Weakening economy versus tighter requirements Study on forest machine enterprises Markku Penttinen Arto Rummukainen Jarmo Mikkola Finnish Forest Research Institute Bo Dahlin University of Helsinki NSR-conference Copenhagen 23 September 2008 / Metsäntutkimuslaitos Skogsforskningsinstitutet Finnish Forest Research Institute www.metla.fi
Urgent demand for studies Forest industry outsource harvesting and supervision more domestic wood needed (10-15 milj m 3 according to Forest Industries) Forest machine enterprises pressure to reorganise into larger units first generation retires difficulties to get operators costs increase
Compensation do not follow costs Index, Base year 2000 = 100 Harvesters, Forest machine index by Statistics Finland 210 200 Salary 190 180 Fuel and oils 170 160 Reparation and service 150 140 130 Capital - 120 110 Interest 100 90 Harvesting and transport 80 compensation 70 60 2000 2001 2002 2003 2004 2005 2006 2007 2008 July
Number of machines do not follow removals Harvested volumes and harvesting machines Index, Base year 2001 = 100 115 Stumpage harvesting, m3 110 Road side harvesting, m3 105 Total roundwood harvesting, m3 100 Number of harvesters 95 Number of forwarders 90 Compensation for harvesting, €/m3 85 Share of first thinning wood on total harvested volume, % 80 (Metsäteho Oy) 75 2001 2002 2003 2004 2005 2006
Wood versus work Index, Base year 2001 = 100 Work and wood prises 165,0 Total roundwood removals, m3 155,0 Harvesting cost, €/m3 145,0 Pine log stumpage price, €/m3 135,0 Spruce log stumpage price, €/m3 Pine pulpwood stumpage 125,0 price, €/m3 Spruce pulpwood 115,0 stumpage price, €/m3 Harvester operator wage, €/h 105,0 Forwarder operator wage, €/h 95,0 85,0 2001 2002 2003 2004 2005 2006 2007
Profitability development of service businesses of wood procurement enterprises, METLA till 2010 � Target Better profitability of harvesting business � Sub projects Structure of enterprises and competitive environment Business models and processes Development of profitability follow-up system Development of service concepts and network economy Clearing structural barriers against entrepreneurship Effects on local and national economy Environmental impacts Extension
Data collection: Databases Finnish Vehicle Authority AKE -Forest machine registration data june 2007 -harvesters and forwarders total 5650 -Removal of unvalid data -machine owner: school, bank, factory, etc. - enterprises 2271 and machines 4748 left Statistics Finland -Tax, company et.al. Databases 2001-2006 - Companies 2271 and machines 4698 delivered with enterprice number to Statistics Finland - Found companies 1864 and machines 4248
Study enterprises share increase Cutting volume (million cubic meters) and cost of harvesting (million euros) 550 500 450 Turnover of enterprises in this study, million 400 euros Standing removals, mill.m3 350 Delivery removals, mill.m3 300 Roundwood removals, mill.m3 250 Harvesting cost at 200 standing sales, mill.m3 Harvesting cost in 150 delivery sales, mill.m3 Harvesting cost total, 100 50 0 2001 2002 2003 2004 2005 2006
Economic situation of the branch challenging: the median as well as 25% and 75% quarters downwards 18 16 14 12 10 % 8 6 4 2 0 2001 2002 2003 2004 2005 2006 -2 Vuosi Q1 Median Q3 Q1 Median Q3 • Note: The percentage too high , because a proper salary correction has not been made yet (the correction of Statistics Finland modest)
Debt burden slowly increasing: the median as well as 25% and 75% quarters upwards 4.5 4.0 3.5 3.0 Vuosia 2.5 2.0 1.5 1.0 0.5 0.0 2001 2002 2003 2004 2005 2006 Vuosi Q1 Median Q3 • Payback period of debts in years
Data collection: Interviews Forest machine enterprises AKE-database Country divided into 6 areas Each area 3 enterprise classes: 1 machine 2 machines 3 or more Target 60 enterprises Interviewed already 48 Forest Management Associations Target 20 FMA Interviewed already 16
What next? In autumn 2008: results on economic situation of forest machine branch based on Statistics Finland database will be published First results on entrepreneurs structure and situation based on interviews will be out in 2009 First results on Forest Management Associations relationships with harvesting business will be out in 2009 Wood procurement farmers in the profitability book-keeping of the Economic Research of MTT Agrifood Research Finland studied Business models (COST-project) and business processes (Joensuu already published simulation studies) of enterprises studied and the study continues Accounting and executive informations systems development project in co-operation in construction
Help & co-operation needed! Thank you! Markku Penttinen et.al. Markku.Penttinen@Metla.Fi Arto.Rummukainen@Metla.Fi Jarmo.Mikkola@Metla.Fi Bo.Dahlin@Helsinki.Fi
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