Estonian sawmills face hard times

TALLINN - This spring a shortage of raw material and the rising price of timber triggered the first major spate of layoffs in the Estonian wood and furniture industry, according to reports.
Data by the Unemployment Insurance Fund show that the number of layoffs in the industry increased by more than a fifth in the first five months of the year compared to the same period a year ago.
Nearly one-third, or 181, of the workers laid off in collective redundancies were employed in the wood and furniture industry, the Aripaev business daily reported.
Further layoffs of some 170 people lie ahead in the wood industry in the coming months, the daily wrote. The Sauga sawmill, part of the Stora Enso Timber group, plans to shut down on June 29 because of a lack of raw material.

"The troubles in the wood and furniture industry are caused primarily by a shortage of raw material, diminishing orders and rapid growth in wages," Kadri Luhiste, head of the Unemployment Insurance Fund's analysis department, said.
Andres Talijarv, managing director of the Estonian Forest Industries Association, said the first spate of redundancies in the sector will apparently not be the last. "Serious problems will arise in September when sawmills' log stocks run out," he said.
On June 4 Russia's railroad operator announced that it had ceased shipments of timber to Estonia due to repairs on the rails. Dmitry Khaneikh, director of a wood industry association in northwestern Russia, said exporters had not been given an official explanation for the sudden ban on timber shipments via Estonia.
"Not only the forest and sawing industry but also transport and other servicing sectors are going to suffer. Thousands of jobs will come under threat," Talijariv added.

He said the government is hiding its head in the sand in the hope that the raw material problem will go away. One solution, he said, lay within the country.
"The government does not appear to be aware that in reality the raw material shortage could be eased with domestic resources if certain measures were taken," he said.
In May the government approved a measure to allow private landowners to sell up to 45,000 kroons (2,875 euros) of timber without paying taxes. The rules require that private forest owners first register as self-employed, which many are unwilling to do.
The Estonian Forest Industries Association had pushed for a 250,000 kroons sale limit for private forest owners.