State of the Wood Industry in Europe

There was muted global GDP growth for the global timber industry in 2016. The industry has been one of hardest hit since the financial crisis of 2008. Coupled to this has been the stricter implementation of the European Timber Regulation (EUTR) from the EU. These requirements have made it harder for developing countries to access the market because they cannot meet these stricter requirements. Exporters that can meet the requirements enjoy a significant advantage over their competitors.

Accountability and Certification

The EUTR bans illegally harvested timber on the European market and covers a broad range of timber products such as solid wood products to pulp and paper. Companies are now required to implement a Due Diligence System (DDS) and keep detailed records on timber and timber products. This provides traceability to ensure the legitimacy of the product. Companies must perform a risk assessment based on the criteria set out in the EUTR and have risk mitigation measures in place to minimise the risk effectively.

A lot of big retailers and importers place great value in the Forest Stewardship Council certification. “FSC certification ensures that products come from well-managed forests that provide environmental, social and economic benefits. Forest owners and managers may want to become FSC certified to demonstrate that they are managing their forests responsibly. Along the supply chain, FSC certification can provide benefits such as access to new markets.”

Timber production has gradually been moving to Eastern Europe because of a slowdown in students taking technical courses, increased competition from the developing countries upping their game to comply with regulations and an ageing European population. In essence buyers see sustainability certification from the FSC as important, but compliance with the EUTR is essential.

Demand for Sustainable Products

The construction market has been depressed since 2008, but with the slow recovery continuing there are good signs for the timber industry of a slight upswing. The renovation and maintenance sector is where the growth is at at the moment. There has been a marked increase in demand for wood products such as doors, decking and floors.

Consumers are also much more conscious of the effect of deforestation and climate change. People are actually looking at where their wood comes from and prefer that it comes from sustainable forests.

Technology has also played a large part with non-timber alternatives becoming popular among smaller contracting companies and architects. Thermally modified wood has many advantages over chemically treated wood. It is more resistant to moulds and rot and is also more durable. The Swedish glulam (glue laminated timber) industry continues to break records. In 2016, sales increased by 13.5% as compared to 2015, which was the previous record year.

The rise in use of European softwoods means that tropical timber is being substituted for furniture, fittings and garden products. In fact, there has been a production upsurge led by Germany and Sweden which has increased more rapidly than consumption, meaning Europe is now one of the world’s largest exporters of softwood.

To find out more about business investment opportunities in the timber sector in Europe and globally, contact Cornfield & Partners at info@cornfieldpartners.com, or you can call us on +44 (0) 20 7692 0873.

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