Voith Paper Prepares for Weaker Paper Market - Papermart

Voith Paper Prepares for Weaker Paper Market

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September 13, 2013

Voith Paper is preparing for a further worsening of the global paper market with a package of measures. The aim of the planned measures is to ensure the profitability and lasting competitiveness of Voith Paper under worsening market conditions. For this purpose, competences will be pooled together at individual locations and capacities adapted to the lowered market volume. Associated with that is a planned cut-back of another approximately 560 jobs at various locations in Germany and Austria.

Already for quite some time now, Voith Paper has seen its business with new machines and large rebuilds at locations in Germany and Austria severely stressed by a structural reduction in demand for graphic paper machines. This structural change will also continue in the coming years. In addition, there is a weakening economic situation in the global paper market that is more severe than expected. In particular, the Chinese market is growing noticeably more slowly than predicted by market analysts in the past year. RISI, the leading analyst in this area, made a clear downward correction in July 2013 of its forecast for paper consumption in China for 2014 from 123 to 115 million metric tonnes. The Chinese paper market continues to grow, but substantially more slowly. Thus expectations in comparison to the previous year have once again been noticeably clouded. As a result of paper consumption that is less than expected, the willingness to invest in new paper machines on the part of Voith Paper’s customers is also cooling off further. This concerns all paper grades except sanitary paper (tissue).

In Europe, Voith Paper is not counting on a market recovery in the coming years. Rather, the business with new machines will remain at a low level. In China, predictions are for growth to increase again in the next two years. But this demand is mostly oriented to compact, locally produced machines of medium size – a trend that is further intensifying and to which Voith Paper has already reacted with specific restructurings. By contrast, the need for paper machines of the larger size segment, which Voith Paper previously produced mainly at its European locations, remains very slight.

Against the background of this, a job cut-back in Germany and Austria is unavoidable. The Voith Paper locations in Krefeld (around 210 jobs), Ravensburg (around 50 jobs), Neuwied (around 10 jobs) and in St. Poelten, Austria (around 290 jobs), are affected by this. In addition, as already announced in August, 240 jobs are being eliminated at Voith Paper in Heidenheim that are part of the Group-wide package of measures for the Heidenheim location.

Despite the adjustments in capacity, the existing competence centres will remain at the respective locations. Krefeld will continue to be the competence centre for calendars and winders; St. Poelten for rolls; Ravensburg for stock preparation systems, environmental technologies and specialty paper machines; and Neuwied remains the centre for quality control systems.