A return to Central Europe

It came as a big bang: Last Friday, Holzindustrie Schweighofer announced the acquisition of the Klausner Holz Group's sawmill in Kodersdorf, Saxony/DE (see link 1). After the competition authorities gave the green light, the Schweighofer Group not only expanded its sawing capacity by 675,000 m³/yr which makes for a total of 2.7 million m³/yr for the group, the deal also constitutes a return to Central Europe. For the first time since October 2001 (see box below), Holzindustrie Schweighofer will be producing lumber in a German-speaking country. The group’s expansion to the West didn’t go very far, though: Kodersdorf is located in the immediate vicinity of the Polish border, and this is for good reasons.

Synergies within the group

The sawmill’s size is impressive – the above mentioned sawing capacity, its 34 ha-property and its capacities for drying 700,000 m³/yr and planing 400,000 m³/yr of softwood lumber. "The site will be integrated into our group", the owner, Gerald Schweighofer, explains. The necessary supplies will come from forests in Germany, Poland and the Czech Republic, and procurement organizations are already in place in the two eastern countries; in the Czech Republic the group even  owns forest areas.
At the moment, the sawmill is operating in a two-shift cycle, but after a transitional period Schweighofer intends to implement a three-shift operation as soon as possible to utilize the site's full capacity. Schweighofer's optimistic conclusion after his on-site inspection: "The facilities are only ten years old and in great condition".

In their press release, the group confirmed the takeover of all 250 employees and announced plans for an expansion. Schweighofer is considering investments in processing structures to manufacture products for the retail market and DIY customers. Bearing in mind the approval period for the takeover, the sawmiller does not want to reveal any further details at this point. What he explicitly rules out, though, is the upgrade with a second saw line that had originally been planned for the site.

Another possibility which Schweighofer is considering is transporting lumber from Kodersdorf to Romania for post-and-beam production for the Japanese market and core board production. "Of course, we also want to step up sales in the bordering markets Poland and Germany", Schweighofer says.

As soon as the closing is complete, Schweighofer – more precisely Dr. Anna Bauthen GmbH (DABG) – will be taking over marketing of international shipments. Up until now this, has been handled by Klausner Trading International, Oberndorf (Tyrol/AT). Schweighofer is gradually taking over the Vienna-based wood distributor DABG: Currently, the Schweighofer group owns 25% of DABG, but their aim is to acquire 75% by the beginning of 2016. Furthermore, DABG will be responsible for supplying lumber from Kodersdorf to the MENA-region.

The sales volume in Western Europe will be restructured and the marketing organization set up accordingly.

Jan Krause, the current plant manager, will continue to be in charge of production, while the Schweighofer headquarters in Vienna are taking over the management of the site for the time being. "In the medium term, the Viennese team will be supplemented by one manager from Germany", Schweighofer elaborates.

The Austrian sawmiller does not rule out further expansions to Central Europe, although at this point there are no ongoing negotiations; potential acquisitions would have to fit in with the Schweighofer Group’s concept. "That is why we showed interest in Rettenmeier's sawmills in the East" - but, as is known, these plants went to the Cordes Group – lock, stock and barrel.

Western Europe instead of Russia

The acquisition of Kodersdorf represents a reorientation of the Schweighofer group towards the West, even more so considering that Schweighofer categorically excludes an expansion into Russia. Schweighofer owns land in the Ukraine, and they are continuously enhancing the basic infrastructure there, without an actual date for the construction start of a new sawmill though.

Schweighofer has to deal with renitency in their core country Romania: The Romanian parliament, for instance, has passed a bill that prohibits an enterprise from purchasing more than 30% of a certain type of timber. It is not clear to what extent this is going to affect the Austrian company's business, as the influential implementing regulation has not yet been published. Schweighofer makes it clear that in case of supply restrictions he will take legal action. "It is possible that by the fall, Romania will have a new government that finally takes measures to fight corruption in the forest sector", he says.

In another matter, the situation improved, however: The sawmill in Reci – its completion has been already months ago – will become operational "within days or weeks"; the relevant environmental permit has already been issued. For the biomass plant, however, further approvals are pending. Despite all disputes, Schweighofer is positive: "Currently, the supply of our Romanian plants is excellent and they are running on full capacity."
Investigations by the Romanian Ministry of Environment were causing further trouble. 40 officers had examined the two sawmills for evidence for illegaly logged wood, but the results have not been disclosed. Schweighofer critizes the public authorities' lack of transparency: "We are told virtually nothing". The accusations have lead to internal consequences though: "For instance, we stopped buying wood from national parks altogether, even though it would be legal in certain regions."

Schweighofer is not alarmed by the announced moratorium on Ukrainian round wood exports, as the WTO and the EU vehemently oppose the proposed trade barrier. "Not all has been said and done here."

Evidently, Schweighofer is confronted with a lot of challenges in the East. When asked if he is planning on operating sawmills in his homeland Austria again one of these days, Schweighofer laughs. "I don't see that happen in the near future."

Background

From the Austrian countryside to international grounds
Since 1974, Gerald Schweighofer has been expanding his parents' business to an international enterprise. With several sawmills in Austria (Brand, Ybbs, Sollenau, Bad St. Leonhard) and the Czech Republic (Plana, Ždirec), Schweighofer signed a merger with Stora Enso in 1998 to become the biggest lumber producer in Europe. This not only refers to their high-capacity sawmills but also to successfully opening up the Japanese market. In 2001, Stora Enso took over Schweighofer's shares who withdrew from wood processing altogether and started investing in real estate - only to return by building a sawmill in Romania in 2003. Today, Holzindustrie Schweighofer is running three processing sawmills (Radauti, Sebes, Reci) as well as two board factories (Siret, Comanesti) in the Carpathian country. A pulp mill in Hallein/AT is another one of the group's assets.

High-performance sawmill in Kodersdorf, Saxony

The sawmill in Kodersdorf was launched on the 22nd of December 2004 as the third German plant of Klausner Holz. The sawmill worth € 45 million with a Springer-Linck line was designed to serve as an export base; 90% of its lumber was to be sold abroad. With a three-shift operation, they achieve a sawing capacity of 675,000 m³/yr, with an additional 700,000 m³/yr of drying capacity and 400,000 m³/yr of planing capacity; apart from that they are running two 10 MW bio mass plants. Spruce and pine timber is being processed.