There are two main reasons for troubles for Finnish sawmills. Firstly, price of wood has risen slowly and now comprises 72% of the price of any finished sawed product. Secondly, basis for timber income taxation changed from land area based taxation into sales based taxation. Together these result into diminishing timber sales and rising timber prices, which in turn result into diminishing production and lower profit margins.

How to get out of this vicious circle before everybody in the industry have gone bankrupt? According to analysts the answer is by increasing the value of finished products. How to do that? To my opinion, log home companies stand at better place as value adders for wood than pure sawmills…

Finnish paper mills have been pushed into corner. Traditional cycle of currency devaluations in order to improve paper companies’ competitiveness has come to an end because of Finland’s European Union membership. Now it is the company that has to change instead of the currency value.

Finnish paper companies have been pushing hard to get in shape. Investments have been done near end markets and remote Finland has lost its importance as a production location. Right now the unimaginable is happening. United Paper Mills has announced massive downsizing programs, which focus especially on Finland.

Arrangements in the use of capital are another road that most paper companies are taking. Properties are sold to garner money to be invested in core functions. This in turn affects sawmills. There are lots of sellers but few buyers. Moreover the logging industry has been on the red for five continuous years and things are not going to get better any time soon.

Where am I getting at? Demand for various timber products in Finland is about to drop and that means business for log home manufacturers, which can benefit from lower raw material prices.