Construction has a huge share of wooden consumption in Sweden. About 90% of low-rise houses are built with wood. The director of Swedish Wood Mathias Fridholm says that Sweden is planning to develop this market with increasing CLT production capacity. In the meantime, furniture takes major part of export that goes to China.
Lesprom Network: What is wood’s share of construction in Sweden?
Mathias Fridholm: If we look at one-family houses, it’s about 90%. If we talk about multi-storey apartments, it’s about 11%, so the share of this sector is still rather small. We are, however, quite optimistic that the share will increase in the future. We are working very hard to do that. We have several major sawmilling companies in Sweden are currently investing in increasing CLT production capacity. And, of course, that production capacity is one of the foundations of growth in the sector; we believe increased capacity will feed through to more widespread use of wood in multi-storey construction, especially as we have the strongest argument of all - that it is good for the climate to build with wood. With wood construction we can transform development from being a big producer of carbon dioxide to becoming a long-term opportunity for carbon storage. The technology has now been tested, and we know that it works. Of course there’s still a lot that we need to do. There are innovations and improvements to come, and there’s quite a lot of research going on. But there are so many reference projects now. Within 7 years we expect to see a big shift towards sustainable construction in wood.
Lesprom Network: What innovations in wood construction have been introduced over recent years?
Mathias Fridholm: I think the most obvious thing that has happened in the last few years is that it has become a lot more common to build high-rise, multi-storey buildings with wood. And a lot of that is because of the new technology - cross-laminated timber. So you can say that in Sweden we are seeing a breakthrough because of this technology. While the technology itself is not brand new, developments in production and increased familiarity are leading to more widespread adoption of this new way of sustainable construction.
The government of British Columbia has decided to start issuing permits for encapsulated mass timber construction (EMTC) up to 12 storeys. Cement manufacturers spoke against this decision. Is there any resistance from traditional materials manufacturers, such as cement and bricks, against massive timber construction in Sweden?
I think they see it as a threat that wood is taking market share, and, of course, they are speaking out in favor of their own materials. But I cannot say that I see any special kind of resistance from their side that could be dangerous for the development for multi-storey wooden buildings. We have our own challenges with, for example, moisture and fire, but we have developed good strategies to overcome these issues.
Lesprom Network: What are the trends in wood consumption in interiors in Sweden?
Mathias Fridholm: We can say that wood for interior use in Sweden does not have the same positive development in terms of volumes and consumption. In Sweden, wood is a very traditional material that we have been using for many, many years. 70% of Sweden is covered in forests, so we have used wood for interior decoration for a long time. I think some people see it as a little bit old-fashioned. This is something that we are working to change in Swedish Wood, through developing relationships with new designers and architects to create interior designs that show wood not only as a beautiful, natural material, but also as very modern. And we see that there are a lot of furniture designers who are really interested in working with wood, particularly because of its sustainability and role as a carbon store. By working together with them, we showcase new ways of using wood, new colors, new designs, perhaps new combinations with other materials - you don’t need to only use wood in a piece of furniture, you can combine it, for example, with metal. So we are showing that wood can be a very modern material from an aesthetic point of view as well as because of all the good environmental things about it. That’s what we are working very hard on.
Lesprom Network: Is the interest in wooden interior products increasing?
Mathias Fridholm: It’s a bit dangerous to look at short-term figures. There are a lot of different trends. The interest in wood is a bit up and down depending on what is trending at any particular moment. This work has more of a long-term perspective, so as to keep wood an interesting material. We have conducted research both in Asia and Europe where we have shown people pictures of different rooms. There is one room with wooden materials and some other rooms. We asked them where they would prefer to live, and we can see that both in Asia and in Europe wooden rooms get high ratings. So we see that people are interested in living with wood, and this gives us a good foundation to build on.
Lesprom Network: What about wooden packaging?
Mathias Fridholm: When we consider wooden packaging, we are mainly talking about pallets. We have just launched a wood packaging handbook in the Swedish market showing best practice in manufacturing wood pallets and packaging. And I think that the argument for this is similar to the argument in the building market. It’s a good material for nature. You can reuse wooden pallets for about 70 times; you can repair them if they break — you can repair a small part of a pallet — and when they are worn out you can burn them as a biofuel.
Lesprom Network: How do you sustain forests in Sweden?
Mathias Fridholm: About 70% of Sweden is covered by forests. We have had legislation in place in Sweden for a long, long time that requires us to plant new trees whenever we cut the forest. It’s fair to say that in Sweden we have very sustainable forestry because we reforest when we cut, and also we do not cut more than the forest grows. So if we have a certain growth every year, we only cut maybe about 90% of that growth. So that means that next year we have a little bit more than we had the year before. So in that way it is totally sustainable. If we look at ten years from now, we will have even more trees than we have today due to this practice.
Lesprom Network: What about the wood supply in Sweden?
