Finnish Forest Industries Federation
In 2000, the economic development in Finland was favourable. The GDP grew over 5 percent, clearly above the average of the European Union area. Growth was largely driven by the strong increase in export volume, about 10 percent, reflecting good competitiveness of the Finnish industry in general.
Private investments showed a healthy growth of 8 percent. Private consumption increased also rapidly, by 4 percent reflecting strong consumer confidence.
Industrial production increased by 11 percent as a whole. The fast development in electronic industry continued, achieving a growth rate of 40 percent.
Unemployment rate decreased, showing 9.7 percent as an annual average.
Inflation accelerated due to rapid increase in oil prices. Consumer prices were 3.4 percent higher than in 1999. Both export and import prices increased by 9-10 percent.
Due to a strong increase in exports, the current account surplus arrived at Fmk 57 billion, 6.5 percent of GDP (+1 percent from 1999).
Annual change (%) |
1999 |
2000 |
GDP volume |
4.0 |
5.0 |
Consumer prices |
1.2 |
3.4 |
Private investment |
6.2 |
4.9 |
Private consumption |
3.6 |
3.9 |
Current account, % of GDP |
5.4 |
6.5 |
Trade balance, % of GDP |
9.0 |
10.0 |
EMU debt, % of GDP |
47.0 |
43.0 |
Industrial production |
6.5 |
11.0 |
Unemployment, % |
10.2 |
9.7 |
Forest industry production in Finland increased by nearly 5 percent in 2000. Production rose to record levels in every main category.
Plywood production rose by over 8 percent, and totalled about 1.2 million m3.
Sawnwood production rose by nearly 5 percent, despite a decline in the fourth quarter. Production reached a record of 13.3 million m3.
Paper and paperboard production reached a record of 13.5 million tonnes, up 4.3 percent from the previous year. Due to the favourable market situation, capacity was almost in full use in the paper industry most of the year. A one-week strike in April lowered the average capacity-operating rate to 95 percent for the whole year (94 percent in 1999).
The development of production varied according to the paper grade. The fastest growth was recorded for magazine papers, up 9 percent. Growth was much slower for fine papers, up 2.5 percent.
Production declined in newsprint and the group other paper, which includes special papers and sanitary papers. Production of kraft paper and paperboard rose by 5 percent.
Pulp production totalled 11.9 million tonnes (+3 percent). Chemical pulp production amounted to 7.1 million tonnes or 60 percent of the total. Chemical pulp production rose by less than 1 percent, but mechanical pulp production increased at a much faster rate, by 4.5 percent.
Towards the end of the year the market situation for sawnwood grew worse, and in the fourth quarter production in Finland declined by 3.5 percent compared with the previous year.
The situation in fine papers also worsened late in the year and the production decreased by almost 4 percent compared with the corresponding period in 1999. Production of other paper grades continued to rise.
Total production of paper and paperboard increased by 1.7 percent in the fourth quarter, more slowly than the average of the first three-quarters of the year. This was partly due to the high production level in the fourth quarter of 1999. Capacity utilization in the paper industry as a whole was over 95 percent during the fourth quarter of 2000, one percentage point less than a year ago.
The volumes of the Finnish forest industry exports developed in line with production, showing an average increase of 4 percent. On the average, export prices were 12 percent higher than in 1999. Thus, the export revenues increased by 17 percent coming up to Fmk 77 billion (EUR 13 billion).
Paper exports increased by almost 5 percent up to 12.5 million tonnes, covering 92 percent of the production. Pulp export volume was down by 10 percent, largely due to increased domestic demand.
In sawn timber, export volumes increased only marginally due to tight market situation and strong domestic demand.
Total turnover of the Finnish forest industry companies reached Fmk 200 billion (EUR 33 billion), 23 percent more than in 1999. The growth was partly due to mergers and acquisitions completed during the year. Currently, the paper and paperboard production capacity of the Finnish companies totals 33 million tonnes, of which 43 percent (14 million tonnes) are located in Finland.
