inno-forest 24. may 2005 iisalmi, finland

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Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS SKOGSFORSKNINGSINSTITUTET FINNISH FOREST RESEARCH INSTITUTE www.metla.fi Prefabricated Wood Frame Components – towards A Prefabricated Wood Frame Components – towards A Sustainable Competitive Advantage among SME’s in Sustainable Competitive Advantage among SME’s in Woodworking Industries Woodworking Industries INNO-FOREST 24. May 2005 Iisalmi, Finland INNO-FOREST 24. May 2005 Iisalmi, Finland

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INNO-FOREST 24. May 2005 Iisalmi, Finland. Prefabricated Wood Frame Components – towards A Sustainable Competitive Advantage among SME’s in Woodworking Industries. INNO-FOREST 24. May 2005 Iisalmi, Finland. - PowerPoint PPT Presentation

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Page 1: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Prefabricated Wood Frame Components – towards A Prefabricated Wood Frame Components – towards A Sustainable Competitive Advantage among SME’s in Sustainable Competitive Advantage among SME’s in

Woodworking IndustriesWoodworking Industries

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Page 2: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Prefabricated Wood Frame Components – towards A Sustainable Competitive Advantage among SME’s in Woodworking Prefabricated Wood Frame Components – towards A Sustainable Competitive Advantage among SME’s in Woodworking IndustriesIndustries

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

ContentsContentsWood in European Construction Wood in European Construction

Forest - Based IndustriesForest - Based Industries

Timber Use in European House Construction Timber Use in European House Construction

Roadmap 2010 for the European Woodworking IndustriesRoadmap 2010 for the European Woodworking Industries

Residential house construction in FinlandResidential house construction in Finland

Demand Structures in Residential House Construction in FinlandDemand Structures in Residential House Construction in Finland Supply of Wood Components, Modules and ElementsSupply of Wood Components, Modules and Elements

Competitive advantages of wood constructionCompetitive advantages of wood construction

Vertical Profile & Subsidiary in Architecture – New Town Planning Vertical Profile & Subsidiary in Architecture – New Town Planning

New Town Planning – wood pilot alternativeNew Town Planning – wood pilot alternative

Competitive factors of SMEs in Woodworking IndustriesCompetitive factors of SMEs in Woodworking Industries

Challenges to wood - forest product chainChallenges to wood - forest product chain

Success factors of Finnish woodworking industry SMEs in a changing competitive Success factors of Finnish woodworking industry SMEs in a changing competitive environment environment

Page 3: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Wood in European ConstructionWood in European Construction

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Forest Based IndustriesForest Based Industries

Costs of input factorsCosts of input factors

Cost of EU raw material resourcesCost of EU raw material resources:: most important competitiveness factor among EU woodworking firmsmost important competitiveness factor among EU woodworking firms

Labour costs and labour productivityLabour costs and labour productivity: : determine the relative competitiveness among countries inside EUdetermine the relative competitiveness among countries inside EU

Productivity, automation and modernisationProductivity, automation and modernisation: : key priorities to compensate high labour costskey priorities to compensate high labour costs

Eastern European countriesEastern European countries: : labour cost advantages constitute a key driving force for capacity investments labour cost advantages constitute a key driving force for capacity investments in woodworking industryin woodworking industry

Firm size and value creation integrationFirm size and value creation integration

SMEs: SMEs: Adopted frequently the fully integrated production covering from basic raw materials (sawn-wood Adopted frequently the fully integrated production covering from basic raw materials (sawn-wood and and panels) to end-products panels) to end-products

M&LEs: M&LEs: Apply flexible production model with a) pre-planned delivery schedules for components, b) Apply flexible production model with a) pre-planned delivery schedules for components, b) assembling assembling and finishing of end-products as their core business and finishing of end-products as their core business

Business networkBusiness network: : Allow efficientuse of competitive advantages among partners against low raw material and Allow efficientuse of competitive advantages among partners against low raw material and labour cost supply labour cost supply

http://europa.eu.int/comm/enterprise/forest_based/forestry_en.htmlhttp://europa.eu.int/comm/enterprise/forest_based/forestry_en.html

Page 4: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Wood in European Construction Wood in European Construction

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Forest Based IndustriesForest Based Industries

