Consider it a sign of the times when internet company Google acquires the buildings and premises of a mill site from a paper, packaging and forest products company that caters to the print industry.
Today, Finland-based paper group Stora Enso has announced that Google is buying the buildings and most of the Summa Mill site, where production of paper was ceased last month in January 2008, for approximately €40 million ($51.7 million).
From the press release:
Stora Enso has signed an agreement to sell the buildings and most of the Summa Mill site in Finland to Google Group of Companies for approximately EUR 40 million.The sale is expected to close by the end of the first quarter 2009. The transaction will improve operating profit by approximately EUR 38 million, of which approximately EUR 15 million is a reversal of earlier impairment, and will be recorded as a non-recurring item in the first quarter 2009 results.
Google is expected to announce its plans or future investment “in due course”, and has agreed that part of the mill site will be further transferred to the City of Hamina for other industrial uses.
Update: obviously the space is most likely going to serve as a data center, which has now also been confirmed by Reuters.
An earlier (brutally honest) press release from Stora Enso reveals that the mill site was closed down because of “persistent losses in recent years and poor long-term profitability prospects” It continues: “Despite tremendous efforts by its employees, the mill cannot compete in today’s and tomorrow’s markets using expensive virgin wood fibre, much of which is imported”.
You can read the whole release about further cost reductions and lay-offs here.
(Thanks to Jens Agerberg for the tip)
Perhaps storage for a new datacenter?
Or the could be gearing up to print their own money?
Yes it is for a data centre. A large part of the rationale for the location was that it is cold, so Google will actually save on the massive air conditioning costs of running their data centres, so it ends up actually paying for itself.
The second rationale is that it allows Google greater connectivity to Russia where Google has not been able to have too much success versus local competitors (despite Sergey Brin actually coming from Russia)
Anjali Sen
@Anjali it would be foolish, however to ignore the possibility of moving into print->media->ad revenues too. Why then a paper mill? why not the closed Daewoo Motor building company in korea? It was close enough to russia as well; and cool too. [:)]
Northern EU data center.
It’s a “Carbon Offset”. Trees are no longer being cut down to make paper, which compensates for the power used in Google’s data centers. I know production of paper ceased *before* Google bought the mill, but a cynical accountant would say the important fact is that they’ve prevented it starting up again.
Nokia started out as forester and rubber booth company. Maybe Google wants to go the other direction.
hahaha
My guess would be that the paper mill had some kind of power generation capacity associated with it, maybe a hydroelectric plant or some other ability to provide vast amounts of power? That’s characteristic of the locations where Google puts its datacenter/server farms.
According to Finnish news site Ilta-Sanomat, an essential point in the deal was ability to build a wind power park to the area.
http://www.ilta....asp?id=1643615
Also a small correction to TechCrunch article: Paper production in Summa Mill was ceased in January 2008, not last month.
Oops, thanks.
Oh, that’ll be used for extra housing – for the working pigeons.
Probably Google is planning to set up data center in Finland
hmm… so i would agree along the data center lines, its in a climate where it should be cheaper to keep cool, and there should be capacity for massive amounts of power to the location to power the original factory.
it might also to be to print more termination agreements for contractors or just save the government the trouble of printing money…
could be a hydro power plan – paper mills are notorious for requiring vast amounts of water input and producing massive amounts of waste water. they’re often located next to fast-flowing rivers emptying down steep terrain as a result.
Robin, what an interesting update. Just like Wouter said, it might be a new data center or engago could also be right that Google wanted to venture to a different field in business — not limiting themselves in the Internet.
Well of course it would most likely serve as a data center facility, updated the post to reflect confirmation on that by Reuters.
a pretty expensive datacenter then…EUR 38Mn for a warehouse?!?!
Or… here’s a crazy thought. MAYBE google just wants to get in the paper business.
Are you people so daft. It’s for a possibility of a wind and hydro plants, as well as the cool climate.
POWER BABY. NOT PAPER BUSINESS ROFL.
May be Google wants to be opportunistic. That is the mark of Good to Great companies.
What if this mill will be used for making hard copy back-up of Google servers (Docs, mail, Search results etc.)? =)
Makes sense, Finland is probably Europe’s most tech orientated country. Estonia is up there too mind you.
I meant the hard paper copy =)
Definitely a right move. Good move to have your fingers in every pie. I believe all Tech majors should consolidate and buy more and more assets during these recessionary times.
Just to add, Isn’t it ironical that all IT companies are vocal of cutting paper consumption to conserve resources and promote healthy and environment friendly living.
