Friday Offcuts – 24 October 2014

growing trees cutting and milling timber forest products
In a discussion paper just released by CSIRO, Australia we’re told needs to move away from its traditional manufacturing into new areas that can provide competitive advantage. It should be recognising, as should New Zealand manufacturers, the worldwide trend towards smaller batches of production, customised products, rapid prototyping and agile manufacturing processes. This has very much been the focus of FIEA events such as August’s MobileTECH 2014 series and the more recent technology series, Wood Innovations 2014. For those looking towards the future, check out the story and link to the new 24 page discussion paper below.

In line with new technology and the pace of change, Finland’s PM has just put the declining fortunes of the country’s paper industry down to America’s multinational corporation, Apple. You’ve got to admit, it’s not very often that you see a single company being blamed for the economic struggles of an entire country. However, with forestry accounting for about a fifth of Finland's exports and 18 percent of the country's industrial output value, the iPad along with other tablets and e-readers according to the new Prime Minister, Alexander Stubb, have been the principal reason for Finnish paper exports dropping for the fourth consecutive year.

In last week’s issue we showed a pretty clever video clip – that was the one with employees decked out in red checked clothing - put out by one of North America’s largest forest products companies showcasing as part of a six month campaign, the many and diverse careers available in today’s modern forest industry. We suggested something like this for this part of the world is long overdue. So, one week later – although not pitched at those looking directly at a career in the forest products sector, the Australian Forest Products Association has just produced a short video aimed at highlighting the importance of tree planting and harvesting by the forestry industry. Check out the video in the story below.

Finally – a good news story to finish the week on. Take a look at the story on the new logging training centre covered this week. A New Zealand harvesting contractor, unable to secure skilled workers and realising that the region is going to need new crews (an expected 40 new logging crews are going to be needed in the lower South Island in the next six years) has decided to take the “bull by the horns”. Rather than wait for funding and for the stars to be aligned, he’s set up and is funding his own logging training school. Complete with simulator, tutors and space to operate the machines, interest in the new training centre has already been strong from within the region, from around New Zealand and even, Australia. Now that really demonstrates faith for the future of the industry and initiative from someone who is "out there doing it".

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Australia’s future could be in iManufacturing

Australia needs to play to its strengths and transition from traditional manufacturing into new areas of competitive advantage. CSIRO proposes the direction for such a move in its discussion paper Equipping Australian Manufacturing for the Information Age: iManufacturing - Is Australia Ready? which aims to generate discussion among Australian industry to prepare them for the move away from 20th Century modes of production and allow them to compete on the world market.

The CSIRO said opportunities exist both domestically and internationally in the market for high valued, niche manufactured goods and associated services produced here in Australia if the local industry were to adopt and utilise modern information technology and develop the associated skills to make best use of it.

The discussion paper talks about businesses growing and evolving from the use of traditional IT-based technologies and into eManufacturing (dependent on cloud-based services) or progress further into iManufacturing (or informatics-linked manufacturing).

To compete globally, the report says, enterprises need to have the right skills and tools to do business, adapt to the future, including:

- Develop workers which combine not only eSkills (general computer/internet abilities) but also iSkills (understanding data, connectedness, the Internet of Things, servitisation) and manufacturing expertise

- Encourage and develop Materialisation technologies that more rapidly turn digital, customised data into physical outputs

- Develop collaborations and networks at local and global scales that are not only engaged at the human communications level but are sharers of data, resources, and processes

- Improve supply chain interoperability and material flow efficiencies Move manufacturing industries increasingly into the service spaces - the servitisation of Manufacturing

- Develop appropriate business models that maximise the potential that these new technologies provide.

For details of the discussion paper, click here
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Blaming Apple for a country's economic problems

Apple is to blame for the economic weakening of Finland according to the country's prime minister. Alexander Stubb said two sectors in particular have declined in recent years at the hands of Apple products.

"We have two industrial problems – two champions which went down," he told CNBC. "I guess one could say that the iPhone killed Nokia and the iPad killed the Finnish paper industry, but we'll make a comeback." His comments followed S&P downgrading the Finnish economy last week. The ratings agency cited the country's ageing population, shrinking workforce and slowing exports.

