Austria’s sawmills face weak construction demand, rising costs and tighter EU rules

Construction downturn weighs on timber demand

Austria’s sawmill and timber trade sectors are entering 2026 under pressure from weak construction activity, elevated costs and expanding regulatory requirements. The downturn in building construction continues, while industry representatives see no clear evidence of a sustained recovery.

Markus Schmölzer, chairman of the Austrian Sawmill Industry, said at International Wood Day 2026 that weak demand, high costs and increasing regulatory density were reducing the competitiveness of Austrian operations. International crises are adding uncertainty, disrupting supply chains and raising costs. Although the sawmill sector remains broadly resilient, its earnings position is strained.

Exports lose momentum after a strong 2025

The timber trade is experiencing a divided market. Franz Teuschler, chairman of the Austrian Timber Trade, reported positive development in roundwood trading but persistently low demand for processed timber used in construction. Flexibility, broad product ranges and reliable delivery capacity have consequently become more important for wholesalers and retailers.

Exports performed well in 2025, with growth particularly in Austria’s traditional European markets. According to Teuschler, however, demand fell after the military escalation in the Persian Gulf, while freight costs increased sharply. The timber trade therefore expects lower revenue and margins in 2026. The pressure is significant for an export-oriented industry: Austria’s wider wood industry generates an annual foreign-trade surplus of €1.95 billion.

Industry calls for investment support and simpler rules

Sector representatives are asking policymakers to improve conditions for investment and growth and to stimulate new construction and renovation. They argue that additional costs and requirements should not make building projects more difficult. Regulatory implementation is another concern. Schmölzer pointed to the EU Deforestation Regulation, or EUDR, and the Packaging and Packaging Waste Regulation, or PPWR. The packaging rules have been applicable for several weeks, although more than 30 delegated acts are still outstanding at EU level.

Adjustments agreed at the end of 2025 reduced some of the most serious administrative concerns surrounding the EUDR. Additional verification and documentation duties nevertheless remain for forest owners and companies throughout European supply chains. Teuschler called for simple, legally certain and practical implementation, particularly in countries such as Austria where the industry says relevant deforestation risk is absent and sustainable forest management is already governed by national rules.

Domestic capacity and forest management

Austria’s sawmill industry comprises more than 1,000 businesses and employs around 10,000 people, mainly in rural areas. It generated production worth €3.1 billion in 2025. The broader wood industry includes more than 1,250 processing companies, employs around 25,200 people and produces goods worth approximately €10 billion. More than 444,000 people work across the forestry and wood value chain.

The sector also links its competitiveness agenda to Austria’s climate-neutrality target for 2040. Industry representatives argue that active forest management and greater use of wood in buildings, components and furniture can retain carbon in long-lived products and replace more emissions-intensive materials. They also say forest renewal is becoming more urgent as drought, heat, storms, pests and fires threaten older and less resilient stands. For sawmills, maintaining healthy forests is both a long-term raw-material requirement and a condition for preserving domestic processing capacity.