world news - 20.06.2003
Forest Industry optimistic about EU enlargement.
On the whole, enlargement of the European Union to Eastern Europe is a welcome development for the forest industry. As new countries join the Union, their standard of living will rise and demand for forest industry products increase, also boosting prospects for Finnish exports. The new member countries cannot produce the volumes necessary to meet demand in the next few years.
Demand for all forest industry products is expected to grow in the new EU member countries. Consumption of paper, for example, may even triple if the volume in the new member countries reaches the present EU level. Currently, paper consumption averages some 200 kg per capita, while in the new member countries the average is only 55 kg. Consumption is highest in Slovenia at 126 kg, and lowest in Bulgaria and Romania at 17 and 21 kg respectively.
With the new member countries, the forest industry will gain new markets and investment opportunities, a skilled labour force and, at least to begin with, lower production costs than in Western Europe.
Relatively small threats and no major challenges
Will the EU’s enlargement in Eastern Europe pose any threats to the forest industry? “Production plants in the applicant countries are struggling domestically and will then face tough EU markets. How could they be a threat? In the new, open Europe, Western European companies are allowed to prevent any emerging threat locally. We have nothing to worry about,” says Claes von Ungern-Sternberg, Trade Policy Director of the Finnish Forest Industries Federation.
In other words, eastward enlargement will mainly mean new opportunities for the forest industry. Of course it will not all be easy. Some countries, such as Hungary, have only limited forest resources, and until effective paper recycling is organized, they may face a shortage of raw material. Another challenge is that the industry of new member countries is suffering from a lack of capital and will therefore require outside funding. Energy, too, may prove problematic, unless the supply can be increased in these countries. It is of course important to remember that these challenges affect each new member country differently and in varying degrees.
The markets are changing, but slowly
How will eastward enlargement change the markets? The forest industry in the new member countries concentrates mainly on wood products. Pulp and paper production is relatively low; the main emphasis has been on board production to satisfy basic packaging needs. Demand for consumer packaging will probably increase only with better living standards.
The new member countries have tried to develop their sawn goods exports. Hence, as they enter the market, competition in sawn goods will probably increase more than that for paper. Foreign investments will be crucial for the competitiveness of new member countries in these markets. Foreign investors have already been active, as the new member countries have plenty of forests and the price of both timber and labour is lower than in Western Europe.
The new member countries will increase the Union’s pulp and paper capacity by only a fraction, the pulp industry by nine per cent and the paper and board industry by six per cent. The industry of the present EU countries already control about half of this capacity.
The new member countries will affect cooperation in the European forest sector. The Czech and Slovak republics, Hungary and Poland are already associate members of CEPI, and will be promoted to full membership in 2004. The other new member countries will be welcome to the organization. The EU’s enlargement will also affect CEPI operations and structures.
See also:
- — China: Domestic timber production continues to fall.
- — China: Imports of sawn timber
- — European plywood market: the overall European plywood and blockboard production during 2002 according to the final FEIC statistics for 2002 amounted to 3.4 million m3.
- — US-Home Sales Hit New Record In May
- — Metso Paper will rebuild a pulp and paper mill of the Slovakian pulp and paper producer.....