The institute said increasing global competition, accelerating technological development and rising customer expectations are creating a turbulent environment for small and medium- sized companies.

Case studies from Finland and Norway have shown that, when facing strong competition, it is easier for SMEs to reduce material costs and increase productivity than move production to offshore companies in a bid to reduce labour costs.

The EFI said the case studies identified two successful types of operating modes for SME sawmills – technology orientated operating mode and fit organisation operating mode.

The first requires sufficient capital resources and technical skills from both management and staff to adopt and evolve production technology, while the latter needs the capacity to operate with moderate working capital and machinery investments and the capacity and resources to run day-to-day business operations with a flat organisation and multi-talented management.

The research discovered that for industries using sawn wood and/or plywood as a raw material, the choice of operational mode varied from company to company.

A key requirement, it reported, is a focused business strategy, which has enabled some SMEs to achieve economies of scale. However, some company bosses warned the focused business strategy approach can also be a company’s greatest weakness if the operating environment develops unfavourably.