The Finnish forest industry’s production has been declining this year, mainly because of a continuing decrease in the economic growth in the main industrial countries, which has weakened demand for products such as paper and board. In addition, the dismal prospects for the global economy as a whole are lowering Finland’s growth forecasts and have also weakened demand for exports by the wood products industry.

The prevailing business cycle in the industry is forcing companies to cut production but reduced supply should lead to a better situation towards the end of the year. Production cutbacks should slowly improve the market equilibrium; the fall in the price of sawn goods has already bottomed out.

The plywood industry too is suffering from falling prices at the same time as it is also having to cope with high raw material costs.

Figures released by the Finnish Forest Industries Federation show that production fell by a little over 1% in the early part of the year in comparison with the corresponding period last year, while in the second quarter of the year production was about 5% below that of the first quarter. It is estimated that production for the whole of 2001 will be 10% down on 2000.


However, in the first half production of softwood sawn goods was up 2.5% on a year earlier at almost 7 million m³. But despite the market situation being better than in the first quarter, the problem of overproduction of sawn goods in Europe remains and a 15% drop in production is forecast for the second half of the year.

Paper and board production fell by 377,000 tons in the second quarter of this year, down 11% on the first quarter.

However, investment in the industry is high. Published investments for 2001 total more than FM9.24bn, while last year the Finnish forest industry invested around FM6.9bn – in itself more than in any of the preceding three years.

Environmental investment

Approximately FM520m was used for direct environmental investments in 2000. Around 40% of the environmental investments involved water protection, about 30% air protection projects, and approximately 20% waste management.One benefit of such investments was that CO2 emissions from the forest industry fell by 7% last year. Since CO2 emissions from energy sources per unit are small, the forest industry’s contribution to Finland’s total CO2 emissions from its own mills amounts to under 10% while, if electricity purchased from the grid is included, the figure is still less than 15%. The forest industry consumes one third of Finland’s electricity.

The forest industry’s investment in research and development has also increased rapidly – doubling from 1998 to 2000 to more than FM1.2bn. Half of this was invested in Finland and half in international units owned by companies in the industry.

‘It is essential for the forest industry to increase research and product development serving the entire energy production chain, since energy is an important competitive factor for the forest industry,’ points out Finnish minister of trade and industry Sinikka Mönkare.

‘Specialisation, continuance of the restructuring of the branch, and the introduction of new techniques are all important to the forest-based industry,’ she adds.


Major company acquisitions in 2000 included StoraEnso’s purchase of Consolidated Papers in the US, UPM-Kymmene’s purchase of Repap Enterprises in Canada and the Changsun fine paper mill in China, and M-Real‘s purchase of MoDo Paper in Sweden and Zanders in Germany. These acquisitions strengthened the standing of the Finnish paper industry in both North America and Europe. Concentration has not proceeded as rapidly in the wood products industry, although the largest corporate groups are very strong.

This year global restructuring in the forest industry has continued vigorously and Finnish companies have not lagged behind. Recent examples were UPM-Kymmene’s purchase of German Haindl and the acquisition of the Norwegian company Moelven Industrier ASA by Finnforest Corporation.