Small and medium-sized enterprisesSmall and medium-sized enterprises

engines of economic growth and employment throughout the European Unionengines of economic growth and employment throughout the European Union

main policy topics: main policy topics:

improvement of framework conditions for SMEs, improvement of framework conditions for SMEs,

financial instruments and programmes in support of SMEs financial instruments and programmes in support of SMEs

enlargement, pre-accession and co-operation with non-member countries.enlargement, pre-accession and co-operation with non-member countries.

support and encouragement on SMEssupport and encouragement on SMEs::

Increased education and training for entrepreneurship, Increased education and training for entrepreneurship,

Cheap and fast enteprise start-up Cheap and fast enteprise start-up

Eased 1) legislation and regulation 2) taxation and 3) other financial matters Eased 1) legislation and regulation 2) taxation and 3) other financial matters

Availability of skills and strengthening the technological capacity Availability of skills and strengthening the technological capacity

Improving online access and use of e-business models Improving online access and use of e-business models

Developing top-class small business support Developing top-class small business support

Strong, effective representation of SME’s interests at Union and national level Strong, effective representation of SME’s interests at Union and national level

http://europa.eu.int/comm/enterprise/forest_based/forestry_en.htmlhttp://europa.eu.int/comm/enterprise/forest_based/forestry_en.html

Page 5: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Wood in European ConstructionWood in European Construction

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Competitive Advantages

tangible input factors

Forest wood:

annual rate of EU wood resources used = 70% of growth

remaining 30% includes forests that are not suitable or available for industrial use.

complementing wood supplies from outside are needed

intangible input factors

R&D and innovation and skills

Mergers, clustering and knowledge sharing with other linked industries have all helped to create a high level of R&D, innovation and skills within the Forest Based Industries in the EU

increased technological know-how has increased production efficiency and quality.

Increase by working closely with Forest cluster ie. related sectors, such as machine and equipment suppliersprocess designers, etc

http://europa.eu.int/comm/enterprise/forest_based/forestry_en.htmlhttp://europa.eu.int/comm/enterprise/forest_based/forestry_en.html

Page 6: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Wood in European ConstructionWood in European Construction

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

European woodworking industries promote European woodworking industries promote

policies to get demand for wood products to growpolicies to get demand for wood products to grow

integratoin of sustainable value chains into national and EU policies to create more favourable regulations.integratoin of sustainable value chains into national and EU policies to create more favourable regulations.

repair on the current EU renewable energy policy to properly acknowledge the industry’s interest in rationally utilizing repair on the current EU renewable energy policy to properly acknowledge the industry’s interest in rationally utilizing the value-added potential of wood raw material before bio-energy use the value-added potential of wood raw material before bio-energy use

growth opportunities for trade in engineered wood products (EWPs) in the short term. growth opportunities for trade in engineered wood products (EWPs) in the short term.

new applications for EWPs in factory-built housing components if historical growth rates are to continuenew applications for EWPs in factory-built housing components if historical growth rates are to continue

the Conformité Européen (CE) Marking in the BJC segment to be extended to several new building products in 2005-the Conformité Européen (CE) Marking in the BJC segment to be extended to several new building products in 2005-2006, following the entry into force of the CE marking on plywood in 20042006, following the entry into force of the CE marking on plywood in 2004

Mr. Jukka Tissari, Mr. Craig Adair, and Dr. Al Schuler Mr. Jukka Tissari, Mr. Craig Adair, and Dr. Al Schuler http://www.unece.org/trade/timber/docs/fpama/2003/fpama2003a.htmhttp://www.unece.org/trade/timber/docs/fpama/2003/fpama2003a.htm

Page 7: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Roadmap 2010Roadmap 2010

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Woodworking Industry Structure:Woodworking Industry Structure:

Partially consolidated, with some large groups but very many small and medium sized companies Partially consolidated, with some large groups but very many small and medium sized companies

Companies remain very small compared to steel and concrete industries Companies remain very small compared to steel and concrete industries

Customers are consolidating more quickly than the suppliersCustomers are consolidating more quickly than the suppliers

Companies are smaller in Europe than in North AmericaCompanies are smaller in Europe than in North America

MarketsMarkets::

Increase the per capita consumption of wood products in a profitable and (as now) sustainable way Increase the per capita consumption of wood products in a profitable and (as now) sustainable way

Develop new markets outside EuropeDevelop new markets outside Europe

Wood SupplyWood Supply : :

Balance the usage of wood raw material between various interests in the societyBalance the usage of wood raw material between various interests in the society

