Forest industry is in a turning point towards regeneration       

Friday, 23 November 2007

Chairman of the Board, Finnish Forest Industries Federation, CEO Jussi Pesonen: "Forest industry has come to a

turning point in Finland and in many other countries. We must rise above present challenges and look to the future.

The industry must not come to a halt - we must ensure that a successful forest cluster is active in Finland even

decades from now, providing jobs and prosperity through the sustainable and diverse exploitation of a renewable

raw material. Increasing the efficiency of operations,  streamlining structures and developing new businesses and

products will safeguard the industry's competitiveness and establish a strong foundation for future," said Jussi

Pesonen, Chairman of the Board of Directors of the Finnish Forest Industries Federation and President & CEO of UPM,

at the Federation's Annual Autumn Meeting in Helsinki today.

"In future, the forest industry will be a very different sector from what it is today. The structure of

manufacturing and product ranges will evolve. I foresee a lowering of the barriers that separate manufacturing

from services as well as the adoption of networked activities between strategic partners. The decisions being made

right now will establish a foundation on which the regeneration and competitiveness of our industry will lean on,

" Pesonen pointed out.

Superior productivity development and a high degree of value-added input combined with products that suit the needs

of customers are necessary tools for victory in international competition. Jussi Pesonen mentioned the overall cost

level as a current challenge for the forest industry. The cost of raw materials, labour and transports is higher in

Finland than in key rival countries.

"A lot of work is needed to improve Finland's cost competitiveness. In addition to measures undertaken by companies

themselves, state authorities play a crucial role in the development of our operating environment. New openings to

ensure the availability of domestic timber are required. Climate and energy policy decisions have a decisive impact

on the forest industry's opportunities to manufacture sophisticated paper and wood products, generate bioenergy and

produce second-generation biofuels."

"The price of energy affects the competitiveness of the forest industry much more substantially than is the case in

many other branches of industry. It is possible to increase the production of bioenergy, as long as this is done

sustainably and cost-effectively. The amount of wood suitable for processing is finite, which is why it should be

directed towards use in the manufacture of high value-added products that satisfy the needs of consumers. Energy

can be generated by burning wood that is unsuitable for processing. Market-economy principles should form the basis

for promoting bioenergy production," Pesonen reminded.

"Modernisation of the paper industry's collective labour agreement, the term of which ends next spring, is one of

the most central improvements necessary to improve competitiveness and, as such, a shared responsibility for both

employees and employers. Many of the recently concluded collective labour agreements in the forest industry

contained significant steps forward, thanks to which it will be possible to improve productivity and respond more

flexibly to changes in demand. Once the means necessary for real productivity increases were discovered, it was

also possible to raise employees' income levels. The future success of the paper industry rests on the adoption of

corresponding modernisations in the next paper workers' collective labour agreement."

Background information

The Finnish Forest Industries Federation represents companies in the wood-processing industries in Finland.

We promote the competitiveness and profitability of the forest industries by strengthening its operating environment

 and public image in Finland and abroad. Our membership covers the pulp, paper and paperboard industries and most of

 the sawmilling, wood-based panel and wood products industry in Finland. The forest-based sector employs directly

and indirectly for nearly 200,000 Finns. It also boosts income and vitality in sparsely populated areas and accounts

 for one-third of the nation's export earnings.

In October 2006, the Finnish forest cluster set an ambitious goal for its common research strategy: the aim is to

double the value of the cluster's products and services by 2030. By then, products that are not yet being made will

account for one half of the total value.

The research strategy defined regeneration of the cluster, enhancement of the competitiveness of companies and

forestry as well as sustainable development as central development targets. Intelligent paper, wood and fibre

products will be developed alongside existing products to generate new business activities in, for example,

communications, packaging, housing and construction. Wood can be combined with many other materials, revealing

exiting new properties. The constituents and compounds of wood can also be processed into wellbeing products

that have a positive health impact. In future, wood biomass will yield increased value-added in second-generation

biorefineries, which will produce chemicals, bioenergy and biofuels in addition to paper and pulp.

The forest industry bases its activities on a renewable natural resource. Products that are made

from wood can be recycled and used to generate bioenergy at the end of their lifecycle.

P.O.B. 336, FI-00171 Helsinki, Finland, Snellmaninkatu 13, 00170 Helsinki

Telephone +358 9 132 61, Fax + 358 9 132 4445, firstname.lastname@forestindustries.

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