EOS issues Annual Report 2016-17
29th November 2017

EOS issues Annual Report 2016-17

The European Organization of the Sawmill Industry (EOS) has recently released its Annual Report 2016-2017.

The report explores the situation of the European Timber Sector in the global economic arena according to different factors such as production, import&export, manufacturing, employment, wood consumption & availability, forests preservation etc.

It also highlights opportunities and threats associated with the global timber trade especially in the light of Brexit.

Remarkably, the report profiles the UK Market in this terms (see page 111):

“Economic growth in the UK (of 2%) in 2016 outperformed forecasts following the vote to leave the EU. This followed some years of steady growth which is forecast to continue. However, growth has been driven by the service sector in the UK, which is expected to be hit by the weakening of Sterling and the resultant increase in inflation – increasing inflation at a time of flat wage rises will squeeze personal incomes, and it is consumer spending that has driven growth. The stronger than expected growth in the UK will, however, provide the opportunity for the Government to do more to stimulate the economy, including building more homes – a priority for Government.

The sawmilling and panel-board sectors had a good year in 2016, helped by the significant fall in the value of Sterling around the vote to leave the EU in June. Raw material prices remain high, however, meaning that margins in the sawmills are not as great as in previous years. Markets for timber have been steady.

Construction and renovation continues to increase as consumers still feel generally optimistic about the future, though real incomes will be squeezed and that could have a negative effect. There is a consensus across political parties that the UK needs to build many more homes, and the government has tried to make the process of securing approval to build easier, but construction firms are always slow to deliver increases, keeping house prices high as demand exceeds supply. There is growing interest in offsite and prefabricated construction, though some of this is being met by investment in using steel.

The UK has a very small hardwood sector, so the focus is on sofwoods. Availability of material is increasing year-on-year and will continue to do so until the 2020s, but then it will peak and reduce into the 2030s. This is an issue of major concern to the industry. Most mills have or are investing in upgrading their equipment and some are increasing capacity. The biomass sector has put a rising ‘floor’ on the price of timber and this is set to continue.”

Sampsa J. Auvinen, EOS President and CEO Norvik Timber Industries, commented: “In March the UK Prime Minister Theresa May triggered Article 50 and formally started the Brexit process. As Mrs May said “this decision was no rejection of the values that Britons shares as fellow Europeans. Nor was it an attempt to do harm to the European Union or any of the remaining member states. Great Britain is leaving the European Union, not Europe –remaining committed partners and allies to friends across the continent.”

This is a new phase for Europe. And it is undeniable that there will be implications also for the European Sawmill sector. The United Kingdom is one of the largest sawnwood importers in the world. Its sawnwood consumption (particularly sawn sofwood) has been steadily growing for past years and its main suppliers are all European countries: for Sweden and Latvia, the UK is the main export market, while it is also a very important market for Finland and Germany. Therefore, the European Sawmill Industry hopes for a deal between the UK and the EU, which will ensure that the trade flows will not be disrupted. Overall, how the Brexit negotiations will be managed represents a concern for the Sawmill sector.”