BarriersBarriers::

Overcome weaknesses of wood at technical/educational level Overcome weaknesses of wood at technical/educational level

Perception:Perception:

Make wood products the leading material and preferred Make wood products the leading material and preferred

Choice in structural and appearance applications, packaging and transport with the public at large Choice in structural and appearance applications, packaging and transport with the public at large

Industry StructureIndustry Structure::

Maintain relative competitiveness of the European production capacity (SME enterprises) Maintain relative competitiveness of the European production capacity (SME enterprises)

Promotion Promotion ::

Effectively promote the interests of the industryEffectively promote the interests of the industry

Page 8: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Roadmap 2010Roadmap 2010

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Building with wood:Building with wood:

Goal 2010Goal 2010 - - double wood based materials’ market share in constructiondouble wood based materials’ market share in construction

Main Actions:Main Actions:Changes in the construction and wood supply chainsChanges in the construction and wood supply chains

European building system and inter-changeability / modularity of building components through standardization processEuropean building system and inter-changeability / modularity of building components through standardization process

Planning toolboxes, e.g. CADCAM, and web sites to share information Planning toolboxes, e.g. CADCAM, and web sites to share information

Industrial and non-industrial codes & standards if not availableIndustrial and non-industrial codes & standards if not available

Needs of non-housing applications (i.e. industrial, commercial, heavy structures, etc.)Needs of non-housing applications (i.e. industrial, commercial, heavy structures, etc.)

Harmonized standards for Engineer Wood Products to ensure the smooth introduction of innovative wood products into Harmonized standards for Engineer Wood Products to ensure the smooth introduction of innovative wood products into the construction chainthe construction chain

Removal of institutional, technical, economical and perceptional barriers & regulatory limitations on the use of woodRemoval of institutional, technical, economical and perceptional barriers & regulatory limitations on the use of wood

Use environmental credentials of wood.Use environmental credentials of wood.

Roadmap 2010 for the European Woodworking Industries. Action Program. CEI-Bois in collaboration with TIMWOOD. Roadmap 2010 for the European Woodworking Industries. Action Program. CEI-Bois in collaboration with TIMWOOD. Stockholm, March 2, 2004. Stockholm, March 2, 2004.

Page 9: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

House construction (residential) House construction (residential)

mrd €mrd €

new housesnew houses 99 ( 60 ( 60 %)%)

repairrepair 6,66,6 ( 40 %) ( 40 %)

TYPES TYPES (new units)(new units)

• residentialresidential 29 50029 500

• free time & saunasfree time & saunas 12 00012 000

• TOTALTOTAL 41 50041 500

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Demand Structures in Residential House Construction in FinlandDemand Structures in Residential House Construction in Finland

Page 10: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Wood frame - residential constructionWood frame - residential construction

Wood frame Wood frame • only reference construction in multi storey housesonly reference construction in multi storey houses• competitive in row house constructioncompetitive in row house construction• dominate in single house constructiondominate in single house construction

WOOD FRAME

TYPE units % units %f lat (multi storey) 11500 39 115 0,8

flat (row ) 5000 17 3000 21

single houses 13000 44 10920 78

RESIDENTIAL TOTAL 29500 14035

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Demand Structures in Residential House Construction in FinlandDemand Structures in Residential House Construction in Finland

Page 11: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Wood frame – single house construction Wood frame – single house construction

Wood frameWood frame dominant market share - growth only through growth in total market demanddominant market share - growth only through growth in total market demand half or more based on pre- fabricated componentshalf or more based on pre- fabricated components

residential TOTAL wood frame* free time & saunas*** WOOD FRAME TOTAL

TOTAL 13000 90 % 12200 23900

pre fabr comp. 62 % 56 50 % 56

in situ 38 % 34 50 % 44

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Demand Structures in Residential House Construction in FinlandDemand Structures in Residential House Construction in Finland

Page 12: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Demand segments BtoC & BtoB Demand segments BtoC & BtoB (residential houses and free time houses)(residential houses and free time houses)

BtoC construction BtoC construction 86 %86 %

BtoB constructionBtoB construction 14 % 14 %

Transfer from BtoC to BtoB do not change the share of wood frame but can increase the use of pre fabricated Transfer from BtoC to BtoB do not change the share of wood frame but can increase the use of pre fabricated modulesmodules

