UPM annual report 2015

IN BRIEF

STRATEGY

BUSINESSES

STAKEHOLDERS

GOVERNANCE

ACCOUNTS

Investing in leadership Due to the age structure at UPM’s Finnish mills, dozens of managers will retire over the next ten years. Compared to future needs, degree programmes in technology include very few courses on leadership, which is why there is a clear demand for a tailored apprenticeship-based training programme that will prepare employees for managerial duties. UPM’s apprenticeship-based training programme for managers is one example of UPM’s investments in leadership. A total of 350 people applied for the programme, and ten applicants were selected to begin their studies in February 2016. The 18-month programme will consist of classroom teaching (10%) and practical work (90%) that participants will carry out at various UPM locations in Finland. The selected trainees already have a relevant degree and some work experience. The tailored training programme focuses on leadership skills and UPM’s way of working. UPM has good experiences of apprenticeship- based training programmes as the Future Professional training programme launched in 2014 was a success. Production managers today and in the future must have the ability to lead and motivate employees in everyday work. A profound understanding of strategy and business targets is also needed. Once the participants have completed the programme, their employment opportunities at UPM pulp and paper mills and within the sawmill and plywood business will be examined.

Part time

Bringing teenagers back to school

Male

Full time

3%

Female

80%

97%

Due to lack of opportunities and long distances, some children living in the rural areas of Uruguay leave school at 12 years old. The early exit will weaken their opportunities to continue education later and makes it difficult for them to enter into professions that require a higher degree or special vocational training. To tackle the problem, the UPM Foundation has launched a project with the Technical University of Uruguay (UTU) to organise secondary level studies with an emphasis on mechatronics in Fray Bentos. “We are organising a basic course that will prepare these young students for repairing and maintaining machines used in agriculture and forestry,” explains Rodolfo Merello, director responsible for regional technical education from UTU. “In the first year they will concentrate on general subjects and then they will pursue more detailed technical studies during the second year. In addition to concluding the current course, we are also planning to organise a new course for the next generation in the coming year.” Furthermore, the UPM Foundation provides necessary tools through the practical training in the course. In the second phase there will also be technical experts like harvester operators from UPM working as teachers.

20%

3%

80%

97%

Shop-floor

20%

3%

62%

80%

97%

20%

61%

Salaried

38%

60%

39%

40%

13%

Fixed term

12% 12%

88% 88%

87%

2013 20,950

Permanent 1)

2014 20,414

2015 19,578 Number of employees in total

1) No contract end date, incl. US employees at Will classi cation

Approximately 600 employees are covered by the plans launched in 2011 and run on an annual basis. Under both plans, shares can be earned based on either group or business area-level performance. More information about long-term incentives can be found in the Remuneration Statement on www.upm. com in the Investors section under Govern- ance. UPM promotes active participation At the end of 2015, UPMhad 19,578 employ- ees working in 45 countries. UPMpromotes local leadership at the main production sites where 94% of management team positions are held by locals. Overall at UPM, approxi- mately 0.3% of employees were on interna- tional assignments at various levels of organisation in foreign countries. As a multinational company, UPM com- plies with international, national and local laws and regulations and respects interna- tional agreements concerning human and labour rights and freedom of association. UPM abides by legally binding collective agreements. UPM does not collect informa- tion on or report on its employees’ union membership at a global level due to differ- ences in national legislation in the various countries. The estimated percentage of active employees covered by collective agreement mechanisms was 74% in 2015. UPMpromotes active employee partici- pation and consultation, organised in accordance with international and national rules and regulations. UPM respects the

privacy of employees and promotes equal opportunities and objectivity in employ- ment and career development. To enhance open international dialogue, UPMhas a co-operative body, The UPM European Forum, which focuses on issues related to changes within the company and the business environment in general. The forum organises regular meetings for employee representatives from business units operating in Europe. Supporting re-employment The central elements of UPM’s activities on permanently closed sites and in restructur- ing typically are retraining, re-employment and relocation within the company, support- ing entrepreneurship as well as severance payments. Active measures promoting employment and retraining are carried out in close co-operation with various authori- ties and other third parties. In restructuring situations, UPM follows the local labour laws. In Finland, the mini- mum notice period is determined in The Finnish Employment Contract Act and collective agreements, based on the length of employment: employment from one year to 12 years, notice period is 14 days and after 12 years six months. Similarly in Germany, the minimum notice period is determined by German Civil Code and adhered to by collective agree- ment. It is calculated by the length of employment: from up to 20 years, notice period accordingly from four weeks to seven

upm PERSONNEL in figures

2015 10.5

2014 10.9

2013 12.5

Turnover %

Turnover% (voluntary)

3.3

4.8

5.5

Average age of personnel People development Average training hours 1) (hours employee) OHS figures, UPM workforce Lost-time accident frequency Total recordable injury frequency Number of occupational diseases OHS figures, contractors Lost-time accident frequency Absenteeism %

43.6

43.7

43.4

14

15

15

3.9

4.4

5.4

10.6

11.6

13.5

3.7

3.4 n/a

3.4 n/a

Read more: www.upm.com/responsibility, www.upmbiofore.com

6

Read more: www.upm.com/careers

5.5

6.5

n/a

1) Reflects active employees

and magazine paper machines at UPM Jämsä River Mills in Finland and at UPMKaukas in Finland were permanently shut down. As planned, UPM also centralised its Supply Chain operations in Paper ENA (Europe and North America) fromTampere in Finland and Altrincham in the UK to Augsburg and Dörpen in Germany. Personnel was reduced by approximately 500 people by the end of 2015, as planned.

months. In China the minimum notice period is 30 days and is described in local legislation. As part of the profit improvement pro- gramme, launched in November 2014, UPM permanently reduced its publication paper production capacity in Europe by approxi- mately 800,000 tonnes in Q1-Q2 2015. Newsprint machines at UPM Shotton in the UK and at UPMChapelle Darblay in France,

contents

39

40

UPM Annual Report 2015

UPM Annual Report 2015