Metsä Wood's leap in growth

EUR 100 million in production of Kerto LVL and plywood

At the beginning of June, Metsä Wood announced a development programme for the Kerto LVL and plywood business, the investments of which focus on Finland and Estonia.

Metsä Group wants to carry out its ownership strategy to the best of its ability. It is therefore essential for us to find competitive uses for logs in the future as well. In the wood products industry, demand is growing particularly in construction and the light transport industry. Competition is tough and global.

"The reason why Metsä Wood's development programme became topical right now is that some of our production facilities are starting to experience renewal needs due to their age. The markets have also shifted in a direction that requires us to anticipate and increase the share of specialty products with higher profit margins within our overall production to improve our competitiveness,” says
Esa Kaikkonen, Metsä Wood's Executive Vice President.  

A response to market changes

Investments of this magnitude – EUR 100 million – are significant in the history of Metsä Wood.
“Investments represent an important leap of growth for us; they are investments in specialty products and the improvement of productivity, in particular,” says Kaikkonen. 

“The demand for Kerto® LVL is driven by urbanisation, which is creating new, special needs for construction products. It is our view that the amount of prefabrication will grow in all construction: the elements and modules are prefabricated in industrial halls and then erected quickly on the construction site.  Kerto's excellent strength properties combined with lightness make it an ideal product for this type of construction,” says Kaikkonen.

Kaikkonen considers the entry of competitors into the LVL markets a positive factor for Metsä Wood:

“Our Kerto product makes us a pioneer in this business in Europe, and we've operated in this market practically alone since the 1970s. This is the first time we are seeing others having faith and investing in this business, which is definitely a good thing.”

“Customers must be able to organise competitive bidding between suppliers – it increases credibility in the eyes of developers. This is why the LVL markets are likely to grow with increasing speed in the future, as more operators join the market. With regard to Kerto, our own investments create efficiency, which spurs growth and improves competitiveness.”


Image by Sergio Gracia

In birch plywood, the main market lies in the transport industry.

“By investing in birch plywood, we gain a stronger foothold in specialty products and thereby the fastest growing customer segments,” says Kaikkonen.

Competing on price for bulk products with manufacturers in low-cost countries does not appeal to Kaikkonen.

“Competition in the traditional softwood plywood has increased, and many producers are nowadays not only able to manufacture these products, but to meet the service capabilities Central European customers require. For us, it seems natural to seek growth for Metsä Wood through new customer accounts with the help of specialty products and from new markets. This is also what our investment in the research of a softwood-based specialty plywood product is based on.”   

Better competitiveness through capacity

Metsä Wood's investment programme brings changes and renewals to a number of production facilities.

The annual production capacity of Lohja's Kerto LVL mill is about to increase by approximately 20,000 cubic metres as two old production lines are replaced by a single, new one.

“A bigger, more cost-effective production line cuts fixed costs per cubic metre. Our quality level will also continue to improve, which will strengthen our position particularly in markets outside Europe,” says Kaikkonen.


The Suolahti mill is subject to plans that concern an annual production capacity of approximately 60,000 cubic metres for a specialty product based on softwood veneer. The commercial negotiations and trial runs are under way right now – the final investment decision will be made later.

“In terms of traditional softwood plywood, our most cost-effective competitors come from South America. The basic spruce plywood of the Nordic countries has retained its competitiveness fairly well: it's an easy and good-quality, basic construction panel. We've also developed spruce plywoods protected against mould and with moisture-proofing properties, for instance, which are ideal for construction needs in Nordic countries or the British Isles, among other places,” says Kaikkonen.

“We should nevertheless move towards a product with a higher degree of processing. Investing in a new product takes nothing away from current products. Rather, we're planning an increase of 60,000 cubic metres to the current selection. This is equal to roughly 40 per cent growth in comparison to Metsä Wood's current production in spruce plywood. ”

New birch plywood mill in Estonia

A new production facility for birch plywood is on the drawing board with regard to Metsä Board's former paper machine hall at Äänekoski. Given that it will operate in the same mill area as the bioproduct mill, the energy solution for drying, for example, is very competitive. The veneer will be dried, loaded in trucks and transported to the plywood mill to be built in Estonia, where the further processing line for birch plywood, currently located at Suolahti, is to be moved.

“Birch plywood production will continue at Suolahti, too, but its production capacity and the number of workers will be lower. The overall number of employees in Central Finland should nevertheless remain unchanged due to the softwood-based specialty product and Äänekoski's new veneer mill,” says Esa Kaikkonen.  

“All in all, the number of Metsä Wood's employees in Estonia will be approximately 200 people, and the number of indirect jobs in Finland, wood supply and logistics included, will increase by about 100.”

The new plywood mill will be built in southern Estonia, either in Pärnu or Tarto.

“The cost of transporting veneer to Estonia will not weaken the investment calculations, since the distance to the end customers in the main markets will shorten at the same time, and we will open up increasingly wide opportunities to use various kinds of logistics partners and solutions. The good domestic raw material and competitive wood supply, combined with quality and Estonia's lower cost level, result in a special competitiveness,” says Kaikkonen.

All things considered, the annual production volume of birch plywood is set to grow by approximately 30,000 cubic metres through the investments.

300,000 cubic metres more log wood

From the perspective of forest owners, the investments in Finland are welcome news. The total investments announced by the forest industry increase the need for wood by approximately 10 million cubic metres annually, with logs accounting for 3–4 million of this. When implemented in full, Metsä Wood's investments in the Kerto LVL and plywood business will increase the use of wood by roughly 300,000 cubic metres. The impact will be felt primarily in the wood supply areas of South and Central Finland.

“We're not seeing problems in the availability of domestic birch. There is a sufficient amount of birch in the forests, and given that the industry's total investments increase the felling of all wood, we believe that at least enough birch will enter the market to meet the increasing consumption,” says Esa Kaikkonen.

“Nor are we planning to make plywood from Estonian or Baltic birch. Based on estimates, all of the local raw materials will be in full use through the investments of our competitors, meaning that the growth of production in Estonia will continue to be based specifically on imported veneer.”

All of the steps related to Metsä Wood's investment programme should be complete by the end of 2018. The effect on the financial results will be fully visible during 2019. 

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