BtoC: private person direct entrepreneur contractsBtoC: private person direct entrepreneur contracts

BtoB: construction entrepreneur & business network (upflow) BtoB: construction entrepreneur & business network (upflow)

pre fabricated Residential single houses

% %

BtoC I (wood frame) 20 47**

BtoC II (wood frame & in situ asembl) 55 29

BtoB I (wood frame & entr. contr.) 20 11

BtoB II (complete delivery) 5 3

** full in situ construction included

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Demand Structures in Residential House Construction in FinlandDemand Structures in Residential House Construction in Finland

Page 13: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Markets & production & foreign tradeMarkets & production & foreign trade

features of home market industriesfeatures of home market industries competitive export production competitive export production competitive power of import lowcompetitive power of import low

milj. € HOME MARKET SALES DOM. FIRMS EXPORT IMPORT NET EXPORTEXPORT % OF

DOMEST. PROD.IMPORT % DOMEST.

MARKET

TOTAL 1106 1425 386 67 319 22,4 6,1

w ood houses 317 437 150 30 120 27,5 9,4

w indow s 339 340 8 7 1 0,2 2,1

doors 104 151 57 10 47 31,1 9,6

parqette 111 180 80 11 69 38,6 9,6

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Demand Structures in Residential House Construction in FinlandDemand Structures in Residential House Construction in Finland

Page 14: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Demand segments in wood frame house construction - BtoC & BtoBDemand segments in wood frame house construction - BtoC & BtoB

(Demand for pre fabricated wood modules)(Demand for pre fabricated wood modules)

Multi storey house Multi storey house (BtoB markets) (BtoB markets)

Demand: Demand: Missing, CA in construction based on concrete elements Missing, CA in construction based on concrete elements

Supply: Supply: A few product innovations available, process innovations missingA few product innovations available, process innovations missing

Row houseRow house (BtoB markets)(BtoB markets)

Demand: Demand: Competitive, in situ construction preferred due to the customer oriented Competitive, in situ construction preferred due to the customer oriented differentation options. Strong competition with concrete elements in pre- fabricated differentation options. Strong competition with concrete elements in pre- fabricated

module markets module markets

Supply: Supply: Cost efficient process innovations missing in module productionCost efficient process innovations missing in module production

Single house Single house (BtoC markets)(BtoC markets)

Demand:Demand: Competitive, majority of production is in vertically integrated large firmsCompetitive, majority of production is in vertically integrated large firms

Supply:Supply: SME’s following differentiation strategy (supply to BtoC and BtoB markets) SME’s following differentiation strategy (supply to BtoC and BtoB markets)

Single house Single house (BtoB markets)(BtoB markets)

Demand:Demand: Competitive, CA in construction based on concrete elements Competitive, CA in construction based on concrete elements

Supply:Supply: SME’s following differentiation strategySME’s following differentiation strategy

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Page 15: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Production of Wood Houses (TOL 20301)Production of Wood Houses (TOL 20301) prefabricated wood house frames (assembling in factory or in situ)prefabricated wood house frames (assembling in factory or in situ)

High number of individual firms High number of individual firms Competition among major firms in product groupsCompetition among major firms in product groups

ENTERPRISES AND EMPLOYMENT

WOOD HOUSES OTHER WOODW. PROD. TOTAL

plants 260 750 1010

employment 5500 7000 12500

CONCENTRATION market share 80 % or

over

WOOD HOUSES* VINDOWS* DOORS**

number of f irms 9 8 5

* number of enterprises

** number of business units

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Supply of Wood Components, Modules and ElementsSupply of Wood Components, Modules and Elements

Page 16: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Supply of Wood Components, Modules and ElementsSupply of Wood Components, Modules and Elements

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Classifying taxonomyClassifying taxonomy

Pre- cut wood components Pre- cut wood components – – precision in dimensionsprecision in dimensions

Standardized modular elements Standardized modular elements –– learning by doing advantageslearning by doing advantages

Wall elements Wall elements – – access to mass tailoring access to mass tailoring

Pre- fabricated wood frame modules Pre- fabricated wood frame modules - - integrated assembling in factoryintegrated assembling in factory

Page 17: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Supply of Wood Components, Modules and ElementsSupply of Wood Components, Modules and Elements

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

On site constructionOn site construction

o unprocessed use of timberunprocessed use of timbero construction with pre- cut componentsconstruction with pre- cut components

