Thursday, 26 June 2008

Finnish Wood Industry to Be Bailed Out by Tax Payers

"Minister for Foreign Trade and Development Paavo Väyrynen says a possible solution in the timber tariff dispute with Russia is the Finnish state reimbursing companies for their losses and then recouping these funds by tolling Russian trucks transiting through Finland"

I can't believe that... So the Finnish wood industry, not only didn't reform itself but has been unable to compete against foreign wood company that have long been suucessfull in the russian soil.

Now it's the tax payer that will pay the wood company to stay profitable. I might understand why they madereforms in the social sector, saving needed to rescue an ill industry...

Below is a report showing that not all paper companies are doing that bad :

"Mondi Group, then a unit of Anglo American Plc, bought into the Syktyvkar mill in northern Russia in 1996 and took control six years later. The company's Russian earnings grew 13 percent last year, to 546 million rand ($68 million), and it's investing 525 million euros to increase capacity.

``Mondi has an extremely profitable pulp machine, they have the infrastructure, and they know how to deal with the Russian side,'' Kjellberg said.

International Paper last year spent $620 million to acquire half of Ilim Group, Russia's largest pulp and paper producer, with $400 million in annual earnings before interest, taxes, depreciation and amortization.

The U.S. company will add about $100 million to profit next year from the Ilim venture, according to J.P. Morgan analyst Claudia Shank Hueston. International Paper has also owned a pulp and paper mill near St. Petersburg since 1998

It has been highligted that under pressure, politicians are slowing reforms and not allowing the necessary changes to have companies ready to compete in the world stage, but it won't happen. Again I'm wondering if it's all about lobby pressure or simply preparing the next election again?? -it's really bad-

Consequences can be dramatic for the Finnish economy, if Russia is to counter the tolling measures unless the government is playing poker, that is, just bluffing...

No comments: