Call to tackle challenges facing the sawmill industry

26 June 2017

Paul Brannen MEP, member of the Environment, Public Health and Food Safety Committee, co-signed a letter to the European Commission which outlines the difficulties of the European hardwood sawmill sector. The letter calls for an action plan to tackle the challenges this manufacturing sector is facing and for the European Commission and the European hardwood producers to establish a roundtable between them to investigate possible and appropriate measures. In the past 10 years, about 350 sawmill plants have shut down only in Belgium, France and Germany. There are currently 89 sawmills in England, of which 10 are located in the North East, but numbers have been gradually declining in the past two decades.    

The letter (below) was also signed by:
Maria Noichl MEP (S&D)
Alessia Mosca MEP (S&D)
Norbert Lins MEP (EPP)
David Borrelli MEP (EFDD)
Jean-Paul Denanot MEP (S&D)
Maria Arena MEP (S&D)
Edouard Martin MEP (S&D)
 

"In the light of the difficulties that the European hardwood sawmill sector is facing, a coalition of Members of the European Parliament calls on the European Commission to investigate the impact caused by the subsidies given by the Chinese government to their wood-processing industries.

A roundtable between the European Commission and the European hardwood sawmill producers should be established as soon as possible in order to investigate possible and appropriate measures. An action plan to tackle the challenges this manufacturing sector is facing should be elaborated in the framework of the future European Industrial Strategy and in future questions of international trade.

In the study “An assessment of the cumulative cost impact of specified EU legislation and policies on the EU forest-based industries” commissioned by the EU Commission from the research centre Technopolis and published in November 2016, it is clearly mentioned that “in order to reduce the dependency on imported raw materials, the Chinese government provides subsidies and loans to support the industry’s expansion”. Such subsidies have been provided by both central and local governments and aim to “develop fast growing, high-yield plantations; reduce taxes and fees on plantations to stimulate investment; reduce tariffs on imports of processing machinery; promote exports of wood and paper products through value-added tax (VAT) rebates; provide loans and loan-interest subsidies for technology renovation; promote foreign investment in state-owned enterprises (SOEs) and protect debt-ridden SOEs and small local companies with excess-production capacity through local governments’ soft loans, subsidies”.

Moreover, China has announced that it will reduce the import VAT for logs from 13% to 11% starting from 1st July. This policy aims at reducing import costs for logs and encouraging more import volumes – especially as less timber is harvested in China.

As a consequence of a growing demand for timber and tighter domestic forest protection laws, China has become the world’s largest importer and processor of logs. China imported 48.7 million m³ of logs in 2016, an increase of 9% since 2015. Of the total log imports, softwood log imports were 33.7 million m³ (+13% as compared to 2015), while the hardwoods were 15.1 million m³ (+2%). Imported temperate hardwood logs (beech and oak) mainly came from Europe, accounting for 56% of the overall temperate hardwood imports. Lax environmental regulations, shortcomings in the respect of basic labour and social rights, subsidies and market distortions determine comparatively low labour and production costs in China.

Taking into consideration the past 10 years, about 350 sawmill plants have shut down only in Belgium, France and Germany. This is largely due to competition with non-European companies, which are buying high quality hardwood logs to be exported and processed outside Europe, depriving European sawmills of necessary raw materials. It is undeniable that the lack of material availability is causing an irreversible process of deindustrialisation. Moreover, it has been our common ecological goal to strengthen stable mixed forests in Europe. A part of this common goal is also to preserve the sector, which is able to process hardwood logs. The current developments put the sector all over Europe at risk.

Manufacturing Industry plays an irreplaceable role in driving growth and economic development. Additionally, the European sawmill industry contributes to the development of green jobs, particularly in rural areas and provides a basis for higher-added value products to be manufactured in the European Union from its natural resources. For this reason, it is essential to preserve the existence of this sector and possibly to enhance its competitiveness."

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