Competitive advantagesCompetitive advantages

precision dimensions precision dimensions

positive scale economics through concentrated orderspositive scale economics through concentrated orders

flexible to architectural solutionsflexible to architectural solutions

Page 18: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Supply of Wood Components, Modules and ElementsSupply of Wood Components, Modules and Elements

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Competitive disadvantagesCompetitive disadvantages

Construction on siteConstruction on siteo weather challengesweather challengeso preservation of high quality workmanshippreservation of high quality workmanshipo labour intensivelabour intensive

Page 19: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Supply of Wood Components, Modules and Elements

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Pre- fabricated wood frame modulesPre- fabricated wood frame modules

Competitive advantagesCompetitive advantageso integrated assembling in factoryintegrated assembling in factoryo effective use of mass productioneffective use of mass productiono automatized production processesautomatized production processes o low labour input needlow labour input need

Page 20: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Supply of Wood Components, Modules and Elements

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Pre- fabricated wood frame modulesPre- fabricated wood frame modules

Competitive advantagesCompetitive advantages

o highly specialized craftmanshiphighly specialized craftmanship

o degree of factory finishing and assembling can be varieddegree of factory finishing and assembling can be varied

o indoor assembling – low quality variation possibleindoor assembling – low quality variation possible

Page 21: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Supply of Wood Components, Modules and Elements

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Pre- fabricated wood frame modulesPre- fabricated wood frame modules

Competitive advantagesCompetitive advantageso effective use of subcontractingeffective use of subcontractingo high applicability of specialized value networksshigh applicability of specialized value networkss

Page 22: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Supply of Wood Components, Modules and Elements

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Pre- fabricated wood frame modules Pre- fabricated wood frame modules

Competitive disadvantagesCompetitive disadvantageso profitability imply high utilization of production capacityprofitability imply high utilization of production capacityo large capital investmentslarge capital investments

Page 23: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Supply of Wood Components, Modules and ElementsSupply of Wood Components, Modules and Elements

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Pre- fabricated wood frame modulesPre- fabricated wood frame modules

Competitive advantagesCompetitive advantages o Syncronized delivery and site assemblingSyncronized delivery and site assemblingo Precision time schedulePrecision time scheduleo low labour input needlow labour input need

Page 24: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Vertical Profile & Subsidiary in Architecture – New Town Planning

Process innovations for new town planning that make production network/chain competitive with concrete module Process innovations for new town planning that make production network/chain competitive with concrete module frame?frame?

Product innovations applying wood based elasticity to make consumer specific solutions?Product innovations applying wood based elasticity to make consumer specific solutions?

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Page 25: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

New Town Planning – wood pilot alternative: Puu-Linnanmaa Oulu (BtoB, mainly in situ construction)New Town Planning – wood pilot alternative: Puu-Linnanmaa Oulu (BtoB, mainly in situ construction)

AreaArea: : 12 hectares, 12 hectares,

Total constructed spaceTotal constructed space: : 25 000 m2 25 000 m2

Aggregated space:Aggregated space: 20 000 m2.20 000 m2.

308 apartments, 45 wood frame multi storey houses (2-3 storeys) 308 apartments, 45 wood frame multi storey houses (2-3 storeys)

all buildings with wood fasade and majority wood frameall buildings with wood fasade and majority wood frame

inhabitants inhabitants 450-500 450-500

Page 26: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Vertical Profile & Subsidiary in Architecture – New Town Planning

Mixed demand segments to pre fabricated wood frame modulesMixed demand segments to pre fabricated wood frame modules

Case research: Karisto LahtiCase research: Karisto Lahti parallel BtoC and BtoB constructionparallel BtoC and BtoB construction subsequent subtowns – opportunities for chains based on partnership & leaning advantagessubsequent subtowns – opportunities for chains based on partnership & leaning advantages

Interview/questionnaire (2005): Interview/questionnaire (2005): BtoC: BtoC: - choice of wood frame type- choice of wood frame type

- competitive advantages among suppliers- competitive advantages among suppliers

BtoB: BtoB: - formation of business networks- formation of business networks

- use of product/process innovations- use of product/process innovations

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Page 27: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Challenges to wood - forest product chainChallenges to wood - forest product chain

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Competitive factors of SMEs in Woodworking IndustriesCompetitive factors of SMEs in Woodworking IndustriesInput factors/suppliersInput factors/suppliers

