about the picture
A satisfied Chairman, Archibald Dickson, when Södra skogsägarna once again became a wholly owned co-operative.
The economy was weak and losses were substantial. Hardest hit were the mills, acquired just a few years earlier. Moreover, the ongoing construction of a new pulp mill at Mönsterås required huge amounts of money. Due to the losses incurred in 1977 and 1978 – and the weak prospects for 1979 – management discussed a range of options. One of the more drastic measures was to sell shares in Södra’s industrial companies to the Swedish government.
The government enters, and exits, as a shareholder
The association called an Extra General Meeting in April 1979, which approved a share sale. The government injected SEK 500 million in return for a 40 percent share in Södra’s industrial companies. The immediate financial crisis was therefore over, but half of the members left the association. The following three years were plagued by weak economic growth and losses. It became clear that other major changes would also be required if the company was to survive the crisis.
Between 1979 and 1983, three pulp mills, two paper mills and equally as many sawmills were closed down. Two paper mills, one sack factory, one sawmill and one prefabrication facility were sold. The MDF sector was transferred to a jointly owned company. The company’s forest land and power stations were sold. In addition, rationalisation measures were implemented in many units. The number of employees at Södra fell from over 10,000 in 1976 to 2,500 in 1994.
The crisis period was difficult and led to a major decline in membership and severe operational cutbacks. However, the foundation was laid for a better future. Profits rose sharply in the early and mid-1980s and Södra was able to buy back the government’s shares. When the agreement was concluded, it included an unconditional repurchase right for Södra. An arbitration panel determined the price of SEK 750 million. Following a formal takeover on 2 January 1985, Södra was once again wholly owned by its members.