ACPWP97 THE STATE OF THE INDUSTRY - GERMANY
April 1997 FO: ACPWP 97/2

ADVISORY COMMITTEE ON PAPER AND WOOD PRODUCTS

THIRTY-EIGHTH SESSION

Rome, 23 - 25 April 1997

THE STATE OF THE INDUSTRY


GERMANY

Introduction

Since last spring, the German economy has begun to recover from the break in growth into which it slipped in mid-1995. The GDP rose 1.4 percent in real terms on average in 1996 as compared with the preceding year. Although the growth rate was slightly lower than in the previous year (+1.9 percent), it picked up appreciably in the second and third quarters, due initially to the effect of pent-up demand following the cold winter of 1995/96, as well as other factors. By the end of the year, however, the expansion continued at a somewhat slower pace.

The economic recovery of 1996 was due, among other things, to the more moderate course pursued where wages were concerned and also to the fact that the currency was no longer so highly overvalued. Moreover, the world economy also picked up, thus considerably improving German industry's overall export chances. With a real increase of 5 percent, exports once again proved to be the main pillar of support for economic growth in 1996. Since imports rose at the distinctly lower rate of 2.0 percent due to the continuing low level of domestic demand, foreign trade had a tangible stimulating effect on overall economic performance. The investment activity which has such a decisive impact on new jobs remained generally weak in 1995. Private consumption increased at the same rate as overall economic performance in 1996. Further expansion was prevented by higher social security contributions and a lower rise in income, as well as the distinct drop in employment.

The economic process of catching up in the new German states continued at a distinctly slower pace in 1996. Although gross domestic product still grew slightly more strongly at +2.0 percent than in western Germany, it remained far short of the high rates achieved in previous years, such as 9.9 percent in 1994 and 5.3 percent in 1995.

The problem of unemployment in Germany also intensified towards the end of 1996 and the number of people out of work rose to 4.15 million at the end of the year. That was 360 000 more than one year earlier and corresponded to an unemployment quota of 10.8 percent.

Performance of the Forest and Paper Industries in 1995-96

Production of sulphite pulp by German pulp mills remained at the previous year's level of 683 000 tonnes in 1996. Imported pulp amounted to 3.2 million tonnes, while exported pulp was only 350 000 tonnes.

The signs of a revival in the German paper industry have become stronger since mid-1996. Companies slowly began to assess the situation more favourably again as the industry bottomed out of a phase of uncertainty. Sales of most paper grades proved to be better than expected in the last months of the year. In October 1996, the new orders received for paper and board even reached their highest level since March 1995. The prospects for an improvement in exports are not bad. The expected expansion of world trade and the end of a period of overvaluation of the Deutsche Mark should have a positive effect.

However, when considering this revival on the paper markets, it must be borne in mind that the industry faced hard times in the first half of 1996, following the slump of autumn 1995. Paper prices in particular have still to pick up strongly again. At DM 18.4 billion, the value of sales in 1996 was almost 11 percent lower than in the previous year. The price index for paper and board is almost 20 percent below the record level reached in August 1995.

All in all, the German paper industry's output declined 1 percent to 14.6 million tonnes of paper and board in 1996. Exports were the sole source of moderate growth. Paper consumption dropped 3 percent to 15.4 million tonnes and domestic sales declined accordingly. Per caput consumption in 1996 totalled only 188 kg (1995 - 193 kg). Since imports simultaneously dropped 3 percent to 6.9 million tonnes, this meant that imports now accounted for only 45.1 percent of consumption.

Planned investments by the pulp and paper industry in western Germany were roughly 5 percent lower at DM 0.9 billion in 1996. After the major commitment displayed by some companies in eastern Germany in the period 1992-94, with investments of up to DM 850 million in the record-breaking year 1993, the scheduled capital expenditure for 1995 and 1996 was no more than DM 160 million and DM 130 million, respectively.

Fibres for the Production of Paper and Board in Germanya  

(thousand tons)
1995
1996b
1996:1995 (%)
Chemical Pulp for Paper Production

Production

./. Exports

+ Imports

= App. consumption


684

270

3 504

3 918


683

350

3 165

3 498


-0.1

+29.6

-9.7

-10.7

Mechanical Pulp

Production

./. Exports

+ Imports

= App. consumption


1 266

19

73

1 320


1 120

10

50

1 160


-11.5

-47.4

-31.5

-12.1

Waste Paper

Collections

./. Exports

+ Imports

= App. consumption


10 531

2 986

1 054

8 599


10 820

3 000

1 000

8 820


+2.7

+0.5

-5.1

+2.6

Fibres in total

App. consumption

13 89013 530 -2.6

a   Total figures for West and East Germany.

b   Estimated.