Nokia, once the darling of Finnish commerce – it contributed a quarter of Finnish growth from 1998 to 2007 – was the king of the mobile market. In 2007, the year that Steve Jobs unveiled the first iPhone, Nokia had around half of the global smartphone market, according to Statista. It now accounts for about 3 percent. Since 2007, when Nokia was worth around $150bn, its share price has plummeted by more than 75pc. Microsoft bought the ailing company's devices division for $7bn earlier this year.

The paper industry is similarly important for the Finnish economy; forestry accounts for about a fifth of Finland's exports and 18 percent of the country's industrial output value. This sector has also taken a hit in recent years, with paper exports expected to shrink for the fourth consecutive year. Since the first iPad was released in 2010, a bevy of other tablets and ereaders have become available, taking their toll on the traditional paper market.

Source: The Telegraph Group Limited

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Inquiry into Australian forestry MIS

The Australian Securities & Investments Commission (ASIC) has released its submission to the 2014 Senate inquiry into forestry managed investment schemes. The submission sets out:

- ASIC’s role in relation to the regulation of forestry managed investment schemes, and

- actions ASIC has taken to address issues arising in this sector as a result of the collapse of a number of responsible entities of forestry schemes.

It also provides ASIC’s views on potential areas for reform with reference to proposals in a July 2012 Corporations and Markets Advisory Committee (CAMAC) report, including:

- the potential for a prospective ban of agribusiness managed investment schemes (MISs)

- the adoption of particular recommendations made by CAMAC

- governance and risk management arrangements that apply to managed investment schemes

- a more flexible regulatory toolkit to address weaknesses in the Australian financial services (AFS) licensing regime, and

- the potential for the introduction of a statutory compensation scheme.

ASIC Commissioner Greg Tanzer said, ‘We see some merit in considering potential reforms of this sector, however, any such reforms should be considered within the broader work that has been done in developing potential refinements to the regime as a whole.

‘As a result, we have identified some potential areas for reform that relate to the specific business model of common enterprise schemes, and forestry schemes in particular, as well as potential areas for reform across the broader managed investment scheme sector.’ Download ASIC’s submission to the 2014 Senate inquiry into forestry managed investment schemes.

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Logging training centre a first for NZ

Passionate about the logging industry and concerned about its future led Mike Hurring to establish a “first of its kind” dedicated training facility in Balclutha, Otago, New Zealand for those interested in making a career in the industry. Mike sees the facility, which is an arm of his business Mike Hurring Logging as having benefits for not only his company but for companies all around the country.

“It was recently revealed that the Otago industry will need another 40 logging crews within the next 6 years, which means we need people trained now”, Mike said. And what are the requirements to enrol? “All I ask is that they can get out of bed in the morning, be drug free and want to work” says Mike.

With a lot of changes in the industry in recent years and a serious lack of trained people, the industry has had a lot of negative publicity and putting a lot of people off, so Mike decided to develop a facility to attract people to the industry, ensure they have the right skills and keep them in forestry, which has become much more complex and safety focused.

Having just begun a long term thinning contract in South Otago and knowing there was a strong possibility of wheeled harvesters being needed in the future he has purchased the first John Deere wheeled harvester in New Zealand. The John Deere E-series simulator has also been purchased by Mike and is the perfect training tool for the wheeled harvester and forwarder will lead to having more skilled operators. “We did this with a view that it could provide training for other crews as well as our own. This has been set up in a container so that it can be moved.”

Mike’s facility is situated on the outskirts of Balclutha and can accommodate up to 10 people for each 5 week course under the guidance of two tutors. The centre’s 12ha property also allows hands-on experience on a loader, harvester, forwarder and a processor. Chainsaw and cable logging training will also be given and a workshop where machine and wore rope maintenance is taught is also on site. Successful participants will leave the course with a forestry entry qualification.

The centre is also available for other contractors who may want their staff upskilled. Interest has been shown from as far away as Australia. The training facility already has some signed up for the next 5 week course, the last to be run before Christmas. Those who wish to participate can contact Mike Hurring Logging on Tel +64 3 419 0101.

