A strong franc and a weak market are chipping away at the Swiss timber industry. Sawmill owners say they fear a looming wood shortage and possible layoffs.
The eastern regional branch of the country’s Wood Industry Association has urged private forest managers to harvest more trees to keep blades whirling and save jobs but foresters remain reluctant. They say soft demand has driven prices into the ground.
Toni Horat, spokesman for the wood association, warns that if foresters don’t send more logs to mills soon the already bruised industry will suffer further even as the domestic economy shows signs of a rebound.
“That’s a problem in our industry that when there’s a lack of raw wood the mills stand still,” he told swissinfo.ch. “Last year we expressed a wish for forest managers to increase supplies, but they are creating pressure to increase prices.”
Horat said that foresters have until the beginning of April to boost harvests and ward off a impending lumber shortage this summer. Otherwise some regional mills will be forced to cut hours, halt production or even close for good, he said.
The Swiss Forestry Association, an umbrella organisation of the country’s forest managers, is not so sure and says increasing deliveries at short notice is difficult under current management policies. The group says sawmill owners mentioned no shortages at a meeting two months ago.
“The association has little understanding for the quick change in message and the blame levelled at foresters,” the group said in a statement. The association called on foresters to do what they could to send wood to mills, saying all industry players are “in the same boat”.
Survival of the smallest
August Brühwiler runs a medium-size sawmill in canton Thurgau and says that there is indeed a shortage of raw wood at the moment. Typically he’d have enough to mill until the end of the summer. Right now his supplies will last through May, he said.
But Brühwiler is optimistic that he’ll pull through. He says there is often a supply-demand game that plays out between millers and foresters who are dependent upon each other to make their bottom lines.
The Swiss Forestry Association admits that big mills like Mayr-Melnhof, which started operating in canton Graubünden in 2007, have “considerably altered” demand for raw timber by “significantly tightening” competition for small mills that want the same wood.
Brühwiler employs 30 people and mills roughly 25,000 cubic metres of timber a year. He says being a small, domestic player will help him weather the drought, while big companies with huge contracts, like Mayr-Melnhof, must do more hunting for timber through foreign suppliers.
“It is not so tragic for us,” Brühwiler told swissinfo.ch, adding he expects to make no layoffs.
“I simply find it a pity that if July or August rolls around and we have to cut back because we aren’t capable of making deliveries simply because we don’t have logs.”
The Swiss timber and wood products industry has been consolidating under a general decline for years with occasional spurts of increased demand for timber. The sector currently employs some 80,000 people across Switzerland, about the same as in 1975.
In 2007 Swiss mills produced around 5.7 million cubic metres of sawn timber. Preliminary figures for 2009 show a 12 per cent decline to about five million cubic metres, according to the federal environment ministry.
The economic recession and a limp euro have not helped. The Italian market, a major outlet for Swiss hardwood exports, has collapsed under a euro withering against the franc. For softwoods like fir and spruce, a cubic metre of raw wood today sells for about SFr110-115 ($102-$107), some ten to 15 per cent less than in 2007.
Marco Zanetti, deputy head of the environment ministry’s forest and timber industry section, put the current shortage into perspective. He said certain regional sawmills will suffer negative consequences in the short term, but the overall situation in Switzerland appears relatively stable.
“By and large production levels are fairly good,” he told swissinfo.ch. “It just takes time for raw timber supplies to meet demand once demand picks back up.”
Tim Neville, swissinfo.ch
There are currently some 800 wooded areas, or 1.2 million hectares of forests in Switzerland. They hold roughly 420 million cubic metres of wood. About 71% of forests are publicly owned while 29% are private. Combined they yield around 8.6 million cubic metres of raw timber a year.
Softwoods like spruce and fir make up the lion’s share of processed timber, accounting for 95%. Live trees, or “standing volume” in forester speak, have been decreasing in the central plateau while forests in the Alps and their foothills have grown older and denser.
The trade balance for Swiss wood and wood products is in deficit, with imported wood and products exceeding the value of exports by almost SFr4 billion a year.
Production costs in the forest industry often exceed profits because the sector is small-scale in structure and the different owners sometimes fail to cooperate sufficiently with one another. Many of the public forestry operations in Switzerland continue to operate at a loss.
The forest is being used by more and more people as an area for recreation and leisure. In many locations, the protection of ground water and drinking water require special consideration and specific maintenance measures. It is difficult to establish the value of such services, and their effects on public health, in particular, are often underestimated. Forest owners gain little profit from the provision of these services by their forests. Source: Swiss environment ministry