As sawmills in Finland and Sweden announce summer shutdowns in response to difficult market conditions, SCA Timber president Kenneth Eriksson remains upbeat.
For he has plans, at the forefront of which is training, training and more training. This, he says, is the key to keeping ahead of the game in today’s tough trading world where raw material prices are high and returns are low.
He believes the timber and wood products industry has lost sight of its history and, as a result, opened the door for other products to compete against it – resulting in a loss of market share and credibility.
That history, he says, must be revisited. ‘Our ancestors controlled the wood the whole way through to the finished product. One hundred years ago a carpenter knew exactly what part of the wood he could take to make a window that withstood the weather.
‘Then the industry started using the wrong product from the tree for the wrong application, letting substitutes such as plastic and aluminium come in. We need to get back to basics through more training and more knowledge about our products.’
Mr Eriksson also believes the company must get closer to its customers. ‘We have to understand and be more proactive to their needs. At SCA Timber we now have the critical mass to enable us to do that.
‘What we produce is unique – a timber log – but we must produce the right product for the right customer – be it quality, length or moisture content.
‘We are all part of the same value chain and that is why I believe it is important to share the experience of training. It is not just the mill managers and operators who should be part of this – it should go right down the line to the customers.
‘We should have products on the one hand and customers on the other, with a strong sales team as the connector. They must translate customer needs back to the mill.
‘At SCA Timber we are more or less self sufficient in raw materials, we have good people and good customers. We have to stop being producers and get this value chain firmly in place.’
This, he believes, means not just understanding how customers use SCA’s products but also how they – and the next customer down the line – market the goods they make from those products.
In March SCA Timber held its first ‘think tank’ – an opportunity for frank discussion about the company’s performance. Ten UK customers from different sectors of the trade were invited to give their views on SCA Timber’s service levels, procedures and products to senior management.
The forum, held in Sweden, covered aspects of business from documentation to deliveries, with the aim of identifying improvements, and Mr Eriksson says it is intended to hold more for customers from other countries.
SCA Timber, which is part of SCA Forest Products, has three sawmills and two planing mills. Net sales for the Forest Products business amounted to e1,600m last year.
Munskund
The planning of SCA’s new £30m sawmill at Munksund in northern Sweden – officially opened in August 1999 – took into account the concept of being part of a bigger value chain.
Mill manager Ulf Larsson says: ‘Many people wonder why we are building a conventional mill – but I think it is the only way to be successful.
‘Today we are producing 250,000m³, compared to 150,000m³ a year ago, and we will be up to 290,000m³ this year after which everything will depend on the market as we won’t raise the volume if we can’t get the demand.’
Between 65-70% of the mill’s costs are connected to raw material and, because of the growing conditions in the Arctic Circle, it uses 100% pine.
Built in 1861 Munksund is one of the oldest mills in Sweden and, prior to the new building, which started in 1998, it was not very profitable. ‘It was a question of being in the game or not – and if we were to stay we had to invest,’ says Mr Larsson. ‘We can dry logs down to 8%, 10% and 12% for the Scandinavian and UK markets for furniture, flooring and mouldings and we have decided to keep that level of different dried products,’ he says.
The mill will soon have 29 kilns, with a further eight planned if volume increases, and the next step will be investment in a new grading mill for further flexibility.
‘At the moment we have a balance in the mill. We have steam from the paper mill and enough cube to run the log sorting department in four shifts. With other areas running in different shifts it makes it all work,’ says Mr Larsson.
The Japanese market
Fifty per cent of product goes to Scandinavia, 25% to the UK and Japan, an important new market, takes around 40-50,000m³ a year.
‘We worked very hard for two years to get into the Japanese market. The first step will be products for the construction market because in this mill we have no facilities for planing or components. However, we are working to build up a network of people around the mill who can do that for us,’ says Mr Larsson.
‘We want to increase productivity but we must find ways of doing things that customers want to pay for. That could be planed goods or components but I don’t think we will build up any facilities for that in our first phase of development.’
In the mill there has been huge investment in computer equipment. Mr Larsson says: ‘We are in the forefront and working to all kinds of certification systems. Putting in the new technology was like going from walking to driving a Formula One.
‘You can’t just say you are going to increase volumes when you make this huge investment. This first year has been successful but we have a lot of hard work to do on the marketing side.’
