Nordic and Baltic countries, mostly covered by temperate and boreal forests (except Denmark and Iceland), are historical strongholds of wood and paper industry. This industry has undergone major changes in the past few years, with the building of large global groups out of a number of small industrial players, followed by a quick vertical integration movement, sharp changes in strategy and a still ongoing process of industrial restructuring.
Despite successive crises and a regular decrease in employment and production value, this sector remains extremely important and strategic for these countries. Crisis has been a strong incentive for innovation in the field, and there is no doubt that the region will remain an innovation magnet in a global wood and paper economy.
Finland and Sweden are major global players in the field. In Finland, the industry accounts for 17% of industrial production, 19% of total exports and almost 60 000 employees without including furniture (10 000 employees). In Sweden it reaches 11% of total exports and employs up to 82 000 people. In the 2007 list of the 10 biggest global wood-paper-packaging companies, 4 were Nordic. Stora Enso, created by the merger of Swedish Stora and Finnish Enso Gutzeit in 1998, is the world's second biggest player after International Paper (USA). Swedish SCA is 4th, Finnish UPM 6th and Metsäliitto 8th. These groups have a global presence and are investing heavily in industrial projects worldwide. Besides them, many medium and small companies produce furniture, plywood (Finland being the biggest producer in Europe) or building materials and rely heavily on exports.
With a broader view, the forest cluster includes also many mechanical industry specialists having their main product related to wood or paper. Examples include Metso, global leader in technologies and equipments for paper industry, or forest machine manufacturers. The cluster includes also producers of chemicals for paper industry like Kemira.
These countries are at the forefront of innovation. In Finland, many research activities are coordinated by the Forest Industry Future cluster. New products include development of new packaging, innovative labels or construction materials. There is also a greater focus on energy and environment issues, with a growing expertise in bioenergy use and production.
Norway is also a stronghold of wood and paper industry, that accounts for almost 11% of exports and has over 30 000 employees. Norske Skog is among the biggest producers of newsprint and magazine paper with 16 mills around the world. There are over 220 sawmills in the country. Whereas forest had almost disappeared in Denmark 2 centuries ago, reforestation gave birth to a small but dynamic wood processing industry, especially around furniture production, with no less than 16 000 employees as of 2008.
Baltic countries have well established wood industries, the main players being Finnish and Swedish groups. For example, Stora Enso has over 1000 employees in its Baltic production facilities, mostly in sawmills or packaging units. Wood, paper and furniture make up to 23% of Estonia's exports, almost 30% in Latvia and more than 5% in Lithuania. In all countries wood production and processing has been increasing steadily since independence, both under the effect of raw material shortage in Finland and the relocation of small industrial units in the Baltics to reduce the cost of labour force.