IKEA acquired a 33,600-acre forest in Romania, making the furniture giant's operations there fullly vertically integrated.
The forest was owned by Harvard University, part of its endowment run by Harvard Management Company, which sought 383 million Romanian le - $116 million U.S. - according to the Harvard Crimson student newspaper. It was sold to Greengold European Capital SA, and then to Ikea Group. Ikea said the acquisition gives it a local, renewable wood supply for furniture production.
“Through this acquisition Romania becomes the first country where the IKEA Group will manage its own forest operations and we aim to set an example for sustainable forest management,” said Frederik de Jong, chairman of IKEA Resource Independence Investments.
In buying the land, IKEA is also responding to the rising price of wood as a raw material, and projected increases in its business over the next 20 years. A Wall St. Journal analysis of IKEA says the company's target for doubling sales to $55 billion by 2020 projects a 50% increase in wood usage. This means IKEA must increase yield and reduce the total amount of wood consumed. Part of that effort will require moving using more of each tree - both heartwood and outer growth. It could also mean incorporating variances in wood coloration on individual pieces. Historically IKEA has produce uniformly light or dark wood furniture.
Here is IKEA's announcement translated from Romanian by Google Translate:
IKEA Group, through its subsidiary in Romania, IRI (IKEA Resource Independence) Investments - invests further in Romania and buys 33,600 hectares of forest. Through this investment, the company announced that it strengthens our country. Romania will become the first country in the IKEA Group will realize the connection between sustainable wood resource owned, production through direct relationships with local suppliers and to finished products from magazine.
"IKEA Group has decided to invest in forestry operations. This decision facilitates our access to raw materials sustainably managed timber and supports our vision to provide the consumer quality products at affordable prices. The investment in forests is also a way to diversify our assets. We are excited to announce the expansion of our investment activities forest in Romania, an important country for our furniture. Through this acquisition, Romania became the first country in the IKEA Group will manage their forestry operations and we intend to be an example of sustainable management of forests, "says Frederik de Jong, Chairman of the Board, IRI also Investments.
According to Krister Mattsson, Board member IRI Group Investments, Kingdom of the Netherlands adds, the overall strategy of IKEA Group has between objective to ensure long-term access to renewable resources which are important for the production chain IKEA, such as renewable energy, wood and biomaterials. "So far, IKEA Group has invested over 1.5 billion euros in renewable energy - wind power and solar panels. This new investment is within the IKEA Group's strategy of investing in sustainably managed forests, located in major markets for developing IKEA Group in Europe and beyond. Romania is a reliable growth market with good potential for development. We analyze for potential investments and other markets, "says Mattsson.
IKEA Group works in Romania with over 20 suppliers that mainly produce sofas, armchairs, tables, chairs, baby items and ceramic products. More than 14,000 people work for the company in Romania, and the products purchased from IKEA Group in Romania rose to 400 million euros annually. The retail division of IKEA Group started in Romania in Bucharest in 2007. Referring to the investment, Steve Howard, Chief Sustainability Officer IKEA Group, said that the investment in forests is part of the extended commitment that IKEA Group and taken through its strategy of sustainability: it will endeavor to independent resources, will use resources within the limits that nature can sustain, promote responsible forestry practices and
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