Family panels

The biomass power stations that «steal» his lumber. The death of his father. The support of the banks and the simplified company reorganization. This is how Alessandro Saviola is managing the relaunch of the Mantova-based group. All homemade.

13-06-201108:16by
Alessandro Saviola with Gianni Letta

«Mine was one of the first “green” companies in Italy, and now it is endangered by none other than the green economy…». Alessandro Saviola, 37, chairman of the Saviola group, based in Mantova, the number one Italian producer of ecological chipboard panels produced exclusively with recycled wood who, with his brother Alfredo inherited the company from their father Mauro, who died suddenly in January 2009, reflects aloud on his new competitor, the companies that process biomasses. These companies burn processing waste, including his beloved wood waste that, last year alone, enabled Saviola to produce 1.3 million cubic meters of panels for furniture and walls. «Now it’s getting harder and harder to find wood waste. Once the municipalities used to call us up asking to take it away for nothing. Now, thanks to the incentives given to those who produce energy from biomasses, it costs us 40 euros a ton».
Spread over the group’s entire production, this means an extra annual cost of 50 mil¬lion euros on the financial statements of 2010, which closed with a turnover of 610 million (+7%) and an operating margin of 75, up from 2009, what Alessandro, who has been in the company since 1994, defines without a doubt as «his worst year ever». In addition to losing his brilliant father, a real genius and a pioneer in the sector of wood and glues, the first in Italy to understand the value and give new life to wood, the young heir had to struggle with a crisis in furniture consumption everywhere in Europe, and manage a company that had grown too fast and chaotically. «We were deeply in debt» Saviola tells Panorama Economy, «and my first priority was to give a strong sign of continuity to our employees and creditors. However, I knew that the changes in the world economy were permanent and that we were going to have to change too, and get our house in order». First we had to cut costs, above all at the management level, but also overhead («We saved about 12 millio¬n euros just by bringing the entire business under our own roof, and in that way none of the workers had to be laid off»). Then he got busy to reorganize the companies in the group: «In the wood sector alone we had four companies, now merged into the Mauro Saviola Group, with Saviola Holding at the top of the pyramid». Everything was centralized, from the administration to finances. «But I have to tell you, the banks helped me and supported this process by extending my debt deadlines to long-term. And for 2011 we expect a 15% increase in revenues». An alliance with the banks, turnover improving. Does that mean your problems are over? «Not really, because the increased business is due to the closure of several German producers, but the margins remain too low in any case». And then there is biomass, that doesn’t let up. Far from it. «Now even the municipalities have begun to realize that wood waste has a value, so they sell it to those companies that burn it to create energy and have government incentives of 60-70 euro a ton. That’s too high a price for our market». Italian law on waste materials in theory should safeguard recycling, foreseeing the use of wood as fuel only for the part that exceeds the needs of recycling. But that is not what actually happens, no one enforces that rule and everyone burns whatever they want. «Let’s say there is a hierarchy of waste, too bad there aren’t any sanctions and everyone does as they please, and wood that is still good gets burned without risking so much as a fine» emphasizes Saviola.
On the other hand, Saviola’s clients in 40% of the cases are companies like Ikea, but also Carrefour, Coop and Auchan, and they want to pay less and less for their chipboard panels, although the prices have inevitably increased in recent months. Thank goodness, the sales of do-it-yourself kits for kitchen furniture are going better (+10%), as this is a business that accounts for 14% of the Saviola turnover, since the market is polarizing into high and low segments, and is starting to move again, after the crisis. Then there is the chemical sector, which covers 36% of revenues for the group, where the higher cost of raw materials was promptly tacked onto the end prices.
Despite his objection to biomass power plants, the group is planning to build one of its own at Mortara, in the province of Pavia, to produce clean energy from wood. «Yes, but you understand that it will serve only to burn the waste of the waste from our plant, that is, the part of the wood that can’t be used at this point for anything else» stresses Saviola. «Our partner is a primary company, and the power plant will go into operation in a couple of years».
The future strategies of the group also include expansion to the United States, which even his father, Mauro, had in mind. In this case, however, the timing is more extended and the negotiations are complex. «Our goal in the States is to export our business model and produce ecocom¬patible panels from recycled wood» says Saviola. «In order not to increase our debt, we will be minority shareholders and will contribute our know how, while the money will come from a private equity fund. But the negotiations are very complicated». The plant, if it’s ever built, will be located in Ohio, where there is plenty of wood, the costs are very low and the logistics are good. «In view of the weight and thus the cost of transport, it is fundamental for us to be located close to the cities, and in this case we will be a very short distance away from the largest American producer of kitchen furniture and also from Ikea».
But, aside from his American dream, Saviola has his feet firmly on Italian soil, where he wants to achieve continuous improvements of wood collection. His brother, Alfredo, 33, is in charge of logistics, a strategic node for the group. «My brother chose to take over the business of transport, which is what he loves» says Alessandro. «Right now we have a fleet of 140 trucks commuting between our 17 plants and 2000 Italian municipalities». Is it true that the communities in the south don’t recycle nearly as much or as well as those in the north? «I can tell you our experience. Before 2009 we depended on foreign imports for 50% of our lumber, now that’s down to 8-9%. And this is thanks to the south: we are getting huge amounts of wood from Puglia, Sicily and Sardinia, while just two years ago Italy, for us, ended at Rome…».
In the coming months, the company’s 2011 financial statements will be certified. «We’re doing it for the banks, to be even more transparent with them» says Saviola. «We don’t have any plans regarding either the stock exchange or outside investors. We prefer to go it alone. Although since I have been in charge, I have learned one thing: I mustn’t let myself be too much in love with my company». He has two managing directors to remind him of that every day: Luigi Gozzi, in charge of finance and sales, and Roberto Bertola, who follows production and research. «They worked alongside my dad for 30 years, but never had a specific role. When I took the reins of the group, I appointed them managing directors in charge of their areas of action». That too is transparency.

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