Negative Trends in the Wood Industry Have Not Bypassed Companies Within the Bjelin Group

While the Croatian economy records stable growth, significantly higher than other EU members, the wood industry has painfully felt the consequences of economic stagnation in Western European countries. The crisis in the construction sector in Germany and recession in some countries caused a drop in orders and demand for wood industry products last year, leading to a decline in exports of about 15 percent, and data on industrial production this year do not yet show a stronger recovery in the market.

Negative trends in the wood industry have not bypassed companies within the Bjelin group, despite the fact that larger companies are usually more resilient to revenue declines and turbulent economic times. Three out of four manufacturing companies in the Bjelin group recorded a significant drop in revenue last year, while revenues of Bjelin Otok increased by only 0.2 million euros.

Although data on the performance of Bjelin’s companies for 2024 are not yet known, the negative trends in the wood market in Europe resulting from the stagnation of the construction industry are unlikely to have bypassed the companies owned by Darko Pervan (and his family), who gained fame in Sweden with a series of patents in the wood industry. In recent years, he has made many investments in wood processing companies in Croatia and announced new investments worth hundreds of millions of euros. However, the weak market conjuncture seems to delay some investment plans.

Slowing Down Investments

– We have been forced to slow down a bit and shift the investment cycle to 2030, first due to the COVID-19 pandemic, and now due to the overall situation in the world – said the president of Bjelin, Robert Žulj, recently commenting on plans to build a new wood panel factory in Ogulin.

In the Ogulin business zone, Bjelin’s investment in a factory for the production of Woodura parquet and the construction of a boiler room worth 100 million euros has recently been completed, and plans include investments in two new production lines worth 150 million euros. How quickly these will be realized will depend not only on the state of demand for wood industry products in Europe but also on resolving the long-standing issues regarding the expansion of the business zone in Ogulin, where Bjelin plans new investments.

Namely, the business zone in Ogulin is 90 percent filled, and therefore the City sought an expansion to additional land owned by the Republic of Croatia, but for this, it had to pay a fee to Croatian Forests, estimated at two million euros. Since Croatian Forests have meanwhile cut down all the trees on the requested land, the City of Ogulin requested a new calculation of the fee, but the same amount was issued, so the saga regarding the expansion of the business zone has not yet been resolved. In addition to the facilities in Ogulin, Pervan has invested significant funds in improving and modernizing facilities at other locations in recent years. Just last year, Bjelin Spačva invested 20 million euros in new machines for final production and a new veneer plant, and the plan was to invest an additional 50 million euros in new facilities and production halls by 2028.

Given the state of the industry, these investments are currently on hold. The third company, Bjelin Otok, specialized in veneer production, invested about six million euros last year in activating a solar power plant, a log yard, and preparing a production hall, while in Pervan’s latest acquisition, the Slavonian manufacturer of solid wood furniture Spin Valis, technological shifts and larger investments are planned, such as the introduction of Välinge click-furniture technology, investment in new cutting and sorting lines, and a line for veneer furniture…

Staffing Turmoil

Regarding how the tremors in the construction market have affected this year’s performance of the Bjelin group, we were unable to get a response from the company, as well as on a whole range of other questions about the restructuring of the company’s operations, new markets, and future plans, so we sought answers from those familiar with the situation in the Croatian wood industry.

Most of our interlocutors agree that Pervan has invested a lot in the acquired companies and that he has significantly upgraded all of them technologically.

– When it comes to the technological aspect, I think there can be no complaint. Pervan has invested in all the companies he has taken over. Perhaps a little more was needed somewhere, but overall, this segment of Bjelin’s business is very good. A much bigger problem is managing the companies and staffing. Unfortunately, the general problem in the wood industry in Croatia is finding quality personnel, and I think Pervan has had quite a bit of staffing turmoil. According to my information, there is also a conflict between Nordic and Balkan mentalities, which is often a reason for misunderstanding. I would also say that there is a problem of multiple lines of command, or the mixing of Pervan and his children in decisions, which also causes tensions – said our interlocutor with many years of experience in the wood industry who wished to remain anonymous.

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