Fin­land pin­ing for the post-Nokia cham­pion

Kuwait Times - - BUSINESS -

AANEKOSKI: Nokia was once the mo­tor of Fin­land’s econ­omy, but since the demise of the com­pany’s mo­bile phone busi­ness the Nordic coun­try has strug­gled to find a new en­gine for growth. But after nine sluggish years and a three-year re­ces­sion that ended in 2015, could Fin­land’s cen­turies-old, if unglam­orous, forestry sec­tor, hold the an­swer? A rare bit of good eco­nomic news came out of the small in­dus­trial town of Aanekoski when forestry gi­ant Metsa Group an­nounced last year a record in­vest­ment of 1.2 bil­lion eu­ros ($1.31 bil­lion) in a new fa­cil­ity.

A gust of wind spreads the un­pleas­ant odour of sul­phur-akin to rot­ten eggs-across the town in cen­tral Fin­land, a reg­u­lar re­minder to the 20,000 res­i­dents of the quest for new riches. A new mill and biore­fin­ery that will more than dou­ble the town’s an­nual pro­duc­tion of pulp-a wood fi­bre mass used to make pa­per and card­board-is un­der con­struc­tion.

Lo­cals do not seem bothered by the stench. “It’s just money that smells,” 50-year-old Pet­teri Hei­mo­nen, a lo­cal IT tech­ni­cian, told AFP on a re­cent visit. The forestry in­dus­try’s main prod­ucts, pa­per and card­board re­claimed the top spot as the coun­try’s main ex­port in 2015, fol­lowed by other heavy in­dus­try prod­ucts: diesel fu­els and stain­less steel. But it is not the new high-tech mir­a­cle Finns have been hop­ing for since the coun­try’s only glob­ally well­known con­sumer prod­uct, Nokia’s mo­bile phones, dis­ap­peared from the scene after fail­ing to catch up with the rapid rise in smart­phones.

An­a­lyst Tomi Am­berla of Poyry Man­age­ment Con­sult­ing be­lieves the forestry’s num­ber one spot says a lot about the dire state of busi­ness in Fin­land’s post-Nokia era. It shows “that other sec­tors have been in trou­ble... There is small growth in forestry’s ex­port in­come and quan­ti­ties, but it’s quite flat, mean­ing oth­ers have de­clined,” he said. Am­berla stressed that Fin­land has di­ver­si­fied eco­nomic growth with high-tech con­sumer prod­ucts and ser­vice ex­ports.

High hopes have been cast for in­stance on Fin­land’s games in­dus­try, led by Clash of Clans cre­ator Su­per­cell and An­gry Birds in­ven­tor Rovio. But this in­dus­try’s com­bined net rev­enue last year equalled just a lit­tle over four per­cent of Nokia’s rev­enue of 51 bil­lion eu­ros at its peak in 2007, when it was the world’s num­ber one hand­set maker. It is un­likely that the forestry sec­tor can com­pete with Nokia’s fig­ures, even though many com­pa­nies are also multi­na­tional.

In 2015, the sec­tor reg­is­tered only 44 per­cent of Nokia’s peak rev­enue in 2007, when measured at com­pa­ra­ble prices. The global fi­nan­cial cri­sis that be­gan in 2007 hit Fin­land’s ex­port-driven econ­omy hard and the forestry sec­tor was par­tic­u­larly af­fected, post­ing a 10per­cent drop in pro­duc­tion in 2008.The in­dus­try’s main prod­uct, fine pa­per, took a hit from both the global eco­nomic slow­down and from the rapid shift in me­dia con­sump­tion from pa­per to on­line ar­ti­cles. “Five to 10 years ago forestry was con­sid­ered a sun­set in­dus­try,” man­ager Ri­ikka Pakari­nen of the Fin­nish For­est In­dus­tries Fed­er­a­tion ac­knowl­edged.

Biodiesel to fuel growth

By 2015, Fin­nish pa­per gi­ants UPM-Kymmene, Stora Enso and Metsa Group had shut more than 30 pa­per-mak­ing ma­chines around the coun­try, most of them lo­cated in small towns highly de­pen­dent on the com­pa­nies for jobs and tax rev­enue.But with forests cov­er­ing 78 per­cent of Fin­land’s land sur­face, they are un­ques­tion­ably one of the coun­try’s most im­por­tant re­sources. Metsa Group is not alone in hop­ing trees can mean new growth in two senses. An­other group, Fin­npulp, plans to build a new pulp and biore­fin­ery in the east­ern town of Kuo­pio, while Chi­nese Sun­shine Kaidi New En­ergy Group plans to in­vest a bil­lion eu­ros in a re­fin­ery mak­ing re­new­able diesel from wood materials in the north­ern Fin­nish town of Kemi.

Fin­land’s lead­ing forestry gi­ant UPM is al­ready in the busi­ness. Last year in the south­east­ern town of Lappeen­ranta it launched a biore­fin­ery that turns resin, a side prod­uct from mak­ing pulp, into diesel. “It’s the world’s first fa­cil­ity to pro­duce wood-based diesel,” UPM’s head of bio­fu­els Sari Man­nonen said. She an­tic­i­pates growth es­pe­cially in west­ern Europe, where the EU’s cli­mate tar­gets urge re­plac­ing fos­sil fu­els with new green op­tions. An­a­lyst Am­berla said forestry in­vest­ments are grounded as global de­mand for pulp is ris­ing, driven by in­creas­ing ur­ban­iza­tion and a grow­ing mid­dle class, es­pe­cially in Asia. But there is a limit to just how much forestry can do: Fin­land’s Nat­u­ral Re­sources In­sti­tute es­ti­mated the har­vested share of forests amounted to 79 per­cent of their an­nual growth in 2014.

AANEKOSKI, Fin­land: The new mill and biore­fin­ery ex­pected to be fin­ished in the third quar­ter of 2017 are pic­tured at Metsa Fi­bre’s new pulp and bio­prod­uct mill in Aeaenekoski, cen­tral Fin­land. Nokia’s mo­bile phones were once the jewel in the Fin­nish econ­omy’s crown, but after their stun­ning demise, the Nordic coun­try has turned its sights back to its green gold: forestry.

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