Finland, forestry reps meet on possible relief

HELSINKI, May 13 (Reuters) - The Finnish government met on Wednesday with forest industry representatives on possible relief for the ailing sector, officials said.

A government spokesman said the meeting gathered four ministers including Prime Minister Matti Vanhanen and Finance Minister Jyrki Katainen, plus representatives from the Finnish Forest Industries Federation and major forestry firms.

He declined to comment on possible relief measures the government could take, nor on a timetable for any such moves. A statement from the Federation said the spirit of the talks was “constructive and positive”.

The paper industry has struggled for more than six years to climb out of a slump, as soft demand and overcapacity have kept prices down and earnings poor, and the current global downturn has further eroded demand for basic materials including paper.

For Finnish firms, the pain has been compounded as a drop in the value of the Swedish crown has led firms like Stora Enso STERV.HE to shift production there. Thousands of sector job cuts have been announced in Finland this year.

National Finnish broadcaster YLE said the government would not rule out possible assistance as the struggling sector restructures, and said one change could be to waive the power tax levied on firms.

“The Swedish forestry industry is exempt from the power tax, unlike the Finnish forest industry which pays around 65 million euros ($88.71 million) annually,” said Stefan Sundman, energy and environment head at the forest industries federation.

Paper companies are major producers and consumers of electricity due to the energy-intensive production process.

“This is the most visible competitive advantage of our Swedish counterparts ... moreover, the Finnish government plans to increase the power tax by around 110 million euros starting from 2011,” Sundman added. ($1=.7327 Euro) (Reporting by Yegor Paanukoski; Editing by Jon Loades-Carter)