A massive drop in German construction sector activity is impacting the German sawmilling sector, industry executives have warned.

The German Sawmill and Timber Industry Association’s (DeSH) online conference for press and its members on June 27 shared the results of its member survey on the current and future situation.

It said the decline in the construction industry posed major challenges for the sector, with a large proportion of companies already having to make significant adjustments to their production activities and not expecting the economic situation to recover in the coming months.

The association is calling for broad measures to stimulate the economy and “preventive calamity management”.

“The signs for a rapid economic recovery are not good,” said DeSH president Jörn Kimmich.

“The massive drop in the construction industry is already having a noticeable impact on the upstream and downstream sectors. As a manufacturer of wood products for the domestic and foreign construction industry, the German sawmill and timber industry is directly affected by this development.”

DeSH’s survey found more than half of those surveyed assessed the current business situation as poor and almost 80% percent are already recording significant production reductions.

The survey, with 96 participants, covers cutting capacities of more than 24.5 million m3.

Mr Kimmich said the weak foreign markets meant exports would hardly be able to serve as an outlet in the current year.

“As a result, 60% of respondents report a weak order situation in Germany, while the figure for foreign countries is 40%.”

He predicted further production adjustments and companies expect the economic situation to become more acute in the coming months.

Currently, 95% of German sawmilling cutting capacity is already affected by production reductions and about 60% of the respondents do not expect a revival of demand, but declining domestic order intake and thus further production cutbacks.

“In view of the fall in demand for sawn timber, companies are increasingly under pressure. Raw material, energy and labour costs are becoming an economic challenge,” explained Mr Kimmich.

Source: German Sawmill and Timber Industry Association