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Germany’s forest sector National benchmarks, regional clusters and the role of network initiatives Dr. Uwe Kies Wald-Zentrum, University of Mßnster, Germany uwe.kies@wald-zentrum.de

EFI Annual Conference 2010, Dresden, Sep 16, 2010 Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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The Forest Sector: a deep value-added chain

Outline  Forest sector concept  Findings from German case study  Forest cluster organization in the EU

Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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The Forest Sector: a wood-based cluster -An obvious concept of a peculiar sector

Construction

Panels

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Forest-based industries

Packaging

Sawmilling

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Crafts

Filière forêt-bois Furniture

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лесного комплекса Energy (Forest complex)

Forestry Suppliers

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Metsäklusteri

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Cluster Wald und Holz

NWFP, Services

Paper production

Publishing, Paper printing manufacturing Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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The Forest Sector: a major force in employment -Key figures Employees

Europe

Germany

(2005, EUROSTAT)

(2008, BA)

Cluster total Cluster, excl. publ. & printing:

5.4 million 3.6 million

857,200 550,300

Share of total economy (A-O)

3.3%

3.1%

Share of prod. industries (C-F) Country/State variances

15% 11-34% (DE, LV)

9.5% 4-12% (SAA, S-H)

Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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Germany’s forest sector: National trends -An unexpectedly large sector ... ... yet in disproportional decline

2008

6th rank position among producing industries (NACE C-F) Wald-Zentrum

Cluster total: -412,400; -32% Wood industries: -65,000; -32% Uwe Kies, Dresden, Sep 16, 2010

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Germany’s forest sector: Regional impact -Regional forest sectors -... can obtain leading positions in regional economies -Up to 15-20% of total employees, large deviation from national average of 3%

Forest cluster share of employees in German counties 2008

-... ensure employment in rural environments -Concentrations located in border locations and weakly industrialized regions

Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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Germany’s forest sector: Regional clusters -Sawmilling, 1999-2008 -Large clusters in West Franken (BW) -> growing, Black Forest (BW), Sauerland (NW), Niederbayern (BY) -> declining

-Local concentrations in East Isolated, but growing Emerged anew after 1990

-Cut-throat competition Large & growing locations vs. Small & declining in their vicinity -> on-going structural change Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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Germany’s forest sector: Regional clusters -Wood-based panels, 1999-2008 -Outstanding cluster in NRW 5,000 employees (30%) in 7 neighbouring counties

-Declining locations in West Strong losses in NRW and B-W Extinctions in Bavaria

-Growing locations in East New foundations Small local concentrations

Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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Germany’s forest sector: Regional clusters -Paper production, 1999-2008 -Major cluster in NRW 5,500 employees (28%) in Rhineland region

-Southern locations decline Strong losses in Bavaria

-On-going concentration Large & growing locations vs. Small & declining

Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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Germany’s forest sector: Regional trends -Western vs. Eastern Germany, small vs. large scale Sawmilling, 1999-2008

-Smooth decline in West in total: -8,300

-Structural shift in East Small + medium: -900 (-27%) Large: +1,600 (+178%)

-Locational factors labor costs, land values, advantageous infrastructure, and:

totals in bold, changes in italics

-Questionable role of federal subsidies ! Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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Forest cluster organization in the EU -Networks and cluster initiatives -Established Scandinavia UK Austria Czech Republic Slovenia -Emerging Germany France Eastern Europe -Embryonic Balkan Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010 Kies 2010 (non representative survey)

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Forest cluster organization in the EU -Improving inter-industry communication via knowledge exchange, networking, innovation           

Building networks among industry, public authorities & research Joint interest representation in politics (lobbying) Initiation of legislative reforms Public relations & marketing Information systems, platforms Education & qualification Business development, spin-offs Logistics, supply chain management R&D for innovation Wood mobilization ! A multitude of specific collaborative projects ...

Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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Forest cluster organization in the EU Selected established initiatives

Moravian Silesian Wood Cluster

German furniture cluster

Slovenian Wood Industry Cluster

www.forestryscotland.com ; www.holzcluster-steiermark.at ; www.cluster-forstholzbayern.de ; www.msdk.cz ; http://grozd.sloles.com/en ; www.zimit.de ; www.paperprovince.com Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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The Forest Cluster: Conclusions (1) -An “unknown, sleeping giant” ?  Rooted in the regions, the sector is a vital source for value added and employment in local SMEs, not only in rural areas. Its major contribution to macro- and regional economics is largely underestimated even in the sector itself, and hence not fully recognized in economic policy.  Its basis are an abundant natural resource (forest), a primary material with excellent properties (wood) and multiple advanced and environmentally sound end uses: these represent decisive strengths and untapped opportunities for regional sustainable development.

 However, the fragmented, poorly organized sector needs to join its forces, bridge the gaps between forestry and wood processing and advocate its case with one voice. Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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The Forest Cluster: Conclusions (2) -Structural change and its impacts ďƒ˜ But: The massive structural change will continue to have wide ranging effects on timber production, markets, prices and hence overall regional availability, putting regional procurement security at stake. ďƒ˜ Enlargement and relocation of single processing capacities has seldom been a success story from a regional economics perspective. After all, increased wood mobilization does not necessarily entail growth in wood industry employment. ďƒ˜ The dynamics of regional clusters, (co-)agglomerating branches and underlying formation factors need to be well understood and should be the starting point for intelligent cluster development policies. Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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The Forest Cluster: Conclusions (3) -Lessons learnt from networks and cluster initiatives ? ďƒ˜ Networks and clusters can stimulate innovative business potentials and stabilise negative employment trends in the wood industry, yet their capacity to ensure long term growth still needs to be demonstrated . ďƒ˜ The majority were initiated with considerable governmental funding, yet during their consolidation few managed to become self-supporting based on membership fees and fund raising. ďƒ˜ Their major opportunities, but also major challenges lie in their proper definition of their role as a facilitator and promoter of joint collaboration and the need to offer competitive support services to their members.

Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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Thank you for your kind attention !

www.wald-zentrum.de/kies uwe.kies@wald-zentrum.de

www.in2wood.eu

-Kies U., Klein D., Schulte A., 2010. Germany’s forest cluster: exploratory spatial data analysis of regional agglomerations and structural change in wood-based employment. Primary wood processing. Forstarchiv 81(6), 236-245. www.forstarchiv.de Wald-Zentrum

Uwe Kies, Dresden, Sep 16, 2010

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Germany’s forest sector