‘The Government betrayed the export industries’

…or so this Paper Workers’ Union press release says. I have absolutely no time at this moment to follow the debate on the budget negotiations, but apparently the government intends to aid the industry by somehow financing installations that clean sulphur emissions from ships and industry.
The president of the Paper Workers’ Union says that ‘we are afraid, that because of this decision [of limited assistance to the industries, presumably – PJH] investments and production will be transferred from the Finnish forest industries to competing countries’ (my translation).

There is probably more than a grain of truth in that statement, but there is also this:

  • At least since 1999, the percentage investments abroad by Finnish paper companies has been 50 to 75%
  • Finnish pulp and paper production has been slashed by already nearly 3.500.000 t/a since 2006
  • Interest levels are extremely low, so lack of investments is more likely due to lack of demand than dissatisfaction with public policy. On a broader scale, demand for pulp and paper in Europe will likely remain weak for years to come – growth can be found elsewhere and the Finnish paper companies know this.
  • As I have mentioned in a contribution to the debate in a Finnish daily newspaper, the Sulpur Directive can also be seen (at the somewhat longer term) as a great incentive to invest in biofuel technology which has the potential to a) create a new high tech industry and b) make the Finnish industry competitive for a world in which the Sulpur Directive is in effect. The low interest rates of this moment should make rapid investment a no-brainer, even when considering the uncertainty regarding the Eurozone economy, euro etc.

But yes, there might be more transfers of production abroad and less investments in Finland (in the traditional paper industry) but that has far less to do with public policy than with demand in Europe, overcapacity in Europe and the technical age of Finnish paper mills in comparison to elsewhere in Europe and the world.
Such are my thoughts this evening.

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