Forests have provided a livelihood for Finns and kept industry running for centuries. The value of forests has long been measured in terms of economy and raw material prices, but now environmental protection and nature conservation have gained in importance. According to experts on the history of the forest industry, the field’s next major transition is already underway.
The Finnish forest industry has transformed itself at regular intervals. To experts in the field, such as Professor of Comparative Business History Jari Ojala and Professor of Strategy and Entrepreneurship Juha-Antti Lamberg, the current heated debate on carbon sinks, logging, and the general development of the sector is not, therefore, surprising.
Ojala and Lamberg have studied the Finnish forest industry , together and separately, since the 1990s. They have plenty of accumulated insight and research material, on everything from early tarring pits up to today’s global markets for highly refined products.
To understand the present, we’d better to take a look at the past.
Single-product export markets
For centuries, forests were the primary source for the main goods in Finnish trade.
“From the 17th century, tar was the most important export item, until timber surpassed it in export records nearly 200 years ago,” Ojala explains. “After this, the number one product was pulp, and then paper. This dominance continued up to the 1990s when metal products and electronics rose to the top position.”
Ojala usually tells his students a story that illustrates the significance of pulp for the development of Finland’s export trade.
“After independence, as Finland was establishing trade contacts with Japan, we exported pulp and imported fishing nets. In the 1930s, as we started to import more expensive textiles from Japan, Finland exported pulp. In the 1950s, as the country was importing optical devices, binoculars and things like that, we exported pulp. In the 1960s, Finland became the first European country to import Japanese cars, and in the 1970s Finland started to import cutting-edge electronics. And what were we exporting? Pulp.”
The lesson and purpose of the story is to pay attention to export industries built on a single product, yet without belittling that product’s role. Ojala emphasises that pulp was a versatile raw material of a high quality.
“Pulp was used in the manufacturing of paper, textiles, and explosives, for instance. It was a high-quality, in-demand product, so it’s no wonder that it was our prime export pillar for so long.”
From village paper mills to gigantic forest corporations
The forest industry has gone through a major, production-related transition about every two or three decades. At the beginning of millennium, paper mills were shut down at a rapid pace in Finland, and the business concentrated on packaging materials. At the same time, the changes relate to the reorganisation of the whole sector. The ownership and production logic of the giant forest corporations changed from national to global.
Looking at the historical calendar, we can conclude that another new page is about to turn in the industrial continuum.
This phenomenon has been studied in scenario work, for example, where one observed factor was the number of Chinese children. Birth rates in the countries with the world’s largest populations have a direct impact on the number of future consumers, and thereby on the demand for packaging material as well.
“On this basis, we will be, about six or seven years from now, in a situation where the demand for packaging materials is no longer increasing, even though the supply will keep growing,” Lamberg explains, who was also part of this research.
“As a consequence, the prices will start falling, which means that forest corporations must, at that point, quickly think of something new to do.”
Signs of life on the innovation front
New ideas are therefore needed. According to the researchers, Finnish forest corporations have not traditionally been pioneers in inventions and product development.
“The corporations have not been very keen on innovating, as pulp and paper were selling well,” Ojala says.
“An exception to this is Metsäliitto (the parent company of the present Metsä Group), which, because of its cooperative ownership, had to create maximum revenue for the forest owners. For this reason, they have had eager innovators in the 1970s already. For example, xylitol was invented in those days.”
Has the situation changed?
At least some positive signals can be observed, the researchers point out. Highly refined products, where less raw material yields a greater and more valuable output, are essential to the present and the future.
In other words, the purpose is to harvest forests to a lesser extent and produce as much as possible from it, creating both value and sustainability, also from the climate point of view.
On a larger scale, this means a modern pulp industry which is already now commonly discussed in terms of bioproducts.
In addition, special recognition is given to Spinnova,a Jyväskylä-based company which has made its way to the international market. The company produces textile fibres from wood and has succeeded, in a relatively short time, to get listed on the stock exchange and become a partner for a number of major brands in the global clothing industry.
Sustainability and environmental values at the heart of future leadership
The transition of the Finnish forest industry does not take place in a vacuum, but it is affected by the geopolitical situation in the world as well as by politics and the values that societal debate is based on.
Ojala and Lamberg have been at the centre of research in this field for decades, and they state that overall, our society is more educated and enlightened than it was in past decades. This means, for example, that attitudes to nature and its defenders have changed significantly.
“Until quite recently big environmental organisations were seen as enemies and an adversary to industry,” Lamberg says.
“Even today, there are still those who are irritated by the carbon sink discussion, for example. But nowadays the former enemies must maintain good relations and channels for discussion.”
“Management skills have improved. A couple of decades ago, we had a lot say about industrial managers, but nowadays the situation is different. Now a graduate with a master’s of technology degree has a different, built-in understanding of responsible business as well as of environmental values. In that sense, the future will be better than the past.”
According to Ojala, the current industrial decision-makers should also look in the rear-view mirror when making decisions about the future.
“It’s good to understand that one is part of history. What we do today will have impacts for decades ahead. For this reason, people need to take clear responsibility in industry as well as for the environment and society. I believe that people are already doing so.”
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