Setra concentrates operations in northern Norrbotten to Kalix

Setra plans to place its operations in northern Norrbotten in Rolfs outside Kalix. Setra currently operates two sawmills in the region, Seskarö and Rolfs. Rolfs also has a well-functioning processing business that can be expanded. A decision to concentrate operations represents both a focus on increased sawing and value-added processing at Rolfs, as well as the phase-out of operations at the Seskarö sawmill during 2008. Negotiations under the Swedish Co-determination Act (MBL) starts today.

Kent Torwald, President and CEO, comments: “Concentrating the sawmill operations to Kalix will create opportunities for increased value-added processing as well as opportunities for continued profitability and growth in the region.”

“There is a general overcapacity within the sawmill industry in relation to access to raw material in the region,” says Kent Torwald. “Despite the measures we have already taken in the Norrbotten and Västerbotten regions, we are still oversized. We need to cut our production capacity by the equivalent of 80,000 m3 in northern Norrbotten in order to adjust to the long-term, available raw material flow.”

The cutback in production capacity is planned to take place by phasing out the operations at Seskarö sawmill during 2008. Today, 155,000 m3 of sawn timber is produced at Seskarö. At the same time, sawing operations at Rolfs will double, from today’s level of 85,000 m3 to 160,000 m3, by increasing production from one shift to two shifts in the existing facility.
Setra plans to increase processing capacity at Rolfs over the next three years.

“Concentrating production to one location is more cost-effective than sawing lower volumes in two. At the production unit in Rolfs there are also opportunities for synergy gains by operating integrated sawing and processing. The total earnings impact of the production cutback and concentration to a single unit amounts to approximately SEK 40 million on an annual basis,” says Kent Torwald.

Of the total of 60 people affected by the closure of Seskarö sawmill, it is expected that 20 can be offered new jobs when sawing is expanded at Rolfs. Over the next three years, an additional approximately 20 people are expected to be required for the extended processing operations at Rolfs.