UPM Timber has pulled through strikes and Covid-19 with minimal damage. We spoke to Mikko Hyvärinen, Sales and Supply Chain director, to learn how this was accomplished and hear about the direction the sawn timber industry is heading.
“The strikes and the Covid-19 pandemic have negatively affected many businesses but I am happy to say that UPM Timber has pulled through with minimal damage,” wrote Mikko Hyvärinen, director of the Sales and Supply Chain Management team, in an editorial published on the company’s website recently.
Overcoming nerves and insecurity with trust
“After the Finnish industrial union strike in December and again in January to February, along with the start of the Covid-19 crisis, I felt a little bit nervous and insecure about what would happen and how we could handle it,” admits Mikko Hyvärinen, who has been working with UPM since 2001. Throughout his career, he has never faced problems in the market environment on this scale.
While the specialty timber business can be unpredictable, it’s difficult to prepare for a strike because UPM’s sawmills are usually running at full production. “We cannot increase our inventory just in case. However, we respected our existing contracts which is not what all our competitors did. We showed our customers that we are strategic partners and they can trust us, as we can trust them in their difficult times,” he highlights.
Approximately 80% of UPM Timber’s business is done on a quarterly basis and, after great effort from the company’s sales team, they were eventually able to deliver sawn timber to customers in good volumes during the first and second quarters of 2020. Hyvärinen, who has been Sales and Supply Chain director since 2012, adds that it was vital to have close collaboration and open discussion with their customers throughout the crises.
The impact of the Covid-19 crisis has been felt in many industries, including timber.
2020 went much better than expected
The cornerstones of reliability and personal contact were established years ago and proved invaluable following the arrival of Covid-19. “Without face-to-face meetings, we decided to stay in touch with our strategic customers by phone, by email and by MS Teams. They were disappointed that we couldn’t travel but, because we have an excellent relationship, business went much better than we expected,” he recalls.
“Even before the events of this year, we have always been open with our customers about the situation,” says Hyvärinen, explaining that it is part of their strong collaborative relationship. “We listen to our customers’ plans for this year and the future. We ask how they are trying to develop and improve their business, and we can then support their development with our services.”
Future-oriented business development has been a little harder this year, with customers uncertain about how a possible second wave of Covid-19 may impact them, says Hyvärinen. “We go day-by-day, week-by-week. We follow the situation and, if something bad happens, we always have a plan B or plan C ready.”
“Despite its challenges, 2020 has been an inspiring year because it has forced us to find different solutions to keep our business running. Even if it was negative, we tried to turn it to a positive because it will pay back well in the future,” he believes.
Increasing the gap from competitors
The sawn timber industry has been a traditional business when it comes to selling and buying, but Hyvärinen sees the future of the industry changing step by step thanks to a younger generation. “They have far better IT skills and we are developing all the time. We will become more up to date, while faster decisions and more business will be done online with our organisational tools,” he predicts.
UPM Timber’s outlook will also continue to champion sustainability and innovation, which are at the company’s strategic core. Environmental concerns are one of the most important issues being raised by customers, says Hyvärinen, adding that the sales team is happy to see the demand for environmentally friendly products growing around the world, especially in China.
The growing demand has resulted in new competitors joining the sawn timber market, primarily from Russia. “Over the past few years, Russian sawmills have become bigger and bigger competitors because they have many log price benefits, as well as investing a huge amount of money into their sawmills, enhancing the quality of their technology and improving their delivery reliability,” he observes.
To stay ahead of the competition, Hyvärinen says that they are utilising their long-term collaboration with customers to fulfil their needs volume and product wise. “We consider our customers as individuals, which is something that many of our competitors don’t do. If we concentrate on that, we can maintain and even increase the gap between us and our competitors,” concludes Hyvärinen.
Photos: UPM Timber