Competitiveness of the woodworking industry
The sawnwood subsector is international from a supply point of view, although sawnwood consumption is more nationally specialised, mostly linked to construction. Wood-based panels and packaging, on the other hand, are more nationally oriented both in terms of supply and demand. The construction sector uses not only carpentry & joinery materials but also much sawnwood and many panels.
As a natural and therefore heterogeneous material, wood has to be carefully worked into e.g. building products having with reliable and predictable characteristics so it can compete with those of other materials such as steel, concrete, glass etc., which can be tailor-made. Nonetheless, wooden products do have certain advantages. In addition to wood being derived from sustainable and increasing EU forest resources, there is potential for a much higher level of post-consumer wood recovery, re-use and recycling, including energy extraction. This will be vital in the future when demand for renewable energy will only increase. Furthermore, the carbon-storage capacity of harvested wood products (HWP) will be equally important in the context of climate change. The woodworking industries have built in high-quality innovation systems and design for both products and processes and excellent sectoral knowledge centres, including for research and technological development.
These factors help foster the applied research and technological development which is currently being carried out in the woodworking industries. Most of this has been led by machinery manufacturers and independent research centres, such as university departments and other dedicated establishments. These specialists often work under contract for the larger, wood-based panel firms and sawmills which have the capacity to finance and apply the development of advanced technology for innovative and added-value products, processes and process-control systems. Increasingly, specialised EU companies focus on such diverse items as:
- engineered wood products (EWP, such as pre-fabricated wall panels and flooring systems);
- wooden composites with other materials for green building;
- fittings and consumer products.
There are market opportunities for these not only domestically but also in export markets, both established and emerging (see below). The Wood Group of the Forest-based Sector Technology Platform has developed sector-specific parts of the Strategic Research Agenda. Also see the website of the European Forest Institute.
On the downside, it has to be said that the EU woodworking industries face increasing competition for wood raw material from the renewable energy sector and in any case have high fixed and variable costs, including for wood, energy and labour, in comparison with some overseas competitors. Although only the bigger sawmills and panel plants are capital-intensive, more generally there is low investment in plant, R&D, education, training and skills. Moreover, the sector has a poor public image, especially among young people. Some further costs may also be added by legislation ("due diligence"), referred to above. Other EU and MS regulations affecting the sector are mostly horizontal rather than sector-specific. The most important elements are:
- the EU Renewable Energy Directive
- the EU Construction Products Regulation
- occupational exposure thresholds for formaldehyde.
The latter is an important constituent of many adhesives used with wood.
EU Competition Policy
State aid to the woodworking industries is difficult to assess as only big cases are notified by Member States. Nevertheless some of these have been important and about €150 million of aid was approved between 2001-2005 on investments valued at over €500 million, mostly to the sawmilling and wood-based panel sub-sectors and focused on a few MS. Between 1990 and 2005, only seven woodworking industries mergers were subject to Commission scrutiny and all of these were approved.