Knocking on Latvian wood, the best you can get.

Knocking on Latvian wood, the best you can get.

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In Latvia, the second largest industry after the food industry is the Wood industry. And it is no wonder why; Latvia has one of the richest forest resources in the world, covering more than 50 % of the country’s total territory (1.6 times the world average).  With a total of 631 million cubic meters in forests, it makes the country one of the most forested EU member states. Over the last 80 years, the forest area has nearly doubled while standing volume has increased 3.6 times.

Image courtesy of Let Ideas Compete at Flickr.com
Image courtesy of Let Ideas Compete at Flickr.com

Around 5% of the working population works in this sector and it contributes 14.5% of the country’s GDP. About 50 % of the forests are owned by the state and managed by the state stock company Latvijas Valsts Meži (Latvian State Forests).

Apart from size, another great advantage for Latvian forests is that they are in very healthy conditions, better in overall health than the world average.  Furthermore, they are constantly being regenerated. For example in 2014, a total area of 37,986 hectare of forest was regenerated, 49.8 % was in state forests and 50.2 % in privately owned forests.

In the realm of exports, the forestry sector is the country’s most important export industry, taking up one third of Latvia’s export turnover. Approximately 80% of the product output is exported. Today, the industry’s leading production is sawn-wood used for building houses and buildings; joinery and household products, furniture and solid wood board; prefabricated wood constructions; glued wooden structures; doors, doorframes and thresholds; windows, double French doors and their frames; parquet blocks and concrete forms. Since 1993, the total output of sawn wood has increased ten times and the product value 15 times.

88.9% of the woodworking sector exports in Latvia go to EU; including countries such as UK, Sweden, Germany, Denmark and Estonia. Recent changes in diversification of the product and the desire to improve profit have made Latvian producers increase their presence in USA and Japan.

In the last 10 years, to ensure that the Latvia’s forests are managed according to international standards, forest owners and manufacturing companies have been certified in the sustainable use of forest resources on the basis of the two most widely used systems in the world – FSC and PEFC.

During the same years, the sector realized that in order to be competitive, the industry had to consider the development of new competitive products. They found that making inexpensive products from expensive raw materials was not cost-effective at all. So, to use more tree species and small-dimension saw- logs the industry has had to replace many of its equipment technology. And now the sector has been divided into niche products for garden, packaging, joinery products, etc. manufactured by the small and medium size companies; and higher value added products such as load bearing products, impregnated products and construction materials made by the larger enterprises.  

The foreign trade balance of the Latvian woodworking industry is positive, having reached EUR 1.3 billion in 2014. Also in 2014, the value of wood product exports was EUR 2 billion, 7 % more than in 2013 and the value of wood product import was EUR 676.7 million.

Image courtesy of tonynetone at Flickr.com
Image courtesy of tonynetone at Flickr.com

Apart from the above mentioned wood products manufactured in Latvia, the wood energy sub sector is also very developed in the country. Because of the country’s climate, thermal energy generation ranks as the number one method for national energy resource; however, wood products have also been an important source of fuel (28%). The major consumers of wood-fuel products are households, heat supply companies and woodworking enterprises.

In 2013, the exports of wood fuel increased 12% compared to the previous year, reaching EUR 239 million (13% of total wood-product exports). Latvia’s exports of this product can potentially grow in the next years, due to the excess of pulpwood as by-product of the country’s large sawmilling subsector.  

As mentioned before, the larger organizations focus on the manufacture of value added products including:

Furniture; there are over 700 furniture manufacturers. Many of these, have been successful in the field of furniture design and entering foreign markets with original designs such as curved and glued chairs and high quality bedroom furniture. In 2013, exports of furniture were valued at EUR 112 million. The main markets are Germany, Denmark and the UK.

Products for Construction and Carpentry; Many Latvian companies have made significant capital investments to develop the manufacture of carpentry products such as wood window frames, doors, construction materials and uniquely handcrafted prefabricated wooden houses. The main markets are Norway, UK, the Netherlands and France.

Wood based Panels; thanks to careful and generous investment, the production of plywood based panels has become one of Latvia’s major woodworking branches. It holds 16% of the total export value of this sector equal to EUR 147 million in 2013.

If you wish to visit and contact a company from this industry, you can visit the Latvian Wood Industry portal, made available by the Latvian Forest Industries Federation, funded by the European Union. Here you can find information related to forest policy, resources, environmental protection and wood industry in general. It also contains more than 1800 companies in the searchable database. http://www.latvianwood.lv/

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