European Parliament, Committee on Agriculture and Rural Development
Exchange of views with experts
Presentation by Mr Mikko Ohela, Vice President, Public Affairs, Metsäliitto Group
Metsäliitto Group
Fourth biggest forest industry group  in Europe - annual turnover EUR 8.5 billion (2004)

Production plants in 14 European countries (10 EU; 2 EFTA; 2 eastern
Europe)
Metsäliitto is a cooperative, owned by Finnish family forest owners – ordinary
people, not ’faceless capital’
29,000 people employed directly by the Group’s companies, mainly in the EU
- indirectly employs more: contractors, services etc.
We have business operations in all major sectors of forest-based industries:
- wood procurement
- woodworking industries (e.g. saw milling, engineered wood for
construction, plywood)
- pulp
- paper, paperboard, tissue, packaging
Main market area: EU
In brief, I come from a very European company
3. Forestry and forest-based industries’ strategies should go hand-in-hand
By the forestry sector I mean both forestry and forest-based industries. This
wider angle should be taken into account in the EU strategies and action plans.
A policy that affects forestry, in turn, affects a long chain down the processing
line and trade. The wood-chain, from forests to woodworking and the pulp and
paper industries, is integrated in many ways.
The whole forest cluster, including the related chemical, engineering and information
technology industries as well as transportation sector, is actually affected
by forest policy measures, too.
Therefore, we cannot isolate forestry as a single issue; we have to look at the
big picture which also includes related industries.
In my home country, Finland, it takes a lifetime to grow a tree for the saw mill
and some 30 years to grow it for the pulp industry.
A green field pulp mill investment costs up to EUR 900 million.
Forestry and forest-based industries are long-term business with heavy investment.
They need a stable society and long-term predictable policies – not random
and ad hoc.
4. Main challenge - competitiveness
The greatest challenge for the EU forest sector in the future is, in line with the
Lisbon Strategy, the competitiveness in the global market. The prices for our
products are settled on global markets but the cost structure is created here in
Europe.
To highlight this, calculations about EU forest sector’s diminishing global competitiveness
could be presented. But I assume it is just enough to note what we
are doing based on business reality: major new investments of the Metsäliitto
Group are going outside the EU.
the next saw mills will be built in Russia
a pulp mill in Uruguay
And please remember that we are now talking about a very European company
by its roots and ownership.
In order to achieve even half of the Lisbon targets, the EU also needs to pay attention
to the basic sectors of economy such as the forest sector. The ‘IT hype’,
space and biotechnologies cannot bring the competitiveness alone.
Having said this, I need to add that all the technologies I have mentioned are
important and applied in our daily operations.
Indeed, innovation and application of new technologies is crucial for long term
competitiveness also in the forestry sector.
The allocation of R&D resources through the 7th Framework Program should be
one of the priorities in the Action Plan.
The sector itself (forest owners and industries) has been active in this field already
and has established a Forest-Based Sector Technology Platform. The
Platform is developing a Strategic Research Agenda that should be taken into
account in the Action Plan.
5. Achievements on environmental field - time to focus on economic and social
sustainability
When reviewing the period since the adoption of the 1998 strategy, the focus in
European forestry has been much in the environmental field. And the EU has
been successful there, too.
Now, in the next phase, it would be time focus more on the economic and social
pillars of sustainability. In the European private forest-ownership conditions,
these two go very much hand in hand.
??The best way to foster economic sustainability is to help the markets take care
of it. This requires some removal of hindrances.
??Europe has the potential to use more wood.
- only 55% of our annual growth is used
??The consumption of wood per capita in Europe is only Ą to ˝ of that in North
America (North America 0.8 m3, Western Europe 0.3-0.4 m3, eastern Europe
0.1-0.2 m3).
??The difference results mainly from construction - the Americans build more
wooden houses.
??In Europe, we have the traditions, construction regulations and illusions (e.g. on
fire safety) that hinder the use of wood in construction.
??The education system is a bottle-neck - from architects to engineers and construction
workers; wood is an unfamiliar material and there is not enough training
on how it can be used. For professionals, it is simply easier to select materials
that they are more familiar with.
??So, there are very concrete points for action:
- education of construction professionals including architects
- review of construction and construction products regulations
- information campaigns to the public on the benefits of wood – the real
characteristics of wood
6. Climate change – wooden products can be part of bridge building to next energy
technology era
At first sight the increase of the use of wood might seem to be in contradiction
with the EU environmental policy’s decoupling strategy.
However, this is not the case when we look at the overall picture. It is very
much a question of moving to more environmentally friendly raw-material.
Our greatest global environmental challenge is climate change. The only sustainable
solution to the problem is quitting the burning of fossil fuels. It will take
decades to change the energy technology basis of the world.
During the transition period, we need to do what we can to slow down the increase
of CO2 in atmosphere.
The full potential of storing carbon into wood products has not yet been taken
advantage of - not even at policy level.
According to calculations, 1 m3 of wood used to construction saves 2 tonnes of
CO2 emissions. The stored carbon in the wood equals 0.9 tonnes CO2 and the
substitution effect equals 1.1 tonnes CO2. The substitution effect results from
not having to use more energy-intensive raw-materials such as metal or concrete.
Recent calculations suggest even higher CO2 emission savings.
Of course, storing carbon in wooden products is no final solution to the CO2
problem. However, it helps us to build bridges over the troubled waters to reach
the next energy era.
7. EU rules of the game needed for the public sector application of forest certification
As final point I should like to raise forest certification. It continues to be an issue
that interests the market. No one asks us about the implementation of National
Forest Programs in the Member States or about EU measures to prevent forest
fires. But forest certification is a daily issue in the company.
Forest certification has mainly been seen as a private sector issue where the
EU and governments do not need to interfere. The Commission though has facilitated
some processes such as the creation of the Pan European Operational
Level Guidelines on sustainable forest management (PEOLG) that have given
the basis for establishing forest certification standards in Europe.
However, now we are seeing the Member State Governments integrating forest
certification into their public procurement policies. Forest certification, a voluntary
initiative going beyond the national legislation, is being employed as a public
policy instrument.
Furthermore, the various forest certification schemes are being assessed in one
process after another to see whether they are good enough for governments.
And the criteria for these assessments vary.
In a recent case, the PEFC system did not pass one government’s criteria of
sustainability. The reason for failure was that the standard setting and auditing
procedures were built in accordance with the internationally applied ISO Guidelines
– as applied in all other sectors, e.g. in the EU’s technical harmonisation
policies. For forest certification this was not enough; finally PEFC volunteered
to change its rules. And the case is still open. Why is forest certification so
special?
And we are expecting to see such assessments by several governments. In the
past the proliferation of forest certification systems was an issue, now the proliferation
of forest certification systems assessments has become an issue.
For business, such uncertainty of government approaches to forest certification
is harmful - governments are major customers and the private sector’s customers
are following government criteria. Business needs stability.
The EU should establish the rules of the game for governments applying forest
certification systems. At present, the functioning of the internal market is jeopardised.
The EU’s rules of the game should ensure that there are not contradictory requirements
coming from governments for forestry: one set from the governmental
MCPFE process and the generally applied ISO principles, and another
set from government requirements on forest certification.