at stake, maybe some pulp mills.
Pesonen also publicly promised that the Finnish paper mills will be safe for three years if the agreement is made. Otherwise, fate can be harsh.
Everyone knows that paper mills are doing badly. Demand for paper is declining at a steady annual rate of 5 percent, an average of one or two years of paper machine production.
Of course, there are machines other than UPM. More than a year ago, the company closed three machines at the Kaipola plant. Last year, Stora Enso closed the Veitsiluoto and Kvarnsveden plants. The demand situation is likely to be in balance for some time.
But in the coming years, UPM will play a playoff game between the Finnish and German mills, one machine at a time.
Pesonen however, it apparently fell wrong.
If you do, you get candy – if you don’t, then you don’t get any food – the type of upbringing doesn’t really work for toddlers, let alone teenagers, and especially it doesn’t work for paperworkers who listen to intimidation until they get bored.
They are professional, highly productive and self-respecting adults.
Workers in the paper and electricity unions decided to start the strike.
The employees of the company’s sawmills and plywood factories, on the other hand, belong to the Confederation of Finnish Industry. In December, it signed new collective agreements with UPM, which Pesonen praised as excellent last week in connection with the earnings announcement.
According to Pesonen, the agreement, which will improve competitiveness, will even attract the company to invest in Finnish production facilities.
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It is semantics whether multiple contracts or flexibilities are entered into within one.
The fact is that the old collective agreements in the forest industry are very rigid and in some cases expensive. The rules on working time arrangements, downtime, bonuses and outsourcing, among other things, are outdated in their complexity.
The paper union’s approximately 200-page collective agreement is so complex, its text unclear and even illogical, that it is not really even possible to understand the agreement.
According to one who is very familiar with the agreement, the agreement is, in fact, the same as its interpretative practice.
All parties believe that the agreement needs a radical rewrite. However, that doesn’t necessarily mean the old deal should be thrown away in the trash.
Is for example, in the end, the semantics of whether the company enters into industry-specific agreements. Within an equally old agreement, sector-specific flexibilities can be agreed.
We like to be in the elevator about these things, but reportedly they have already been done.
Parts of the old contract can also be erased together or rewritten. It is possible to agree on everything.
UPM: n competitors chose the path in which the contract will be developed round of contracts at a time. They did not see the need to wage an open war against their workers, but considered that the best result would be achieved together.
It is particularly interesting that Metsä Group entered into a Group-specific agreement, even though its pulp and board business is its own independent company. It could therefore have concluded business-specific agreements in practice, but considered it unnecessary.
STILL The paper union should take a spoon in a beautiful hand. It is foolish to destroy production facilities and jobs because labor costs are a little too high.
According to UPM, these are often relatively small margins in the end. The company’s negotiation objectives have not been properly explained, but apparently UPM does not seek to radically trample on working conditions.
Especially in the working conditions of paper mills, it would be worthwhile to be flexible now, otherwise you can probably say goodbye to the rest of the paper machines one at a time. German industrial policy is a bad competitor.
Wages for paper mill workers were the highest in the industry at a time when demand for many grades of paper was growing and prices were high. It’s different now.
Flexibility in one industry does not mean that the whole company has to follow suit.
It’s also a little hard to see why the Paper Association is absolutely refusing to bring chief shop stewards who know the issues of their own workplace to the negotiating table.
Would it really erode the bargaining power? For example, the Confederation of Finnish Industries acted differently in its own negotiations.
But UPM should also oppose it. All other employees of the Paper Association are employed and solidarity with UPM’s colleagues is guaranteed. The money from the union does not run out right away.
Besides, the strike is welding the trade union movement more and more closely together – by no means defeating it. The ACP has already announced support measures. JHL, the public welfare association, said on Friday it was ready to support the strike.
The whole idea that new collective agreements could even be scratched from scratch in quick negotiations is perhaps unrealistic. In any case, they should take large parts of the old. Heavy three-shift work requires the agreement of little more than just salary and total working time.
Employees are unlikely to come to work until the new collective agreement has the names below, unless, however, the old agreement is promised to be complied with during the negotiation period.
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Who would the gentlemen of UPM listen to?
Pesoselle and UPM’s Chairman of the Board To Björn Wahlroos there may not be clappers even in the employer camp. Elsewhere, UPM’s lonely crusade is astonished.
Agreements have already been reached in other key industries. There was enough will to agree, because no one hopes that the factories will stand in a peak.
Furthermore, UPM’s position in the Finnish economy and society is no longer such that the company can dictate anything.
Before UPM’s long-term agreement must also be reached. At the time of the closure of the forest industry in 2005, the gaps were so inflamed that a chief clerk was needed to act as an intermediary. Raimo Sailas. Maybe something similar would be needed this time too.
What is needed now is a compromise in which both sides can keep their faces.
In the paper union, flexibility will probably be found in the end. But who would the gentlemen of UPM listen to?
The challenge is compounded by the fact that the company does not have a clear major owner who could control the actions of the management duo. Wahlroos and Pesonen have done a great job at UPM in 15 years, but they have also elevated themselves to a position where critical voices are poorly tolerated.
Neither has reportedly been interested in meeting the other party, at least so far, but the negotiations have been left to the labor market director. Jyrki Hollménin and industry. The mandate is probably tight.
UPM’s management will see red if the controversy is called ideological. Perhaps stubborn would be a more pertinent characterization.
The strike began its fifth week on Monday. The factories are standing and the euros are ticking.
As a shareholder, I would already be a little worried.
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