Thomas White Global Investing
Finland
Finland Stamp
November 21, 2008
A Postcard from Finland
Finland: Finnish Forestry- Turning Nature’s Abundance into a Vibrant Economy

Finland Forests The Finnish forest industry’s biggest market is the European Union, which accounts for around 70% of Finnish exports, mainly Germany, U.K., France and the Netherlands. Other European countries account for 9% of forest industry exports, and the rest of the world 20%.

Almost 188,00 lakes, 647 rivers, 32,727 miles of sea, 1.8 million saunas, and 13,6700 sq miles of forests – this is Finland, a country awash in nature, blessed and nurtured by nature, and an economy that is fed by nature. Verdant and lush, Finland is Europe’s most forested country, with timberland covering three-quarters of the area. These acres of green have provided employment and income for generations of Finns – even mobile phone giant, Nokia, began life in 1865 as a wood-pulp mill in southern Finland. Today, Finland’s forest industry provides precious and abundant wood as well as paper for a globalized world.

Tucked away from the giants of Europe, Finland has grown from a relatively undeveloped, agrarian society, into a prosperous, post-industrial country, largely because of forestry. In the 1950s, forestry accounted for as much as 80% of Finland’s export income.

Today, around 30% of Finland’s export income still comes from forestry, especially from high-quality paper products. Finnish forest companies are among the world’s largest. In fact, the gross value of the industry’s production in Finland was about €24 billion ($30.48 billion), with exports amounting to €12.5 billion ($15.88 billion), and total investments of the Finnish forest industry totalling roughly €2.3 billion ($2.92 billion) in 2007. The country’s forest industry accounts for about 8% of the Finnish gross domestic product (GDP), and the forest cluster, which includes the manufacture of wood products, pulp, paper and paperboard contributes 30% of aggregate industrial output.

Having such a heavy forest cover, Finland is taking steps to reduce the use of fossil fuels such as coal, oil, and gas, and instead invest in biomass. There is a human, personal side to Finland’s forestry success – almost 61% of the forests are owned by ordinary Finnish families, (one Finnish family in five). This fuels economic activity across towns such as Etelä-Karjala, Kymenlaakso, Etelä-Savo or Kainuu.

Recently though, challenges have emerged over the rich foliage – rising costs, slowing demand, and Finland’s distance from large, growing markets such as China have hampered its competitiveness. Exactly how the Finnish forest industry copes in the weakened global economy will depend on its ability to successfully re-invent itself, and bring in new products. Growth has slowed this year as demand plummeted – sawn wood production for the July-September period fell one-fourth to around 2.1 million cubic meters. Plywood production too slipped 4% in the January-September period, and paper and board production for the third quarter dropped 7%.

Yet, despite such challenges, the country that gave the world Nokia and Santa Claus also quietly meets much of its paper and wood needs. As an old Finnish saying goes, Finland lives off of its forests. Nature continues to nurture the Finnish economy, breathing life into virtually every sector.

 

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