The Ural cluster got into wild fires

The Ural cluster got into wild fires

25 May 2011

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Russia — The Sverdlovsk Region, having embarked on construction of a forest cluster a few years ago, ran into serious problems. Business is not willing to make investment in leading-edge technologies and development of new products, which makes cooperation of related manufacturing companies senseless. Experts explained to the “RusBusinessNews” columnist that the blame lies with the government that, actually, cast small business out of the forest industry. As a result, lobbying of large companies’ interests led into degradation of the industry and wanton destruction of forests.

More than half of the territory of the Sverdlovsk Region is covered with forests. Therefore, during the Soviet Union period, it was a thriving area for vigorously built wood enterprises: woodworking integrated factories, pulp-and-paper mills, hydrolysis plants, etc. At that time, the annual felling and partial processing reached 25 million cubic meters of timber. Today, the volume went down to 7-9 million cubic meters, thus, causing many harvesting and processing firms to close down. The recessionary situation in the sector led the regional government to the idea of creating a forest pulling together the remaining enterprises.

Officials decided to start with the increased levels of timber processing and mastering of new products. The Turinsk Pulp-and-Paper Factory started manufacturing writing paper based on German technology as well as high-quality wallpaper, the Fankom integrated factory launched manufacturing of laminated plywood, and the Rezh logging-lumbering enterprise started manufacturing of Euro-firewood – pressed fuel in the form of briquettes. Many companies turned to manufacturing of furniture board; there was created a sector fabricating wooden houses based on Finnish and German technologies. Some companies plunged into mill-work, using heat-modified timber and biological fuel.

A few years later, Andrei Mekhrentsev, head of the Forestry Department at the Ministry of Industry and Science in the Sverdlovsk Region, made a discreet statement that “there have been formed principal characteristics that allow speaking about movement towards development of a cluster”. However, as the official made it clear, the movement is hardly possible within the present-day environment. Generally, the cluster is based on cooperation of small business that relies on innovative development of engineering companies and intellectual potential of educational institutions. In 2007, Russia adopted the new Forestry Code that over two years actually eliminated small business in the forest industry. Small-sized companies that operated actively in timber procurement lost an opportunity to lease forest plots and, for the most part, turned into subcontractors for large companies.

The erosion of the economic basis of small business, in fact, left no sense in the Ural forest and technology park. According to Andrei Dobrachev, its head, there have been and, most probably, will be no investors who are willing to invest money in innovative business. Numerous public structures that were created to provide support to advanced developments sent researchers to the venture fund. Its executives did not mind financing projects, however, only after the fund received control over innovative businesses. The technopark refused, and put projects on hold.

The innovation site would have ceased to exist, if the regional ministry for industry and science had not allotted 4 million rubles. This money was used to set up first businesses; later, scientists of the Ural Forestry University that constituted the backbone of the technopark found some more funds and started working in four areas: forestry technologies and timber processing, house-building, chemistry and power engineering. A. Dobrachev says that several projects were successfully implemented, but many technologies found no demand – again, due to lack of financing. Contrary to expectations, the institutional experimental forestry farm had no investment showers, and ten projects that were scheduled for development were suspended. The technopark head hopes that they will be implemented when the park acquires an international standing: the Finnish forest industry is booming, and Paivi Menard, project manager, the Finnish Cluster of Clean Technologies, invited Russian scientists to start cooperation.

Construction of a cluster without the innovation component is equivalent to dress making without thread. Thus, it not surprising that today, the forest industry of the Sverdlovsk Region is in recession: outside the country, products of Ural manufacturers are in low demand, whereas in Russia there is no effective demand – among other factors, due to the government’s mercilessness towards small business.

Experts state that the forest industry goes through the protracted crisis; even if it overcomes it, the raw stock will be substantially reduced. Natalia Pashkina, Deputy Director of the Forestry Department of the Sverdlovsk Region, argues that as of today, the restoration of forest resources falls significantly behind harvesting volumes. Forest nurseries sank into decay; as a result, the Sverdlovsk region is three times short in its amount of forest plantations.

Officials feel quite comfortable about the ongoing situation, as they even take no pains to ask what forest resources are available to Russia. According to N. Pashkina, over the last 5-7 years, the federal budget has not given a single penny to forest management. The country has no unified program product for maintenance of the uniform state register, meaning that today no one needs timber accounting.

The situation has been aggravated by numerous fires. Sometimes, forests are set on fire by criminalized entrepreneurs who in this way try to knock down prices on timber. Obviously, the lion’s share of arsonists accounts for employees of those small-sized businesses that the government put away from timber procurement. When working through shaky contracts with large timber companies, they are able to get their margin only is they lower sizably the price for timber, – so they lower it in the way they can.

In the rage of barbarous consumption of overwhelming natural resources, Russian people went to such extremes as burning the ground under their feet. With such “fire” situation, the construction of a forestry and technology cluster is nothing but nonsense.

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