Evaluation of Global Competitiveness in Wood- based Industries. Economic and Environmental Aspects Research proposal for Visby Program Grant, sponsored.

Evaluation of Global Competitiveness in Wood-based Industries. Economic and Environmental Aspects

Research proposal for Visby Program Grant,

sponsored by Swedish Institute

Conducted at Swedish University of Agricultural Science,

Department of Forest Products

Structure of presentation

1. Formal part Some personal information (who am I , where I come

from) Background and achievements Previous studies, research and projects General presentation of current project Focus on questionnaire development as integral part of

current research Expected outcomes of the project Feedback, comments and suggestions

2. Informal part

FORMAL PART

Some personal information (who am I , where I come from)

Olena Maksymets, PhD in EconomicsAssociate Professor

Department of International Economic Activity ManagementNational Forestry University of Ukraine, Lviv, Ukraine

More detailed information can be found:https://sites.google.com/site/olenamaksymets/home

Ukraine within Europe

Map of Ukraine

Background and achievements

Education

2001-2005 – Doctoral studies, National Forestry University of Ukraine, Lviv,PhD in Economics (Environmental Economics) (2005)

1999–2000 – Ukrainian State University of Forestry and Wood Technology, Lviv, Specialist Diploma in International economic activity management, with distinction (2000)

1995–1999 – Ukrainian State University of Forestry and Wood Technology, Lviv, Bachelor Degree Diploma in Management, with distinction (1999)

Professional Training

09.2012-02.2012 – Visiting scholar, Sveriges lantbruksuniversitet -  Swedish University of Agricultural Sciences (Uppsala, Sweden)

01.2011 – 05.2011 – Visiting Scholar, the Pennsylvania State University (University Park, PA)

09.2007-03.2008 – Fulbright Senior Scholar, Washington University (Seattle, USA)

03.2000-05.2000 – Internship, Ministry of Economy of Ukraine (Supervisor – Chief of Furniture and wood-processing industry Department O. Varenytsya)

07.1998-10.1998 – Research study on Wood-processing industry products markets in Western Europe, University of Padua (Italy) (Supervisor Prof. Davide Pettenella)

Previous studies, research and projects

Major direction of research

Competitiveness of forest-related products

Trade flows in forest and wood-working industry products

Wood products’ markets research

Analysis of TOP100 forest companies’ results over last 5 years

Sustainability and trade flows in forest products

International marketing in forest-related industries

Eco-effeciency of international trade of Ukrainian state forest enterprises

Courses taught

Marketing in forest-related industries, International marketing, International economic activity analysis, Economics and finances of the enterprise, International management, International investment and innovation management

General presentation of current project

1. Why it is important to consider both economic and environmental aspects wood is not only economically efficient product, but also

as environmentally friendly renewable resource, is suitable for the a great variety of applications.

evaluation of competitiveness should encompass these two categories. The one couldn’t exist without another, and to achieve considerable and mutually beneficial results these two aspects must be studied as interrelated

2. Why it’s important to consider global aspects of the issue

Globalization and international competition are impacting the way forest products companies operate. New opportunities and challenges arise that allow investments, capital and technology to move easily into those world regions where manufacturing and trade give competitive advantage

“Today forest company might have its headquarters in the USA, build a processing mill in Central America (where trees grow to commercial maturity in less than 10 years), manufacture in China and sell to markets all over the world” (Alvarez, 2007)

Some facts about wood-based industry and it’s role for Europe Wood-based industry is a major employer in many of the Member States of the

European Union and features among the top 3 industries in Sweden, Austria, Finland and Portugal (European Commission, 2010). A provider of welfare in Europe the woodworking industry employs more than 2,7 million people in the EU 25. In common with all traditional industries, it plays an important part in achieving the Lisbon goal of becoming the world’s most competitive region.

The industry is a significant contributor to rural development in all European countries as well as it generates opportunities for cross-border entrepreneurship. Firms are often located in remote, less industrialized or developed areas, making an important contribution to the rural economy. This all is of great concern of the EU Eastern Partnership plan.

