The board of Norske Skog resolved in 2004 to invest AUD 160 million (USD 110 million) in an extensive reorganisation of operations at Norske Skog Tasman and the Norske Skog Albury mill in Australia. This project will reduce costs in the region by roughly AUD 30 million on an annual basis, and improve gross operating margins by three-four percentage points. These savings will be achieved through downsizing and by replacing the shipment of 50 000 tonnes of paper from New Zealand with extra output at Norske Skog Albury. That significantly reduces regional distribution costs. In addition to upgrading and capacity increases both at Norske Skog Albury and on Norske Skog Tasman's PM2 and PM3 units, the project calls for the closure of PM1 in New Zealand. Overall output from the two mills will be more or less unchanged.

 

The bulk of the investment has been carried out at Norske Skog Albury, and involves conversion of the paper machine - including a shoe press in the press section and a new winder. Staffing at Norske Skog Tasman has been reduced by 127 people following the shut-down of PM1 and associated activity in wood handling and mechanical pulping.

 

This downsizing has been achieved almost entirely on a voluntary basis. At an early stage in the process, for instance, a resource centre was established with qualified personnel to provide advice and information.

 

Oxenøen 1 August 2006

Norske Skog

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