UPM annual report 2014

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UPM PERSONNEL IN FIGURES

Significant change in UPM’s safety culture

Part time

Male

Full time

Female

80%

97%

20%

80%

YOUNG PROFESSIONALS GAINING EXPERIENCE

97%

Shop-floor

STAKEHOLDERS 31–44

20%

61%

79%

2014 was the final year for the “Step Change in Safety 2012-2014” initiative that was launched to improve safety culture and performance within UPM. Altogether, the initiative brought approximately 18% improvement in lost time accident frequency on the previous year and 70% improvement over three years. Safety is an essential part of UPM’s activities and business management system. Equal safety requirements are applied to all employees as well as to visitors and subcontractors working on the company’s premises. In 2014, UPM’s lost time accident

frequency (LTAF, the number of lost-time work accidents per one million hours of work) was 4.4 (5.4). The target for the end of 2014 was below five. At the end of the year, 11 production units achieved more than one year without any lost-time accidents. Unfortunately, there were three fatal acci- dents in total in 2014 at UPM premises: one in Finland as well as one fatal contractor accident in Finland and one in Germany. In 2014, UPM adopted a new indicator: TRIF (total recordable injury frequency) which includes, in addition to LTA, modified duty cases and accidents requiring medical treatment. In 2014 the frequency rate was 11.6 (13.5). The rate of absenteeism due to illness and accidents at UPM was 3.4% (3.4%) globally. Absenteeism due to accidents at work decreased by nearly 20% in 2014. Accident prevention In 2014, safety efforts concentrated particularly on avoiding slip, trip and fall accidents at UPM premises. Approximately one third of absences due to work-related accidents have resulted from these kinds of cases. Regardless of severity, employees must report all near misses and make safety observa- tions. UPM has a monthly near miss and safety observation report system in use at all its busi- ness units. All high-risk near misses are investi- gated with root cause analysis and corrective actions are undertaken to prevent their reoccur- rence. In 2014, a total of 47,095 near miss and safety observation reports were recorded. Good performance in safety is recognised with company-wide safety awards. The 2014 UPM Safety Award was given to UPM Changshu paper mill for excellent development in safety results and activities. In April, UPM celebrated the company’s second Safety Week in connection with the World Day for Safety and Health at Work organised by the International Labour Organization (ILO). Despite the end of the safety initiative, safety work will continue to be one of the key focus areas. UPM has set a new target for the next three years: to achieve LTAF 3 by the end of

2017, with the focus on implementing and perfecting local practices. The UPM Paper ENA business area launched its Safety 2.0 programme to ensure full implementation of new safety practices in its paper mills. The target of the safety requirements is to ensure that neither UPM employees nor contractors are subjected to any risks when working at UPM’s premises. Contractor safety enhanced UPM requires its contractors to follow safety guidelines which enable them to carry out their work safely whilst on UPM premises. The safety induction is a prerequisite before start- ing work at a UPM site. Nearly 40,000 contrac- tors have completed the web-based UPM safety induction by the end of 2014. In 2014, the number of contractor accidents was at the same level as in 2013. In 2014, UPM also rewarded contractors for their good safety performance, commit- ment and initiative with an annual safety award. The 2014 local contractor safety awards were given to 11 contractors in Finland, UK and China. Focus on health To support the wellbeing of its personnel UPM is working in close co-operation with employ- ees and external organisations responsible for occupational health. In 2014, UPM launched the “Focus on Health” campaign, the aim of which is to support continuous improvement of employ- ees’ health, quality of life and ability to per- form on a voluntary basis. The campaign was run in connection with the Step Change in Safety initiative. The campaign concentrated on supporting personal health under the themes of Activity, Recovery and Nutrition. After reviewing health practices among different businesses, functions and sites, several new voluntary health and wellbeing initiatives were launched under the themes. The pilot health project conducted at some sites in Finland consisted of a medical check, wellness assessment and personal support based on individual health improvement action plans. Monitoring wellbeing To improve wellbeing at work, UPM is moni- toring employees using several metrics and indicators on a yearly basis. The indicators include, for example, the annual employee engagement survey (EES), follow-up of safety and absence indicators, and occupational health checks aligned with national legal requirements.

97%

Emmi Reinikainen participates in UPM’s first apprenticeship programme at the UPM Kaukas mill in Finland. The objective is to provide a comprehensive knowledge of the paper production process and maintenance work while performing different tasks at the mills. “For me, on-the-job training has proved an excellent way to learn the work of the mill in practice,” says Emmi Reinikainen of her experiences. Despite the turbulent times within the paper industry, she is confident of her career prospects. “Currently, there are difficulties in all industrial sectors, but I believe that there will be more work opportunities in future. I have enjoyed training very much, so I hope to be able to continue working in this field.” Altogether there are some 40 trainees at four paper mills in Finland. The programme runs in co-operation with local vocational schools. At the end of the programme, the participants will obtain a degree in the paper industry. The two-year programme started in February 2014. UPM also organises apprenticeship pro- grammes in other countries. For example, there are more than 100 apprentices starting in 15 professions at UPM in Germany every year.

21%

60%

Salaried

39%

60%

40%

12%

Fixed term

12% 13%

88% 87%

88%

2012 22,180

Permanent

2013 20,950

2014 20,414 Number of employees in total

2014

2013 2012

Turnover %

10.86 12.45 15.06 4.76 5.49 5.95

Turnover% (voluntary)

Average age of personnel

43.7 43.4 42.8

People development

Average training hours *) (hours employee)

15 15 17

OHS figures Lost-time accident frequency

4.4 5.4 8.5 Total recordable injury frequency 11.6 13.5 n/a Absenteeism % 3.4 3.4 3.5 *) Reflects active employees

Supporting re-employment The UPM Docelles paper mill in France was closed in January 2014. UPM’s activities on permanently closed sites and in restructuring typically focus on retraining, re-employment and relocation within the company, as well as on supporting entrepreneurship. Active meas- ures promoting employment and retraining are carried out in close co-operation with various authorities and other third parties. In November 2014, UPM announced a plan to reduce its publication paper capacity permanently in France, Finland and the UK. In addition, UPM centralises UPM Paper ENA supply chain planning and order fulfil- ment activities to Augsburg and Dörpen in Germany. Personnel would be reduced by approximately 500 people by the end of 2015 according to the plan. As part of UPM Raflatac’s efficiency improving measures, the sheet labelstock business closed down coating operations and reduced capacity in sheet finishing in Polinya, Spain. Sheet coating is being centralised at Nowa Wies, Poland.