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The series of our reports on countries of the world continues. Our aim is to highlight the industrial structures of countries in which “wood” (and all its related aspects), represents a material of prime importance. This study on Lithuania is the result of a recent visit to Latvia during which we visited factories, took photographs and talked to those active in the sector. Lithuania obtained independence in 1918 but was annexed by the USSR in 1940. Following a referendum it once again obtained independence in 1991 and is, today, a democratic republic that extends over a surface area of 65,300 square kilometres.
With regard to the general subjects related to the sector and to the furniture industry we used the official data published by the Lithuanian Association of wood and furniture industries (Lietuvos Mediana Asociacija) whose positive collaboration proved to be of invaluable assistance to us.
Lithuanian forests and wood supplies The Lithuania economy is supplied with round timber and firewood that comes almost entirely from local forests. The condition of Lithuanian forests is currently evaluated to be a positive one: the area covered by forests is growing, and timber reserves in the forests are increasing. The percentage of Lithuanian forest-land is planned to increase by at least 3% over the next 20 years. Volumes in both tree-felling as well as quality industrial raw materials from local resources are growing. In 1990, felled timber amounted to 3.65 million m3; in 2000, m3 6.22; while, in 2005, as much as 7.23 m3 (5.88 m3 industrial timber and 1.85 million m3 firewood). This figure represents the largest quantity of wood obtained from local forests over the last fifty years. According to 2005 operating results, total products from Lithuanian forests (timber, etc.) were estimated to generate 211 million USD. In other words, one hectare of forest resulted in an income of 1012 USD. The process of forest privatisation – the restitution of forest ownership rights to previous owners - is still being carried out. According to July 2005 data, private forests presently occupy 698.000 hectares in Lithuania, 3.33% of the total forest area. The number of private forest estates has already reached 151.000 ha. Both the number of private forests and the quantity of wood felled in them are growing every year. Today, round timber from private forests accounts for over 45% of the total market. However, on-going forest privatisation today does not have economic efficiency as its sole objective; rather, it is a process of owner restitution in terms of historical justice. Therefore, privatisation still faces economic problems. Forests are frequently taken back by owners who lack proper maintenance qualifications. A decrease in the area of forest estates, together with a growing number of owners have been observed. As many as 74% of the estates occupy less than 5 hectares. State-forest supervision institutions do not yet have the necessary capacity to ensure proper control of the use of private forests, and this results in an increasing amount of unauthorised tree-felling and timber thefts. True efficiency of private forests should manifest itself considerably later, when estates grow larger and their owners acquire the necessary management skills. In 2004-2005, financial support amounting to 22 million Litas was granted from the Structural Funds of the European Union for the Intensification of Forestry. Forest planting on non-agricultural land and investments in the industrialisation of tree-felling will be economically supported. In the very near future, wood-fuel resources will be supplemented by timber from willow plantations. The Lithuanian Biofuel Producers and Suppliers Association (LBPSA) expects the cultivation of at least 150 hectares of new willow plantations for energy purposes in 2005. EU has allotted 93 million Litas for the cultivation of energy plantations covering the 2004-2006 period. With the use of local biofuel, approximately 11% of centrally-used thermal energy is now being generated. Strategic planners in the thermal economic development sector forecast that, by the year 2010, thermal energy generated from renewable power sources should account for 17%. The supply of round timber from local forests is expected to increase in the future, though not in a significant manner, while the importing of round timber should also increase. In 2004, total imports amounted to 200.000 m3. Nevertheless, overall timber imports account for only 3.8%. Several new Lithuanian companies are already operating actively in Russia and Belarus, the target being to export wood and timber materials into Lithuania. Round timber consumed