Scaninge Timber is the result of a union between SCA and Graninge. The company owns four sawmills and two planing mills, all close to its own forests. Its Bollsta sawmill is one of the most modern and efficient in Europe and represents a SKr320m investment. Dealing solely with redwood, it comprises a timber feeder, splitting and grading and it aims to develop more added value products – for instance using the planing mill.
Ulf Larsson recently took over as president of Scaninge Timber AB, bringing closer co-operation between the two organisations. He says: ‘Scaninge has well-known trading markets and a strong base in the middle of Sweden. There is potential to take part in further restructuring of the sawmilling industry in central and northern Sweden.’
Scaninge employs around 600 people at its four mills – Vilhelmina, which produces 110,000m³ of sawn timber, of which 15,000m³ is planed; Rundvik which produces 260,000m³ of sawn timber, of which 150,000m³ is planed; Graningebruk, which produces 25,000m³ of sawn timber; and Bollsta which produces 400,000m³ of sawn timber, of which 50,000m³ is planed.
Tunadal
Tunadal sawmill produces planed and rough sawn whitewood. Product manager Fredrik Nordin says that the mill takes around 800,000m³ of sawlogs and 50% of them will go for chips.
‘Between 1849 and 1957 there were 44 mills in this area. Tunadal, the oldest, is the only one left. About 30 years ago all the mills were owned by SCA and at the beginning of the 70s the company decided to put a lot of money into Tunadal.’
The mill is some 2km long but only about 200m wide because of the sea on one side and the road and the railway on the other.
Seventy-five per cent of the timber comes from SCA’s own forests and the rest from private owners. The mill has 24 log sorting bins and about 35 different log classes and caters for special lengths.
There are three sawlines – small, medium and large – two sticking machines, 24 progressive kilns, 11 chamber kilns and four warehouses, plus a new planing mill. Production could be increased to 320,000m³ without any need to increase kilning capac-ity. In 2000 production stood at 272,668m³.
Mr Nordin adds: ‘Last year there was a small investment programme to bolster production, now increasing to 300,000m³. This means we will be able to use all our kilning capacity. If this production remains profitable, we may go up to between 400,000-500,000m³ in five years’ time. We think we will come up to 285,000m³ this year and break the record with two shifts.
‘We invested in the planing mill in 1997 and it is projected at 65,000m³ this year with three shifts. We think half our production will be planed goods within five years. Our main market is Japan which accounts for 25-35% of volume. Others are Scandinavia, Holland, Germany, France and the UK, plus Ireland which is growing fast.
‘We operate in three different whitewood market segments – building, interior and joinery. The building segment consists of glulam – mainly to Japan – studs, special lengths for the Japanese market and battens.
‘We are now looking into stress grading which we hope to be able to supply from the autumn.’
The smallest of SCA’s three sawmills, Holmsund was one of the original facilities incorporated into the SCA group in 1929. It produces 80,000m³ of specialised products each year destined for specific uses such as glulam, flooring, doors and joinery. It also has a planing mill with a capacity of 18,000m³, mainly taken up by the panelling and flooring industries. Holmsund’s markets include the UK, southern Europe and the Middle East.
Sawmill manager Lars-Olof Alm says: ‘We forecast a production increase of 10% over the new year by smoothing out occasional bottlenecks. We’re now investigating increasing production at our planing mill.’
Holmsund has just received Forest Stewardship Council chain of custody certification.
Sustainable management
The importance of sustainable, renewable forest resources to SCA’s operations is demonstrated at Bogrundet nursery – one of the largest in the world – where around 50 million plants are cultivated annually.
The nursery is the core for the company’s future, providing top quality plants to replace trees harvested in SCA’s two million ha of FSC-certified forests.
Many of the seeds are hand picked from SCA’s 100ha-plus seed orchards, and up to one million seeds are sown each day.
A hi-tech sowing process places individual seeds in specially designed containers, then they are taken into greenhouses managed from a computerised control room which regulates irrigation, temperature, fertilisation and light.
During the winter the plants live outside, covered in a thick blanket of snow. If there is insufficient snow to give the protection required, artificial snow is used to keep the young plants warm.
In the high season Bogrundet delivers about one million plants daily using lorries which can carry around 270,000 plants.