Foreign customers are massively canceling orders for parquet and wooden furniture parts

Marijan Kavran warns that this situation is just the beginning of a larger crisis, given the stagnation of investments in construction, and that the real effects of the global crisis will be felt in the spring.

Despite the repeatedly emphasized optimism of Petar Čobanković, the Minister of Regional Development, Forestry and Water Management, the growing production and export data, and the expected record growth in revenue for the wood processing sector, a handful of wood processors from the municipality of Josipdol initiated a meeting at the County Chamber of Commerce in Karlovac to warn of a drastic deterioration in economic performance in the second half of 2008. Along with the long-known arguments and accusations from wood processors regarding the monopolistic privileges of Croatian Forests as the main supplier of raw wood, the wood processors at this meeting, which was also attended by Marijan Kavran, Assistant Director of HGK in the Agriculture, Food Industry and Forestry Sector, and Pavao Miljavac, President of the Professional Group of the Wood Processing Industry of Karlovac County, emphasized that the mass cancellations of orders from foreign customers are a direct consequence of the financial collapse and recession transferred from the American to the European and other markets.

Dragutin Vidoš, owner of Josipdol’s Drvotehna, accuses Croatian Forests of a hidden significant increase in raw material prices allegedly through biased classification of logs to the detriment of customers, and claims that due to the increase in the so-called red tariff model, electricity prices have risen by 152 percent. Under such conditions, without state stimulation, wood processors believe that even extending the payment term for raw materials to 120 days will have no effect. The meaning of the statistical report by Zlatko Kuzman, President of the Chamber of Commerce Karlovac, about a 11 percent drop in wood processing in Karlovac County in the first six months and a simultaneous increase in employment of 11.7 percent was questioned by a member of the Management Board of DIP Karlovac, Dubravko Golubić, who presented the data that DIP’s realization fell by 20 percent in the first nine months. The reason for this is the decrease in demand for parquet in the Slovenian, Italian, Swiss, and German markets, as well as alarming announcements from wholesalers that they are exiting this part of the business. The result of this is the layoff of 100 workers this year, and the disrupted liquidity of DIP Karlovac will only be bridged thanks to the sale of 40,000 square meters of land for the construction of the SuperNova and OBI shopping center.

Small processors from Josipdol, who are mostly producers of semi-finished products, for example, components for chairs for Italian manufacturers, are not in the same situation as DIP Karlovac, but have been brought to a halt in production due to the drastic interruption of orders from Italian ‘chair makers’. Franjo Rendulić, who could not cover costs and repay investments even with the production of 450,000 chair backs per year for an Italian partner, and is now left without further orders, warns of the emergence of foreign intermediaries who will attempt to exploit the desperate situation of domestic producers through extortion, who consider the slogan ‘Wood is first’ to be a platitude. Marijan Kavran warned that this situation is just the beginning of a larger crisis, given the stagnation of investments in construction, and that six large Croatian wood processors have been destroyed by exchange rate differences between the dollar and euro in the global market. – The real effects of the global crisis will be felt in the spring. All projects currently being carried out in construction were contracted a year ago, when parquet was also ordered. But new orders depend on the strategic decisions of investors, and we expect a greater slowdown after the January fairs in Cologne, Paris, and Hanover. If global construction stops, and the Arab market has also abandoned our beech program, the question is how severe this crisis will actually be, concluded Kavran. (M. V.)