by the industry accounts for only 66% of the total quantity of round timber consumed. The remaining quota (i.e. 3.4%) is used for fuel and power generation. Wood consumption for fuel is promoted in all possible ways and is supported by structural funding. Growing volumes of tree-felling waste and most of the timber waste accumulated in the economy (in particular, in large companies) are both used for power generation; the production of fuel pellets for export is increasing every year. Exports of round timber still remain an urgent issue today. Until 1990, Lithuania imported 1 million m3 of raw wood each year. At the onset of industry privatisation, interruptions in operations by several of the largest wood consumers, resulted in a decrease in imports of round timber from Russia and increasing exports to Scandinavia. In 2002, exports of round timber amounted to 1.4 million m3, while in 2005 to only about 1 million m3. Volumes of pulp-wood exported to Sweden, Finland and Russia and sawn logs to Poland have decreased, while exports of sawn logs and raw materials for birch plywood production to Latvia is growing. The growth in round timber exports was caused not only by lessened local demand for pulp-wood and sawn logs in the beginning of the last decade but also by competitive prices. Foreign clients offer higher prices than local consumers of such raw material. The currently-existing difference in timber prices between neighbouring countries is likely to start disappearing gradually in the very near future. In 2005, timber items were produced by 2.478 enterprises, including 964 individual companies. The number of enterprises is growing and, in proportion, the furniture industry in total timber production is constantly increasing. In addition to furniture, the timber industry produces a great deal of sawn timber, plywood, cleats, joinery items, wooden tare and wood prefab housing. The paper industry produces cardboard, sanitary items and toilet paper. Several companies specialise exclusively in the production of furniture components parts. 2005 showed a growth in efficiency indicators: productivity, company profits, investments in the modernisation of existing enterprises and the construction of new enterprises. In the Lithuanian timber, paper and furniture industries, salaries are still lower than in countries in central Europe and Scandinavia, but they are increasing every year. In 2005 in Lithuania, 486 stock companies of various sizes and 305 personal enterprises were involved in the production of furniture and its parts. Foreign investments have decreased, and the furniture industry has turned into an entirely national one. It represents a very small share in foreign capital. In addition, Lithuanian furniture enterprises have undertaken foreign investments by establishing enterprises and affiliates in Russia and the Ukraine. Meanwhile, foreign investors are active in Lithuania in the industries of sawn timber, wooden and cardboard tale. Its three largest timber industries (Stora Enso Timber, Pajuirio Medena and Ochoco Lumber) are owned by foreign investors. In 2005 in Lithuania, around 2.500 enterprises of various sizes (the majority being small and individual companies) produced wood products. As a result, the largest part of production fell on 4 industrial Groups (SBA, Libra, Vakaru Mediena and Baltjos Baldu) and 6 separate enterprises (Stora Enso Timber, Pajuirio Medena, Ochoco Lumber, Vilniaus Baldai, Grigiskes and Klaipedos Kartonas). Experience over recent years has shown the concentration of production and enterprises management to be the most significant mover of progress within this industry.
The largest enterprise groups are the following:
BBG: Baltijos Baldu Grupe (Baltic Furniture Group) has 4 groups in Lithuania, with a turnover in 2005 of 150 million LT (43,4 Million Euro) and 3 industries (Freda, Diliktas and Wood Team Production). In Kaunas this year, a new company in this Group will start operations. This new enterprise, which will receive an investment budget of 6.2 million LT (17,9 Million Euro) during the first stage, will produce kitchen doors with membrane presses, covered by pvc folies. Grigiskes, and its secondary company “Baltwood”, showed a turnover of 108.5 million LT (31,4 Million Euro)in 2005, a figure that was 12.3% higher than 2004. Their main products are hardboard panels, cleats and crepe paper products. Production was renovated and modernised in 2002, with a new coating line as well.
Klaipedos Kartonas is the only Lithuanian cardboard recycling and paper packaging (using recyled paper)company, with 300 employees and a turnover in 2005 of 90 million LT (26 Milion Euro); it recycled approximately 110.000 tons of recyclable paper.
