Rus News Journal

In Russian lesprome there should be accurate game rules

interview to vice-president UPM - Kymmene Arto Juvonenom

One of the world`s largest timber industry companies UPM - Kymmene among the first has come to Russia. However till now the basic business of the company in our country is concentrated mainly in timber cutting sphere. Thus to put up money in building new derevoobrabatyvajushchih capacities in Russia the Finnish company does not hasten yet. About what strategy in Russia adheres UPM - Kymmene, to the correspondent daily to MICHAEL FADEEVU the vice-president of the company ARTO JUVONEN tells.

- Recently UPM - Kymmene has begun re-structuring of the Russian actives. For what purpose the company has started this reform?

- We wanted to build normal corporate structure which would include all functions necessary for business dealing in Russia. In particular, it is logistics, HR, the finance and communications. Before re-structuring all our divisions among themselves did not co-operate in any way and worked separately from each other. This process has begun only last year, but already now it is possible to tell that the company structure is built how we wanted.

- the Mainstream of activity of your company in Russia is wood preparation. You could estimate scale of this activity? What part of wood bought in Russia goes for export?

- last year we have bought an order of 5 million in cubic m of raw materials, from them 1 million has been used to Russia which has remained in 4 million we have put for export. Thus Tikhvin lespromhoz which enters in UPM, prepares about 300 cubic m of wood.

As to production which we make in Russia, and it is plywood, a birch interline interval and saw-timbers, about its third is on sale in home market, and the rest goes for export.

- How the company sobi ­ raetsja to increase volumes of preparation of wood?

- First of all we want to raise efficiency Tikhvin lespromhoza as there there are possibilities for this purpose thanks to introduction of new techniques of timber cutting and use of experience which is saved up the companies in timber cutting sphere.

- What regions are interesting to the company as raw or industrial base?

- At present it is regions in which we work. As to manufacture, now it is concentrated to Novgorod ­ skoj areas, lesozagotovitelnye the enterprises are in Severo - the Western region, and we sell production in big cities, in is frequent ­ nosti in Moscow.

- For the last years foreign, in particular Finnish, the companies more and more actively enter the Russian timber industry market. It concerns not only large tselljulozno - the paper companies, but also derevoobrabatyvajushchih. Than interest foreign lesopromyshlennikov to the Russian market is caused?

- the Situation in Russia is very simple: the big source of raw materials, thus last years the market for paper and production sale derevoobrabotki grows. Costs, in particular cost of timber cuttings, energy, labour At the same time grow.

- whether your company of the investment into creation of new capacities on deep processing of wood Plans?

- When UPM the decision on any investment plans makes, it considers a situation as a whole, thus Russia is only one of the markets for the company, and now at UPM - Kymmene there are no plans on building new derevoobrabatyvajushchih the enterprises in Russia.

- your basic competitor - Stora Enso - was already defined with region where this company will build TSBK. At the same time your company, as far as it is known, showed interest to participation in creation Udorsky TSBK? Whether it was defined UPM - Kymmene with plans concerning this project?

- the Unique concrete plan in which we are involved, is the civil-engineering design our affiliated company Metsa Botnia TSBK in the Leningrad or Vologda area.

- Why the majority of the western companies prefer to build TSBK in the countries of the South America and avoid Russia?

- First of all it is caused by environmental conditions - there it is possible to use wood in ten years after landing, besides, is not present sharp klimatiche ­ skih fluctuations, therefore timber cuttings can be conducted all year long.

- last year your company has closed some enterprises in Europe. In what the reason?

- Closing of the enterprises has been connected with paper overproduction in Europe. These measures have allowed to raise profitableness of the company and the remained factories.

- Closing the enterprises in Europe where UPM opens the new enterprises?

- Metsa Botnia builds cellulose factory in Uruguay, also we actively develop the manufactures in China.

- Why in China?

- There the huge population and sharply grows demand for a paper.

- In the Irkutsk region for suppression of illegal transportation of wood special wood terminals and wood yards are created. How you consider, whether will help to stop it illegal export of wood? What measures, in your opinion, optimal in the decision of it serez ­ nogo a question?

- We do not conduct activity in the Irkutsk region, therefore it is difficult to us to estimate efficiency of measures which there have been accepted. But we consider that the system developed and accepted in UPM on tracing of an origin of wood which assumes regular check of suppliers, brings the results and allows to struggle with illegal cabins. It is difficult system which includes some elements. First of all it is correctness of registration of the documentation according to requirements UPM which it shows to suppliers, and also it is geoinformation si ­ stema which traces system of preparation of wood. Thus the system has been created specially for Russia, as in other countries, where more than the certificated wood, a situation another.

- whether you expedient Consider norm of new edition of the Wood code according to which on lesopolzovatelej the duty on infrastructure creation on the rented sites is assigned? Whether it is necessary state blow ­ stvu to support lesopolzovatelej in this question?

- it is difficult to tell, how these costs, but that the most important for the manufacturer so it is final cost of wood will be redistributed. If cost suddenly strongly increases, it will have negative consequences for all branch. But, of course, the state should make efforts to develop a wood infrastructure.

- your company besides timber cutting and wood processing is engaged in Russia and sale of paper production. In what regions of Russia production UPM uses the greatest demand and who is your competitor in Russia?

- the Basic commodity market of our paper is Moscow as a lot of journal production here is published. Also we deliver production and in other big cities of Russia. Sales of office paper are in regular intervals distributed on regions. The basic competitors in the market of office paper for our company are large rossy ­ skie manufacturers. In the market of a journal paper we compete to the leading world companies.

- whether acceptance of the new Wood code Will promote increase in investments in Russian LPK? What problems can arise at its realisation?

- When all necessary amendments, only will be approved then it will be possible to understand, how it will affect an investment climate. At the same time I would not like to make the recommendation to the Russian government. Thus I would like to pay attention that the Finnish wood legislation totals more than hundred years, game rules there are already known, and for investments into branch stability both the accurate and settled game rules first of all are important.

Arto Juvonen has left school economy in Helsinki in 1977. The formation has continued at Technological university of Helsinki, having received a speciality of the engineer on derevoobrabotke in 1981, and also degree MBA at University Juvjaskjulja in 1996. It has begun the career in 1981 in Schauman (affiliated company UPM) as the engineer on sales. Then four years headed company branch in Tokyo, and in 1989-1992 was the manager on control and the finance, subsequently the manager on sales in the French division in Rouen. With 1992 for 1999 was responsible for development of a product and company strategy in Savonlinne. In 2000 it is appointed by the vice-president of division on manufacture of plywood UPM - Kymmene Corporation. C on June, 1st, 2004 Arto Juvonen heads the Russian division UPM.