The acquisition by Stora Enso of AS Sylvester, Estonia’s largest sawmilling and wood procurement company, has led to the formation of a new Baltic Production Group within Stora Enso Timber. The group comprises five softwood sawmills and a component factory.
Previously, Sylvester‘s sawmills, wood procurement and logistics companies all operated as separate companies. Each had their own board of directors and management group and operated independently under Sylvester and Forestex, but not as a single production group. Last year, however, Sylvester took its first steps towards consolidating operations.
Seppo Vainio, who heads up the Baltic Production Group, explained: “Stora Enso Timber has managed export sales for Imavere sawmill, while UPM-Kymmene looked after export sales for Paikuse sawmill. The other sawmills sold independently. In total, 30% of the products are sold to the Baltic countries, mainly to Estonia and Latvia.
“Due to the large amount of sixth quality timber, the North African and Middle Eastern countries have accounted for a relatively large proportion of the exports, particularly of Imavere’s redwood products.”
Mr Vainio said all the softwood sawmills have processed both spruce and pine species. Näpi, Sauga and Launkalne sawmills specialise in sawing small logs, while Imavere and Paikuse also handle large diameter logs.
He added: “What they all have in common is that they have grown rapidly. In 1995, Imavere processed 10,000m3 of sawn timber, whereas this year’s budgeted production is approximately 950,000m3. Component production in Imavere and Viljandi Liimpuit amounts to approximately 15,000m3.”
New production groups
Amalgamation of operations is being implemented in the Baltic Production Group on two levels – the integration of the sawmills into a single production group, and the integration of the entire production group into Stora Enso Timber.
“At the same time, extensive development programmes are in progress at the sawmills. All are increasing their production, and most are also investing in further processing facilities. For instance, there is a project under way to construct a sawmill in Alytus, Lithuania and another sawmill is planned for Latvia.
“To ensure that we make the right decisions, it is essential to find the right mill concept for each sawmill, and one that is at the same time in line with the concepts of Stora Enso Timber’s other sawmills.
“This enables us to eliminate overlapping operations and ensure that we can offer customers better quality in the form of a wider product range.”
A major investment programme totalling €30m is already under way. Sauga sawmill will concentrate on sawing redwood and whitewood. The mill produces structural sawn timber for the European and US market, sound-knot sawn timber for the furniture market and various planed products for the DIY market. During the first half of 2003, the mill will build additional drying and further processing capacity, and a thermal power plant. The machinery and equipment have already been ordered.
At Viljandi Liimpuit production is to be doubled to 10,000m3. Its products – mainly components for window manufacture – will remain the same and the investment will be implemented during the spring.
Production will also increase at Näpi – to 100,000m3 this year and 130,000m3 next year. The investment covers modernisation of dimension grading and the sticker stacker in order to allow processing of both green and dry sawn timber. A thermal power plant will be built and plans include investment in further processing during the year. The present investment programme will be completed during the first half of 2003.
Production at Imavere sawmill will be raised to 380,000m3. This investment project will be completed in August. The products’ added value will be increased by boosting component production in the second half of 2003.
Paikuse sawmill has already been converted into a single-species sawmill – since January it has concentrated on processing spruce. In addition, production is being raised to 200,000m3 and drying capacity will be increased. Paikuse will also invest in further processing capacity. Production at Launkalne sawmill will be raised to 215,000m3.
Production at Alytus sawmill, which is under construction, is scheduled to begin in August. Mr Vainio said the sawmill will mainly produce sawn timber for construction in the European and US markets.
