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Daily News / Market Analysis / Lumber / Sawmilling / Europe / Global / North America
December 19, 2016

Innovation critical to hardwood competitiveness

Innovation critical to hardwood competitiveness

There are significant opportunities to increase yield and reduce material costs in the international hardwood industry but these are being squandered due to high levels of conservatism and a widespread lack of capacity and willingness to innovate. There’s also a need to work towards a smarter regulatory environment, driven more by sound scientific data and less by the concerns of narrow lobby groups, to encourage innovation, improve competitiveness and stimulate trade.

These were key messages in an intervention by Mr. Hans Joachim Danzer, Chief Executive Officer of Danzer Holding AG, at the ECE Committee on Forests and the Forest Industry (COFFI) held in Geneva, Switzerland in October 2016. Mr Danzer delivered a presentation as part of a panel
discussion on “opportunities for and barriers to forest products from the perspective of the private sector".

Mr Danzer offered these views from the perspective of a company which is the largest producer of decorative sliced wood worldwide and amongst the largest producers of sawn hardwood in Africa and North America. Now headquartered in Dornbirn, Austria, Danzer has operations in the US, Canada, France, Germany, Czech Republic, and the Republic of Congo.

On the question of how to encourage more innovation in the hardwood sector, Mr Danzer said that ultimately the initiative must lie with the private sector.

However, regulators can contribute by putting in place a regulatory environment that encourages a “bottom-up process of creative destruction”.

In such an environment, innovative companies will succeed while those that do not innovate will fail.

Government authorities should seek to avoid the creation of perverse incentives, through poorly targeted subsidies or research grants and marketing support for government preferred technologies.

According to Mr Danzer, governments should aim to develop clear rules for international trade and place greater emphasis on negotiating and implementing free trade agreements by reviving and finalising the Doha Round. He also called on the EU and partner governments to speed up the FLEGT process and to expand the number of VPAs, while ensuring consistent implementation of existing demand-side measures like EUTR.

However, he also observed that there needs to be greater recognition that excessive regulation tends to favour large companies and that compliance is relatively more costly for small businesses.

Mr Danzer made a plea for markets to be kept open to timber products from developing countries. He noted that entry barriers to hardwood production are low and the hardwood sector is therefore well placed to contribute to development goals. If tropical timber products are valued in trade and thereby help to support the local population, there is a greater incentive to maintain the forests.

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