After peaking in summer 2021, activity has been in 'free fall' ever since
Notwithstanding the fact that business confidence rose to its highest level in the past five years by mid-2021, it nevertheless weakened month after month in the second half of 2021. Following the war in Ukraine in early 2022, business confidence in the wood processing industry almost went into free fall, with, fortunately, a slight positive uptick in April.
Evolution of turnover by product group
|In million euros||2020||2021*||21/20*|
|Wood-based panels||1.555,9||1.933,8||24,3 %|
|Wooden construction elements||913,1||1.194,5||30,8 %|
|Wooden Packaging||405,5||729,8||80,0 %|
|Miscellaneous wood products||179,9||198,4||10,3 %|
|WOOD INDUSTRY **||3.054,4||4.056,5||32,8 %|
Turnover growth partly due to sharply increased timber prices
Turnovers in the wood processing industry rose by fully 32.8% in 2021 compared to 2020 figures. This more than compensated for the loss of turnover during the first year of the corona crisis (-4.6% in 2020). Nevertheless, this sharp rise in turnover includes sharply higher timber prices, which were passed on. Output prices rose by an average of +19.2%, bringing the turnover growth in terms of volume to 11.4%.
Across all product groups, turnovers were higher in 2021. The largest rise was achieved in packaging (mainly pallets), where turnover rose by fully 80.0%; nevertheless, 66.9% was attributable to a rise in production costs. The rise in turnover in wood-based panels (+24.3%) and building elements (+30.8%) should be set against an average price increase of 13.5%. Other wood processing experienced a 10.3% rise in turnover in 2021 (rise of output prices +2.2%).
Exports a significant growth factor
Around 45% of wood turnover comes from exports. 85% of these wood exports are destined for the EU market, which saw a 40.7% rise in 2021. Here too, the price effect plays an important role. Deliveries to France, the most important export market with a 34.7% share, grew by 48.0%. The Netherlands (19.7% share) and Germany (14.6%) are the second and third most important markets and rose by 28.1% and 62.7%, respectively.
While Belgian wood exports grew by 35.3% worldwide, the growth in imports was just as large (+35.5%). China, the largest supplier of wood products to Belgium, still grew its deliveries by fully 60.2%, whereby its import share rose to 34.2%.
Investment and employment higher
In 2021, the capacity utilisation rate in the wood industry reached a historically high level of 88.8%. This led to a sharp 45.2% rise in investment in 2021, or €183.4 million. The positive effect on employment was not long in coming. Employment rose by 108 employees to 7,751 in 2021; +1.4% compared to 2020.
War in Ukraine clouds the outlook
Between the summer of 2021 and the spring of 2022, the conjuncture in the wood sector deteriorated significantly. While in the summer of 2021 there was still some optimism about the continued economic recovery, this had evaporated after the summer thanks to exploding energy and commodity prices. And in the spring of 2022, Russia's invasion of Ukraine completely dashed all hopes of a rapid economic recovery.
Also on the demand side, Western consumers kept their wallets closed, given that too much purchasing power drained away, being diverted to overpriced energy bills. Consumer confidence took a serious knock and does not seem likely to recover anytime soon. Even if the war turns out to be short-lived, it will never be possible for the economic damage to be fully made up during the year.