Savage capacity cuts in European paper making capacity are set to continue with UPM announcing plans to axe a further 580,000 tonnes of production.

Another mill in France is to be sold and machines in Germany and Finland closed under cuts which will put 860 staff out of work.

The company says continuing challenges in the European economy have significantly impacted the consumption of  paper, exacerbating the effect of structural changes in paper end-uses and resulting in further decline in the demand of graphic papers.

"High costs and significant overcapacity continue to challenge the industry operators in Europe," it says in a statement.

The 580,000 tonnes capacity reductions come on top of those brought into effect in Stracel, France, this month, where 270,000 tonnes of coated magazine paper capacity is being cut with a mill closure.

With today’s plans, this brings capacity cuts to about 850,000 tonnes of graphic paper capacity in 2013.

Under the UPM plans, it will close paper machine 3 at its Rauma mill in Finland, and paper machine 4 at UPM Ettringen in Germany. UPM Docelles mill in France would be sold or closed, and UPM's paper business and global functions streamlined.

The Rauma and Ettringen machine lines would be closed by the middle of this year. Both machines produce uncoated magazine paper. UPM is giving itself six months for the "employee information and consultation processes" in Docelles starting immediately.

Including Stracel, UPM expects to save 90 million Euros  year from the moves, after a one-off cost of $90 million Euros.

The company says the machines to be closed the are either at the end of their life, have limited product flexibility or poor profitability. "The situation is very regrettable for the personnel, however, in the overcapacity situation, we need to adjust our capacity to the level of profitable customer demand,” says paper business president Jyrki Ovaska.

“Healthy cash flow is critical for UPM and its employees. Therefore UPM must take action to secure it. Under these circumstances only the most efficient and the most flexible production lines and organisations are competitive,” he says.