TimberTimber : : majority of firms have only some supply contractors which narrows their access to high quality timbermajority of firms have only some supply contractors which narrows their access to high quality timberLabourLabour: : excess demand of qualified workforce impeding systematic intellectual capacity increase excess demand of qualified workforce impeding systematic intellectual capacity increase CapitalCapital: : risky capital investments are insufficient in one third of firms risky capital investments are insufficient in one third of firms

Market/CompetitorsMarket/Competitors::

High demand elasticity among customersHigh demand elasticity among customers implying of price competitiveness implying of price competitiveness

Inferior position wrt house construction firmsInferior position wrt house construction firms implying oligopsony features in the marketimplying oligopsony features in the market

High barriers to entryHigh barriers to entry implying high cost competitiveness in the market and lack of implying high cost competitiveness in the market and lack of new competitive factors to entrancenew competitive factors to entrance

Parameters of market competitionParameters of market competition::

Dominant:Dominant: price, product quality, delivery and logistics price, product quality, delivery and logistics

MinorMinor: : R & D, marketing R & D, marketing

mail surveysmail surveys: 78 firms, 2000 (Petäjistö, Selby, Mäkinen 2001); 19 firms, 1998 (Mäntymäki 1998): 78 firms, 2000 (Petäjistö, Selby, Mäkinen 2001); 19 firms, 1998 (Mäntymäki 1998)

Page 28: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Competitive factors of SMEs in Woodworking IndustriesCompetitive factors of SMEs in Woodworking Industries

Summary on impeding factorsSummary on impeding factors

Slight business management planningSlight business management planning: : even large firms subsidize documented management even large firms subsidize documented management planning with systemic non documented management planning with systemic non documented management

planningplanning

Low investments to R & DLow investments to R & D; ; mainly oriented to product development mainly oriented to product development

Missing strategic planning and structure analysesMissing strategic planning and structure analyses ; However, use of MP do not explain performance ; However, use of MP do not explain performance

Missing generic strategies and benchmarkingMissing generic strategies and benchmarking: : only 20 % of firms apply these tools systematicallyonly 20 % of firms apply these tools systematically

Inferior market knowledgeInferior market knowledge: : also among firms is what concerns relevant customers and also among firms is what concerns relevant customers and market competitionmarket competition

mail surveysmail surveys: 78 firms, 2000 (Petäjistö, Selby, Mäkinen 2001); 19 firms, 1998 (Mäntymäki 1998), : 78 firms, 2000 (Petäjistö, Selby, Mäkinen 2001); 19 firms, 1998 (Mäntymäki 1998), expert surveyexpert survey: Industry Outlook 2003 : Industry Outlook 2003 Woodworking (Ministry of Trade and Commerce)Woodworking (Ministry of Trade and Commerce)

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Page 29: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

THE FOREST-WOOD VALUE CHAIN THE FOREST-WOOD VALUE CHAIN

Knotty furnitureKnotty furniturequality zonequality zone

Dry knot zoneDry knot zone

Nearly knotlessNearly knotlesszonezone

Sawmilling, paper and pulp industrySawmilling, paper and pulp industry

SawmillingSawmilling

Drying Drying

Planing Planing

Furniture Furniture

Wooden houses Wooden houses

SawntimberSawntimber

LamwoodLamwoodpreforms preforms

Lamwood panels Lamwood panels

Profile planedProfile planedproductsproducts

The use of coniferous wood The use of coniferous wood

Wood workingWood working

Best qualityBest qualityWood workingWood workingWeakest qualityWeakest qualityPulp productionPulp production

SourceSource: : Antero Lepojärvi, Lapin LiittoAntero Lepojärvi, Lapin Liitto

Pulp production /Pulp production /Structural timberStructural timber Construction components Construction components

Page 30: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Products & processing steps in the forest-wood value chain

•Roundwood production

•Roundwood harvesting and delivery

•Manufacturing of plywood, chipboard & fibreboard •peeling, chipping, defibration, gluing, laminating, pressing

•Sawmilling•Standard sawn timber

•Secondary & further processing of sawn or chipped timber •Special sawn timber products•Preforms and wood components for the carpentry, joinery and construction industry•Engineered wood products: LVL, Glulam, I-bars•Wood components for building construction

•Customer products•Prefabricated wooden frame houses•Joinery products: door and window frames, casings, parquet, flooring, staircases

Challenges to wood - forest product chainChallenges to wood - forest product chain

Deg

ree

of p

roce

ssin

g

Page 31: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Towards A Towards A Sustainable Competitive Advantage among SME’s in Sustainable Competitive Advantage among SME’s in Woodworking Industries - COST Action E30 Woodworking Industries - COST Action E30

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Action focus:Action focus:

New rural economic development through the creation of entrepreneurshipNew rural economic development through the creation of entrepreneurship

Firms with Sustainable Competitive Advantage (SCA)?Firms with Sustainable Competitive Advantage (SCA)?

