About 400 people will lose their jobs at the UPM Kymmene forestry operation in Miramichi, N.B., as the company announced plans to close its kraft mill and restructure its entire woodlands division.

The mill's final day will be Jan. 31, 2005, the Finnish company said in a news release posted on its website Wednesday morning.

The kraft mill has been operating for more than half a century, and the company is the largest employer in the region.

"This is a disaster for the Miramachi and for the New Brunswick economy," said Max Michaud of the Communication, Energy, and Paperworkers union.

"There are some 400 families whose lives are directly affected and thousands more who will feel the impact of this closure."

Jyrki Ovaska, UPM's magazine paper division president, said the mill is technologically and environmentally obsolete, adding that the company can't justify spending money on upgrades.

"The average competitive kraft mill today is cost efficient and three-to-four times larger than this one," he said in a company press release.

The company intends to focus on its magazine paper mill, which operates at the same site.

"Our efforts must now be focused on making the paper mill competitive. That is where the facility's future lies," said Heikki Malinen, UPM's North American president.

Mill closure announcement is second in New Brunswick this month

UPM Kymmene bought the Miramichi forestry company from Repap Enterprises for $160 million in 2000. UPM is the world's largest maker of magazine paper, with interests in Europe and the United States.

The UPM announcement is the second major mill closure to hit central New Brunswick in less than two weeks. The town of Nackawic is still reeling from the abrupt closure of the St. Anne Nackawic pulp and paper mill on Sept. 14

More than 400 people lost their jobs when mill owners Parsons and Whittemore shut the operation down without warning, and filed for bankruptcy in a Halifax court. The company said it had been losing money for years and couldn't justify keeping the mill open any longer.