Key sectors

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Wood processing companies are located all over Estonia. Larger concentrations may be observed near bigger centers such as Tallinn, Tartu, Pärnu and Rakvere.

In developed countries the products of Estonian wood processing companies are competitive mostly thanks to their reasonable price-quality ratio. This means that the prices of Estonian companies are lower than those of West European enterprises but the quality is higher than the one offered by Polish and other Baltic manufacturers. Estonian producers price their products based on market situation and the costs incurred. Most companies apply cost-based pricing.

Manufacturing of wood and paper products, 2005 - 2007

Source: Statistics Estonia

Raw materials

The main indicator of Estonia wood usage is the sawn industry that in 2005 produced 1.9 million cubic meters of sawn material, using 4 million cubic meters of sawn logs. Another important domain of wood usage is the energetic industry that used 3.5 million cubic meters of wood of which about a third comes from the logging residues and coppice. Industries of wood panels, pulp, and plywood together use an estimated 0.7 million cubic meters of wood. After the pulp and paper mill in Kunda, the Estonian Cell, has launched it production in full capacity, the need for wood will grow up to 1.1 million cubic meters. A local wood usage in 2005 was thus 8.6 million cubic meters.

The figure of imported round wood (mainly sawn logs) in 2007 was 1.4 million cubic meters, the exported timber (mainly paper wood) 1.5 million cubic meters.

Labour

According to the Statistical Office, in 2006 wood processing and furniture production companies numbered 1604, accounting for 29% of all Estonian manufacturing enterprises. In 2006 wood processing companies employed 29 298 people. 80% of wood processing companies employed up to 20 people. Only 3.8% of the companies operating in the wood processing sector had more than 100 employees.

Average monthly gross wages in wood processing industry, (EUR)

Source: Statistics Estonia

Industry associations

Estonian wood processing companies are members of various professional associations and organisations. However, there is no organisation that unites them all. The largest and most influential organisation is Estonian Forest Industries Association, which unites mostly wood purchasing companies and sawmills. It has 57 members and has launched a Wood info programme that is aimed at identifying possibilities for the use of wood and increasing wood consumption.

Other associations:
Estonian Wooden Houses Association
Estonian Woodworking Association

Foreign Investments

Estonian wood processing industry has received foreign investments for ca 10 years already. The largest investment in the wood processing sector has been the establishing of the aspen pulp plant in Kunda (the investment amounts to ca 155 Mio EUR and the company employs 85 people).

Larger foreign investments in wood sector

Sources: Enterprise Estonia, media

As a result of the purchase-sales transaction in progress, several successful Estonian sawmills have been transferred under foreign capital.

Export

According to customs statistics and Statistics Estonia, in 2007 the exports of wood processing companies totaled 1,617 million EUR (the figure includes exports of unprocessed and firewood).

Export of wood and articles of wood and furniture, 2004 - 2007

Sub sectors

Sawmilling

Over the last decade, the market for sawn material has undergone fast developments and can be considered well organised today. Both large players and small-scale enterprises providing niche-products are on the market. The competitive advantage of large sawmills is their size, name, reliability, efficiency and price. The advantage of smaller producers is their flexibility and niche-production not available with large players. In addition, they can also more easily adapt to producing different items.

According to the Estonian Forest Industries Association the total volume of sawn wood export in 2007 was 693 thousand m3. In 2007, sawmills exported ca 50% of their production.

Builder's joinery and prefabricated buildings

The construction joinery and prefabricated buildings sub-sector is one of the fastest growing segments within manufacturing. Recent developments in the saw milling industry and an increase in drying facilities have created a good base for future development. With exports having tripled in recent years, 60% of production is currently exported - mainly to Germany, the UK and Scandinavia.

Log-house producers

Over the last decade, several log-house producers have emerged. If ten years ago we had less than 10 companies engaged in the area, the sub-sector today has more than 80 companies with their total annual sales amounting to approximately 50 million EUR. A couple of larger producers have reached sales of ca 4 million EUR a year. Their products range from manufactured round and milled square log houses, hand-made log-houses, pre-fabricated wooden frame houses to module houses.

Concentration of the companies into specific geographic regions is not a tendency but the general trend is that those with the largest sales figures and higher number of employees operate in Tallinn and Tartu regions.

Export represents ca 85-90% of the total sales in the sub-sector. Log-houses are exported to ca 30 states with Germany being the principal target market.

The companies expect that the domestic market for log-houses will be better organised in the future. Today the competition is intense: companies fight both for raw material and clients by making lower price offers.

The emerging export markets are France, Italy and Spain. A considerable trend is also the expansion to Asian markets, especially Japan.

Furniture manufacturers

There are many furniture manufacturers in Estonia from sole proprietorships to large manufacturers with more than 1000 employees. In 2006 furniture manufacturers numbered 513. 75% of them employed less than 20 people. In 2006, the sector's total net sales amounted to 171 Mio EUR.

The furniture industry accounts for approximately 7% of all Estonian exports. In the case of large manufacturers, the share of exports in total sales can differ vastly. According to Statistics Estonia, in 2007 furniture exports totaled 561 Mio EUR. The main export markets were Finland and Germany, followed by Denmark, Sweden, Norway and Great Britain.

Manufacturers of construction supplies

Manufacturers of construction supplies who use wood as a raw material can conditionally be divided into window and door manufacturers and manufacturers of building materials.

The largest Estonian chipboard and hardboard manufacturers are based in Pärnumaa (Pärnu County) and Eastern Virumaa (East Viru County). Window and door manufacturers can be found in all counties. Companies tend to be located in the vicinity of large towns. Window and door manufacturing is largely based on Estonian capital.

There are two kinds of window and door manufacturers. Some focus on the domestic market and export 10-20 percent of their products. Others export two thirds of their products. Their main export markets are Germany, Sweden, Russia, Japan and Ireland.

The domestic market is saturated. Therefore, companies can grow mostly by increasing their exports. Window and door producers can increase their export potential by selling to log house producers who export most of their products. It may be assumed that smaller manufacturers will remain focused on the domestic market whereas larger ones will increase their exports. Risks will be hedged by extending the product range.