VLP Group reports a crisis in woodworking in the Northwestern Federal District

Alexey Churkin, Chair of the Board of Directors at Vologodskiye Lesopromyshlenniki Group, spoke at the meeting of the Union of Timber Manufacturers and Exporters of Russia and highlighted the acute problems currently faced by the woodworking industry in the northwestern part of Russia.

Specifically, Alexander Churkin reported that timber harvesting in the Vologda Region dropped by 31% from April to August 2022, sawn timber production reduced by 12%, and plywood output, by 26% compared to the same period last year. He also noted that these indicators showed no upward trend. Mr. Churkin additionally mentioned that sawn timber production and sales in October were loss-making, citing one of the Group’s sawmills as an example. It sold products to Egypt, China, South Korea, and the domestic market with a profit margin of -19%.

“I believe that real support measures are required at the government level to organize logistics chains at true market value, using Northwestern ports, hiring container lines, subsidizing export transportation costs, and supporting the investment in building new ships to carry export cargos. It is also necessary to increase the number of crossing points for railway shipments to China, remove all the remaining barriers to exporting processed products, and subsidize the interest rates on loans taken to implement priority investment projects.

The current situation in the industry certainly requires immediate and significant support measures for timber enterprises by the government, and real experts from the timber business should be involved in developing such measures. As for Vologodskiye Lesopromyshlenniki, we are always ready to participate in developing collective actions,” Alexander Churkin said in his presentation.