Libra Group unites 11 companies of various sizes: Dominga Mill (a producer of Boen wood flooring, with sales of 158 million LT per year); Venta (a chair manufacturer, with quantities of 600.000 chairs and 60.000 tables per year); and Dailinta (producers of the highest quality glued panels from birch and solid oak).
The other companies are all producers of furniture and wooden tare, as well as trade timber products: Nabukas, Linokompa, AMG, Grendvista, Dirvonu Lentpijuve, Medzio Apdaila, Singils and Domingos Prekyba), with a total 2.000 employees and a 290 million LT (S Euro) annual output.
Ochoco Lumber is a daughter company of the USA one bearing the same name; it was incorporated in Kupiskis in 1993 as an enterprise of sawn timber production, with an annual output of 72.000 m3 dry shaven produce.
Pajurio Mediena is a Lithuanian and Canadian joint stock company located in Klaipeda and incorporated in 1994; it is the second largest company (170.000 m3/yar)in sawn timber production. This company undergoes constant modernisation and has a well-established energy section, with heat power of 24 MV and electric power of 1.5 MV and 4 new everyday-use drying chambers of 2.000 m3 volume.
SBA Furniture Group is made up of 7 furniture industries: Klaipedos Baldai, Silutres Balda, Kauno Baldai, Akmena, Zao, Novo and Mobel). The producer of metal parts for Baldutura furniture, SBA also owns UAB “SBA Germania”, incorporated together with a German group, and 50% of shares in UAB “Vakaru medienos Grupe”. In 2005, turnover of the consolidated SBA Group was 320 million LT (S Euro). SBA exports 95% of its products into EU countries, the USA, Russia and Japan.
Stora Enso Timber (Alytus Sawmill) is a new, modern, Finnish foreign-capital, sawn timber enterprise, which started operations in 2003 and is, today, Lithuania’s largest company (with a capacity of 180.000 m3/year). The company buys exclusively thin logs from coniferous trees and produces the highest quality shavings.
Vilniaus Baldai was the largest, modern assembled-furniture producer in 2005, with 2.060 employees and a sales product of 190 million LT (S Euro). At the end of June last year, the company, after having invested 30 million LT (S. Euro), established a technological line for printing on honeycomb panels.
VMG: Vakaru Medienos Grupe (Western Timber Group) includes 3 companies: Klaipedos Mediena, Giriu Bizonas and Sakuona, with a total turnover of 260 million LT (S Euro), 22% higher than in 2004. Klaipedos Mediana produces plywood, trimmed cleats of milled wood and assembled furniture provided for sale in blocks. It is the second largest producer of timber items in Lithuania, with sales in 2005 of 148 million of LT (S Euro). Giriu Bizonas also produces components and furniture. Saukona is involved in the production of bent part furniture, and the Vakaru Medienos Group in the Ukraine (the Zernigovo region) is building a new factory for the production of wood cleats and furniture that will employ 500 people. For this operation, it will receive investments of 70 million LT (S Euro). The Lithuanian timber industry is best described through its foreign trade. Timber product exports can be grouped into 3 types of trade articles:
1. Furniture makes up the largest part; 2. Raw materials and other timber products; 3. Material for paper production, paper, cardboard and articles of paper and cardboard. In 2000, Lithuania exported similar items for 1.3 billion LT (S Euro). In 2005, exports had more than doubled, for a value of 3.6 billion LT (S. Euro). Exports of furniture and its parts shows the highest growth. At present, furniture and wooden houses comprise the largest part (59%) of exported timber articles. Exports of paper products and other timber items show a smaller growth. Experts in foreign countries and international organisations make a particularly positive assessment of Lithuania furniture exports and their rapid growth. At present, furniture companies are capable of providing products and components upon request to different countries and industrial enterprises, as well as providing large-scale suppliers, especially for major shopping centres. The greatest amount of furniture is exported to Sweden, the United Kingdom, Germany, Denmark and France, which represents over 65% of all furniture exports. Saw timber is similar, geographically.
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