Although veneer-based plywood has its origins in England 200 years ago, its industrial manufacturing is rooted in the development of the wood processing industry in Finland. The plywood industry has undergone significant structural changes over the past few decades, and as a result, smaller factories have now closed shop and plywood manufacturing in Finland is concentrated in the factories of UPM, Metsä Wood and Koskisen Oy.

The business model of the plywood industry is increasingly centred around know-how, manufacturing technology management and customer service. Plywood is produced from Nordic softwood and birch, which are suitable for plywood applications that require durability. According to Mika Sillanpää, EVP of UPM Plywood, the success of Finnish plywood in demanding end-uses stems from many generations of manufacturing experience and know-how.

Global trends favour the use of plywood

According to Mika Sillanpää, EVP of UPM Plywood, major global development trends are increasing plywood use across several industries. “Urbanisation increases new construction with plywood, but the material also has many potential uses in renovation and expansion. Simultaneously, the growth of e-commerce has increased freight traffic, where plywood is a key material for floors in the construction of transport equipment.” 

According to Sillanpää, plywood’s light weight is a major asset in the transport industry. “Green values are constantly increasing the demand for renewable and lighter materials,” says Sillanpää.

“The objectives set in the fight against climate change increase the use of wood-based renewable products in all construction. We are also improving environmental friendliness by phasing out the old fossil based phenol adhesives used in plywood manufacturing and replacing them with renewable lignin-based options.”

The construction of liquid nitrogen (LNG) tanks has been a stable business for three decades. UPM’s success in the industry is based in particular on the insulation properties of birch plywood in extremely cold conditions. During transport, temperature of the gas is a chilling minus 163 degrees, and birch plywood has been found to maintain its strength well despite the extreme sub-zero temperature.

“LNG tankers are large, which means that their construction consumes large volumes of plywood. One tanker needs one to three thousand cubic metres of plywood, depending on the insulation technology. The transport of LNG is on the rise, which is reflected in the construction of suitable transport vessels,” concludes Sillanpää.

In addition to the construction industry and the construction of transport equipment and LNG tanks, plywood is produced for the furniture industry as well as interior decoration and parquet manufacturing. “Typically, these end-uses consume high-quality plywood in the higher price ranges, and we have invested in manufacturing development and an end-customer service network to serve these customers.”

New investments to increase plywood production

Construction is on the rise in Europe after a long slump, and the rise has significantly increased the demand for plywood. Construction is plywood’s largest end-use sector. According to Sillanpää, the plywood business has positioned itself as a material producer in the construction industry and has no interest in venturing too far into the realm of its customers’ end-uses.

“When we operate through distribution chains, we are free to sell to any wholesaler we wish. In terms of the amounts of plywood used and consumed, it is not of great importance to us whether the construction method is concrete or wood. Concrete construction uses plywood in casting molds, among other things.”

Most of the plywood used in construction is softwood plywood. Birch plywood, being stronger and more valuable, is used in industrial processing. Two cubic metres of softwood are needed to make one cubic metre of plywood, whereas the same amount of birch plywood requires three cubic metres of birchwood. “The availability of birch will be a major challenge in future as Finland and Russia are the only areas where the tree grows in the abundance required by industrial use.”

“The expansion of the Chudovo plant in Russia is an important step in the implementation of our future strategy, which involves securing raw material supply. Our goal is to further strengthen our position in the most important end-uses of plywood. The added capacity for birch plywood is competitive, which improves our ability to meet the growing demand of key markets,” Sillanpää reminds us.

Sillanpää estimates that availability of raw materials will increase as a side effect of new pulp mill investments. “As the demand for all timber increases, the availability of the types of wood needed by mechanical wood-processing industries should improve in the wake of the increased pulp production. And since we buy the most expensive part of the log, this is good news for forest owners, as well.”

According to Sillanpää, Finland has a good reputation in the wood product industry as both a supplier and an exporter. “We use certified wood in our processing, and we have no ethical problems in our production.”

UPM has invested in production increases in Finland and Estonia in recent years and is currently expanding the plywood plant in Chudovo, Russia, as well. The total value of the investment is EUR 50 million. The investment will increase the plant’s production capacity by 45,000 cubic metres – raising the annual total to 155,000 cubic metres – and will expand the plant’s product range. A new biomass power plant is also being built in the factory area.

UPM Plywood is the leading plywood manufacturer in Europe, supplying plywood and veneer for the needs of the construction and transportation industries in particular. The company also produces UPM Grada wood material, which is suitable for compression moulding. The company operates in ten different countries, with a total of nine factories and nearly 2,500 employees. Turnover last year was EUR 484 million. 

This article is part of a series by Markku Laukkanen and Mikko Viljakainen. The series presents a variety of best practices and trends in the Finnish wood industry. The aim is to spread information about best practices and solutions in the Finnish wood industry to increase its competitiveness and make Finnish expertise more widely known. The articles will be published in Finnish and in English. They will be made freely available for use as source material and for publication as they are. The articles will be distributed as Puuinfo newsletters and will also be published on the puuinfo.fi and woodproducts.fi websites. The article series is funded by the Ministry of the Environment’s Wood Construction Operational Program.