Rising prices and increasing competition are a problem for the wood industry

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  • In the long run, this will have a negative impact on the condition of the entire sector, because the smallest entrepreneurs, who constitute 70 percent of of all debtors of the wood industry may not withstand the pressure of rising prices and competition with large foreign investors.
  • Entrepreneurs from Silesia have the most to deliver – PLN 27.7 million. Next on the list are companies from Pomerania (PLN 13.1 million) and Greater Poland (PLN 12.9 million). The list of debtors with over PLN 10 million to return is completed by the Mazowieckie Voivodeship. Entrepreneurs from this region are in arrears with repayments of PLN 11.4 million. At the other extreme, i.e. with the lowest debt, there are entrepreneurs from the following voivodeships: Świętokrzyskie (PLN 1.5 million), Opolskie (PLN 2.6 million) and Podlaskie (PLN 3.2 million).
  • Silesia is also a leader in the statistics of the highest average debt. An average company from this province has over 100,000 jobs to be delivered. zloty.
  • At the same time, wood producers are creditors themselves. The difference is that these claims are not that clear anymore – they account for slightly more than 15 percent. the entire industry debt. According to an expert from the factoring company NFG, this problem will not worsen in the pandemic, because the wood industry is important for sectors such as industry, furniture production and construction. Even though the rising prices of materials and raw materials are overwhelming for any entrepreneur, no one wants to be cut off from the source of supply. Therefore, despite the high prices, the companies will settle their liabilities towards key contractors. The NFG research shows that in the pandemic, liabilities towards key contractors have increased in importance twice. Also, the money obtained as part of factoring, entrepreneurs spend primarily on the repayment of key contracts, immediately after settling current bills.

According to the data of the Polish Chamber of Commerce for the Wood Industry (PIGPD), the wood sector generates approx. 2.5 percent. national GDP. The industry directly employs approx. 350 thousand. employees. It also translates into many other industries, including transport, construction industry and producers of furniture, machines and devices for wood processing.

The pandemic had a big impact on the health of the industry. The raw material crisis in China and the USA caused a huge increase in demand for wood abroad, which translated into an increase in raw material prices. In such a situation, wood producers began to massively sell them for export. This led to a shortage of raw material on the Polish market and a further increase in prices. According to PIGPD, for example, in the case of a cubic meter of pine and spruce, even by 220 percent. Industry representatives are also concerned about the system of wood sales for 2022 proposed by the State Forests. According to the new rules, more than in previous years will go to auctions, which promote companies with a history of purchases. According to entrepreneurs, in such a case, entities purchasing wood and selling it abroad will be in a privileged position.

In the database of the National Debt Register, no significant economic downturn is yet to be seen. It is true that the indebtedness of the industry has been growing successively since the beginning of the pandemic, when it amounted to PLN 127.1 million, but so far the increase is slight and reflects the trend observed for years. The current situation, however, heralds future difficulties in functioning.

– At the beginning of the pandemic, the timber industry, like other industries, was still struggling with the problem of employment. The lack of workers, the shortage of raw materials, and hence the growing competition have led to currently very high prices of wood. In the long run, this will have a negative impact on the condition of the entire sector, because the smallest entrepreneurs, who constitute 70 percent of of all debtors of the wood industry may not withstand the pressure of rising prices and competition with large foreign investors. This may have an impact on other branches of the economy that are closely related to the wood industry, such as the production of furniture, says Adam Łącki, President of the Management Board of the National Debt Register of Biuro Informacji Gospodarczej SA.

Entrepreneurs from Silesia have the most to deliver – PLN 27.7 million. Next on the list are companies from Pomerania (PLN 13.1 million) and Greater Poland (PLN 12.9 million). The list of debtors with over PLN 10 million to return is completed by the Mazowieckie Voivodeship. Entrepreneurs from this region are in arrears with repayments of PLN 11.4 million. At the other extreme, i.e. with the lowest debt, there are entrepreneurs from the following voivodeships: Świętokrzyskie (PLN 1.5 million), Opolskie (PLN 2.6 million) and Podlaskie (PLN 3.2 million).

Silesia is also a leader in the statistics of the highest average debt. An average company from this province has over 100,000 jobs to be delivered. zloty. However, the changes can be seen in the following places. The second and third places are occupied by: voiv. Podkarpackie (PLN 67.4 thousand) and Pomeranian (PLN 66.6 thousand).

The wood industry has the greatest arrears, nearly PLN 96 million, towards representatives of the financial and insurance sectors. It’s 70 percent. all their debt. Further on the list of creditors there are entrepreneurs from the commercial sector who are waiting for the repayment of PLN 10.6 million. On the other hand, industrial companies want to recover PLN 6.6 million.

At the same time, wood producers are creditors themselves. With the difference that these claims are not that clear anymore – they account for slightly more than 15 percent. the entire industry debt. According to experts, this problem will not worsen in a pandemic, because the wood industry is important for sectors such as industry, furniture production and construction. Even though the rising prices of materials and raw materials are overwhelming for any entrepreneur, no one wants to be cut off from the source of supply. Therefore, despite the high prices, the companies will settle their liabilities towards key contractors.

– This is evidenced by our study “Business Payment Priorities”, which we conducted among companies from the SME sector. According to it, in the pandemic, liabilities towards key contractors have increased in importance twice. At the beginning of last year, when there was no crisis yet, the main suppliers were in fourth place from the end of the company’s list of payments – 18.7 percent. indications. After several months of the coronavirus crisis, the entrepreneurs realized that if the others failed, they too would be left with nothing. Therefore, commitments to strategic partners quickly became a priority for 36.8 percent. of the surveyed companies. Also, as we know from the entrepreneurs themselves, they spend the money obtained as part of factoring primarily on the repayment of key contracts, immediately after the settlement of current bills. Hence, I believe that in the coming months the problem of overdue receivables among wood suppliers should not gain momentum – says Dariusz Szkaradek, President of the Management Board of the NFG factoring company.


About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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