Source: Otago Daily Times

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World leading robotics specialist for ForestTECH 2014

With a technology focus for forestry companies being planned for ForestTECH 2014, we’re delighted to announce that a world leader in robotics will be presenting as an after-dinner presenter in Melbourne on the first night of the conference, Tuesday 25 November. Professor Saeid Nahavandi who leads the Centre for Intelligent Systems Research at Deakin University will be opening delegates eyes to the opportunities open to the industry through the increasing use of automation and robotics.

As well as being renowned for his research and commercial applications, he is in high demand presenting at conferences throughout the world. He used to live in New Zealand and actually designed a robotic pine pruning machine many years ago for the NZ forestry industry. He also, for another project, won the NZ Engineer of the Year - beating the NZ America's cup team (who won the cup that year).

A couple of weeks ago he was in Boston with the company who made international headlines by designing a robot that runs like a cheetah ( check out this video) - which got bought by Google last year.

Prepare to have your eyes opened. Dinner and full registrations to the ForestTECH 2014 event in Melbourne can be made – with the other workshops being planned for Australian resource and planning foresters detailed – on the event website on

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Export log market update

NZ log exports

NZ log exports to China decreased in August, to 885,000m³, which was 20% below a year ago. This is the fourth consecutive month of exports to that country being lower than year ago levels, but it is yet to offset the increases seen in the first four months of the year, meaning that total exports to China for the year to August are up 7% year-on-year.

Exports to India at just over 100,000m³ were the lowest since January during August, but for the full year are up 8% on a year ago. Exports to South Korea for August were the highest since April 2011, but this is not indicative of an upward trend there, rather a peak in monthly fluctuations. The market there has been very steady, and looks to be on track for similar volumes to 2013 this year.

Log prices are up significantly at the wharf-gate, which is almost entirely driven by foreign exchange movements. Average unpruned log export prices are up 9%-11% for the month. Pruned log price movements are closer to a 6% rise. At wharf-gate prices have had almost $7/t added through foreign exchange movements this month.

A-grade log prices are now back over $100/t at the wharfgate in the Northern North Island, which historically is a high price, but not in comparison to the past 12 months. In the past this level of prices, especially when combined with the high domestic demand seen currently, would lead to increased harvesting levels. However, indications from large forest owners are that intentions are not to wind up harvests this summer at the moment, due to wariness about China’s ability to consume logs. There are indications that small forest owners will also be wary after some were caught out by the rapid decline in prices this year, and many will also be holding out for higher prices before committing to harvesting given what has been seen in the market in the past 12-18 months.


China’s log imports showed a large decline in August to 2.29 million tonnes, the lowest since February 2013. The major sources, NZ, Russia and the Pacific Northwest all showed decreases in supply from a month ago, and year on year. This meant that although NZ supply dropped 20%, it remained the largest supplier of logs to China. Log supply from other sources increased, and for the three months to August were up 16% year-on-year while the top four suppliers had a 12% decline.

This is likely to be a structural change as more and more log suppliers look to export to China. China’s construction industry is still slowing, with house prices coming down and total area of real estate sales down 8.3% for the year to August compared to 2013. The decline in new house sales is larger than for existing homes, with sales down 9.1%. Processors in China are reporting a 30% decline in demand for construction grade lumber which potentially means that log imports will have to come back further.

Russia and the Pacific North West

Russian supply typically starts to slide towards the end of the year, while Canada and US supply is normally steady out to the end of the year, but slow in the first half due to their winter. Russian log supply has continued to fall this year, despite appearing to arrest the decline at the start of this year. Indications are that big increases are unlikely, mostly due to high transport costs, and difficult harvesting terrain. The low hanging fruit has been harvested in Russia, and as a consequence there are more remaining harvesting options on frozen ground and distant forests.

US housing starts are not meeting expectations yet, but it’s expected that in the next 12 months there will be less wood exported from the US and Canada as the US housing market increases. Canada’s lumber exports to the US have already increased 10% this year.


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K-C Australia to invest AU$20M

Kleenex tissue manufacturer Kimberly-Clark Australia will invest AU$20 million in its Millicent factory in the state’s south-east as a sign of its continuing commitment to the region and its 400 workers. The investment over 12 months will involve capacity and equipment upgrades to increase production at the site, but no jobs are expected to be lost or created as a result.

This week’s announcement comes as global parent Kimberly-Clark Corporation said it was cutting 1300 jobs from its 58,000-strong worldwide work-force to save about $150 million by 2017. Millicent mill manager Scott Whicker said there would be no impact on SA jobs. However, the company’s other two Australian manufacturing sites at Ingleburn and Albury in NSW will be reviewed.

Source: The Advertiser (Australia)

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Pulp production in Japan picking up

Pulp production in Japan has picked up in 2014 as compared to 2013, with wood fibre consumption being six percent higher during the first six months of this year as compared to the same period in 2013, according to the Japan Paper Association.

The increase in demand was practically the same for softwood fibre as for hardwood fibre, but the overall volume of the total virgin fibre consumption is still split at approximately 68 % hardwood and 32 % softwood fibre.

To meet the higher wood fibre needs, domestic fibre sourcing from the domestic sawmills has increased by two percent and import volumes have gone up nine percent year-to-date. In the 2Q/14, importation of softwood and hardwood chips was up by as much as 17% and 14%, respectively, as compared to the same quarter last year.

Despite the substantial increase in import volumes, average prices for imported hardwood chip prices in Japan declined by about 17 dollar per odmt from 2Q/13 to 2Q/14, as reported in the latest Wood Resource Quarterly (WRQ). Average prices for softwood chips were one dollar higher in the 2Q/14 as compared to the same quarter in 2013, but as much as 13 dollars higher than in the first quarter this year.

The general trend the past four years has been that prices for imported chips have gone up in the local currency due to a weakening Yen against the US dollar, and that prices for domestically sourced chips have fallen slightly. In the 2Q/14, prices for imported softwood chips were on average 65% higher than residual chips from domestic sawmills, while imported hardwood chips were just over 20% higher than locally sourced hardwood chips, as reported in the WRQ (

The biggest change in fibre sourcing this year has been a sharp increase in softwood chip imports from the US and record high import volumes of hardwood chips from Vietnam. Other developments include higher volumes imported from South Africa, Brazil and Indonesia, while shipments of hardwood chips from Chile and Australia have continued to decline in 2014. With the recent pick-up in hardwood fibre imports to Japan, the total import volume for this year could very well reach its highest level in six years.

Source: Wood Resources International,

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Wood supply chain resources open to FIEA members

Over 300 forest managers, harvesting contractors and wood transport companies in the region participated in the FIEA technology event, Wood Flow Logistics 2014 that ran in both New Zealand and Australia in June this year. With 30-40 percent of delivered log costs being contributed by transport, local companies were very keen on checking out just what innovations had been developed and how some of this new technology is being employed to improve efficiencies through the wood supply chain.

Delegates to the technology series have been able to download presentations from both the New Zealand and Australian event. A cross section of key presentations from the series have just been uploaded onto the Tech Updates section of the FIEA website for FIEA members to download. Presentations include;

- New Innovations in Harvesting & Felling Heads, Jules Larsen, General Manager, Waratah Forestry Attachments, Australia

- Production Planning, Harvesting and Transport Optimisation - Tools being used in a 10 million m3 pa wood flow company in Chile, Claudio Parada, Chief of Operational Planning, Forestal Mininco SA, Chile

- Key Trends Shaping Global Supply Chain Management, Ross Robinson, Associate Director of Research, Institute for Supply Chain & Logistics, Australia

- GPS and Vehicle Fleet Performance Tools – how best to leverage your current systems for financial gain, Corinne Watson, Director, CCS Innovation in Logistics, New Zealand

- Just what Impact does the Number of Log Sorts on a Landing have on the return to the Harvesting Operation, Rien Visser, Associate Professor, School of Forestry

- Innovations in Log Transport, Trailer Design & Operation, Warwick Wilshier, Managing Director, Wilshier & Williams, New Zealand

- Case Study. Fibre Logistics and Planning Involved with Australasia’s Largest Wood Manufacturing Operation, Visy, Tumut, Rodney Anderson, Forest Operations Manager, Visy Tumut, Australia

- Advanced Forest Inventory on Merchandising Yard Costs, Reino Pulkki, Professor, Forest Operations & Transport Logistics, Lakehead University, Canada

- Analyzing Wood Procurement Systems, Reino Pulkki, Professor, Forest Operations & Transport Logistics, Lakehead University, Canada

- Collaboration Through the Wood Supply Chain, Reino Pulkki, Professor, Forest Operations & Transport Logistics, Lakehead University, Canada

For FIEA members who have forgotten their access code to this extensive list of recent resources, please contact

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Forestry workers high risk of work related injuries

Two reports have come out in the last two weeks telling us probably what all of us already knew – that forestry workers are amongst the highest in both New Zealand and Australia for work related injuries.

