 Today the local economy is driven by mainly the sawmill, lumber and paper industries. Kajaani paper mill, established in 1907 by Kajaani Oy (ex Kajaanin Puutavara Osakeyhtio), was the largest private employer in Kajaani. The factories are on the river bank, at Tihisenniemi. They built a new paper machine in the town in 1980 which was projected to have an annual output of 170,000 tons. Kajaani Oy was eventually acquired by Valmet in 1983, and the subsidiary Kajaani Electronics was formed. Kajaani Electronics was cited as "one of the leading makers of special sensors and analyzers for the pulp and paper industry" in 1990. When the paper mill was acquired by UPM Kymmene in 1989 it became the third-largest paper company in Finland. It closed in 2008 due to lack of profitability and high energy costs, but has since continued its operations, and was sold to Pölkky Oy in 2012.