In Sweden, the forest-products industry accounts for 15 to 20 percent of the total industrial investments. Together with indirect employment in sectors that supply it with goods and services, it employs around 180,000 people over the entire country, more than a quarter of total industrial employment (Swedish Forest Industries Federation, 2008).

It should be added that the industry covers a wide range of activities, from sawmilling, planting to the production of wood-based panels, veneers and boards; from construction products to joinery; from pallets and packaging to furniture; from bio energy incentives to wooden pellets and briquettes production.

THUS…..

The wood-based industry has potential to contribute much not only to a single country’s sustainable development and economic growth, but also to European region

And that is why

The assessment of competitiveness and competitive advantage is vital taking into the account tough conditions.

Enterprises are nowadays fighting for financial resources and raw materials. So revealing competitive advantages and disadvantages on the industrial level is of increasing interest not only to the industry itself, but also to potential investors.

So far least examined and developed are different evaluation aspects of the industry competitiveness taking into account globalization processes.

Also environmental aspects are not widely considered in assessment of wood-based industries competitiveness.

The aim of the research is to develop the methodology

(aggregated index) enabling to evaluate wood-based

industry competitiveness taking into account globalization and

environmental concerns

In this regard

Competitiveness of wood-based industries in Sweden,

USA and Ukraine will be evaluated using the aggregated index

Research tasks examine the peculiarities of measuring competitiveness on different levels

(global, national, industrial, company) as well as in forest and wood-based industries;

identify factors of competitiveness in forest and wood-based industries and their changes in new conditions;

study methodical approaches to evaluate competitiveness in forest and wood-based industries (National and Global competitiveness indexes);

survey business representatives’ and academicians’ attitudes towards factors that determine competitiveness in different sectors of wood-based industry;

determine the role of clusters in wood-based industries development and their influence on industries’ competitiveness;

develop an aggregate index enabling to evaluate competitiveness of wood-based industries.

In this context the research

seeks to benchmark the global wood-based industries according to their competitiveness

aimed to highlight the strengths and weaknesses of the business environment of the participants for selected sectors of the wood-based industries

will provide a basis for a debate and, and support in the identification of scope and direction for profitable policy intervention and investment flows.

The research will be both qualitative and quantitative, so the following methods will

be used

Quantitative Methods methodology of computing Competitiveness index based on Porter’s

diamond of each sector (but sustainability factors in the competitiveness should be emphasized instead of price factor);

methodology of computing Forest Investment Attractiveness Index;

factor analysis – to extract the unobservable dimensions which include many variables;

econometric methods (regression and correlation analysis);

methods of economic statistic;

Cost-Benefit Analysis.

Qualitative Methods

desk research,

stakeholder meetings,

questionnaires, field research, interviews (in-depth, informal),

causal chain analysis (CCA),

benchmarking.

The research will be conducted in two stages

1. First stage – development of the questionnaire to interview business representatives, experts and scholars on the importance and relevance of different indicators that will be a part of aggregated index.

2. Second stage - empirical testing of the index. Quantitative data can be obtained from statistical databases. Qualitative data will be gathered via questionnaires (different from the first one) sent to business representatives.

Core elements of competitiveness index for wood-based industry1. Country-related factors (25%) – X1

2. Business environment related factors (40%) – X2

3. Enterprise-related factors (35%) – X3

321 35.04.025.0 XXXCIWBI

Country and business environment related factors are the preconditions for industry competitiveness - they reflect what already exists and what company deals with

Enterprise-related factors are the reflection of the way company reacts on the competitive environment it works in

Country-related factors

Can be described with the help of World Economic Forum’s GCI (based on Porter’s methodology)

Business environment related factors Resources cost and condition

Processing development

Market development

Sustainability and environmental concerns

Government incentives and industry related policy

Business environment related factors Resources cost and condition

Timber availability Timber cost Contribution of domestic forest ownership and timber supply

organization to efficiency Technical manpower availability Technical manpower cost Energy availability Energy cost Transport infrastructure adequacy Transport cost Capital accessibility Capital cost

Processing development Market development Sustainability and environmental concerns Government incentives and industry related policy

