Survey: Coronavirus pandemic causes major burden to global wood industry companies

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Most wood industry businesses now have to face some serious consequences caused by the coronavirus pandemic. Moreover, the vast majority is pessimistic about the near-term outlook.

These are the findings of an online survey conducted by Fordaq over a period of one month (click here to get the full survey results). The survey attracted 1329 respondents as of April 21, from Fordaq member companies all across the world and offers a clear picture of the effects that the coronavirus crisis has had on the wood industry's businesses so far, as well as the one it will have in the future.

More than three quarters of the respondents to the survey say that the pandemic already had an impact on their sales in January-March 2020. A little over 44% of the surveyed companies say that their sales dropped by more than 20%; more than 13% say that their sales dropped by between 10-20%, while 18% see a sales' decline by between 0-10%. ''No more active actions taken because most countries are on a lockdown and movement is restricted. Supplies and orders are therefore no momentarily possible. I see there's a huge drop in both demand and supply resulting from a low purchasing power all over the world, hurting most businesses,'' a respondent to the survey said. 

 
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13.5% see a trend reversal and report that their sales have increased. In this respect, one respondent said: ''Our factory has not been affected in any way, because all our staff must be quarantined for 14 days before returning to work, and through the temperature test we achieve 100% health on duty. We don't have any problems with our production at present, and we have been working on it for one month.''

Divided by continents/region, the overall picture is more or less balanced. In Europe, 43% see a more than 20% drop in sales in January-March 2020; in North America, 48%; South-East Asia 47% and in China over 50%. 

Negative outlook

Added to the overall impact on sales, the companies surveyed are pessimistic about the near-term outlook. Almost two quarters (46%) of the respondents say that they expect the pandemic to determine a 20% drop in their sales during the next three months.

17% expect a 10-20% drop in sales, and 10% see a 0-10% decline in their sales over the following 3 months, while only 10% expect no negative impact on their sales. 

 
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One respondent talked about the uncertain future:  ''We are exporters of logs and wherever possible we kept working. We are building stock so when the green light to shipping and exports comes we will be ready. We do not expect to recover the lost volumes but at least to mitigate the impact in our cash flow.'' Another respondent said: "Our business has completely shutdown last month, no sales , no future purchase; it seems another 3-5 months no sales no demand''.

Supply disruptions

Given the fact that so many wood industry businesses reported disruptions in supplies during the first three months, especially to China, the survey asked companies to tell more about how their goods delivery flows were affected in January-March 2020. Thus, more than a third of the respondents (36%) reported less sales to China and 44% experienced big delays in delivery of goods. On the positive side, 45% see no decline in sales to China, while 37% see no delays in delivery of goods to the country. 

 

 
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Forced measures

Companies in the wood industry are taking a variety of measures to combat the effects of the coronavirus pandemic on their operations. The most common measure reported is the volume reduction of purchases (66% of the respondents answered positive to this question).

Reduced cost base via temporary unemployment or layoffs is one response reported by 36% of survey respondents, and 53% have ordered some staff to work remotely. Some businesses (44%) have reviewed supply chains to diversify producers or even restricted payment terms of clients (42%).

 
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One company said: ''Office staff can work from home if they have symptoms. Raised limits on credit insurance before the crisis started. Analysis of sold goods - which will be shipped and not. Cash flow analysis, increased sales efforts, Information to customers that hesitate; we will sell the goods elsewhere or stop production and their promised volumes will go lost if no possibility to deliver. Information to customers that want to stop deliveries within the logistics chain they will be responsible for container rental fees and storage costs'' 

42% of the respondents of the survey increased online sales and marketing efforts; 36% reduced cost base via temporary unemployment or layoffs; 21% increased purchases to increase buffer stocks.

Methodology of the survey

This survey was conducted online by Fordaq over more than one month period (March 18,2020- April 21, 2020). The survey generated 1329 completed responses from Fordaq active member companies all over the world, which indicates a high level of confidence. 

 

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