Papermaking strike in Finland being felt on city's waterfront

Paper workers on strike in Finland for more than a month have caused people there to fear for their stock of toilet paper. And while the ripples from their lack of rolls have not crossed the Atlantic, a prolonged labor dispute could affect the second-most popular kind of paper in U.S. bathrooms.

Finland produces just about 15 percent of the world's paper but is a significant exporter of the fine coated kind used for circulars, magazines, mail-order catalogs and other leisure reading materials.

Paper and forestry experts say the dispute is likely to be resolved before Christmas gift catalogs are put in jeopardy, or even before global markets do much more than raise otherwise slumping paper prices. But with consumer appetites for paper bigger than ever, experts are watching to see how much of an impact the labor dispute will have in Baltimore.

Finland is slightly smaller than Montana and ranks sixth in world paper production, but it's second in paper exports, giving it control over 20 percent to 30 percent of the world exports - and a lead position in the market for high-quality magazine paper, said Clive Suckling, director of PricewaterhouseCoopers LLC.

For now, the local impacts are largely limited to the waterfront in places like Baltimore.

The port of Baltimore is one of the nation's largest handlers of paper imports. Last year, it took in almost 705,000 tons, over 30,000 tons more than the year before. So far, the strike has cost the port about 40,000 tons of imported paper - enough to cause some pain among longshoremen and the company that employs them.

"It is hurting some individual companies and people," said David Ashcraft, director of development in North Carolina State University's College of Natural Resources and a paper industry expert.

"As much as some of those circulars annoy me in my Sunday paper, and I'd like to see them go away, that's not happening now," he said.

Ashcraft said U.S. paper mills, followed by Chinese and Japanese papermakers, are the world's leading producers. Also, Finnish producers have mills in other countries, so there still is enough supply to go around.

The Finnish Forest Industries Federation, an industry association that locked out striking paper workers last month, plans to keep the mills shut until at least July 6. But both sides plan to continue negotiations that center on the traditional shutting of mills for the summer and holidays.

The companies want to keep the mills running, possibly through outsourcing the jobs as other Finnish industries have done. Labor wants to maintain their time off or be better compensated for working.

European news outlets have been focusing on costs to the country - paper accounts for about 8 percent of Finland's gross domestic product - and the fact that workers would rather have time off than money. But also making the news are consumers who are hoarding tissue and berry growers who can't find packages for their fruit.

John O'Brien, managing editor of PaperAge magazine, said the paper workers are at risk of hurting themselves and the national economy. Other mills worldwide running slightly below capacity could pick up the slack and render Finnish paper less necessary.

The Finnish companies, who haven't made as much money in the past two years selling to U.S. buyers because of the euro's appreciation against the dollar, may not mind if the price for paper goes up as supply goes down. But Baltimore port officials say lack of supply moving around has hurt companies such as BalTerm, which handles much of the port's paper.

The majority of imported paper products come from Finland, with other items coming to the port from Brazil, Norway and Sweden.

While the port can reduce rent to BalTerm as its imports decline, other costs are fixed. And worker hours have been reduced, although company President Morgan C. "Trip" Bailey and union officials declined to say by how much.

"For us," Bailey said, "it's a very big deal."

Finland's UPM-Kymmene Corp., one of the world's largest paper companies, is one of BalTerm's biggest customers. The papermaker alone has locked out 7,500 workers in Finland. Tens of thousands more are affected.

The company says it ships about 1 million tons of paper from Europe to the United States a year, with about two-thirds coming to Baltimore and the rest going to Jacksonville, Fla.

Worldwide, about 340 million tons of paper goods are produced a year. Nowhere do people consume more than in the United States. TAPPI, the technical association for the worldwide pulp, paper and converting industry, estimates that each year, every man, woman and child in America uses about 700 pounds of paper - the weight of about 233 copies of Vogue magazine's thickest issue.

The group also says that more than 350 million magazines, 2 billion books and 24 billion newspapers are published annually in the United States.

And while the swimwear and holiday gift catalogs, as well as Sunday magazine subscriptions, are probably safe for now, PricewaterhouseCoopers' Suckling says something is going to have to give.

"This issue has been boiling up for years," he said of the fight over closing Finnish mills for summer and Christmas. "Holidays are followed religiously in Scandinavia. Concessions will be needed on both sides for this to end."

Copyright © 2014, Los Angeles Times
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