Business environment related factors Resources cost and condition

Processing development Public technology R & D infrastructure quality Industry process technology quality Industry patents filed / purchased Machinery and equipment market quality Development of supportive value-added industries

Market development Sustainability and environmental concerns Government incentives and industry related policy

Business environment related factors Resources cost and condition Processing development

Market development Domestic market growth rate Domestic customer quality consciousness Export market growth rate Export market customer quality consciousness Trade disputes and barriers Growth rate and developments in supportive branches Importance of marketing measures Public image of wood-based industries

Sustainability and environmental concerns Government incentives and industry related policy

Business environment related factors Resources cost and condition Processing development Market development

Sustainability and environmental concerns Importance of sustainable activity for the industry The state and level of customers’ and clients’ environmental concerns Adoption of forest certification schemes Adoption of chain-of custody schemes Adoption of product quality standards Ability to get price premium for environmentally sound products Quality of environmental legislation Quality of forest management Incentives and related procurement policies

Government incentives and industry related policy

Business environment related factors Resources cost and condition Processing development Market development Sustainability and environmental concerns

Government incentives and industry related policy National forest policy support Taxation incentives for investments Maturity of competition policy Conflicts with traditional forest dependent communities Private investment in timber production Policy on FDI into industry

Enterprise-related factors

Management system

Technology adoption, level of R&D investments

Sustainability reporting and level of response to environmental concerns

Enterprise-related factors

Management system Managerial manpower availability and cost Management system quality Investment in management innovation Investment in service innovation Investment in management training

Technology adoption, level of R&D investments Sustainability reporting and level of response to environmental concerns

Enterprise-related factors Management system

Technology adoption, level of R&D investments Collaboration with R&D services and universities / clusters

development and importance Process innovation investment Product innovation investment Technology training investment

Sustainability reporting and level of response to environmental concerns

Enterprise-related factors

Management system Technology adoption, level of R&D investments

Sustainability reporting and level of response to environmental concerns Incorporating sustainability aspects into companies’ strategy Reporting using GRI method or sustainability reports Adoption of environmental standards

Focus on questionnaire development as integral part of current research

Some hypotheses

There is difference in competitiveness in the industry depending on production orientation, scale of production, as well as geographical presence in terms of manufacturing and trade and this should be reflected in the methodology of Competitiveness Index for wood-based industry

Sustainability issues have great impact competitiveness of the industry through entire supply chain

Focus groups

Selected business representatives Associations Academicians Government institution representatives

Procedure of data collection – questionnaire survey, interviews and focus groups discussions

Selection procedure For each country representatives in such branches

should be questioned/interviewed Forestry/sawmills Wood-based panels and flooring Furniture and furniture parts Pulp, paper and packaging Wood energy

Enterprises of different size and with different geography of operational activity should be considered

Sampling (draft goal) Sweden:

5-10% of all SME’s in the industry around 50% of large-scale enterprises and TNCs

in the industry USA (PA state):

20% of SME’s in the industry 50%-60% of large-scale enterprises

Ukraine: 5% of all SME’s in the industry 70% of large-scale and TNCs in the industry

Draft of the questionnaire (distributed)

Expected outcomes

The research will be important to the development of wood-based industry not only in Ukraine, but also in other countries due to the following expected results improvement of the methodology for the evaluation of competitiveness in wood-based

industries;

determination of the core factors influencing the development of wood-based industries in different countries and particularly in Sweden, Ukraine and USA;

assessment of international competitiveness, comparative economic advantage, and markets for wood-based products (including substitution of wood vs. non-wood products), supply, demand and price analysis,

assessment of cross-border cluster development in the industry (including value-added wood products manufacturing clusters) which is a part of the EU Eastern Partnership plan in terms of economic development;

recommendations for industries development, marketing, and regional analysis of economic contribution of wood utilization;

recommendations for establishing successful business-to-business as well as business-to-science relations.

Feedback, comments and suggestions are welcomed!

THANK YOU FOR THE ATTENTION!

INFORMALPART

THANK YOU ALL THANK YOU ALL FOR COMING!!!!!FOR COMING!!!!!