Dmitry Zachko, CEO at Plitwood: “The domestic demand needs to be incentivized. This will increase the sales of high-quality products within the country.”

On September 22, 2023, Plitwood officially launched a plant producing large-sized plywood with a capacity of 180,000 m³ per year in Vokhtoga, a settlement in the Vologda Region. The investment value reached 12.5 billion rubles. The project was initiated by Cherepovets Plywood and Furniture Plant and Vologodskiye Lesopromyshlenniki Group. The enterprise is reportedly the largest greenfield project of a plywood production site in modern Russia. We have talked with Dmitry Zachko, CEO at Plitwood, to find out when the plant is planning to reach its full capacity, what markets the products will be shipped to, what support measures are available for the plywood industry, and much more.

What sizes of plywood are you going to produce? Are there any specific features of producing Nordeco Plywood?

Our equipment has the capacity to produce a wide range of plywood sizes, both conventional like 4×8, 8×4, and 5×10, and rare ones—5×11, 5×12, and 5×13, which are made by few enterprises in Russia and globally.

Our plans for the nearest future also include producing dimension stock by clients’ requests. We have the facilities to make such a product at our plant.

There are no specific features of producing Nordeco Plywood; this is quite a conventional product.

What industries are you going to make your product for? Will the plant produce tanker plywood?

Our plant makes water-resistant birch plywood with phenol-formaldehyde resins. This type of product is used in transportation machinery-building (light and heavy commercial vehicles, maritime containers), construction (in structures and assemblies, as system formwork and architectural solutions), and furniture and packaging production.

As for plywood for tankers—yes, we will make this kind of product.

Are you planning to produce any other types of woodworking products besides plywood and biofuel?

No, for the time being, the plant is planning to make only Nordeco exterior-grade birch plywood, plywood laminated with various films, including Nordeco color films, and wood briquettes.

What companies supplied the equipment? How are you going to do maintenance on your production lines in the future?

Our key requirement to equipment is consistent operation and high performance: minimum downtime, maximum raw material output, high product quality, etc. That is why we used equipment made by leading European, Asian, and Russian companies.

We will primarily do maintenance on our production lines ourselves. We are also planning to involve specialized firms in certain types of operations.

Are you still dependent on supplies of spare parts and components from European equipment producers?

There is a problem with supplies of spare parts and components, but it is solved through efforts of Russian producers involved in import substitution and parallel import.

How are you planning to solve the problem of log supplies? Are you going to purchase from third-party suppliers or from other assets of Cherepovets Plywood and Furniture Plant and VLP Group? Or maybe do your own timber harvesting?

The Department of the Forest Industry of the Vologda Region assigned an AAC of 1.2 million m³ to us in order to provide our production site with raw material.

We are going to harvest from this felling site together with Vologodskiye Lesopromyshlenniki Group. We are also going to involve third-party suppliers if it makes financial sense.

When is the company planning to reach its full design capacity (180,000 m³ per year)? 

The company’s reaching its full production capacity depends on several factors: setup completion on all process lines, the employee hiring and training rate, and the demand for our product. Under favorable circumstances, we are looking at 12 months to reach the production capacity.

What share of the product are you planning to supply to the domestic market?

20% of the output is supposed to go to the Russian and CIS markets.

What are your target export destinations now, when the European market is unavailable? Do you have any major contracts with foreign buyers yet? 

We are planning to export our product to markets in the Near East, North Africa, Southeast Asia, South America, and CIS countries.

Plitwood takes active part in specialized trade fairs overseas (in Turkey, Uzbekistan, India, the UAE, etc.) to find potential consumers of plywood and sign long-term contracts.

At the moment, we have reached agreements and signed contracts for product supplies with several foreign customers.

Where are you planning to ship wood briquettes?

In view of the current situation in the market, we will focus on domestic customers.

Which state support measures for Russian plywood producers are currently lacking, in your opinion?

We believe that important dimensions of state support are improving the logistics situation, specifically, increasing the quotas on shipping finished products in the eastern direction, and negotiating with friendly countries to lower or cancel import duties.

On the other hand, we definitely appreciate the program of subsidizing the costs of product transportation via northwestern ports. We are counting on this tool to have a positive impact on the industry.

In 2021, a historic high of 4.5 million m³ of plywood was produced in Russia. When and under what circumstances can such a production output be achieved again, according to your forecasts?

First of all, the domestic demand needs to be incentivized. This will increase the sales of high-quality products within the country.

We also need to normalize the level of transportation tariffs, as I have already mentioned. This will make it possible to develop new markets and successfully compete in places where our plywood used to lose because of high delivery costs.

But the most important factor is the renewed growth of the global economy as a whole that will entail a rising demand for high-quality products made in Russia.