Domestic market
Competition is tighter in almost all end use segments. Previously the material choices were based primarily on traditions and availability, today “ease of use”, price and ecological arguments are very important new components in the business.
Concrete, steel, aluminum and various plastic-based goods have all over the years gained foothold at the expense of wood. Typical examples of this are big public buildings, multi storey apartment buildings, doors, windows, furniture, and also interior and exterior cladding.
Increased need for service
There is one common denominator in the advancement of timber substitutes: service.
In forest industries the emphasis has been strongly on the problematics of raw material availability, cost effectiveness, productivity, production volumes and buyers, whereas the competition has had a firm focus on customer preferences. This partly explains the slow reactions of the wood industry to the structural changes in the market place.
The service aspect has emerged also strongly in the development of domestic wood construction. The Finnish wood industry has made long-term promotional commitments for the increased of use of wood on the domestic market.
This activity has been led by Puuinfo Oy, which is a jointly funded and owned operation of several forest linked associations. Because a large part of Finnish domestic houses are already timber framed the main emphasis has been on the development of large wooden structures – especially apartment buildings.
The current situation is that the wood products industry has taken care of building regulations, standards, norms and the product development.
Building regulations should favor wood
This work has borne fruit and as a result the building regulations were changed in 2011, allowing eight storey wooden buildings. The main bottlenecks are still today the process in the building work and lack of competition – the customer focus could also be improved in this area.
There is a need for service providers in the value chain, who can offer design, development and assembly services.
Once the whole process has been developed in to a seamless entity it can also be sold for export, although wood construction – with the exception of log construction – today tends to be in the hands of local operators.
The construction of wooden apartments also provides an opportunity to grow domestic timber sales by several hundreds of thousands of cubic metres. Other drivers for domestic timber sales continue to be in the areas of private homes, repair and maintenance, and garden products.
© UPM
Export
Export prospects for sawn timber are relatively positive.
Demand for sawn goods is on the increase both for construction and other end uses. The success of Finnish industry is largely determined by competitiveness.
Japan and China
Over the past 20 years the sales of Finnish sawn timber in Japan and China have grown to well over 2 million cubic meters on an annual basis.
In Japan, Finnish goods are used for demanding, high quality end uses in wood construction. The properties of the material have been clearly defined.
In China a large part of Finnish timber goes into the furniture industry. The price of timber and good quality have been important factors in the trading in those two countries.
The general appreciation of wood in Japan and the green economy programmes in China, will be contributing to further increases in the use of Nordic timber. Especially the Chinese growth potential look encouraging.
North Africa and the Middle East
North Africa and the Middle East have become very important market areas for Nordic producers. These regions have long traditions in the use of wood, the population growth is high and these countries have valuable natural resources as well.
These positives, however, have at times been shadowed by geopolitical tensions, conflicts and economic uncertainties. If these issues do not escalate these markets offer a great growth potential for timber products.
Europe
Demand for sawn goods in Europe will grow further. The EU’s energy and environmental policies favour wood based goods as a carbon binding material.
Wood construction is expected to grow steadily at the expense of other materials. It must be noted that a large part of domestic European requirements can be sourced domestically.
North America
North American building and construction is based on wood products. At the turn of the millennium Europe exported millions of cubic meters regularised timber to USA.
Exports were enhanced by the boom conditions and strong US Dollar before the financial crisis. A large part of USA’s timber imports come from Canada, but there the logging and production opportunities have been reduced by large scale insect damages to the forests.
It is therefore possible that the USA will become a regular, large scale export market for the European sawmills. This hinges mainly on the above mentioned Canadian export levels and how the new forest areas in the southern states are going to be utilised.
