Competitiveness and cost structure analysis of selected wood-processing industries in Ethiopia

Abstract

Wood-processing industries contribute to economic and social development by producing a variety of wood products, yet limited information exists on their competitiveness and cost structures in Ethiopia. In this study we examined their competitiveness by using diamond model and cost structures of chipboard, plywood, and sawn wood industries using a survey of 29 large and medium firms and detailed cost analysis of three case studies. We used both qualitative and quantitative data to ensure a comprehensive analysis; quantitative data were examined using descriptive statistics including frequencies, means, and percentages to identify measurable patterns and trends, while qualitative data provided contextual depth and insights into the operational and strategic challenges faced by respondents. Findings revealed that limited support from government was a key constraint to competitiveness, while growing demand for wood products had a positive effect. Cost structures varied by industry type: raw materials were the largest expense for chipboard (43%) and plywood (51%) producers, while overhead costs dominated (76%) for the sawn wood (sawmill) respondent from 2019 to 2024. Profitability improved across all products: chipboard margins rose from 6.9% to 7.1%, plywood from 9.6% to 22.8%, and sawn woods from 3.8% to 13.3%. Enhancing the competitiveness of Ethiopia’s wood-processing sector requires addressing industry-specific challenges and costs.