Comparative advantageComparative advantage of (nations, clusters, industry groups, industries, firms) of (nations, clusters, industry groups, industries, firms)

Characteristics of a firm environmentCharacteristics of a firm environment wrt SCA: wrt SCA:

(i)(i) factor conditions, factor conditions,

(ii)(ii) demand conditions, demand conditions,

(iii) related and supporting industries and (iii) related and supporting industries and

(iv)(iv) firm strategy, structure and rivalry. firm strategy, structure and rivalry.

Under conditions of: political and legal structures, state of technological knowledge and Under conditions of: political and legal structures, state of technological knowledge and macroeconomics (Porter 1990).macroeconomics (Porter 1990).

Page 32: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Success factors of Finnish woodworking industry SMEs in a changing competitive environment Success factors of Finnish woodworking industry SMEs in a changing competitive environment

Enterprises, Innovations and Public Policy Related to Forestry-wood Value Added ChainEnterprises, Innovations and Public Policy Related to Forestry-wood Value Added Chain . .

February 11-12 2005, Joensuu, Finland. February 11-12 2005, Joensuu, Finland.

The purpose of the seminarThe purpose of the seminar: :

promote knowledge formation on challenges related to new SMEs in forestry wood-product value-chains promote knowledge formation on challenges related to new SMEs in forestry wood-product value-chains

in house and timber construction. in house and timber construction.

The special focus:The special focus:

business activities, product and process innovations in forestry wood-product value- chains, business activities, product and process innovations in forestry wood-product value- chains,

market supply and demand of wood products in house constructionmarket supply and demand of wood products in house construction

public policies associated with production, supply and demand of these wood products public policies associated with production, supply and demand of these wood products

http://www.metla.fi/tapahtumat/2005/woodconstruction/index.htmhttp://www.metla.fi/tapahtumat/2005/woodconstruction/index.htm

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland

Page 33: INNO-FOREST 24. May 2005 Iisalmi, Finland

Pekka Ollonqvist & Thomas.Rimmler METLA.Joe / METSÄNTUTKIMUSLAITOS

SKOGSFORSKNINGSINSTITUTET

FINNISH FOREST RESEARCH INSTITUTEwww.metla.fi

Success factors of Finnish woodworking industry SMEs in a changing competitive environment Success factors of Finnish woodworking industry SMEs in a changing competitive environment

METLA 2004-2008METLA 2004-2008

Katja Packalen*Katja Packalen* business networks and other co- operationbusiness networks and other co- operation

Thomas Rimmler**Thomas Rimmler** innovationsinnovations

Ashley Selby & Leena PetäjistöAshley Selby & Leena Petäjistö knowledge managementknowledge management

Pekka OllonqvistPekka Ollonqvist public policy & business environmentpublic policy & business environment

Mikko ToropainenMikko Toropainen macroeconomics of woodworking industriesmacroeconomics of woodworking industries

Eero VatanenEero Vatanen METLA house Joensuu (wood frame office)METLA house Joensuu (wood frame office)

Jari Kärnä (PuuOske) (assoc.)Jari Kärnä (PuuOske) (assoc.) technology programstechnology programs

Pekka Mäkinen (Univ of Hel,) (assoc.)Pekka Mäkinen (Univ of Hel,) (assoc.) business strategiesbusiness strategies

* STSM Nov. 2004 INEA Legnaro PD (Luca Cesaro)* STSM Nov. 2004 INEA Legnaro PD (Luca Cesaro)

** STSM spring 2005 BOKU (Ewald Rametsteiner)** STSM spring 2005 BOKU (Ewald Rametsteiner)

INNO-FOREST 24. May 2005 Iisalmi, FinlandINNO-FOREST 24. May 2005 Iisalmi, Finland