Russian Cut Stock Company Prospers While Supplying European Pallet Makers

ST. PETERSBURG, Russia – A sawmill company that manufactures cut stock for European pallet manufacturers has reaped the benefits of the country’s growing economy. However, the Russian sawmill industry is still in its infancy.

            PSB-GEM-HOLZ is based in the port city of St. Petersburg, the largest cultural and industrial center in Northwest Russia. When you think St. Petersburg, think Finland: the city is about 100 miles from the Finland border and also is at the furthest reach of the Gulf of Finland, which opens into the Baltic Sea.

            PSB-GEM-HOLZ, which was featured in a European sawmill and pallet plant tour organized by the Canadian Wood Pallet & Container Association-ACMPC last summer, specializes in making softwood deck boards for European pallet manufacturers. The company’s cut stock is used in the making of CHEP pallets and Europallets.

            Boris Strogiy and his son, Nikita, owners of the company, hosted the Canadian-sponsored tour group to their plant. By e-mail, Nikita, who was educated partly in the U.S. and is fluent in English, answered questions and provided information for this article.

            The company was started as a joint venture between a German pallet manufacturer and Russian investors in 1995, and Boris was hired to manage it. Boris and Nikita acquired a 30% share in the company in 1999, buying the Russians’ interest, and in 2002 purchased the remaining interest from the German owners to become sole owners.            

            PSB-GEM-HOLZ exports its entire production of pallet cut stock. Apparently, there is little demand for pallets in Russia itself because the company’s manufacturing sector is so small. However, Boris and Nikita are considering adding pallet production to their company’s operations.

            The company’s annual sales have increased six times since 1995, according to Nikita. “I guess our business has grown up together with the whole Russian economy,” he wrote. However, despite Russia’s vast natural resource and supplies of timber, its sawmill industry remains small, he indicated.

            Russia has been a leading supplier of wood raw material to Scandinavia, other European countries, and China and Japan, Nikita said. “The role of Finland and Sweden in forming the timber industry of the northwest region of Russia cannot be underestimated. These countries have been the biggest importers of logs…I’d say the sawmilling industry in this region has not been born yet.” Two Finnish forest products companies, UPM Kymmenne and Stora Enso, have sawmill operations in the region.

            There is little private ownership of Russian forest lands. PSB-GEM-HOLZ leases timber rights on government land, and the agreements specify how much timber may be harvested. The company has its own logging crews and trucks to cut and transport timber, and it also buys logs from suppliers.

            At its sawmill, PSB-GEM-HOLZ processes softwood logs ranging from about 5 inches to 14 inches in diameter and in lengths ranging from about 13 feet to 19 feet long. Logs arrive in the yard by truck and rail and are unloaded by a crane and sorted by diameter into eight categories. The logs are debarked by a Valon Kone debarker, go through a metal detector, and are measured by a computerized electronic system and then sorted and stored in inventory.

            The company’s sawmill was equipped by Shumacher GMBH in Germany. It features sawmill machinery from several different European manufacturers. Chipper-canters process the logs into squares. Squares are resawn to remove lumber or cut to the appropriate length and the pieces then resawn by gang saws. The company also has chamfering equipment to produce chamfered deck boards. Finished deck boards are stacked and treated outside with an antiseptic and then are ready to be shipped. Lumber is shipped via truck and ferry to western European ports and also loaded into cargo containers for transport by ship to England. The company’s chips are sold to Finnish pulp mills.

            PSB-GEM-HOLZ employs about 95 people in the sawmill and about 70 workers in its logging division.

            The presence of the Finnish sawmill businesses represents competition – for raw material – for PSB-GEM-HOLZ. “I guess having these companies around might be our biggest challenge in the future in terms of the log supply,” Nikita noted. “They need a lot of timber…I think we should add more logging operations into the business to secure as much timber as possible.”