Working with mature markets, in good times and bad, takes a robust approach and a steady eye on the future. SCA Timber has gauged demand to be on a long-term path to expansion, and in eight years has invested more than £175m in its Swedish production capacity and in product quality development. Now the second largest manufacturer of wood products in Europe, SCA is looking more strategically at its markets, including the UK, building customer relationships based on providing an integrated service.
"Our focus on profitability meant announcing in December the closure of our two smallest mills at Vilhelmina and Holmsund," said Jonas Mårtensson, president of SCA Timber. "SCA’s production of around 2 million m³ will remain the same but will be focused on our five remaining large mills.
"The value of timber products is far greater than that of sawmill by-products, so our concentration is on increasing timber yield from each log," he added. "We’re looking for innovation in production, as small increments in yield create much greater value."
For example, SCA’s Bollsta sawmill has been implementing new cutting technology, enabling yield gains by using thinner saw blades. It may not sound like rocket science, but given that over five million logs pass through the mill each year, even small gains equate to hundreds of thousands of eurosworth of additional products for SCA’s global markets.
"Productivity is absolutely key," Mr Mårtensson added. "A combination of accumulated investment and engaging with our staff, helping them to understand their part in developing our production and profitability, has seen productivity per person at the larger mills increase by 46% since 2011," he said. "The third factor in making us a more stable supplier to our markets, less immediately affected by economic twists and turns, is the SCA Group’s global share price performance. It’s been better than all other Scandinavian forest-related businesses, particularly in the past two years."
At the end of 2012, SCA Timber reorganised its internal business framework, creating a new international builders merchant supply grouping, taking the name of its UK subsidiary: SCA Timber Supply. Products manufactured for builders merchant sectors in Sweden, Norway, France and the UK will grow to represent 30% of SCA Timber’s turnover by the end of 2014.
The recent opening of a second site in Stokeon- Trent, in addition to its existing Hull and Welshpool facilities, heralds the start of further expansion for SCA Timber Supply in the UK.
"We’re devoting more wood resources and product supply to the British builders merchant market, as we see potential for furthering our market share," said Anders Ek, president of SCA Timber Supply internationally. "It’s a mature market but we see scope for developing our service-oriented category management style of business." SCA Timber Supply recently gained the contract, starting on July 1, to supply all wood products to Wickes.
Investing in capacity in Britain
"We are also investing in our capacity to manufacture products in Britain," added Mr Ek. SCA Timber has just approved commissioning of a new £5m planing mill on Humberside, housing up to three production lines. From early 2014, it will service the company’s expanding supply to the builders merchant sector, augmenting existing UK production. Part of the mill’s capacity will be taken up by SCA Timber Supply’s new agreement with the Travis Perkins Group. SCA will retain its two sites in Stoke-on-Trent and its planing mill at Welshpool, which will serve customers in the south and west of Britain.
"We are gaining critical mass in the UK and making a firm commitment to all merchant customers," said Mr Ek.
"Bringing greater volumes to the UK will significantly improve our costs, generating related benefits to customers. We have also put greater resources behind business development and marketing."
SCA Timber Supply in the UK has been taking a different approach on traditional wood supply to its builders merchant customers. To uplift its timber sales in a market beset by downturn and heavy competition means going the extra mile, helping customers reorganise their sales areas and product ranges, linking in related products and promotions. Sales analysis with customers has become deeper and more refined, to be more attuned to the consumer’s yearly repair and maintenance cycle.
"We’re no longer a supplier of wood products that we expect the market to buy. We are working intelligently with our British customers on their needs. Being a responsive business partner creates a more stable future for all parties," said Mr Ek.
