Forest Industry Production Continues to Grow in Finland – Cost Developments are Eroding Competitiveness

Finland , May 4, 2011 - “The forest industry's production has recovered both from the recession and the structural changes."

"The industrial policy decisions included in the coming Programme for Government will largely decide how profitable Finnish mills can be in international competition,” says Timo Jaatinen, Director General of the Finnish Forest Industries Federation.

“Amending the energy tax refund mechanism, improving the availability of wood, considering the combined effects of taxes and subsidies that promote the energy utilisation of wood as well as paying attention to the state of the transport network will have a substantial impact on the future success of the forest industry. All of these issues are influenced through domestic decisions,” Jaatinen points out.

“It is also important that a negotiated solution is reached quickly in the labour dispute with salaried paper industry employees. We should hold on to all of our industrial jobs, and not drive them out of the countries through our own actions – even if a labour market dispute is involved. The employer side remains prepared to offer salaried employees a pay solution that in amount and form matches those agreed to with other paper industry personnel groups,” Jaatinen says.

Forest industry's January-March production increases substantially in Finland

Some 1.7 million tonnes of pulp and 3.0 million tonnes of paper and paperboard were produced in Finland in January-March 2011. Paper and paperboard production was up more than 7% in comparison to Q1/2010. The export prices of pulp and different paper grades have also continued to increase during the first quarter.

Finnish sawn timber production came to about 2.4 million cubic metres in January-March, up 1% from the corresponding period of 2010. Plywood production increased by a fifth during the first quarter of the year. Livelier construction activity, especially in the industrial and commercial building segment, has also contributed to an increase in demand for the products of the joinery industry.

The value of forest industry production in January-March is estimated to have been almost €5 billion, which is about 5% more than in the corresponding period of 2010.

The industry did not manage to procure sufficient quantities of wood in January-March to satisfy quarterly needs, and had to utilise reserves stockpiled earlier. Demand is strengthening and more wood will be needed to fuel capacity in the remaining part of the year. Sawlogs, pulpwood and energy wood are all in demand. Livelier timber sales will be boosted by stumpage prices, which have been buoyant during the first quarter.

Finland is the world's sixth-largest producer of pulp, paper and paperboard in addition to being one of Europe's largest producers of sawn timber.

The forest industry directly and indirectly employs almost 200,000 Finns. The industry's multiplier effects extend broadly into surrounding society and up to 500,000 Finns are affected by the economic footprint of the forest-based sector.

Finland has a unique opportunity to pioneer the bioeconomy thanks to the abundant forest resources, sustainable forestry practices and the first-rate expertise and competence of the forest cluster as a whole.