Finnish Forest Industry Growing, Urges Government Backing

May 4, 2011 - Forest industry production continues to grow in Finland, but cost developments are eroding competitiveness, says the Finnish Forest Industries Federation (FFIF).

According to FFIF, 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.

"The forest industry's production has recovered both from the recession and the structural changes," said Timo Jaatinen, Director General of the FFIF.

However, Jaatinen warns that rising costs could all but squash the upturn if the Finnish government doesn't stand behind the industry.

"The industrial policy decisions included in the coming Programme for Government will largely decide how profitable Finnish mills can be in international competition," Jaatinen said.

“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 pointed out.

“It is also important that a negotiated solution is reached quickly in the labor 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 labor 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 said.

The value of Finland's forest industry production in January-March is estimated to have been almost EUR 5 billion, which is about 5% more than in the corresponding period of 2010. Finnish sawn timber production came to about 2.4 million cubic meters in January-March, up 1% from the corresponding period of 2010. Plywood production increased by 20% during the first quarter of the year.

FFIF said that the industry did not manage to procure sufficient quantities of wood in January-March to satisfy quarterly needs, and had to utilize 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," FFIF added.

SOURCE: Finnish Forest Industries Federation