Postimees: Estonian wood sector companies faced with inevitable layoffs

TALLINN - Problems with economic performance have forced several woodworking companies in Estonia to optimize their production volumes and, as a last resort, make part of their workforce redundant, Tartu Postimees reported.

In October, wood industry company Palmako announced that it will cut a hundred jobs within a year. In the middle of the summer, Lasita Maja, one of the largest manufacturers of wooden houses in Europe, had to cut its workforce by 10 percent, agency workers included, due to a sharp decrease in demand.

According to the Unemployment Insurance Fund, the mouldings manufacturer Liistuvabrik based in the South Estonian small town of Kambja has also submitted an initial layoff notice, according to which it plans to lay off 19 people. The redundancies at Liistuvabrik have not yet materialized, as negotiations are still ongoing, according to the Unemployment Insurance Fund. Andrus Allikoja, member of the management board of Liistuvabrik, said that the entire industrial sector is going through very difficult times, but did not want to be specific about the redundancies at this point.

"We will somehow get through these difficult times," he said.

The problems affecting the wood sector are mostly the same: the decline in global demand due to inflation and uncertainty related to the war in Ukraine, the change in people's consumption habits compared to the habits that had developed during the period of coronavirus-related isolation, and skyrocketing prices of energy and raw materials.

"The situation in Estonia is particularly difficult, as both our energy and raw material prices are higher than those in the Nordic countries," Henrik Valja, CEO of the Estonian Forest and Wood Industry Association, told Tartu Postimees. He said the Estonian wood industry is at a disadvantage compared to its neighbors, as the state has essentially left businesses on their own with their worries.

"Energy prices are not compensated for companies, and in addition, our log prices are significantly higher than those for our neighbors," Valja said, adding that log prices have been affected by the ban on Russian imports as well as Estonia's own logging policy and planned cuts in logging volumes.

Although there are no precise figures on redundancies in the wood industry, Valja estimates that the number of jobs cut could already be more than a thousand, and that more redundancies are likely to be announced in the sector in the near future.

If the slump in the wood sector continues, the emigration of workers is not excluded, the head of the industry body said.

"Timber industry companies are often located in rural areas where workers do not have a wide choice, and if they lose their jobs, working abroad may be the only option," he said.

"Most European countries compensate businesses for energy costs, Estonia has decided not to do this. In order to preserve jobs in the wood industry,  discussions are ongoing in Latvia and Lithuania about increasing felling volumes. In our country, the minister of the environment informed about the desire to reduce the volume of felling. At the moment, it is essentially impossible to make any forecasts," Valja said.

The number of job vacancies has also started to decline. According to the Unemployment Insurance Fund, recruitment has slowed down significantly from the record numbers of vacancies seen in the first half of the year and there are fewer job offers than in the autumn months of last year. In October, 4,600 job offers were added to the website of the Estonian Unemployment Insurance Fund, of which less than 600 were in the manufacturing industry.