Sweden’s Setra Plans Closure of Horndal Pine Sawmill

on May 29, 2012
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Sweden’s largest wood products company, Setra is planning to close its Horndal pine sawmill in Avesta, Sweden. The unsatisfactory profit situation and a declining market for the products produced at the site as well as the need for substantial investment should the mill continue to operate are the background to the planned closure, which is still under discussion.

Earlier this month Setra announced that negotiations with employee representatives were to begin on the basis of the Swedish Co-determination Act (MBL) regarding the closure of the company’s Horndal sawmill in Avesta, Sweden. The Swedish MBL is intended to promote employee participation in decision-making on employment and working conditions in the broadest sense. And as Setra has recently announced in a press release, closure of the Horndal plant will affect about 35 employees, some of whom will take part in the MBL negotiations.

Setra further reported that the reasons for the sawmill closure plans are the major investment needs, the weak earnings development and the declining market for Horndal’s specialised product range. Hornald, in which roughly 32,000 cubic metres of pine lumber were produced in 2011, is a specialised sawmill for veneer logs, mainly high-quality logs from slow-grown Swedish pine and spruce. Their range of products have traditionally been used for window-scantling and small furniture production. Buyers are primarily window-manufacturers and smaller boutique furniture companies in Europe. Recently the market for these types of products, however, has been declining, causing unsatisfactory income generation by Setra’s Horndal.

!m[](/uploads/story/174/thumbs/pic1_inline.png) “The market for Horndal’s high-quality specialist products is shrinking due to structural changes in the customer base,” said President and CEO of Setra, Borje Bengtsson. “As small specialised joineries disappear as customers, the previously profitable special product range accounts for an ever diminishing share of sales from Horndal,” he continued.

Horndal sawmill is part of Setra’s Redwood business area which is responsible for sales of sawn redwood products to industrial customers primarily in Scandinavia, the UK and North Africa. And as the window industry in this geographical catchment area, which is Setra’s most important customer group in terms of volume, has cut back its production, the company’s earnings have also been affected. “Earnings development for the Horndal sawmill has been weak for a long time. The unit also has major, urgent investment needs which cannot be justified in the present shrinking market situation,” said Mr Bengtsson.

Setra is Sweden’s largest wood products company, operating twelve sawmills with an annual production of approximately 2.3 million cubic metres of sawn timber, and six processing units for the manufacture of panels, mouldings and floors. The company has about 1,000 employees and annual sales of approximately SEK 4.5 billion, of which exports – primarily to the UK, Denmark, Germany, Spain, Norway and Japan. Setra’s shareholders are about 2,400, the largest of which are Sveaskog AB (50 per cent), Skogsägarna Mellanskog ekonomisk förening (26 per cent) and Lantbrukarnas Ekonomi AB (23 per cent). Other shareholders own approximately one per cent of the shares. According to the company’s representative, the closure of Horndal sawmill is an unfortunate but necessary decision to consider. “It is an onerous task to make a decision to close Horndal, but we cannot continue to operate a unit that makes a loss year after year,” Mr Bengtsson said.

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