German Wood Products Industry Remains Under Economic Pressure

The economic situation of Germany’s sawmill and timber industry remains strained as weak construction activity, subdued export demand, and high production costs weigh on domestic companies, the German Sawmill and Wood Industry Association (DeSH) reported on June 20.

DeSH said the hoped-for recovery in Germany’s construction industry has yet to materialize, while demand for construction timber in key export markets remains subdued amid geopolitical crises and a global economic downturn. Persistently high raw material, energy, and production costs are also putting German production sites at a growing disadvantage in European markets.

Competitive pressure is intensifying both domestically and internationally, according to the association. DeSH said raw material and energy costs in Germany are the highest in Europe, while wood products produced in neighboring European countries and other markets with significantly lower costs are competing in German and international markets.

The effects are already being felt, with numerous companies extending plant inspection periods or reducing production. DeSH warned that without a recovery in sales markets and relief from production costs, further production cuts could lead to short-time work and additional job losses.

DeSH called for economic policies that improve the industry’s long-term competitiveness, including competitive energy and raw material supplies, less bureaucracy, and investment incentives for the construction industry and climate-friendly timber construction.