Sunday, July 6, 2008

Why shall paper industry be moved to foreign countries from Finland?

IM was sitting with an old friend from Helsinki on the terrace of his summer cottage (no water lines, no electricity)on yesterday evening.

- (IM) Where are we going in near future?
- Basic production (agriculture, fishing etc.) will be respected after a while...
- Why we cannot continue P&P production in Finland?
- Labour costs are not the problem. Their share is under 10% of the costs of paper production.
- But..?
- Transport of the products and price of the raw material are the main problems.

IM has read from local newspaper "KESKISUOMALAINEN" about the problems of timber production. A manager of timber enterprise told that "the taxes are the problem. Price of the Finnish raw wood is too high today. Government should help to have wood with acceptable prices..".

This is economy.


Helge V. Keitel said...

Juha you say, "Transport of the products and price of the raw material are the main problems."

That's a paradox. Smaller mills are closed to ensure maximal productivity at the mill. Wood is transported across the country to the largest integrates.

The Finnish P&P mill ownership structure is also leading to inefficient logistics structure.

We're probably soon witnessing a consolidation of the industry. What about merging UPM and Stora? Are we heading towards one big company in Finland in a near future?

Juha said...

It seems that (at least from my point of view) UPM is very actively developing novel paper products.

UPM is strong with papers? Stora Enso with boards? Maybe your future forecasts will be actualized?

Regards, Juha