Russian timber industry is open for cooperation

The external guidelines of the Russian timber industry have changed significantly over the past year. Now it is much easier for companies interested in cooperation to gain a foothold in the Russian market of equipment for woodworking and furniture production. And there are several factors involved.

Russia is the second country in the world in terms of timber reserves (1/5 of the world), where the forest occupies 45.4% of the territory. The development of the forest complex is in the focus of the Russian government: until 2030, the Strategy for the Development of the Russian Forest Complex is in effect. Among its priorities are:

• renewal of the production fund,
• expansion of the production base,
• deep wood processing, where the key goal is to increase the value added per cubic meter of harvested wood by 2.5 times by 2030.

2022, however, has made significant adjustments to the plans for the development of the forest industry. Thus, the European direction of cooperation was almost completely closed for Russia. Both in terms of exporting products, and in terms of importing equipment, technologies and components. Until 2022, the EU countries accounted for a significant part of Russian exports of timber products — about 20–25%. A significant share in exports was occupied by plywood and wood pellets: out of 3 million cubic meters of plywood produced annually, 60% went to the EU countries.

Large furniture and timber companies from Western countries have stopped their work in Russia: IKEA, Stora Enso, Metsä Group, Mondi, UPM and others. And yet, in any crisis there is a window of opportunity. Today the Russian market of equipment, materials and components for woodworking and furniture production is fully open to companies that are interested in cooperation.

New companies in the Russian market: what are the prospects?

Under the current conditions, entering the Russian market, gaining a foothold on it and starting to make a profit is much easier than before. This is due not only to the departure of European companies and the closure of Europe as an import destination. The emerging trends in the development of the forest complex provide a lot of opportunities — it remains only to use them.

Lack of machinery and equipment for the timber industry

It is no secret that for many years the timber industry in Russia was heavily dependent on imports. In the logging process, the main weight was occupied by American, Swedish and Finnish equipment: harvesters, forwarders, attachments, etc. Russian equipment was represented mainly by tractors and timber trucks. Mostly imported were spare parts, components, software. Those few Russian and Belarusian technologies in the field of mechanical engineering were often based on old solutions and imported elements. Therefore, already in the foreseeable future, there is a high probability of disposal of equipment due to its wear and tear in many sectors of the Russian forest complex: logging, timber processing, and woodworking. The issue of maintenance will be acute, large volumes of spare parts and components will be required.

At the same time, the growing shortage of machinery and equipment is associated not only with the departure of European manufacturers. The need for high-quality, high-tech equipment is growing against the background of the development in Russia of the volumes of domestic processing of wood, products with high added value. In January 2022, the Russian Government adopted a bill that introduced a ban on the export of valuable coniferous and hardwood roundwood. As a result, roundwood exports decreased by 70% in 2022, to 3.8 million cubic meters.

The purpose of the measure was to reduce the export of unprocessed cheap timber abroad. Instead, it was proposed to develop processing capacities within the country and export high value-added wood products. The development of domestic processing, however, requires the supply of modern forestry equipment and technologies.

Thus, the urgent need for equipment opens the Russian market for companies from China, Turkey, India and other countries.

Increasing volume of wooden housing construction

A number of Russian regions are launching initiatives to develop wooden housing construction. In the Khabarovsk Territory, this is the project "The House of the Far East": for the production of house kits, it will be necessary to harvest up to 0.5 million cubic meters of wood annually. According to the plans of the Ministry of Industry and Trade, by the end of 2025, we can expect an increase in the share of the use of wooden housing construction products in the total volume of construction from 12 to 20% throughout Russia.

Segezha Group, a large timber holding, showed by its example the possibilities of innovative wooden housing construction. The company in December 2022 announced the completion of the construction of the first multi-storey wooden houses in Russia. The main building material was industrial quality CLT panels (Cross Laminated Timber). The total area of the four-story complex, built in less than six months, amounted to 6 thousand square meters. As of April 2023, the Russian Ministry of Construction is conducting an examination of projects for the construction of nine-story wooden buildings.

The widespread use of CLT panels in housing construction can significantly accelerate the development of the Russian construction industry in the near future, as well as expand the domestic market for timber industry products.

Growth of investment in woodworking and government support for the industry

In 2022, despite all the external instability, the capital expenditures of Russian timber industry enterprises reached their peak of 189 billion rubles, which is 4% higher than in 2021. The volume of investments for 9 months of 2022 reached 140 billion rubles. Of these, 47.8% accounted for the production of paper and paper products, another 40.8% was invested in woodworking and the production of wood products. Logging received investments in the amount of 10.7 billion rubles (7.7%), and furniture production — 5.1 billion rubles (3.67%).

In addition, the Russian government provides active support to timber industry enterprises. In 2022, special support measures were launched, the volume of financial state support for enterprises amounted to more than 17 billion rubles. At the same time, in 2023, funding will not be lower than last year — the government intends to continue to continue the course towards the development of the industry.

Increasing investment in woodworking, logging and furniture production, as well as state support for the industry — all this leads to an increased need for new, high-tech solutions, high-quality equipment for timber industry enterprises.

In Russia, the most representative exhibition of equipment, materials and components for the woodworking and furniture industry is Woodex.

About six months left until the next one: Woodex 2023 will take place in Moscow, IEC Crocus Expo, November 28 — December 1.

More information about Woodex >>

In 2021, 230 companies from 18 countries and 78 regions of Russia became Woodex exhibitors. Woodex 2021 was attended by 5,781 specialists from 38 countries and 78 regions of Russia.

Such a variety of visitors makes it possible not only to find new customers, but also to significantly expand the geography of sales. The audience of the Woodex exhibition is interested in purchasing products and has a high buyer potential:

• 87% of visitors plan to make purchases based on the results of the exhibition*
• 21% of visiting companies have a budget of more than 50 million rubles*.

*2021 Statistics

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