On the average, the profitability improved compared to the previous year. The result before extraordinary items was one of the best ever, 14 percent of turnover. Increased sales volumes, higher product prices and high operating rates were the main factors behind this improvement.
Industry's real investments in Finland were moderate at Fmk 7.2 billion (EUR 1.2 billion), about 6 percent of turnover. The majority of the investments were directed to the pulp and paper industry, while the wood industry's share was below 10 percent.
The cyclical peak was experienced at the end of 2000, and currently the economic growth is slowing down worldwide. To some extent, this will no doubt affect the demand for forest industry products. In the forest industry the slowing down means perhaps no more than coming back to a long-term average growth level.
The CoP6 meeting in The Hague in November 2000 failed to reach an understanding about, for example, the consideration of carbon sinks of forests.
In combating climate change it is vital to both reduce greenhouse gas emissions and improve the capability of forests to bind carbon dioxide. In particular, the destruction of forests must be halted. Indeed, from the point of view of the forest industry, the key issue of the Kyoto Protocol is the consideration of forests.
Particularly the countries rich in forests - Finland at the forefront - have been worried since, according to some estimates, especially those countries that have managed their forests well will hardly benefit from them in the Climate Convention, or they may even suffer from them. The parties continue to discuss how the terms of `afforestation', `reforestation' and `deforestation' referred to in the article of the Protocol that concerns forests should be defined, and which definition of forest should be used. Depending on the interpretation of these definitions, Finland's forests, for example, may be either calculable emission sources, since the area of forest land is being reduced mainly as a result of urban and regional construction, or net sinks if forest regeneration is included in the review without the effects of felling.
The inclusion of carbon sinks in the mechanisms of the Kyoto Protocol is being discussed, since the Kyoto Protocol refers to them only in connection with joint implementation projects between industrialized countries. With regards to the rest of the mechanisms, attitudes towards sinks have so far been rather reserved, since the definitions and calculation methods of sinks are still unsettled. From the point of view of the forest industry, it would be attractive if at least the afforestation projects carried out in developing countries were accepted as a clean development mechanism.
The Kyoto Protocol also enables the concept of carbon sinks to be extended. Paper and wood products have already been included in the discussion, since they constitute, even on the basis of preliminary studies, an important carbon reservoir. Country-specific background information is currently being collected on these carbon sinks.
The Climate Convention is an intergovernmental agreement, which is implemented mainly at national level. From the point of view of globally operating companies in the forest industry, the situation is difficult. On the one hand, the agreement does not take global players into account, and on the other, global companies must take many national climate programmes into account in their own operations.
All the country's 13 Forestry Centre regions now possess a certificate for sustainable forest management according to the requirements of Finland's national FFCS (Finnish Forest Certification System) - which means that certified wood is available for the industries in the whole country. There are 21.9 million forest hectares now under the FFCS umbrella in Finland. That represents 95 percent of forests in Finland. These forests are owned by a total of 311 500 forest owners.
A start was made on the development of Finland's national forest certification system in 1996. In 1999 and 2000 the system was adopted throughout the country. One of the most important tasks of the Finnish Forest Certification Council (a governing body for FFCS) is now to ensure that all the certification requirements are actually met in Finnish forestry. Another vital task is to determine the development needs of certification applying to forestry and forest management. The FFCS was endorsed by the PEFC (Pan European Forest Certification Scheme) in May 2000.
The right to use the PEFC logo has been granted already to numerous forest industry companies: Pölkky Oy, Metsäliitto Osuuskunta, UPM-Kymmene Forest, Schauman Wood Oy, Finnish Fibreboard Ltd, Finnforest Corp., United Sawmills Ltd, Vapo Timber Oy, Forssan Saha Oy, Oy Lindell Components Oy, Koskisen Oy, Ahlström Pihlava Ltd, Visuvesi Oy, Oy Metsä-Botnia Ab. First PEFC-labelled products have been sold and more PEFC-labelled products are expected into the market.
Further information: www.ffcs-finland.org/