Changing times

When AssiDomän was acquired by state-owned Sveaskog in December last year its policy was to focus on forest ownership and the intention was to dispose of the sawmill side of its business. However, after careful consideration Sveaskog decided to retain and strengthen its sawmill business

In August this year Sveaskog bought 235,000ha of land (of which 200,000ha is productive forest) together with the Kastet sawmill from Korsnäs. Sveaskog assimilated the forest land acquired from AssiDomän and Korsnäs into its own forest holdings. AssiDomän Timber has eight sawmills and one wood processing mill, while and AssiDomän Frövi has one board mill. Seven of the sawmills are pine or redwood mills and there is one spruce or whitewood mill. “We see ourselves as the leading pine appearance company – 1.2 million m3 of our production of 1.5 million m3 is pine,” said Mikael Eliasson, manager in charge of the company’s southern redwood mills.

Forest holdings

AssiDomän’s parent company Sveaskog is one of Europe’s largest forest owners. It owns approximately 4.4 million ha of land throughout Sweden, of which about 3.2 million ha consists of productive forest land. In fact, Sveaskog’s land holdings comprise approximately 18% of the total forest area in Sweden.

The whole of Sveaskog’s forest holding has Forest Stewardship Council certification and all AssiDomän Timber’s sawmills have certification in accordance with both ISO 9000, ISO 14000, as well as FSC chain of custody.

AssiDomän Timber has a turnover of e290m, 730 employees and an annual production of 1.5 million m3 of sawn timber.

The market segments the company is aiming at are producers of windows, doors, floors, mouldings and furniture. “When we set our objectives in 1999 our goal was that 50% of our production would be for this type of industry within western Europe,” said Mr Eliasson. “We are a very focused company and we have not seen anyone else place such emphasis on the supply of pine appearance products.”

AssiDomän is also very focused when it comes to products and marketing. Roughly 50% of its sales are to Norway, Sweden and Denmark. As a single market the UK takes second place after Sweden. In fact, Scandinavia plus the UK accounts for 70% of sales.

Sales strategy

The company has two sales offices in the UK, one in the north and one in the south of England. It is an important part of its strategy to have a local sales force providing good service to its customers. That is why, for a number of years, sales offices have been located in the markets rather than at the sawmills. The sales staff are located close to the customer, to learn what is needed at source and thereby provide a good professional service.

The UK is the biggest export market for Swedish forest exports. In fact, 37% – 2.4 million m3 out of 6.5 million m3 – of Sweden’s total production of softwood goes to the UK. “Many of the Scandinavian forest companies have benefited from the wood. for good campaign in the UK and would like to see it continue in one way or another,” said Mr Eliasson.

The company feels that when it became an important supplier it also had to take on a lot of the responsibility for joint product development and is running a number of projects together with its customers to increase their combined knowledge. It also means that in the future AssiDomän will continue to build up its capac-ity when it comes to different kinds of added value.

“We can make a comparison with the car industry, where component manufacturers are very integrated into the process of producing a car and take a lot of the responsibility for the whole life cycle of the vehicle,” said Mr Eliasson. “Perhaps we are lagging behind the car industry, but the same will happen in our field. That is why we are focusing on certain segments while our colleagues focus on other segments.

“This will mean more focused marketing with fewer markets, fewer customers and fewer products. We have to move from the traditional system with random production.”

Priority markets

In 1994 AssiDomän’s market share of targeted segments was approximately 2.5%, but now it is in the region of 10%. When it comes to the company’s seven to eight priority markets, its share of sales to these has increased markets from 55% to 84%. And total production has more or less tripled from 600,000m3 to 1.5 million m3, of which roughly 80% is redwood. The number of sawmills is almost half, resulting in a continuous improvement in efficiency and productivity – production per employee per year has more than doubled since 1994, from 1,100m3 to 2,400m3, and the target is now set on 3,000m3 per employee.”

“It is not enough just to provide a good product and a good service, we must also be able to compete with the most competitive colleagues,” explains Mr Eliasson. “It is also important for us to invest as wisely as possible and to specialise. Because in the end we are judged on the return on operating assets. So we must keep a balance on both investment and inventory.

“We have to decide and control what we produce, beginning with the harvesting in the forest. We specialise in some products leaving our colleagues to focus on others, so the trend is towards a more specialised and more efficient Swedish sawmilling industry. The Swedish sawmilling industry is currently in a state of rapid consolidation. This process will no doubt continue and we have to take our responsibility in this development.”

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