First dialogue with Karelia, Russia & Nordics to support the wood construction industry

The first dialogue around wood and construction across the Nordic countries and Karelia region was organised in November 2020 by Nordregio and Nordic partners together with Vera Meshko, executive director at the Swedish-Karelian Business and Information Center (SKBIC). The aim was to gather interested actors in the Russian republic of Karelia and make an assessment of their interests and possibilities for cooperation. The Chamber of Commerce and Industry of the Republic of Karelia (CCI RK) helped to identify interested companies and actors in the region. 

Russian Participants 

Participating companies included: 

●  SK DOM LCC: builds cottage settlements using panel assembly of individual houses with modern and environmentally friendly materials. 

●  Travel Hut: builds wood-framed houses and mobile resting huts (small wood cabins) for resting in nature. 

●  Karelsky Profil: Builds frame houses in “Finnish” style, “Canadian” style, HiTech houses, summer cottages, etc. 

●  GOAHTE: builds mobile houses (ecohouses) and saunas mostly for tourism purposes. They use ‘ecodesign’, use only natural materials, including natural oils. They supply to Russia, USA, Sweden, and Europe, and are working to enter the Asian market. 

●  IP Moshkov: produces assembly houses. Now focusing on rustic interiors in Nordic and North Karelian styles. 

Additionally, Taisia Garbuzova, professor at St.Petersburg Forest Academy was also present. She works with Finnish exchange, agritourism development, wood construction and is an advisor for the government of St Petersburg- ecology and forestry 

Nordic participants: 

Masonite Beams, is a Swedish company that “manufactures and sells modern, customised, efficient, wood-based I-joists systems and technical solutions”. The company has developed the masonite flexible building system (MFB) which is open source. They have also established the MFB-Academy for those who use this building system - which is a network and training tool and way of doing business with different suppliers, developers, construction firms etc. https://masonite-beams.com/ 

 Additionally, Tina Wik, Architect from Stockholm, was also involved. She is interested in wood architecture and in collaboration. She works with hardwood and eco-friendly technologies. 

 Key Interests identified: 

●     Interested in learning about technologies (example: wood drying) 

●  Quality standards (technical, environmental, design). 

●  Explore business opportunities 

 Discussions: 

Nic Craig, a partner in the project and manager of the Nordic Wood in Construction Secretariat, introduced five major trends identified in the Nordic countries. The use of wood in construction in the Nordic countries is rapidly growing, with several multi-story apartment buildings in construction, as well as public buildings such as the Culture House in Skellefteå. Craig attributes much of this success to the ability of different actors coming together in driving the industry further, bridging skills and knowledge and pulling resources together (e.g. local governments as key clients in build schools and other republic facilities). 

Russian participants commented that developments in the Nordic countries are “very encouraging”. Vera Meshko from SKBIC noted that “the way public procurement is designed in the Nordics is a very important way to enable wood constructions”. However, she points out that currently “in Russia, public procurement regulations prioritize the cheaper offer only, which obstructs other types of construction”. This may be changing in the future, however, as the Federal and local governments are highly invested in pushing forward the industry. Moreover, exchanging knowledge and technology can also enable the development of the industry. 

 Anton Shcherbak from the Institute of Economics of Karelian Research Center of the Russian Academy of Science emphasised that “new technologies are coming to Russia and more types of construction”. Many emphasised that previous interaction with the Nordic countries have served as inspiration and opened concrete opportunities. Ekaterina Lesnyh from the CCI RK, recalled a visit to Joensuu, Finland where they “saw the tallest wooden building in the world - a student dormitory”. She is “hoping that this kind of development will become possible in Russia”. Similarly, when Igor Kozlov from SK DOM LCC travelled with SKBIC to Sweden to Umeå, in 2005, he visited wood-building enterprises. he mentioned being “surprised how things work - how everything is organised from the governmental level from calculation systems, to managerial levels and down to the consumer”. After the trip, he established contact with a Swedish company to buy equipment used in wood construction. 

Another example is Travel Huts which has already established connections with Finland. SSAB Finland supplies metal for their huts, and they are working towards entering the Nordic market. Yet, Aleksander Garder, from Travel Huts, noted that to be able to do so, they need to improve their quality standards and get certificates, which can be challenging with few suppliers willing to take this step. Further exchange with Nordic countries could, however, prove useful to establish new bridges and raise opportunities on the various fronts. 

A different discussion point was the existing fear of using wood in construction, which hinders development, particularly because banks in Russia are not willing to give loans for this type of construction. Yet, this is about to change. The latest news from Russia of January 2021 has it that the government is willing to allow the banks to offer loans for wooden construction. https://www.kommersant.ru/doc/4653845 

Mads Randbøll Wolff, from the Nordic Wood in Construction Secretariat, noted that financing is also a challenge in the Nordic countries, as it represents an “extra risk”. However, as the industry pushes the technological limits, these risks can be minimised and in turn the perceptions will be able to change. 

Key Challenges 

●     Regulations impede building multi-story buildings in wood 

●     Loans: banks so far refused to give loans for wooden buildings (fear of wood), but the situation will most probably be resolved in 2021, as the Russian government announced plans to introduce mortgage loans on wooden housing 

●     Public procurement: demands for the lowest price. Does not favour wood construction. 

●     Meeting quality standards for the Nordic market requires certifications and design qualities. 

●     To be compliant to climate, sustainable development and biodiversity Lack of joint vision on the level of decision-makers of the wooden construction as a sustainable, long-lasting and competitive solution 

●     Promotion of individual wooden housing requires increased capacity of power grid, which also depends on power supply companies’ development plans, and calls for closer interaction involving higher executive level. 

Opportunities 

●  There is a growing demand for single houses - including wood houses in Karelia, which has accelerated with the pandemic. “People want to get out of the city”. 

●  In Sweden, the need for multi-storey timber construction is rapidly growing. 

●  New technologies are enabling the construction of multi-story buildings and meeting higher quality standards. 

●  The chamber of commerce (CCI RK) is a key helping hand locally, actively supporting industries with finding new partners and suppliers and obtaining certifications. 

●  Masonite Beams already work with Karelia, buying prefabricated elements from the company DOK Kalevala, based in Petrozavodsk (production of OSB panels).  

Next steps 

Upcoming meetings will enable dialogue between key actors in Karelia and in the Nordic countries, with concrete lines of cooperation, including business relations, technology exchange, standards, and building a community.