Apr 28, 2005. /Lesprom Network/. Finnish paper mills stopped on Wednesday afternoon due to a surprise strike that would last until Friday morning, a move employers said would threaten the Nordic country's labour market and welfare system. The strikes shut the Finnish operations of the world's largest paper and board maker Stora Enso (STERV.HE), its smaller peer UPM-Kymmene (UPM1V.HE), the leading magazine paper maker, and M-real, Europe's biggest fine paper maker. "Almost the whole Finnish pulp and paper industry shut down today until Friday morning," Arto Tahtinen, the head of labour issues at the Finnish Forest Industries' Federation said in a statement. "The Finnish labour market has for decades been based on negotiations and agreements between the employers and workers. Now the paper workers' union wants to ruin that," he added. The head of the paper union Jouko Ahonen told Reuters the sides met in the afternoon for about 1.5 hours, but no progress was made and no further meetings agreed. He said the union could decide on Thursday whether to threaten the employers officially with another strike, which would require the state to take active steps to mediate a deal. Finnish paper workers and employers have been deadlocked over a new labour deal for the past few months, mainly due to disagreements over mid-summer and Christmas holiday plant shutdowns and plans to outsource some operations. Employers say the paper sector's productivity had risen less than 5% in Finland since 2000, versus about 20% in the United States and 15% in Germany. At the same time, labour costs in local currency terms had risen over 15% in Finland, more than elsewhere. U.S. PAPER SHORTAGE SEEN "If Finland goes on strike, the U.S. would be ... short of paper in this catalogue season," said CSFB analyst Lars Kjellberg. "The U.S. would be the first business to be hit because the continental European mills would not have the export capacity and (the Finnish firms) would obviously focus on the continental European business," he added. There have been about 20 strikes at individual mills since the end of March, when the paper union banned all overtime work, with paper machines shut down over a hundred times, according to the federation. The sides disagree on whether the ongoing strikes are legal. Union representatives said earlier that Stora's paper workers, who originally planned to strike on Thursday, had decided to start the action earlier after the firm refused to pay salaries at one of the mills. About half of top global magazine paper maker UPM's output comes from Finland, while Finnish-Swedish Stora has about 36% of production capacity in Finland and M-real about a third. Other big firms include privately-owned Myllykoski Group. The federation said the daily output of the whole Finnish industry, a key export sector together with the Nokia-led electronics industry, was worth about 40 million euros. Stora Enso's Chief Executive Jukka Harmala told a conference call on Wednesday the firm would lose about 3 million euros daily due to the strike, while UPM has earlier estimated the daily cost at 5 million to 6 million euros. Shares in Stora, which reported first-quarter results earlier on Wednesday, closed 1.2% lower at 10.24 euros. UPM stock fell 0.6% to 15.52 euros and M-real declined 1.4% to 4.28 euros.