Global economic downturn: A statement from a global sawmilling machinery supplier

Jartek Oy is one of the leading Finnish producers of sawmilling machinery, drying kilns, equipment for thermal modification of wood. The company has been operating in the Russian market since 1970-s.

World crisis affected more or less all actors in the market. How would you characterize the current situation?

Actually, the crisis had a sanitary impact on the economy in general. It made everyone work and clearly marked those who worked ineffectively. That’s why the crisis itself is so called good turn-out. There are companies that already left the market, those that are still operating but are close to close down. It is impossible to forecast the final results, but about 40% of companies were seriously damaged by crisis – with crisis affecting everyone to that extent or another.Fortunately, the crisis was “born” far from Russia, and consequently couldn’t fatally influence the Russian economy and actually it didn’t. The more complicated situation was formed in such overcredited countries like Latvia, Lithuania and Estonia to some extent.

Your company is a supplier of sawmilling solutions. What are in your opinion possible perspectives in sawmilling sector development? 

I’m glad to notice that the crisis is coming down in our sector. It became evident already in August. The first improvements were seen in the end of spring, however, within summer holidays the situation became somewhat unstable as a rule and the market undergoes some ups and downs. Currently the market is growing and increasing. It can be clearly seen but it is too early to speak that everything is quite OK.

It is also worth mentioning that rather an interesting situation is forming in the market of sawmilling machinery suppliers. Part of our competitors practically left the market – being now known only as brands, they are not active from the point of sales and production. And even in those conditions we are to work harder than 1-2 years ago. As a rule weak competitiveness is not always a positive factor, as a real competitiveness is one of the most effective engines that makes market participants develop and move further.

How much time does it take to return to the previous level?

The situation is different for everyone. As for Jartek, I guess it will take no more than 1-1.5 year to achieve the results we had. It refers to all markets where we are operating, and first of all in the Russian market, that provided about 90% of the company incomes. It concerns not only sawmill projects but also deliveries of drying machinery and installations for thermal treatment.
 

What are perspectives of timber industry development?

The prospects are good, especially for companies that use advanced machinery, and for those who in those complicated conditions managed to find investments in construction of new facilities and modernization of existing one. Moreover, it is the right time for investing – cheap machinery, and machinery suppliers are ready and can give more consideration to the project. It is the approach we have to our project in Komi. As soon as the plant is finished (we plan to finish deliveries in May 2010), and the crisis is over; the customer can produce and sell competitive products of good quality.

As for prospects in sawmilling sector we shouldn’t forget that we are to solve the issue of roundwood export duties. Sawmilling projects would be more cost effective with prohibitive duties being introduced. Today even large harvesting companies that were involved only in export deliveries of round wood agree with us. As own sawmilling facilities installed they see the difference and understand that wood processing (even primary) provide real opportunities for making money. There are not so many companies so far, but they are, and it means that business has already seen positive results of governmental measures that were not so popular at first.

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Issued by:  RUNA

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Issue date: November 3, 2009

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