The Finnish forest industry in 2012: European economic crisis depresses forest industry production – economic growth must be boosted, not hindered

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“If we so desire, domestic decisions can help our competitiveness to be on the winning side once the European economy returns to a growth track,” says Timo Jaatinen, Director General of the Finnish Forest Industries Federation.

“The upcoming spending limits negotiations and the Government’s mid-term review must focus on promoting growth conditions and repairing the damage done to our competitiveness. The starting point for our nation’s prosperity is formed by a vibrant and competitive export industry that can afford to invest and provide employment,” Jaatinen says.

Retaining the competitiveness of the Finnish forest industry on even its present level calls for cost discipline. In addition to direct costs, expenses associated with other branches of industry cumulate in forest industry. Labour market negotiators, for example, must create solutions that do not raise costs in the export sector. Rising domestic costs cannot be transferred to product prices on the global markets.    

“We need immediate decisions on how to compensate, for example, the hundreds of millions of euro in extra costs the Sulphur Directive will cause to the export sector. Plans for a windfall tax that would punish the forest industry must also be dropped. Instead of implementing tax hikes, which burden industrial vitality, we should be looking for means with which to boost, not curb, economic growth,” Jaatinen says.

Paper production in the red, paperboard showing signs of recovery 

In total, Finland produced 10.7 million tonnes of paper and paperboard in 2012; this is 5.6% less than in 2011. The fall in production volumes was due especially to the economic downturn in the main market areas of Europe, production capacity cuts and a fall in demand for graphic paper grades. Graphic papers, i.e. printing, writing and newsprint grades, account for about two-thirds of the Finnish paper industry’s overall production.

Production of paperboard for packaging use came to 2.8 million tonnes. Paperboard production volumes showed signs of a slight recovery in the final quarter of 2012 and this helped overall annual production to exceed the previous year’s volume by about one percent.

Pulp production totalled 6.8 million tonnes, up more than one percent from 2011. Pulp exports were up more than 12% from the previous year.

Lengthy slump in construction activity kept wood products industry production in the red  

Sawn timber production was down 4% on the previous year and came to 9.3 million cubic metres. The volume of exports was slightly higher than in 2011, however. Domestic consumption decreased. Weak demand in Europe was compensated by growing demand in the Middle East and North Africa as well as by the ongoing rebuilding effort in Japan.

The industry’s raw wood costs were high relative to the market prices fetched by end products. This burdened especially the sawmill industry, whose raw material expenses account for some 70% of overall production costs.  

Annual timber sales were more subdued than on average. Energy and emission allowance prices remained moderate because of the economic crisis.

Further information:
Timo Jaatinen, Director General, Finnish Forest Industries Federation, tel. +358 9 132 6600