Packaging increases paperboard production by nearly 10 per cent – cost pressures bring out the importance of competitiveness

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Finland’s economic growth has strengthened and expanded to export, which can be seen in the forest industry. However, the importance of competitiveness is highlighted by the increased cost pressure and the persisting declining trend in the demand for paper.

Although economic growth picked up earlier this year, in terms of the economy in Finland, the past decade can be considered as lost time. Finland caught up with the rest of the euro area much too late. The growth we are currently witnessing does not allow for a more lax economic policy, as economic forecasts predict that the growth will begin to slow down towards a slower medium-term pace in the upcoming years.

“Right now, the recovery of Finnish export is supported by factors such as the end of the sharp decline of the Russian economy and the improvements in Chinese and US export. However, international economic developments are overshadowed by the uncertainty related to economic relations and trade policy. The rise of protectionism may hinder global trade more than anticipated,” says Timo Jaatinen, Director General of Finnish Forest Industries.

“Especially the UK decision to withdraw from the EU increases political risks in Europe. The British market is very significant for forest industry companies, which is why the needs of companies and the ease of international trade must be carefully considered in the Brexit negotiations,” Jaatinen continues.

The forest industry production figures for the second quarter indicate a moderate economic situation and demand for forestry company products in Europe and Asia. New investments are visible in paperboard production, which amounted to 0.9 million tonnes, or 9 per cent more than in the same period in 2016. Among the factors increasing demand for packaging materials is the rise of online trade.

Differences between product groups remain large

The production of sawn softwood in the second quarter of 2017 was 3.2 million cubic metres. This is an increase of 3 per cent over the same period last year, thanks to construction. Plywood production remained at the same level as in 2016, amounting to 0.3 million cubic metres. Pulp production was 1.8 million tonnes, which is in line with the result of the April–June period of the previous year. Paper production fell by one per cent to 1.6 million tonnes.

“Finland’s cost competitiveness must be improved. Reforms to improve productivity need to be implemented especially during autumn’s round of labour market negotiations in order to enable companies to respond to the increasing competition and allow them more agility in the challenging market environment,” Jaatinen says.

“Finland is in dire need of high-productivity industrial jobs that would strengthen sustainable economic growth and secure well-being. Therefore, decision-makers must ensure that the operating environment of companies promotes competitiveness. The Government must keep its promises to not increase industrial costs in the autumn budget session,” Jaatinen states.

The forest industry utilises renewable raw materials to develop and produce global, customer-oriented products. In addition, the industry has an essential role in achieving targets related to renewable energy.

“This is why the EU’s energy and climate policy must be made more consistent. EU must not hinder the growth of bio and circular economy by limiting Finland’s possibilities for sustainable felling,” Jaatinen emphasises.

Additional information:

Timo Jaatinen, Director General, Finnish Forest Industries Federation, tel: +358 (0)9 132 6600

Maarit Lindström, Chief Economist, Finnish Forest Industries Federation, tel. +358 40 531 8262

Additional information

Timo Jaatinen

Director General

+358 9132 6600