Development Outlook of the Latvian Forestry Sector

1
Development Outlook of the Latvian Forestry Sector

• Director of the Latvian Forest Industry
  Federation
• Kristaps Klauss
• Director of Forest and wood product RD
  institute
• Andrejs Domkins

2
Table of contents

• Latvian Forest Industry Federation and its
  involvement in cooperation networks
• History and present situation in the Latvian
  woodworking sector
• Challanges and tasks we are addressing now
• Future outlook

3
Cooperation (I)
Latvian Union of Timber Harversting Companies
Latvian Association of Independent Timber
Harvesting Companies
Latvian Timber Producers Traders Association
Latvian Association of Wood Processing Companies
and Exporters
Association "Latvijas Mebeles"
Association "Latvijas Koks"
Architects Builders Project developers Financia
l sector Environmental organisations
Latvian Forest Industry Federation
Latvia University of Agriculture
Forest Sector Information Centre
Forest and Wood Product Research and Development
Institute
Association "Zalas majas"
Institute of Wood Chemistry
Management of Measurement and Inventory of
Latvian Timber Products
Technological platform of Latvian forest sector
Forestry Research Institute "Silava"
Competence Centre
Latvian Confederation of Forest Owners and
Managers
Forest Owners' Association
A/s "Latvijas Valsts mei" - manager of
state-owned forests
Latvian private forest owners and unions
4
Cooperation (II)
5
Participation in international organisations

• C.E.I. Bois European Confederation of
  Woodworking Industries
• U.E.A European Furniture Manufacturers
  Federation
• FEIC European Federation of the Playwood
  Industry
• EPF European Panel Federation
• EOS European Organisation of the Sawmill
  Industry
• CEF- Confederation of European Forest Owners
• ELO European Landowners' Organisation
• EUSTAFOR European State Forest Association
• Forest Advisory Committee of the European
  Comission

6
Present potential of the sector (I)

• Totalannual growth is 27 million m³
• Annual fellings 11 million m³
• Annual fellings per capita 4.73 m³
• Annual wood consumption per capita 0.9 m³
• Forecasted annual wood consumption per capita 1.5
  m³

7
Forest coverage
According to statistical forest inventory data
B-1-1
8
Forest ownership in Latvia
9
Dynamics of logging volume (by forest
ownership), mill. m3
Private
State
10
LVM Business Model
                                                 
     
 
LVM forest, staff, finance, IS
Production and sale of round timber products
 
LVM Apalkoksnes piegades (Roundwood Deliveries)
LVM Mes (Forest)
Consultation services
Forestry
Hunting services
Production of forest tree seeds
Production of forest tree plants
LVM Hunting and Recreation
Production of decorative nursery material
Recreation services
LVM Seklas un stadi(Seeds and Plants)
NB! Accounting of internal settlements between
the branches according to the market prices
11
Sales of Standing Timber
Sawmill
Sawmill
Logging company -intermediary
Sawmill
Forest owner
Sawmill
Sawmill
Plywood manufacturer
Pulp manufacturer
12
Sales of roundwood assortments
Sawmill
Logging company provides services
Sawmill
Sawmill
Forest owner
Sawmill
Sawmill
Plywood manufacturer
Pulp manufacturer
13
LVM Timber Sales, mill. m3
Sources LVM Budget 2007 LVM Corporate
strategy
14
Price dinamic (I)
15
Price dinamic (II)
16
Present potential of the sector (II) (0,7 LVL1
Euro)

• Number of enterprises 4 000 8
• Employed 54 000 5
• Turnover of the sector 1.3 billion LVL
• Export of the sector 0,85 billion LVL 25.7
• Share of GDP/ Added value 4.7
• against total in Latvia

17
Export and import balance (2000-2007)
?
?
18
Primary processingSawnwood, thousand m3
11 out of 544 companies produce 50 of the volume
19
Primary processing Sawnwood

• A high level of mechanisation and computerisation
  in the "large" sawmills, "small" finding their
  niches
• Partly self-subsistence economy remains as a
  problem
• due to undeveloped outsourcing
• due to inefficient, unspecialised manufacturing
  of byproducts.
• It reduces efficiency and output per employee.

20
m3 processed by largest Latvian sawmills by years
efficiency strategy
m3
Niche/service strategy
21
Primary processingBoard manufacturing

• Significant investments have been made in the
  production of particle-fibre boards, plywood and
  OSB, namely - new production units have been
  established
• Oriented strand board (OSB) capacity - 250
  thousand M3 in 2007 and second phase of
  construction is continuing (to reach the capacity
  of 500 thousand m3)

22
Primary processingWood particle board, thousand
m3
-planned
23
Primary processingFiberboard, million m2
- planned
24
Primary processingPlywood, thousand m3
- planned
25
Primary processing

• In our opinion primary processing in Latvia is
  modernised and corresponds to international
  requirements regarding productivity and quality,
  and forms a stable basis for export and further
  development of value added products

26
Further processing

• With significantly growing local consumption in
  the construction sector, it fosters also the
  development of
• Building joinery products windows, doors, stairs
  etc.
• Manufacturing of wooden frames and log houses
• Production of furniture, including sectional,
  customised.

27
Current topical issues

• Increasing efficiency of forestry and its
  resource base
• Increasing proportion of value added products
• Investment in increase of energy independence
• Increase of investment in regional development

28

• Currently, according to these assessments and
  taking into account the development of the sector
  we have achieved the following level and given
  the following contribution to the national
  economy of Latvia

29
Growth of the Latvian forestry sectorexport and
local market, Bn LVL (0,7 LVL 1 Euro)
without contribution to the energy industry
30

• Thank you for your attention!