Wood-processing industry keeps growing

  • 2004-11-10
  • By Aleksei Gunter
TALLINN - The timber and wood-processing industries have long served as a driving force in Baltic exports, and, thanks to aggressive competition among both large and small market players, their momentum looks set to continue.

Estonian business experts point out that large enterprises such as the international wood-product giant Stora Enso, which holds an estimated market share of a little over 50 percent in Estonia, offer better prices and conditions to raw material suppliers. This, in turn, dries out the raw material supply of smaller sawmills that lack further processing capacity.

The Estonian Competition Board, the state-run competition watchdog, will soon focus on the wood-manufacturing industry, after having already examined the logging and sawmill sectors. According to the board, no violations of the fair competition rules have so far been registered in the forestry and wood processing sectors.

Peter Kickinger, executive vice president of Stora Enso Timber, said that the Baltics had recently been the center of company attention.

"Raw material in several areas is different due to climate and soil conditions. We use production concepts tailor-made for particular places. Running as many operations as we do, we work with sawmill concepts. Every sawmill has a unique concept that serves a particular market," Kickinger explained.

Stora Enso currently employs about 1,700 people at its wood procurement, processing and sales facilities in Estonia, Latvia and Lithuania. The company owns one stand-alone component mill and six saw mills in the three countries, of which four have the capacity to produce additional wood-based products.

The estimated total capacity of Stora Enso's mills in 2004 will reach 1.3 million cubic meters of wood by-products, of which 300,000 cubic meters will undergo further processing. House frame construction products made in the Baltics are sold in the U.S.A., Australia and Europe; joinery and nonstructural products go to Europe and South-Eastern Asia.

Kickinger said that Stora Enso is looking to expand in Latvia and Lithuania but does not yet have any concrete plans to do so. He added that the company was now more focused on having its own harvesting operations rather than buying wood from small forest owners. Some 60 percent of the company's production in Estonia is being exported abroad.

Stora Enso's latest project in Estonia was the purchase of the bankrupt Scanforest sawmill, located next to the company's previously acquired facility in Napi, near the town of Rakvere.

The firm invested 3.8 million euros in the Napi mill in order to increase the mill's annual capacity to 60,000 cubic meters by 2005.

According to Stora Enso Timber's Baltic production group, the company plans to further develop its wood processing capacity in Estonia's Paikuse sawmill, and then in Launkalne, Latvia. The market share of Stora Enso in Latvia and Lithuania makes up to approximately 25 percent and 20 percent respectively.

About one-third of raw material processed at the company's Baltic operation facilities comes from Russia.