MADISON — Madison Paper Industries, the town’s largest tax contributor and a major employer in the region, is not part of massive layoffs announced Wednesday by its new owner.

UPM-Kymmene Corp., the world’s largest producer of magazine paper, plans to lay off nearly 1,300 employees at some of its newly acquired European facilities and reduce annual paper production by 1.3 million tons.

Madison Paper, however, is not on the Finnish company’s list of locations to shut down.

“We’re not one of the mills that would be elected to be closed by UPM at this time. To my knowledge there’s no other plan now than what’s been communicated,” said Russ Drechsel, president and chief executive officer of Madison Paper Industries.

UPM will permanently close a mill in Finland and a mill in Germany, shut down a paper machine at another German mill and either sell or close a mill in France, said Jussi Pesonen, the company’s president and chief executive officer, on Wednesday.

Reducing paper production will ensure the company remains competitive, Pesonen said during a webcast from Finland. Demand for paper has dropped because consumers are increasingly turning to digital media.

UPM acquired Madison Paper’s parent company, Myllykoski Corp., for $1.278 billion on Aug. 1.

The annual amount of money saved by restructuring — also called synergy benefits — will total 200 million euros or $288 million, according to UPM.

“The planned closures are very unfortunate for the affected employees, but restructuring is the only way to make a fundamental improvement in the cost competitiveness of our paper business,” said Jyrki Ovaska, president of the company’s Paper Business Group.

The 1,295 employees in the company’s paper, pulp and plywood businesses who will lose their jobs make up 5.3 percent of UPM’s total workforce of 24,500.

The announcement came after the company spent weeks reviewing each publication paper mill. As a result, UPM plans to eliminate 1.2 million tons of magazine paper capacity in Finland, Germany and France, in addition to 110,000 tons of newsprint capacity in Germany.

That amounts to cutting more than 2 percent of Europe’s total paper capacity of around 51 million tons, according to the Reuters news agency.

The company will also restructure overlapping paper sales, supply chain networks and global functions. The layoffs will not affect the volume provided to customers, Pesonen said.

The European paper market is declining, and overcapacity remains despite UPM’s restructuring, Pesonen said. “Those companies that are most cost competitive will be the winners,” he said.

Madison Paper survived UPM’s review, while the mill in Finland, which produces the same product, did not.

“It’s good news for Madison Paper, and it’s good news for the town. It shows that Madison Paper continues to be a viable asset for UPM,” Madison Town Manager Dana Berry said.

While Madison Paper appears safe for now, the long-term future remains uncertain. Before the acquisition, the mill offered a voluntary severance package and reduced its workforce from about 235 to 215.

“We just don’t know at this point (about cuts in the long-term),” Drechsel said. “Over the last several years we have reduced our workforce to maintain a cost-competitive position.”

The mill not only plays a significant role as an employer but as a tax provider, said Joy Hikel, Madison’s economic development director. It provides nearly half of the town’s real estate and personal property taxes.

“Madison Paper is important to our town. It’s really the truth,” Hikel said. “We’ve got a good workforce there.”

Erin Rhoda — 612-2368

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