TTJ’s south Sweden sawmilling region focus tour stopped off in Alvesta, where the head office for timber giant Vida is located. Vida is one of the big sawmilling names in the region with about 900 employees, nine sawmills and an annual group turnover of about £450m. In fact, it is the largest private sawmilling company in Sweden and Scandinavia.
Four different divisions in the Vida Group comprise the sawmilling business: timber packaging, energy (wood pellets and briquettes) and timber housing (Villa Vida).
Like many Swedish sawmillers, its timber production started following the second world war, with the first sawmilling unit in nearby Vislanda getting under way in the 1950s.
The company’s original Swedish name was dispensed with as it moved more into export markets. It was the abbreviation of the “Vislanda” shipping mark on the wood that spawned the company’s international brand name – VIDA.
The mills, focused on producing structural timber, are strategically located near forest owners in the Småland and Västra Götaland regions.
Through its own raw material purchasing company (Vida Skog), the company buys most of its raw materials from private forest owners. A total of around 3 million m3 solid timber excluding bark is acquired annually.
Since 1999, the group has grown rapidly and over the past seven years turnover has quadrupled with maintained profitability. It has an annual production of 1.7 million m3 of sawn and planed timber, with 80% being whitewood and the remaining portion being redwood.
Recent Investment
Måns Johansson, whose grandfather started the business, is the CEO of Vida Wood AB and shares the main ownership of the company along with Group CEO Santhe Dahl.
He freely admits that he loves being in the timber business and it’s certainly not been dull of late, with a number of investments and acquisitions, coupled with strong demand in global markets.
Investments in 2016-2017 included the purchase of a site from Moelven in Nössemark near the Norway border.
Vida has been investing in the region of £20-25m in the site, including a new sawline and log sorter from HewSaw. It has also been building a new planing line, with technology from C Gunnarssons Verkstads AB.
The site is already producing timber and the investment work will be complete in September.
In September 2016 Vida also bought a sawmill and treatment facilities from Rörvik Timber in Tranemo. Recent months have seen this mill incorporated into Vida Wood. And more recently Vida has also bought the Rörvik Boxholm mill, described by Mr Johansson as a strategic acquisition. Vida is making ongoing investments at group mills, with around £10-15m being invested annually.
And that’s not to forget investments in its other divisions – in January the Växjö timber housing business Villa Vida started a new modular housing line costing about £10-15m.
This business is working on some large projects, including a 240-unit student accommodation project in Växjö.
South Sweden Sawmilling
“We have one of the best balances of supply and demand in the last 7-10 years,” said Mr Johansson.
“If you are not doing OK in this market [as a sawmiller] now then you have a big problem “All our main markets are doing well, and are all up a couple of per cent this year.
“There is a lot of talk about some mills not doing well in southern Sweden but if you look at some of the independent smaller mills they are actually doing very well. They manage things year to year and deal with the raw material costs better than larger companies.
“The so-called consolidation of the south Sweden sawmilling sector is happening all the time. The speed of consolidation has increased this year. Production is disappearing and log costs are very high.”
“If you compare it with mid and north Sweden it is a totally different situation.” For example, Vida’s site near the Norway border has a more cost-effective raw material supply base.
“If we are really going to get the log costs down then two larger sawmilling groups will need to merge and mills will have to shut.”
Strong demand and price growth
Domestic and export markets have been stable with prices increasing. Mr Johansson said in the Swedish domestic market builders merchants were currently very busy and Vida was seeing increased sales to this sector.
“The US is an option because of the strength of the US dollar compared to the last couple of years and the construction activity there is strongly increasing, with remodelling work also very good. That is helping the balance and the feeling is more volumes could be shipped to the US.
“There are price increases to all our markets between Q1 and Q2. I expect that to continue in Q2 as well.”
With such good demand, talk in the trade of possible timber shortages has resurfaced, but Vida is not expecting any significant problems.
“I do not think there will be a shortage of timber but supply could be a bit tighter in summer.”
Currently, Vida’s production is sold out several months in advance.
“China is in place as well and we are supplying 100-150 containers per month.
Five to six years ago the Chinese only wanted the cheapest timber but now they want the good stuff, though they all want sawn material.”
Swedish forestry delegations to China in recent years have really paid off, he added, in terms of developing the Chinese market. Less than 1% of wood being shipped from Sweden to China is being used for construction. It is more for manufactured items such as picture and door frames.
UK Market
The UK remains the biggest overall export market for Vida, with over 30% of total production being sold into the UK – more than 500,000m3. The UK sales office is based in Essex and is led by Richard Thick.
Vida has three different types of customers in the UK – DIY retailers, the timber frame and trussed rafters sector and merchants.
The second of these is the largest sector for Vida, comprising around 60% of its UK volumes, with TR26 and CLS being important products.
“There has been a much higher reluctance in accepting price increases among merchants compared to the other two sectors. CLS and TR26 prices have been increasing more than normal carcassing.
“A lot of wood products being sold to the UK at the moment are at a discount, compared to what you could get elsewhere.” But Mr Johansson was quick to point out that Vida was “very committed” to the UK, saying any reduction in volumes to the market in the future due to increasing global demand would be measured and would probably be in the scope of a few percentage points – perhaps a 27% share of production in the future instead of the current 30%.
Price increases achieved in the UK have been small and incremental – £10-15/m3 in total since last year. Vida is working with customers to improve these prices.
But international timber trading and market dynamics are fluid and Mr Johansson said “next year could be the opposite situation in the UK”.
“For several years the UK prices have led the market. We have to look at the UK market long term because it’s such a high percentage of the market.
“The strength of the pound is vitally important. It has been volatile in the last year and that’s what we have to live with and manage.”
On the subject of Brexit, he took a pragmatic approach, saying the UK would still need to buy and build with timber after exiting the EU.
Alvesta Mill
Eight of Vida’s mills are located within a two-hour drive from the Alvesta head office.
The Alvesta mill itself cuts short length max 3m-long logs, handling both spruce and pine logs of 12-26cm diameter size. Larger diameter logs up to 40cm are handled at the nearby Vislanda facility.
Logs come in by train and lorry, the latter from within 50km of the mill, with the trains bringing material in from further afield.
Woodchip by-products go to coastal pulp manufacturers and also IKEA’s Swedspan hardboard factory. Interestingly, the IKEA founder lives near Alvesta and is a forest owner who sells logs to Vida.
The Alvesta mill is very much dedicated to the UK, Japanese, Australian and US markets.
On site during our tour we could also see 38x195mm sizes destined for a German glulam manufacturer, 47x100mm and 47x150mm standard carcassing earmarked for the UK and also specific grades for the Japanese market.
For the latter, Vida is only one of a handful of European mills that produce Mabshira A-grade internal wall stud material, with 27x105mm products being one of the sizes produced at Alvesta.
Around 35 people work at the mill, producing five times as much as on the site in the 1960s due to mechanisation and optimisation. There are two shifts per day, producing 175,000m3 of sawn goods annually, with 75% of all timber produced on site being planed.
Technology being used includes an Ari Vislanda main sawmill line, Rema Sawco RS-3D log scanner, Valutec kilns, Woodeye automatic grading and a System Hall planing line running at 300m/min.
Vida’s nearby Vislanda facility has a planing line with speeds capable of up to 1200/min.
