The stevedore strike has cut off export revenues while production and raw material costs continue to accumulate. Industrial action by the dockworkers is preventing deliveries of Finnish sawn timber as construction activity kicks off in spring.
“The Transport Workers’ Union AKT’s actions are having a heavy impact on the sawmill industry, which has already experienced plenty of hardship because of the economic downturn. The sawmill industry’s export revenues have dried up as customers will only pay for delivered goods. It’s also very difficult to close any sales when you can’t guarantee a delivery date. This strike is eating the sawmill industry away,” says Antro Säilä, Senior Vice President of the Business Environment and Innovation unit of the Finnish Forest Industries Federation.
“The sawmill industry has had problems with securing adequate amounts of log raw materials. Now that the weather permits all types of logging sites to be harvested, it must continue with its wood procurements as well as harvest the timber it purchased earlier, before warmer weather arrives – even though revenue flows are fading away. This is an extremely tough situation for an industry just beginning to recover from the economic downturn. It should be borne in mind that wood raw material procurements account for up to 70% of the sawmill industry’s costs,” Säilä points out.
After export transports are halted, warehouses will fill up in about a week. If pulp mills stop their manufacturing operations, sawmills will be able to store only a couple of days’ output of pulp chips, a by-product of sawing.
Spring is a critical time for export deliveries
“Construction sets the pace for sawn timber export deliveries. Spring is a critical time for construction starts and sawn timber export deliveries. Buyer inventories are now, in the wake of the economic downturn, small throughout the entire chain, making rapid deliveries necessary. Modern commerce demands punctual deliveries also because companies aim to minimise the capital tied up in inventories,” Säilä says.
The value of sawn timber exports was €933 million in 2009, 70% of which was exported. The biggest destination countries were Egypt, the UK and Japan.
Sawmill export revenues flow directly into the wallets of forest owners
“Sawmills generated €600-700 million for forest owners solely through their processing of logs for export. In addition to this, a large portion of pulpwood raw material flows and stumpage fee revenues pass through sawmills. The significance of these export revenues is especially great in the heavily forested provinces where there is little other industrial activity,” Säilä says.
Antro Säilä, Senior Vice President (Business and Innovation Environment),
tel. +358 9 132 6633, +358 40 589 1891