Norway's timber industry is preparing for what it believes will be the most difficult phase of the current market downturn, warning that the prolonged weakness in residential construction is now beginning to work its way through the country's sawmills and wood-processing sector.<\/p>\n
\"We have the worst ahead of us,\" said Erland L\u00f8kken, chief executive of Bergene Holm and the newly elected chairman of Treindustrien, the Norwegian Timber Industry Federation. According to L\u00f8kken, many companies are likely to spend the coming months reducing production, temporarily laying off employees and focusing on preserving liquidity as demand for construction timber continues to weaken.<\/p>\n
The industry's concern is that the full impact of today's housing market has not yet reached timber producers. Sawmills typically continue operating on existing orders for several months after housing activity slows, but once those order books begin to empty, production adjustments become unavoidable.<\/p>\n
Statistics Norway has repeatedly described residential construction as remaining at historically low levels. Although housing starts recovered modestly during 2025 from an exceptionally weak 2024, the improvement has been limited. January 2026 recorded the lowest number of housing starts for that month since comparable statistics began in 2010, while new-home sales have remained subdued. Statistics Norway expects housing investment to remain broadly flat throughout 2026 before any more meaningful recovery emerges next year.<\/p>\n
Weak housing construction ripples through the supply chain<\/strong><\/p>\n The industry's difficulties begin with residential construction, but the consequences extend far beyond building sites.<\/p>\n When developers postpone or cancel housing projects, contractors purchase less structural lumber, cladding, decking, formwork and other wood products. Merchants reduce inventories, sawmills receive fewer orders and production schedules are scaled back. As sawmills process fewer logs, demand for raw material weakens, affecting forest owners, harvesting contractors, transport companies and numerous local suppliers that depend on the timber sector.<\/p>\n What starts as a slowdown in housing construction gradually spreads across the entire forest value chain.<\/p>\n Treindustrien represents companies responsible for around 90% of Norway's lumber production, giving L\u00f8kken's warning significance well beyond a single business.<\/p>\n \"The downturn comes when this industry is hit properly at the same time as we have a housing shortage,\" L\u00f8kken said. He expects many companies to use the autumn to reduce production, temporarily lay off employees and focus on surviving until residential construction begins to recover.<\/p>\n A warning from one of Norway's largest sawmill groups<\/strong><\/p>\n The comments carry particular weight because they come from one of Norway's largest timber producers.<\/p>\n Founded in 1946, Bergene Holm is Norway's second-largest sawmilling company, operating seven production and processing facilities across southern Norway. The group processes approximately 1.3 million cubic metres of sawlogs each year and produces around 700,000 cubic metres of lumber, alongside a broad portfolio of value-added products including structural timber, cladding, decking, mouldings and planed products. Through further processing, finger-jointing and industrial surface treatment, the company supplies both the domestic construction market and export customers.<\/p>\n Bergene Holm employs more than 450 people, generates annual revenue exceeding NOK 2.1 billion (\u20ac180 million), and is estimated to account for roughly one-quarter of Norway's lumber production. As chairman of Treindustrien, L\u00f8kken therefore speaks not only on behalf of one of the country's largest sawmill groups but also for an industry that forms a key part of Norway's forest-based economy.<\/p>\n Liquidity pressure is replacing profitability concerns<\/strong><\/p>\n L\u00f8kken argues that the sector is no longer dealing solely with weak demand but with a growing liquidity challenge.<\/p>\n Many family-owned timber companies have already exhausted the financial reserves that helped them navigate previous market downturns. Describing the pressure facing the industry, he remarked: \"Now even the mother-in-law and the garage have been mortgaged. There is nothing left to mortgage.\"<\/p>\n The comment reflects the reality facing many manufacturers after several years of rising costs. While revenues have weakened alongside residential construction, companies continue to face elevated expenses for energy, transport, financing, labour and timber procurement. Fixed costs remain high even when production volumes decline, leaving producers with increasingly limited financial flexibility.<\/p>\n Temporary layoffs have already begun at some companies, and the industry expects further workforce reductions unless housing activity improves sufficiently to rebuild order books.<\/p>\n Without a sustained recovery in residential construction, Treindustrien warns that more companies may be forced to reduce production capacity just as the country continues searching for ways to address its growing housing shortage.<\/p>","protected":false},"excerpt":{"rendered":" Norway’s timber industry is preparing for what it believes will be the most difficult phase of the current market downturn, warning that the prolonged weakness in residential construction is now beginning to work its way through the country’s sawmills and … Continue reading