Finnish Forest Research Institute  Metla
Press release 24.01.2007

Wood industry companies in Northwest Russia want additional markets in Europe

The price of roundwood not a particularly significant competitive advantage for companies

Wood industry companies in the Leningrad and Vologda regions consider large market size and good logistic connections to be their most important competitive advantages. The price of roundwood, though reasonable from the Finnish point of view, is not considered a particularly significant asset. Constant timber supply is a more significant competitive advantage.

A case study conducted by the Finnish Forest Research Institute (Metla) and Pellervo Economic Research Institute PTT examined the perceptions among managers in wood industry companies of their companies’ competitive advantages, future business possibilities and strategic objectives. The study comprised interviews of 18 company managers in the Leningrad and Vologda regions.

The results indicate that the best competitive advantage for a company is to be close to large markets and to have good logistic connections. Qualified and skilled personnel was also considered a source of competitive advantage. The managers regarded constant roundwood supply as being more important than favourable wood price. The external business environment was felt to be more in need of improvement than the companies’ own business operations. For example, taxation was considered excessive and investment to fund business development was thought difficult to obtain.

As for their future objectives, the managers interviewed wished to focus on European markets and build improved quality into their products. If the results of the case study can be thought to apply to the forest and timber industry on a wider scale, the supply of sawn timber and other wood products from Russia to Europe will continue to increase. The product quality will also improve. This would intensify competition for the Finnish forest industry in the most important European market. Greater competition will also be extended to the markets for more processed and higher value products.

The case study on the wood industry of Northwest Russia is part of joint research on exports of roundwood and sawn timber from Northwest Russia and their impacts on market competition. The programme is financed by the Ministry of Agriculture and Forestry as part of the Academy of Finland ’s Russia in Flux programme. The four-year programme is scheduled for completion at the end of 2007.

Publication: Toppinen, A., Toivonen, R., Järvinen, E., Goltsev, V., Tatti, N. & Mutanen, A. 2007. Business Environment and strategies of wood industry companies in Leningrad and Vologda regions – results from a pilot study. Metla Working Papers 41, Pellervon taloudellisen tutkimuslaitoksen työpapereita 87.

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