 | |
Commonwealth
Forests | | |
 Issues
From a business point of view, ‘mainstream’ forest products industries are grappling with a
number of related issues. They include competition from other industries, subsidies to other
industries by certain countries, lack of innovation in product development, changing consumer
tastes, and new trade complexities.
The industrial forest products industry is undergoing a period of rapid change. On the one
hand it is facing significant competition from other materials such as plastics, steel, and
aluminium in various applications; on the other hand, it is facing competition from other
industrial sectors such as energy, where cogeneration processes are competing for wood for
use in pellet plant installations.
The industrial challenges that have emerged with these two changes are further compounded
by the eagerness of governments to assist – some refer to this support as subsidies. This
distorts product pricing, raw material flow, land use economics and even market acceptance.
It is also generally agreed that the industry is not being particularly innovative; its investment in
research and development is relatively low compared to other industries and there is a distinct
lack of new product development. The blame for this is largely laid at the feet of the financial
indicator ‘return on capital employed’, which has been relatively low for a long period of time.
The industrial forest products industry is also facing a new type of final consumer, one whose
tastes are changing, at least in many cases, to a non-rational use of wood or related products.
The consumer is demanding greener products too, and as a result the industry as a whole
has had to adopt standards, such as certification, that aim to demonstrate that the wood
product is coming from a sustainably managed forest.
Forest products trade is being hampered by the coupling of the forest as a raw material source
to the profitability of the manufacturing sector. This means that in many countries barriers are
erected to the free flow of logs. In addition, there has been a rise in non-tariff trade barriers
such as certification and phyto-sanitary standards which may discourage trade.
| 
