Forest money is flowing away from Finland

Stora Enso has invested three times as much abroad as in Finland over the past five years

print this

The news announced on Wednesday by the Finnish-Swedish pulp and paper manufacturer Stora Enso concerning further plant closures sounded once again like the end of the world for the Finnish forest industry.
      However, the underlying picture behind individual plant decisions is much larger.
      The annual reports of the company reveal that Stora Enso has made investments in Finland worth EUR 1.0 billion over the past five years. Simultaneously, the volume of investments abroad has been about EUR 3.0 billion.
     
In addition to plant engineering and construction, a significant part of the figure consists of acquisitions of land - or "tree fields" - and maintenance investments.
      The figures indicate clearly in which areas business is believed to be profitable.
      However, Stora Enso CEO Jouko Karvinen does not think that all foreign investments would be automatically taken out of the Finnish hide.
      ”Even after these unpleasant news items, Finland remains by far the largest production area for Stora Enso. One should not always think that we are taking something away from Finland”, says Karvinen.
      In the future, the production of consumer board will belong to Stora Enso’s core business area in Finland. According to Karvinen, the company’s Imatra Mills have ”the best know-how in the world” in packaging board manufacturing.
      ”Amidst the general moaning, while the consumption of paper is declining, liquid packaging boards are a growth industry”, Karvinen notes.
      In addition to fibre-based packaging, one of Stora Enso’s core areas is pulp production in its plantations in Latin America, and in China with its rapidly-growing consumer markets.
     
In the course of the past five years, Stora Enso has made significant plant investments in Brazil, Russia, China, and Poland.
      On the other hand, not every cost-cutting measure hits Finland, as units in some other European countries are also axed.
      For example, the Swedish Norrsundet Pulp Mill and the German Kabel Mill that produces coated printing papers for magazines are both among those facing the axe.
      Karvinen does not want to repeat the mistakes made in the paper industry in North America.
      ”In North America, the mills were always lagging behind, and there was always too much capacity, which is why the ability to make profit and to invest remained weak. The final result was disagreeable. I hope that the European paper industry does not intend to wait for better times, while in the meantime using public funds to maintain low-quality capacity or even building excess capacity”, Karvinen warns.
     
Another Finnish forest giant UPM has invested EUR 1.8 billion abroad and EUR 1.5 billion in Finland over the past five years.
      The company has production in 14 countries, while half of the company’s 64 mills are situated outside Finland.
      In recent years, UPM has made its largest investments in China, Germany, the USA, and Poland.
      Special researcher Lauri Hetemäki from the Finnish Forest Research Institute (Metla) says that the most recent new paper machine that has been built in Finland dates from 1998.
     
According to Metla’s records, the capacity in the Finnish forest sector has come down by one-fifth over the past four to five years, compared with its best years.
      The paper industry is estimated to shrink by another one-fifth by 2020.
      ”I see these reductions as part of a development that is unavoidable. We could try to slow it down, but in the end we cannot prevent the trend. The cost-cutting measures do not mean the end of the world, as new operations will inevitably replace the closed mills. However, it is alarming that during the recession the prerequisites for new business activities are particularly difficult in those localities that have been hit by layoffs”, Hetemäki regrets.
      In Hetemäki’s view, no other individual branch in the forest products sector as significant as the pulp and paper industry is in sight. The best prospects could be found in wood-based energy production, Hetemäki believes.


Previously in HS International Edition:
  Stora Enso to close more mills in Finland (19.8.2009)
  Stora Enso plans massive new pulp mill investment - in Uruguay (19.5.2009)
  Stora Enso to investigate land use dispute over tree plantations in China (28.4.2009)
  Paper manufacturer UPM cutting thousands of jobs in Finland (9.3.2006)
  Stora Enso cutbacks spark strong backlash (20.8.2009)
  Weak krona and cheap wood prompt Stora Enso to move production to Sweden (19.3.2009)
  Stora Enso pulp mill closed down in Kemijärvi (28.4.2008)
  Stora Enso to shut down two factories in Finland and one in Sweden - 1,400 jobs to go (25.10.2007)

Helsingin Sanomat