In New Zealand, just under one-quarter of agriculture, forestry, and fishery workers had a work-related injury claim accepted by the Accident Compensation Corporation (ACC) in 2013, Statistics New Zealand said.

Provisional figures for 2013 show that agriculture, forestry, and fishery workers made 226 injury claims per 1,000 full-time equivalent employees (FTEs), and 2.6 percent of these workers experienced an injury that resulted in a week or more off work.

For more information about the statistics look at Injury Statistics – Work-related Claims: 2013.

In Australia, truckies, posties and warehouse workers top the list of Australia's deadliest jobs, according to new research. The transport and storage industry recorded the highest number of deaths, with 65 workers killed on the job in 2012, comparison website Life Insurance Finder found. Transport and storage workers accounted for nearly one-third of all workplace deaths that year.

Agriculture, forestry and fishing is Australia's second-most dangerous line of work, with 53 deaths in 2012. Interesting though that workers in this industry are more likely to die from being hit by an animal, drowning and heat exposure than any other industry on the top 10 list, the research found.

Transport Workers Union assistant national secretary Michael Kaine said the union had been campaigning for a safer road transport industry for more than 20 years. "Road transport workers are 15 times more likely to be killed at work than any other worker in Australia," he said.

Other jobs on the list included public administration, safety and defence (13 deaths, 5330 injuries); mining (seven deaths, 2670 injuries); professional, scientific and technical services (six deaths, 2100 injuries); wholesale trade (five deaths, 5315 injuries); and utilities (five deaths, 530 injuries). More >>

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The true art of tree hugging

The following clip is short AFPA video produced in light of the Australian Government announcement that it will work with the community to plant 20 million trees by 2020, to re-establish green corridors and urban forests. The video highlights the contribution to the community, made by the forest products industry each and every year, to carbon storage by planting and harvesting trees.

The Intergovernmental Panel on Climate Change (IPCC), has stated that: In the long term, a sustainable forest management strategy aimed at maintaining or increasing forest carbon stocks, while producing an annual sustained yield of timber, fibre or energy from the forest, will generate the largest sustained mitigation benefit. (Climate Change (2007): Mitigation. Contribution of Working Group III to the Fourth Assessment report of the Intergovernmental Panel on Climate Change).

This is a public video. The link can be shared far and wide with friends and colleagues to highlight the importance of tree planting and harvesting by the forestry industry. The video may even challenge a few misconceptions …

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Wood fibre replacement for insulation

New wood fibre-based insulation materials and sprayable insulation foams will replace products made of non-renewable or poorly recyclable raw materials. These mass producible materials lower energy consumption at the production stage, and reduce the products' carbon footprint.

As part of the WoTIM project (Wood-based Thermal Insulation Materials), VTT Technical Research Centre of Finland is developing wood fibre-based insulation materials and sprayable insulation foams with enhanced product features. The WoTIM project involves the development of foam technique-based production methods in order to create high-quality wood-based thermal insulation panels and in-situ spray-on insulation materials.

The project aims to raise the overall performance of wood-based insulation to the same level as that of polyurethane insulation. The insulation properties of cellulosic materials can be improved by using foam-like structures to create closed-like air pockets in the material.

Because the raw materials of plastic-based in-situ spray-on polyisocyanurates and polyurethanes (PIR and PUR) contain hazardous components, insulation workers must wear protective respirator masks and protect their skin during installation work. In contrast, the spray-on cellulosic foam to be developed by the WoTIM project will involve no health hazards, either during or after its installation.

For more information and a link to this project, check out the latest issue of R&D Works.

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Building activity update

NZ Building Consents

There’s been a dip in NZ building consents in August. Building consents in Canterbury were down 7% year-on-year, which is the second month of slowing growth. The rolling quarter growth, for the three months to August, was 6% year-on-year, which is the slowest growth since June 2011. Slower growth was seen in the Auckland building consents as well, where consents in August were down 3% on 2013.

