With the first sawmills built as early as the 16th century, Estonia’s wood processing industry has a long tradition.
Over the past decade it has been one of the few industries that has maintained sustainable growth.
In 2000 wood processing, along with furniture and pulp and paper production, made up 22.4% of the total manufacturing volume. Timber products exports were valued at EKr6.2bn while imports amounted to EKr1.2bn. Wood and wood products made up 13.4% of total trade volumes in 2000, a small decrease compared with 1999.
At the beginning of the year, the timber companies’ sales volumes increased at a similar pace to that of 1999. During the second half of 2000, the sector experienced a small slowdown, which escalated towards the end of the year. This resulted in a 4.6% decrease in the timber industry’s share in the overall structure of the manufacturing sector compared with 1999. A record growth in terms of sales volumes was experienced in the paper and board sector.
The main reason behind the fall in timber products sales was the decreased supply of logs because of seasonal problems and bad weather which reduced supply, especially from private forests.
An additional factor could have been an increase in timber products prices, as a result of the appreciation of the US dollar, which held back demand.
Log imports
A reduced supply of logs in Scandinavia forced Scandinavian companies to increase their Baltic imports and this put pressure on local companies.
Increased local processing in Estonia has boosted local demand for raw material and imports of Russian logs provided slight relief for the troubled sawmills.
Officially, 6.4 million m³ of timber was felled from Estonian forests in 2000, 41% of it from state-owned forests. As it is difficult to influence the log supply from private forests, the main responsibility for stabilising the market is expected to lie with the state forest management agency, RMK.
The agency has implemented a wide range of comprehensive measures for timber supply from the state forests over the past few years. The number of long-term contracts has increased, providing the private sector with an incentive to continue investments.
Log exports
Round log exports still made up 28% of total export volumes in 2000, but they have been gradually reducing over the years. There has been a continuous trend towards more value added production and this has been recognised in a much wider context: adding value to local products is one of the Estonian Forest Industries Federation‘s key targets for development.
To obtain the highest added-value possible, Estonia is still chasing after its long-awaited pulp mill. With the Metsäliitto–Södra joint project well under way in Latvia, Estonia now has its own greenfield enterprise. Norway-based Larvik Cell plans to build a US$23m pulp mill 50km from Tallinn, in Kehra. The plant will have a capacity of 100,000 tons of pulp.
The plant will use aspen to produce high quality sulphite semi-chemical pulp and negotiations are under way with various government bodies to secure the needed log supply and infrastructure. The plant should be operational by the end of 2003. Looking at the volumes of pulpwood currently exported, experts say there is still room for a 500,000-ton plant.
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“There has been a continuous trend towards more value-added production and adding value is on of the Estonian Forest Industry Federation’s key targets for development” |
In the panels sector several projects have been announced recently. Finnish Schauman Wood Oy, along with Estonia’s largest forestry group Sylvester AS and Forestex Oü, has opened a plywood and veneer factory in Otepää, south Estonia. The plant will produce 18,500m³ of birch plywood and 1,500m³ of veneer a year and employ about 80 people.
GM Panels, producing edge-glued panels, started production in south Estonia in November 2000. Because of Estonia’s favourable cost base, the Danish parent company Gronbjerg Mobelindustri decided to relocate its whole production unit to Estonia in the middle of this year. The company hopes to employ 90 people when it reaches its full capacity. In addition to glued panels, GM Panels will start producing components for the furniture industry.
Furniture manufacturing
Furniture, chipboard and ski and hockey stick manufacturer Viisnurk recently arranged a public share issue to acquire capital to finance its expansion plans. The company is looking at expanding its furniture manufacturing arm either through its existing plant or acquiring new capacities. Viisnurk’s furniture subsidiary was recently accredited to ISO 9001. The company, whose vision is ‘to become the best wood processing company in the Baltics’, opened a new edge glued panels factory in May. Viisnurk also has 25% of the world’s cross country ski market and aims to produce hockey sticks for the National Hockey League. In the first quarter 2001, the company’s turnover increased by 12% to e66m and profits were up 44%.
As for primary processing, most of the large sawmills increased capacity during 2000 and several new projects are in the pipeline. The recently opened Sakala sawmill in Suure-Jaani will produce 100,000m³ of sawn timber annually, with an anticipated export volume of 80%. The company’s Estonian owners have invested e60m in the new enterprise and the production complex also includes drying kilns.
Low-value timber
Sauga sawmill, which started operation in March this year, will specialise in processing lower-value timber such as aspen and grey and black alder – species which have been heavily under-used in Estonia to date.
In addition to sawn wood, the plant produces pallets for export to southern Europe – Spain, France, Italy and Portugal. Sauga’s annual capacity will be 80,000m³ of sawn timber. Sauga sawmill is part of the Estonian-owned Sylvester group.
In an increasingly competitive world one of the means of differentiating and gaining a competitive advantage is through marketing the environmental attributes of the product.
In April, RMK, which is responsible for 40% of Estonia’s forests, started to pursue Forest Stewardship Council certification. The process will be carried out by SmartWood which has indicated it will be the first project in the world which will be carried out at such an extent.
Certification will undoubtedly upgrade Estonia’s image as a environmentally conscious country and increase the competitiveness of Estonia’ s forest products.
RMK is also continuing the implementation of environmental management standard ISO 14001. It has issued an environmental handbook which provides information on environmental management issues according to ISO 14001 and specifies the organisation’s environmental objectives and procedures in achieving them.
Like many countries, Estonian Forest Industries Federation is establishing an organisation aimed at raising the profile of timber as a local building material and increasing its use. According to the Federation, the country’s consumption of timber is 0.2m³ per capita, while in neighbouring Finland the figure is four times higher.
With increasing investments into more value-added production, stable supply of timber and environmentally conscious management, Estonia’s wood processing is on its way to continuous growth.
Related Files
Export of Wood Products from Estonia in 2000