Paper and Boards in Germanya

(thousand tons)
1995
1996b
1996:1995 (%)
Production

- West Germany

- East Germany

14 827

13 647

1 180

14 620

13 428

1 192

-1.4

-1.6

+1.0

Exports

Imports

App. consumption

6 161

7 161

15 827

6 198

6 930

15 352

+0.6

-3.2

-3.0

Export quota

Import quota

41.6%

45.2%

42.4%

45.1%

a   Total figures for West and East Germany.

b   Estimated.

Sustainable Forest Management/Certification "Sustainable Forest Management"

The equivalence and sustainability of the forest's useful, protective and recreational functions are rooted in the Federal Forests Act and in the forestry laws of the individual German states. Sustaining the various functions of the forest eco-system also formed the central tenet of the United Nations Environment Conference in Rio de Janeiro in 1992 and the subsequent processes (Helsinki Resolutions, Montreal Process, UNCSD-IPF (United Nations Conference on Sustainable Development - Intergovernmental Panel on Forests).

The German Forestry Council (DFWR) representing the German forestry industry introduced a mark of origin for "wood from sustainable forest management - grown in German forests" in 1996. The German pulp and paper industry has welcomed this resolution as a first step towards the development of an independent world-wide and voluntary system of certification. At the same time, however, national certification projects must not become a barrier to trade and thus violate the WTO rules.

The German pulp and paper industry welcomes the introduction of a certification system within the context of eco-management systems to ISO 14001 which should simultaneously include the work of the FSC. The German pulp and paper industry also considers important that representatives of the German forestry industry take part in the working group ISO TC 207 WG 2 set up by ISO in June 1996.

Together with the European Newsprint manufacturers, the Association of German Magazine Publishers (VDZ) and the manufacturers newsprint and magazine papers operating in Germany, as members of the German Pulp and Paper Association have adopted a voluntary agreement on "Printing products and ecology". In a statement on "Forest management and harvesting" these associations and manufacturers have undertaken only to use wood from sustainably managed forests for timber production and to assure the variety of species when producing newsprint and magazine paper for publishers.

Socio-Economic Dimension of Sustainable Forest Management and Timber Production

Sustainable management of our forests is essential in order to preserve the forest's manifold functions for future generations. The method of forest management should be in accordance with the prevailing conditions and thus take into account the variety of forest communities world-wide. Regular care and maintenance are essential in order to obtain stable, natural and economically efficient forest stands as the objective of sustainable modern forest management. The small-dimensioned wood found particularly in young forest stands with their high growth rates is largely purchased and processed by the pulp and paper industry. In this way, small-dimensioned wood accounts for more than one-half of the timber required by the German pulp and paper industry. Through the sustainable use of timber as a raw material, the industry makes a significant contribution towards preserving the stability of the forest eco-system and its manifold functions.

Sustainable Supply of Timber

Statutory sustainability of the forest's useful function in Germany means that the amount of timber felled must be no more than can regrow. This minimum objective is clearly exceeded in German forests, for around 58 million m3 of timber grow up on 10.7 million ha of forest land every year, although only two-thirds of this timber are actually used.

A study by the Federal Forestry and Timber Research Institute investigating the potential supply of raw timber in Germany up to the year 2020 found that the German forests contain sufficient resources to assure the supply of raw timber at present or even higher levels until at least the year 2020.

Even if the potential volume of roughly 58 million m3 of raw timber that could be utilized through sustainable forest management were to be exploited in full, this would still yield an average increase in resources of 16 million m3 of timber per year in the coming years (1.5 overbark/a/ha).

Roughly one-third of the 37 million m3 (1995) of timber felled in Germany every year are sold on the market as timber for industrial use. Together with the by-products accumulated in saw mills (chips, shavings), a total of 9.5 million stacked m3 (7.6 million m3) pulpwood were processed altogether by the German pulp and paper industry in 1995.


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