Two Baltic timber businesses are taking different perspectives on their prospects in the UK post EU accession. One, a timber window maker, is planning a big promotional push. The other, a timber import/export business feels the market may get a little crowded and, while looking for further growth here, feels the time is right to explore opportunities elsewhere.
The window manufacturer, Flora Woodworking Company, which also produces the glulam timber used to make its finished products, has teamed up with Colchester-based Titon to develop sash designs for the UK market. Titon, which manufactures window fittings, has independent facilities where it will test Flora’s products to UK and European standards.
Flora director Viesturs Garda said: “We know from our research over the past two years that the market for timber windows in the UK is growing and believe this could be good for our product. We are also searching for new buyers for our glulam sections in the UK and hope to team up with architects and building companies.”
Between 1991 and 1996 the Riga-based company grew from a production volume worth €100,000 to €1.4m, 80% of which was exported to Germany.
Turnover in 2003 amounted to €4.2m, up from €2.76m in 2002, and exports to the EU amounted to €2.7m. Mr Garda said: “We estimate a turnover of €6m in 2004.”
In the past three years the company has invested around €500,000 in Hess, Dimter and Weinig woodworking machines, drying kilns from Mühlbock, and other equipment. Further investment is being made to expand production of ready-made windows. It is proposed to install a new €200,000 window painting line and a further €150,000 will be invested in window frame producing machinery.
The company also owns a sawmill which provides part of the requirement for boards for the production of laminated timber.
Optimistic outlook
Mr Garda is optimistic about the future, especially with the Baltic states being in the EU. “Flora has been in the European market for quite a long time, so we do not expect any surprises and feel quite stable. Joining the EU will doubtless give us wider possibilities as our product is of very good quality but cheaper than west European equivalents.”
He forecast that small companies in Latvia will find it difficult to maintain their market, but added: “For companies like Flora it will be easier and simpler to export, as the customs formalities will be a lot simpler. The exporting procedure will be cheaper too as, in the future, we will not be dependent on currency exchange rates.
“Another good point for us is that it will be easier to work in markets outside the EU: Latvia is small and not well-known in the international business community, but now we’re in the EU our product will be ‘EU-made’ and that can only be good for us.”
Meanwhile, Lindeks – which claims to be one of the largest forestry and timber sales companies in the Baltics – aims to reduce its dependence on the UK.
Sales director Janis Alenciks said: “The UK is a big and good market for us, but we feel we have too many eggs in one basket and need to split the risk.
“We are looking to increase our sales by 10% this year and would like to see that increase in other markets which we are working on at the moment. We already deal with Germany, Holland, Belgium, Austria, North Africa, Italy and Slovenia and trial volumes have been sold to Japan and China where co-operation is growing.
“We need to spend more time developing these markets than we have done in the past. Meanwhile, our domestic market grows year on year.”
The fact that the UK market was saturated was another reason to look elsewhere. “We need to take volume away from the UK and look to adding value,” said Mr Alenciks.
To service an enlarged market, Lindeks, which has Forest Stewardship Council certification and a Latvian Environment Award, is going into Russia. “We have two logging companies in Latvia and will have one in Belarus. We own four sawmills in Latvia and one in Belarus which will start operations this month to counter the high competition for log supply and price in Latvia. We also propose to establish three simple bandsaw mills in Russia soon,” said Mr Alenciks.
“A lot of companies are seeking to source timber from Russia and Belarus and as a Latvian company we could be the bridge between the east and west. This is a good opportunity to use our knowledge of the markets that we have established in the west with our knowledge of the Russian language and our understanding of the people and their culture.
“We have built up relationships there, but a lot of things still need to be done and it is very hard work. We have to take the long term view – it takes two to three times longer to make the dream a reality there.”
