Italian marketplace loses significance

The traditional meeting of representatives of the Austrian wood working industry and the Italian import associations was held on 15 March in Verona/IT. Traditionally, the main topic of the meeting was the wood trade fair Legno & Edilizia. On the contrary to previous times, the fair was goverened by tristesse this year – only slightly more than a hall was sparsely filled with exhibitors.

Empty halls reflect the market situation

"Dreary as it was, the exhibition is somehow a reflection of the present market situation in Italy", said Christoph Kulterer, Chairman of the Austrian sawmill industry, who lead the mini delegation in Verona. "But the contacts that we were able to make this year were very significant. In a sence you could say: Sales in Italy are getting more and more high-grade." With this, Kulterer is alluding to cross-laminated timber – a product of high added value – which is currently the only product with increasing sales.

Two-thirds renovation

Only 36% of revenues in the construction business are currently generated on new buildings. 64% come from the renovation projects. Until now, no Italian government has been formed yet. But even before the elections there was agreement among the parties to make living in Italy more ecological. Says Kulterer, "The issue will probably be brought up now: old residential blocks will be replaced by ecologically sound constructions."
Yet there is a lack of finances in Italy. The liquidity of all market participants has continued to deteriorate. "It is estimated that 50% of the approved projects will not start simply because there is no money," says Kulterer. Therefore, the construction activity this year might drop by another 5%.

State owes to companies

"The public sector owes the Italian entrepreneurs a total of € 148bn – that includes € 70bn which were not paid to the construction industry", it was said in Verona. "Communities, regions, state institutions – all are bad payers." A € 50bn-bond is said to be issued soon. It is supposed to pay the crediting companies. For some this might be too late.
"Italian companies are paying badly because they are being badly paid", said Dr. Carl-Erik Torgersen, President of the Federal Commission of the Austrian Timber Trade, pinpointing the problem.

Fewer and fewer logs

At the same time, the Italian buyers learned that Austria's imports of roundwood has constantly been decreasing. From 7 million cubic meters at peak times, they have come down to only 4.5 million cubic meters at the moment.
"On top of that we get less and less wood from domestic sources," says Kulterer. "The forest owners already have announced this would happen this year. If 100 fm had earned them € 8,000 a while ago, they are getting as much for 80 fm now. In 2012, our production went down 9%. The market is ready to absorb the same amount of products this year as in 2012. Yet round timber shortage could thwart that."

Italy receives fewer goods

Kulterer stressed that there will be good business to be done in Central Europe this year. At present, construction is calm due to adverse weather conditions, but it should ramp up after Easter. " In 2012, the large Austrian industries have successfully been looking for replacement markets. For Italy, no longer every grade will be available in any quantity this year", Torgersen pointed out.
In case increasing selling prices in Italy will prove unsuccessful, even lower amounts of goods will arrive there, both Austrians representatives agreed. "I hope the Italian friends will get sufficient shipments," said Torgersen. "But they will probably have to accept certain conditions in order to be adequately supplied with wood products."
Only a few years ago, Italy was a reliable buyer of two thirds of Austrian softwood lumber exports. This share fell to "only 54%" last year. It is possible that 2013 will see it drop to below the 50%-mark.

Austro-Italian model contract successfully revised

The paramount importance of the Austro-Italian relations are also reflected in the bilateral trade agreements. A key element is the standard contract Contratto tipo. Over a span of several years it was renewed and officially signed on 15 March.

Who's counting right?

It was told as an anecdote in Verona, that in 2012 the Italian import statistics corresponded well with the Austrian export record: Both reported a 19%-decline of Austria lumber landing in Italy. Usually, statistical differences used to be greater. Italian import statistics on glue-laminated timber seem to reflect reality much better: -15% – as opposed to the official Austrian figure of +17%.