Currently, the Russian economy is facing unprecedented challenges. A ban or restriction on exports for entire industries, a drop in domestic demand, problems with logistics, import of technologies, equipment and components, and much more – all this leads not only to the need to find solutions to emerging problems, but also to the question of the depth of the expected decline and the ability of both individual enterprises and entire sectors of the national economy to survive a sudden crisis.
Unfortunately, both the timber industry of the Russian Federation as a whole and its important component, plywood production, have not escaped the problems described above in any way. Moreover, this industry is one of the most affected as a result of the imposition of sanctions. The ban on the export of timber products from Russia to "unfriendly countries", of course, turned out to be very painful, since the production of products is many times higher than domestic needs (which are also declining due to the crisis in construction, engineering and other industries).
The situation in the plywood industry looks much worse because of the high quality of products, no matter how paradoxical it may sound. Russian birch plywood is a premium product, characterized by both high physicochemical properties and a beautiful exterior. Accordingly, the demand for this product is mainly presented by developed countries, and without Europe and North America, the export of Russian plywood will be reduced by two and a half times. The only major consumer of Russian plywood outside the circle of "unfriendly" countries is not China (which buys Russian plywood not much more than Latvia or Estonia) or India (whose share in Russian exports is negligible at all), but Egypt.
It would seem that in such a situation, many commodity items could be reoriented to the largest Asian buyers: China, India and Turkey, but this is hindered by logistical problems. It is quite difficult to arrange deliveries from the Kirov, Vologda, Leningrad and other regions to the east or southeast: this is hindered by the congestion and the relative scarcity of railway tracks connecting the European part of Russia with Asia. The solution to the problem could be sea transportation, but in this case, manufacturers face a shortage of container fleet: the world's largest companies, controlling up to 80% of the world's container fleet, refuse to cooperate with Russian manufacturers and carriers. In addition, it is necessary to take into account the already mentioned quality factor and, accordingly, the high cost of domestic birch plywood, because consumers from Asian countries, as a rule, prefer lower-grade, but also cheaper plywood.
The situation on the world markets also creates additional difficulties. The largest economies are facing peak inflation over the past 40 years, GDP in the United States is declining, which means the official beginning of a recession, China is experiencing a crisis in the construction sector. All this has already led to a significant drop in prices for many raw materials, for example, non-ferrous metals, and, of course, means a drop in demand, including for plywood products.
These factors have already led not just to a reduction, but to a collapse in the volume of output. According to the owners of many plywood enterprises, in the summer of 2022, the underutilization of the capacities of their plants amounted to a catastrophic 60-80%. It is clear that enterprises cannot produce products at a loss, but it is also clear that in such conditions the industry will not be able to exist for a long time.
Of course, this situation causes significant concern to the authorities, both at the federal, regional and local levels, so there is some hope for support from the state, which will allow, if not to avoid the crisis at all, then at least mitigate its negative consequences. Owners and managers of the largest enterprises, for example, Alexey Mordashov and Anatoly Fishman, have already asked for such support.
What exactly could such support be expressed in? Since the main problem today is the reorientation to new sales markets, the reduction of tariffs, duties and trade barriers with "friendly" countries could be a priority support measure. In addition, the development of infrastructure projects could support domestic demand for plywood and thereby also ensure the expansion of sales markets for domestic producers.
In addition, a very likely weakening of the ruble will provide significant support. This measure affects the interests of not only plywood production or even the entire timber industry as a whole, but also export-oriented industries that traditionally provide most of the tax revenues to the budget and therefore are invariably in the focus of the government's attention: oil and gas, metallurgical, chemical industries. Therefore, a change in the ruble exchange rate at a faster pace than it is currently laid down in the forecast of the Ministry of Economic Development is also quite possible.
Finally, government support is highly desirable, which will not only increase the revenue of plywood enterprises, but also restrain the growth of their costs. For example, such a measure could be the freezing of rent for the use of forest plots, which would allow enterprises to control the costs of basic raw materials.
It is hardly necessary to count on the fact that all these support measures will be fully implemented. However, even some of them can significantly improve the situation in the industry and help many enterprises survive the crisis. Under these conditions, it can be expected that enterprises without excessive debt burden, whose managers and owners will be able to adjust logistics and reorient supplies faster than others, as well as quickly optimize costs, will not only be able to successfully overcome the crisis, but will also turn it to their advantage by developing new markets and expanding production, including through absorption less efficient or more credited competitors. It seems that in this case, the Russian plywood industry will not face a wave of bankruptcies in the coming years, but the consolidation of the market around its most effective participants, which will increase the efficiency of the industry as a whole and will have a positive impact on its competitiveness and development prospects.