Mathias Fridholm: Swedish sawmilling production has been quite stable for the last five years. The main reason for that is that there is a limit on how much raw material we can get from our forest, and we are going to stick with the rules - to cut less than the forest grows. So if you ask “is it enough?” - yes, it is enough for production at the moment. Then, of course, if we need to increase sawmill production here in Sweden we will need to find more raw material, whether through importing timber, or by changing our silviculture so we can actually increase the growth of our forests. I am no expert in exactly what is done there but there are different ways you can promote higher growth in the forest. So there are a lot of projects and research on that as well.
Lesprom Network: How is the price of the raw material is formulated?
Mathias Fridholm: The price of the raw material is determined by the market. It depends on supply and demand. 50% of Swedish forests are owned by private individuals. So they can decide to whom they want to sell their logs. The companies have their own price lists, saying what they are prepared to buy, and if your price is too low you will not be able to buy anything, and if your price is higher, then you can buy more. The exact price today varies depending by a region. You have one price in the South of Sweden, another in the Midland, and another in the North, so you can say it is a local price list.
Lesprom Network: How will the consumption of lumber and other wood products develop in China?
Mathias Fridholm: Before 2010-2011 the Chinese market was insignificant for exports from Sweden. Since then it has grown a lot, so that it is now one of our major export markets. Most of what is imported from Sweden goes to the Chinese furniture industry, much of it for children’s furniture. And we are also encouraging China to start building with wood because that is not very common today. We are part of an organisation called European Wood that promotes modern industrialised building with wood in China. We can see that there is great interest in copying what we are doing here, in Sweden. We know that China is second only to the US in wood consumption, yet they are still not building much with wood. So, when they do start building more with wood the market will get much bigger. Today in China there is a lot of secondary buildings in wood, but little else, so we see a huge potential there. Our general opinion is that this will continue to be a very important market for Swedish sawmills. The wood consumption per capita in China is very low, and we think that there is a good chance that this will increase as well.
Lesprom Network: What about India?
Mathias Fridholm: I am very positive when it comes to India. Today it is a very small market for Swedish sawmills. Imports to India come mostly from New Zealand. Traditionally, they prefer dark hardwoods in furniture and interior decoration and so on. But I think that there is a possibility that that will change as well in the future. India is a giant country. 50% of the population is under 25 years old, and I am also quite positive about the Indian economy. It will be much slower than China, but today the growth is bigger than China. The population of India will grow as well. I think the platform is there for India to become the most important wooden market. Then, of course, tropical hardwoods will not be able to meet this future demand, making our softwood a good alternative. For example, IKEA is putting up shops in India. They have quite high expectations for growth there. If the tradition has been only to accept dark hardwood furniture I definitely think that for the future, the younger generation will be interested in lighter, more Scandinavian style furniture.
Lesprom Network: What is your forecast for the Northern African market?
Mathias Fridholm: We have been in North Africa for a long time. We deliver a lot of wood to Egypt, Algeria, Tunisia, Morocco and so on. They have been very good markets for us. They are pine markets. Wood that goes to construction in Sweden is mainly spruce, with pine used predominantly for interior decoration, but Scandinavia has exported a lot of it to Northern Africa. There has been some political instability in the past, from which we have suffered a bit, however, in general they are very important markets for us and I think that they will continue to be so.
Lesprom Network: Does Sweden export to the US as well, as it is the biggest market at the moment?
Mathias Fridholm: From time to time exports from Sweden to the US go up and at other times down, which I expect to continue. It very much depends on price levels. Even though the construction sector is very positive at the moment, prices have been going up and down. I think that Swedish suppliers following these prices quite well. When the price goes up, we deliver a bit more volume and when the price goes down we deliver a bit less. In that, it is a bit of a buffer market for us. There are sawmills in Sweden that are very stable suppliers to the US, but in terms of our export figures it’s not one of our major markets.
Lesprom Network: Canadian sawmills move their production facilities abroad to places where they have greater timber supplies. Canfor announced last fall that it was buying a 70% stake in Sweden’s Vida Group. How will this tendency develop in future?
As far as I know we only have one example so far of Canadians buying sawmills in Sweden. It’s not common. The important thing, if you want to buy sawmills in Sweden, is to have access to the raw material - you cannot just buy sawmills, you have to make sure that you have a supply chain from the forests. It is just one case. Will it happen again in the future? Yes, maybe. But I don’t know.
Lesprom Network: How do you see the investment appeal of the Swedish forest industry?
Mathias Fridholm: We have a few examples of foreign investments in Sweden, but not many. Will it increase in the future? I’m sure it will happen in the future, but I also think that a lot of these sawmilling companies have a very clear connection between the forest and the sawmills and therefore may not be so easy to buy. What I’m trying to say is we don’t see a clear trend here.
Lesprom Network: How do you see the future of the Swedish wooden industry?
Mathias Fridholm: We are very optimistic about the future and the potential for wood in all these sectors. It is a fantastic material in many ways. We feel good about wood in general and Swedish wood in particular.