The economy was weak, and the losses were significant. The crisis primarily affected industries that had been acquired just a few years earlier. Additionally, the ongoing construction of a new pulp mill in Mönsterås required enormous sums. The losses during 1977 and 1978 – and weak prospects for 1979 – led management to discuss various actions. One of the more drastic was selling shares in Södra's industrial company to the state.
The state enters and exits as a shareholder
The association convened an extraordinary meeting in April 1979, where a sale was approved. The state stepped in with 500 million kronor in exchange for 40 percent of Södra's industrial company. The acute financial crisis was thus resolved. At that time, half of the members left the association. The following three years were characterized by weak economy and losses. Other major changes were also necessary for the company to overcome the crisis.
Between 1979 and 1983, three pulp mills, two paper mills, and as many sawmills were closed. Two paper mills, a bag factory, a sawmill, and a house factory were sold. The particle board sector was placed in a jointly owned company. The company’s forest land and power stations were sold. Beyond this, rationalizations were carried out at many units. The number of employees in Södra decreased from over ten thousand in 1976 to two and a half thousand in 1994.
The crisis years were tough, leading to many member departures and major cutbacks in operations. However, the foundation was laid for a better future. Profits increased significantly in the early and mid-1980s, and Södra could redeem the state's shares. At the agreement's inception, an unconditional redemption right for Södra was included. An arbitration panel set the price at 750 million. On January 2, 1985, the formal takeover occurred, and Södra once again became fully owned by its members.
