Economic situation puts Estonian timber companies in a difficult position
As a result of the general economic downturn, the export volume of timber companies in south-east Estonia has declined. Timber companies selling products to Scandinavia are in a particularly difficult situation.
Like most Estonian timber companies, Hobbiton, a company that builds wooden houses near Lapina, has had to adapt to the recent drop in exports.
"The demand from the Nordic countries is no longer so great. The biggest reason for this is the significant devaluation of the local currencies in Norway and Sweden. All the houses we build in Norway and Sweden are between 20 and 25 per cent more expensive than last year," says Ragner Lõbu, a member of the board of Hobbiton OÜ.
Although the falling cost of wood has brought some relief to the furniture manufacturers, they still have to lower the prices of their products in order to retain both domestic and foreign customers.
"Competition has increased, and in order to compete you need to constantly reprice your products. In other words, customers are constantly signalling to you to re-evaluate your prices - the main raw material, wood, is declining (says Remo Allikas, CEO of Võru Empak AS):
In these challenging economic times, managers in the timber frame industry are not making long-term plans. Their main concern is to keep production going.
"Right now, it's important for a company to have jobs. The most important thing is not how much profit it makes, but to keep people working so that we don't have to start cutting wages or reaching the minimum wage" It's important to keep up the pace, and that's our goal at the moment." Peetri Puit OÜ board member Peeter Peedomaa said.
