Lemeks expands into plywood

Estonia’s AS Lemeks has launched a project estimated to be worth about €30m to build a plywood and birch veneer plant in Jõgeva, in the east of the country.

The production facility is expected to be opened in 2019, creating up to 150 new jobs. It will be operated by Lemeks’ latest subsidiary, Estonian Plywood, which was established last year.

Chief executive Jüri Külvik told WBPI that the project is ongoing but, as yet, the company was not able to provide a more detailed financial overview of the work.

"The technology and site planning works are going on. After the final plan is ready, we will be more clear on the budget," said Mr Külvik.

Asked whether the new plant would only supply customers based in Estonia, Mr Külvik said that, because of the relatively small size of the country’s wood products market, the new factory would be mostly export-orientated, with a focus on other European countries.

"Estonia is a small country and we need to base our plans on export sales. We are aiming to sell mainly to European countries but, of course, we have to [have a broader] look," said Mr Külvik.

Established in 1993, AS Lemeks is headquartered in Tartu, Estonia’s second largest city. The group has a workforce of 850, and its 22 subsidiaries and affiliates are active in Estonia and its neighbour Latvia, as well as in the UK and France.

Brands and Markets

The Estonian group sells its output under the brands of Raitwood, Parkwood, Palmako, Imprest, Pinest, AP Mets, Lemeks and Nordwood, and exports to markets in Europe and Asia, as well as Australia and Russia.

"The purpose of the establishment of Estonian Plywood was to extend the value chain of hardwood. It will be Lemeks' first plywood mill," said Mr Külvik. "Raw material will mainly come from Estonia. Regarding its sizes and grades, a sales strategy is currently being worked out.

"We plan to start by producing 30,000m3 of birch plywood annually. The machines for birch plywood production will be bought from different companies. Currently, the negotiations are taking place," Mr Külvik told WBPI.

In addition to the ongoing project in Jõgeva, AS Lemeks is also pursuing a number of other investments to expand and modernise its production capacities.

The investments are worth a further €30m. These include a new €15m band sawmill that is to be launched at a facility operated by Nordwood, another subsidiary of the Estonian group in Viiratsi, and another €15m investment to develop a new glulam factory for AS Palmako, said Mr Külvik.

The group’s investment programme is facilitated by its improved financial results for last year. In 2017, Lemeks Group posted sales of about €130m. This represented a solid growth of 13% compared with the €115m reported a year earlier, as indicated by data from the Estonian holding.

AS Palmako operates a plant in Tartu where it produces square log garden houses and laminated timber. Established in 1997, the company’s factory was expanded in 2013 with the opening of a new pellet plant which enabled it to make pellets with diameters of 6mm and 8mm.

In 2015, AS Palmako was merged with another company from Lemeks Group, AS Imprest, allowing the manufacturer to expand AS Palmako’s product portfolio with AS Imprest’s round and impregnated garden products.

In total, AS Palmako’s four production facilities make more than 51,000 wooden houses, up to 27,000m3 of laminated timber products, more than 24,000m3 of impregnated garden products, and 46,000 tonnes of pellets per year. In addition to its domestic market, the company sells to customers in several European Union member states, including the UK, Germany, France, Spain, Italy, as well as the Nordic countries.

Increasing Capacity

The second project, which is to be developed in Viiratsi, in south-east Estonia, will contribute to the further increase in the production capacities of Nordwood which operates three sawmills.

The company produces sawn timber from local Nordic pine and spruce logs, and supplies both domestic and foreign players from the construction, furniture, packaging and wood industry. In total, Nordwood produces about 250,000m3 of sawn timber per year.

In addition to the sawmill in Viiratsi, Nordwood operates two sawmills in Aegviidu and Vasta.

Nordwood’s history dates back to 2002 when AS Viiratsi Saeveski was established as a joint venture by AS Lemeks and AS Rait through the purchase of the assets of the sawmill in Vana-Võidu, Viljandi. AS Aegviidu Puit, operator of the sawmill in Aegviidu, in northern Estonia, was incorporated by Lemeks Group in 2009. Three years later, AS Viru-Nigula Saeveski, the subsidiary that runs the sawmill in Vasta, was also incorporated by the Estonian group.