I think they just want to print those out-of-print books they’re scanning, since Amazon’s Kindle won’t be available in Europe. I assume they’ll buy an ink factory shortly
At least now they’ll have something to fall back on if the whole internet thing doesn’t work out for them.
Yes, besides the storage space on the data servers Google needs space for the data servers. It makes sense.
http://www.youtechno.info
Google are building millions of paper planes to create a new Street View perspective
Now they have yo buy a petrol platform, that would be nice!!!
The great thing about buying that, is that they must have enough power to run the datacenter without invest in power supply.
Surely a datacenter play!!!
Looks like expansion of a big datacenter in another part of the world.. distributing the load..
Way to go Google.. recession is a best time for purchasing the land
Will be good for the town to have a business not in recession.
big surprise
Hold on a minute …. the Finish paper company was IMPORTING WOOD TO FINLAND? That’s the most ridiculous thing I’ve ever heard of! Finland is mostly forest!
Absolutely , Google going to make Newspaper/Magazine with some print advertisement on it.
An interesting trend is that Google has continued to buy land in Europe for data centers, even as it slows its data center expansion in the US. In November they bought land in Austria while mothballing a project in Oklahoma:
http://www.data...ter-in-finland/
This makes perfect sense. Lots of space. Paper mills have loads of water cooling and heat re-use capability (they use excess heat to assist in power generation).
Paper Mills have power generation plants on site. They generate a megawatt or two from wood remnants like bark. They also have to have one megawatt connections to the power grid for back-up.
In addition, most paper mills today produce excess power and sell it back to the local grid.
Clearly, in a couple of years, the only publication left will be TC. Expect Google to produce a series of Google-branded local newspapers so they can sell ads on them.
Thanks robin!
That’s pretty funny!
Nice to see they’re going to be transferring some assets to the City…..hopefully at no cost to the city.
Last year I met a girl who worked in HR for Google in the UK, she’d recently left and hated the company. She told me that for each potential applicant HR had to put together a 100 page dossier for management about the potential employee. Apparently if there was a single mistake the whole thing would go in the bin, and need to printed out again once corrected. She said this was something that happened regularly and consequently the amount of paper the company got through as a result of this was a joke.
Google’s remark on the matter is odd:
“We are currently considering to build a data centre at this site”
It seems odd that Google buys the mill before knowing for sure what they’re going to use it for. It seems like they’re hiding something to me. My guess is that they know exactly why they bought it and that they plan to use it for something other than a data center. However, had they wanted to buy a printing business for their google print service, why wouldn’t they buy a printing plant? Maybe they want to go into some sort of recycled paper service and could not find reliable suppliers?
Finland. The country where Google wants to be? So near to Russia, but so far from Japan. Quite a long way from Cairo and many miles from Vietnam.
It’s good to see Google putting some money into a country so sadly neglected, often ignored, really a poor second to Belgium.
What I want to know is if Google will next attempt to amass an unrivaled collection of scandinavian credit cards. But, I don’t know. Google clearly knows that Finland has it all!
Oh, I forgot to mention that this clearly indicates Google’s interest in pony trekking and snack lunch in the hall!
Why dosen’t Google invest in some smaller US towns. ie. Kittanning PA.
Because most of the growth isn’t from the U.S. anymore? While being an obvious to cater for Nordic countries, Finland acts also as a quite nice hub to St. Petersburg area in Russia — without the uncertainties you always have when investing/doing business in developing economies such as Russia. Some insight can be maybe drawn from this:
http://www.info...a/A0781359.html
Finland ranks as #1 “least corrupted country”, while Russia ranks at #143, on par with Gambia and Nigeria..
So, it was all Google’s fault that finnish companies are coming to southamerica to install their damn pollutive paper mills.. !
here’s a sneak preview of the next google product http://fury.com...-circa-1960.php
Thats awesome I am gonna try it and see what I get for a reply.
Perhaps not content with knocking out all possible digital competition, they realise we can’t live without paper either.
the carbon credit reasoning is highly plausible.
if it can be confirmed that the Finland site has its own hydrodam: this will allow google to gather a green tag. huge show of corporate social responsibility.
alternatively: think of the potential of renewable energy in the next 10 years. Finland government is likely to support google if they decide to pump in money to build wind farms in the area.
google into power business….hrmmm….
Maybe for this?
http://mail.goo...paper/more.html
(Hint: Debut date for “Gmail Paper” was March 30, 2007.)
Maybe they want to spy on nokia
Google also announced its foray in to Energy metering through Google PowerMeter. Google is really diversifying.