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October 15, 2020

Analysis: Damaged wood and coronavirus, two major challenges for the German sawmill industry

Analysis: Damaged wood and coronavirus, two major challenges for the German sawmill industry

In the German economy, Corona has led to a severe slump. The gross domestic product (GDP) in the 2nd quarter of 2020 is 10.1% lower than in the 1st quarter of 2020 and thus experiences the strongest decline since 1970. According to current estimates, economic research institutes expect the GDP for 2020 to be about 7% lower.

The extensive efforts of the German government to support the economy were welcomed and also used by the economy. The 700 million euro economic stimulus package is also important for the sawmill industry. This is intended to preserve the forests, among other things, by providing for the conservation and sustainable management of forests and extensive modernization and digitization projects. In addition, a greater use of wood as a building material is to be promoted. The 2.5 billion euro CO2 building renovation program and the reduction in value-added tax also fit in with this. Our companies can also benefit from the €25 billion as a bridging aid for small and medium-sized companies with corona-related loss of sales, as well as from additional programs for the energy-related renovation of municipal buildings and climate adaptation measures at social institutions.

Coping with the amount of damaged wood, which increases again significantly in the 4th year, the German sawmill industry is additionally challenged by the corona pandemic.

At the beginning of the year, there was still a justified hope that the sawmill industry would be able to make its contribution to coping with the increasing amount of damaged wood in 2020 by cutting more logs. Against this background, the Corona pandemic has had a considerable impact on the sawn timber markets. In particular, the temporary lockdown and closure of borders in several neighboring countries, but above all the severe impairment of long-distance exports to Asia to important consumer countries have significantly reduced export opportunities. Restricted exports unsettle the sawmills and lead to restrained production.

In the meantime, it has become apparent that the individual customer sectors of the sawmill industry are developing very differently under the limited possibilities during the Corona pandemic.

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