On October 11 the congress of the Union of Timber Industrialists and Forest Exporters of Russia took place in the form of a video conference, which was attended by Alexander Churkin, the Chairman of the Board of Directors of JSC “Vologda Group of Companies” Timber Industrialists.
The participants heard a detailed report by the Union’s president, Myron Tatziun, on the work of the Union during the reporting period. The work of the Union was unanimously called satisfactory. The main tasks and activities of the Union for the next period were outlined and formulated.
«I would like to point out that the Union has done a lot of work. At the same time, I would like to emphasize several aspects. Firstly, it is necessary to accept that the development strategy does not correspond to the realities and it has to be written anew, and first it will be a survival strategy, and then a development strategy. The main thing is that everyone needs to recognize the fact of crisis in the segment of mechanical wood processing in the North-West of the country.
For example, in the Vologda region, timber harvesting in the period from April to August this year fell by 31%, the production of lumber decreased by 12%, the production of plywood – by 26% compared to the same period last year. And there is no trend for growth of these indicators. In addition, the production and sale of lumber in October is unprofitable – the profitability, for example, on one sawmill minus 19% with sales to Egypt, China, South Korea, and the domestic market.
We repeat the words like a mantra – reorientation to the domestic market, new markets, but at the moment – this is nothing more than an illusion. The domestic market will not expand at our behest, and new markets are low-margin with a small capacity. Enterprises of the North-West cannot get to new markets with the existing logistics, when the cost of delivery is more than 50% of the price of goods.
I believe that real action is needed to support measures at the government level to organize logistics chains with true market value, using the ports of the Northwest, attracting container lines, subsidizing transport costs for exports, supporting investment in the construction of new ships for the transportation of export cargo. In addition to this: it is necessary to increase the number of crossing points for rail deliveries to China; to remove all other still existing barriers to exports of processed products; to subsidize interest rates on loans aimed at implementing priority investment projects».
The situation in the industry undoubtedly requires the immediate adoption of any significant measures to support the enterprises of the timber industry from the state with the involvement of real experts from the forest business. For our part, “Vologda timber industry workers” are ready to participate in the development of joint measures”.