• Austrian sawn softwood exports to the UK were 103,008m³ in 2008.
• Ecobuild featured a strong Austrian presence.
• The processing sector has invested significantly in recent years.
• Sustainable forest management practices were implemented 150 years ago.

With a population of 8.2 million and a surface area of 83,839km², Austria is one of the smaller European countries.

But when it comes to timber it is a giant, in the world’s top five for softwood exports, supporting a powerhouse of a wood processing sector and brimming with innovation in the joinery and timber construction fields.

The recent Ecobuild show in London featured a big, bold representation of Austrian timber product firms, despite the economic circumstances, including two of the biggest sawmillers – Binder Holz and Mayr-Melnhof. The latter made a statement of its expansionist ambition by opening an astonishing new timber headquarters in Leoben at the start of 2009.

Also exhibiting were door and window producers such as Gaulhofer, Freisinger and Internorm, plus various timber construction systems, including cross-laminated timber. Thoma Holz’s Wood 100 cross-laminated product had its UK launch and, amazingly, boasts a structural fire resistance of 150 minutes.

Behind this, the industry’s current statistics are a mirror of those of other European countries – declining production and exports since the onset of the credit crunch.

Production figures

According to Statistik Austria, sawn softwood production reached 11.3 million m³ in 2007, with sales worth €2.31bn. However, last year preliminary figures show sawn softwood production was about 10.1 million m³. There will be a bigger reverse in 2009: the Austrian Wood Industries Association predicts the figure will be 7.5-8 million m³ – the lowest for than 10 years.

Exports to the UK boomed in 2007 to 208,394m³, a 120% rise, but that halved last year to 103,008m³, a figure that will probably shrink further in 2009. More than 80% of the Austrian wood processing sector’s sales are going to export markets such as Italy (58%), the US, Japan, North Africa, the Middle East, Spain and Greece.

The 40 biggest sawmills account for 90% of output, with 65% of the total produced by the 10 largest mills.

A history of timber production

So why does Austria have such a big timber industry?

Christoph Kulterer, managing director of Hasslacher Norica Timber, situated deep in the mountains, is well qualified to answer, since his company has been operating since 1901. He puts it down to tradition, an extensive forest base (over 50% of the land area), very efficient milling operations – mills have had to be innovative since the mountainous forest terrain adds to cost – and sustainability.

Sustainability, he said, was ingrained in the industry, with forest conservation rules enacted by the Austrian emperor Franz Joseph I in 1852 – long before the advent of today’s forest certification schemes such as FSC and PEFC.

Hasslacher Norica Timber, which has a turnover of €120m, is fairly typical of the Austrian wood industry, milling mainly spruce, but also redwood and larch.

Its 500,000m³ annual lumber production, is made up of about 300,000m³ rough sawn and the rest planed for a variety of uses including construction, floor boards, roof shuttering, handrails and cladding. Other products include glulam (80,000m³), three-layer cladding boards for formwork, quick erection façade systems, pellets and a wood-concrete composite system for decks, wall and ceiling elements and bridge construction.

“Traditional sawmills have developed themselves along the whole value chain. We no longer just supply rough sawn timber,” said Mr Kulterer.

“Much of the timber is in mountainous areas and is slow-growing, high strength and large dimension,” he added. “We are a little bit too far away from the UK market to sell low-cost commodity products. What we are looking to develop is sales of high-end products, such as façade systems in larch.”

The company is looking at working with architects and builders but is also interested in possible trading relationships.

Challenging conditions

Mr Kulterer said sawmilling conditions were currently challenging, especially for large capacity businesses that were export focused towards the US. With the collapse in US homebuilding, they have been searching for market opportunities for those volumes in Europe, while discovering that log availability projections had been over optimistic.

Mr Kulterer predicted some mid-sized mills would drop out of the market in the next few years, leaving super mills and small operators.

George Binde, managing director of Austrian timber promotional campaign Pro Holz, also believes there will be casualties. “In just a few months all the markets broke away, including the UK,” he said. “Sales went down by 30%, and the fear is that it will be very difficult for some companies in the sawmill sector to survive the crisis due to weak equity capital and sharp sales declines.

“The biggest sawmillers and glulam producers face the most problems because they have invested heavily and grown significantly in the recent past.”

But on a refreshingly positive note, Mr Binde said the mid-term future was positive for the use of wood in Austria and also in key markets. “The demand will rise, and the sawmilling companies will develop further after the crisis. Although the industry’s structure will comprise fewer companies,” he said.

“The situation seems better for engineered wood products, supplied for large-scale buildings. It looks like they have still some work to do. “Small carpenters in Austria have some business, but this will also slowly decrease in the domestic market.”

Log prices have also recently come down to €62-65/m³ from about €75-80/m³ before Christmas, said Mr Binde.

One of the largest Austrian mills is Holzindustrie Pfeifer. About 600,000m³ of sawn timber are produced in its Imst and Kundl sawmills and shuttering panels, formwork beams, glue laminated beams, single- and three-ply panels, pellets and briquettes are also manufactured to make up a diverse product portfolio.

Like other large mills in Europe, Pfeifer has been on the expansion trail in recent years, taking over one German mill in 2005 and currently building another one in Germany, in Lauterbach (Hesse), due for completion in the coming weeks.

Since 2008 the Imst glulam factory has also been producing beams with visible quality specification thanks to the addition of a new flick station, which automatically recognises knots and black branches – an improvement as glulam is being used more frequently for interiors. And from January, a new coiling machine has allowed the packaging of beams to protect against the elements.

Positive attitude

Pfeifer’s joint managing director Ewald Franzoi, speaking in the company’s latest newsletter, took a positive attitude to the current market challenges.

“These consolidation processes are normal in an industry. You cannot expect to always go up. A com-pany should be able to take it. You should be able to grow in these times, maybe not in terms of turnover but certainly in terms of strength. I do think that times such as those we are experiencing today also offer chances. They show where you haven’t done your homework, and where readjustments can be made. Also, we are bound to see some interesting opportunities for takeovers.”