Economic slumps are a tough trial but the work continues
Life needs a little bit of drama to spur us into action. It sends adrenalin flowing through our veins and makes our brains work faster and our legs move quicker.
However, many would probably agree that there has been too much drama going on lately, not just in our sector but around the world as well.
When everything seems overwhelming, I try to focus on the basics; the things that matter the most. If the foundations are in order, everything else will eventually come together as well.
This is also my approach for assessing the situation of our sector. Is our foundation in order? Are we fulfilling our role in society? When assessing our sector, having a large amount of data to analyse is an excellent starting point. The most recent source of data is the survey by EY Advisory Oy which assessed the impact of the forest sector, in other words, forest economics and the forest industry, on the national economy of Finland.
And yes; Finnish forest industry companies continue to have a significant impact on our national economy and the well-being of Finns. Our export-driven, competitive forest industry continues to create well-being throughout Finland, and the industry has a significant impact on regional economy. A successful forest industry has a wide-ranging effect on the surrounding business activities and also contributes to the sustainability of the public economy. It provides competitive strength, while enabling future investments that are vitally important for both sustainable development and renewal of operations.
EY's survey also reveals the multiplicative effects of the industry: nearly 50% of the added value produced by the forest industry stems indirectly from work carried out in other industries. The extensive Finnish production and processing chain of the forest sector and the success on the international market is directly reflected on the industry's employment capacity.
The recent survey is not alone in highlighting the role of the forest industry in our national economy. The Role of the Largest Companies in the Finnish Economy report by ETLA, for example, keeps ranking the major forest industry companies among the ten most impactful companies time and time again.
Of course, over time, the structure of Finnish economy has become more diversified and the forest industry is now accompanied by other industries that support our national economy and contribute to its diversification. Nevertheless, Finnish forest industry companies have had and will continue to have an incredibly intensive, unshakable and long-lasting impact on the economic growth of our country and the well-being of people.
Revenues, added value, investments and, of course, jobs
The revenues directly accrued by the forest industry in Finland in 2021 amounted to nearly EUR 33 billion, and with indirect impact included, that increases to EUR 45 billion. The direct and indirect added value accrued by the forest industry amounted to a total of nearly EUR 11 billion.
The survey by EY reveals that nearly 50% of the added value produced by the forest industry stems indirectly from work carried out in other industries. Value is produced by procurement industries, forest economics, timber harvesting, wholesaling, transport, storage and the energy industry.
In 2017–2021, forest industry investments in Finland, including indirect impact, amounted to an average of EUR 1.9 billion per year. While there are some annual fluctuations in investments made in Finland, their level has remained high. According to the national economy statistics compiled by Statistics Finland, direct forest industry investments in Finland between 2000 and 2021 amounted to EUR 20.5 billion; in other words, nearly one billion euros per year.
The extensive Finnish value chain of the forest sector, the willingness to invest in the future and the success on the international market are directly reflected on the industry's employment capacity. According to EY's survey, the forest industry directly employed nearly 40,000 people in Finland in 2021, and with indirect impact included, the number rose to about 83,000 people. The employment impact of the entire forest sector, including indirect impact, amounted to nearly 100,000 people.
Nearly EUR 4 billion in tax revenues
The tax information released in recent weeks also reflects the important role of forest industry companies as taxpayers. Forest industry companies top these charts as well. In 2021, the tax revenues produced by the entire value chain of the forest sector amounted to nearly EUR 4 billion.
In total, the direct and indirect impact of the forest industry generated more than EUR 3 billion in tax revenues. About 50% of the total tax revenues consists of taxes and social security costs paid by employees as well as social security costs paid by the employer. The tax revenues are also considerably increased by corporations' income taxes, value added tax, energy and fuel tax and the capital gains taxes of the forest economics.
The taxes paid by the forest sector cover the salaries of a large number of teachers and nurses and the cost of various services across Finland.
Trials and tribulations are part of life
It is true that the demand for forest industry products in key market areas decreased this year when compared to previous years. The impact of inflation, rising interest rates and full inventories combined with general uncertainty have inevitably been reflected in the demand for both wood products and chemical forest industry products.
However, the impact of the forest industry on the national economy is steady and unshakeable, and the global long-term market prospects, in light of increment forecasts, are extremely positive for many forest industry products.
This industry is used to enduring the trials and tribulations of life and working hard nonetheless. Rest assured: we are as steadfast as ever.