For the rest of NZ has been an increase in building consents growth over the three months to August, but it’s not enough to offset the drop in Christchurch and Auckland consents, which have made up between 53%-61% of NZ’s housing consents in the past year. Overall housing consents in NZ were flat to August 2013.

China house prices

House prices in China have continued to come down in many cities as house sales dry up. The new housing price indicator has fallen to 0.5, indicating 0.5% growth year-on-year for new house prices in the 70 largest cities in China. This is the slowest growth since the end of 2012, but the reasons for the slowdown appear to be different at the moment.

In 2012 the slowdown was engineered by government policy, restricting high loan to value ratio loans and local government policies including restrictions on second house ownership. Currently the slowdown is market based, and these restrictions are being unwound in order to arrest the slowdown.


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NZ log export log prices to China lifting

New Zealand export log prices have lifted from a two-year low as Chinese importers resume buying and local returns are bolstered by a decline in the New Zealand dollar and cheaper shipping costs. The average wharf gate price for New Zealand A-grade logs fell to NZ$76 a tonne in July, the lowest since April 2012, but have since recovered to $80 a tonne in August and NZ$88 a tonne in September, according to Agrifax's monthly survey of exporters, forest owners and sawmills. This month's survey, which is still being collated, is also likely to show a gain, Agrifax said.

Chinese importers have resumed log buying after a glut of inventories on Chinese ports pushed down prices. New Zealand returns in the past two months have been bolstered by a decline in the value of the kiwi and cheaper shipping charges as a result of increased capacity.

"There has been an increase in buying as importers try to take advantage of the lower price but construction activity definitely seems to be down over there," said Agrifax forestry analyst Ivan Luketina, who visited China for the Global Timber and Wood Products Trade Conference last month.

"We saw that construction activity was not picking up at all," said Luketina, who visited Chinese ports and sawmills as part of a tour organised by Canadian-based International Wood Markets Group. "A lot of these importers have bought in more imports at the lower price but it's not being passed on to the construction industry.

"Overall the construction industry seems fairly stagnant, we were visiting some facilities where they had capacity for 80 to 100 sawmilling lines and only 30 were operating in one place," he said. "Generally the conversations we had with the sawmill owners were that they had seen quite a big downturn in construction activity and construction lumber."

Many Chinese sawmills were trying to adjust their business to the furniture market, where they saw more demand, Luketina said. "They have adjusted to the lower construction and any increase in construction activity should be supportive of prices but at the moment it's a little bit tenuous where importers have started buying again without being able to pass on the logs that are already sitting in inventories," he said.

New Zealand wharf gate prices are being distorted by the impact of currency and shipping, with some exporters receiving NZ$110 a tonne this month, Luketina said. The higher wharf gate price "is likely to mean more people are going to be exporting even though the inventories in China haven't actually decreased significantly," he said.

Source: Scoop

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Buy and Sell

...and one to end the week on ... the jewish elbow

The Jewish ELBOW

A Jewish grandmother is giving directions to her grown grandson who is coming to visit with his wife.

"You come to the front door of the apartment. I am in apartment 301. There is a big panel at the front door. With your elbow, push button 301. I will buzz you in. Come inside, the elevator is on the right. Get in and with your elbow, push 3. When you get out, I'm on the left. With your elbow, hit my doorbell."

"Grandma, that sounds easy, but, why am I hitting all these buttons with my elbow?.......

"What..... You're coming empty handed?"


Wise Italian Grandfather

Why Italian Fathers and Grandfathers pass their handguns down through the family.

An old Italian man is dying. He calls his grandson to his bedside, Guido, I wan' you lissina me. I wan' you to take-a my chrome plated .38 revolver so you will always remember me."

"But grandpa, I really don't like guns. How about you leave me your Rolex watch instead?"

"You lissina me, boy. Somma day you gonna be runna da business, you gonna have a beautiful wife, lotsa money, a big-a home and maybe a couple of bambinos."

"Somma day you gonna come-a home and maybe finda you wife inna bed with another man.

"Whatta you gonna do then? Pointa to you watch and say, 'times up'"?

And on that note, enjoy the weekend - a three day one this week for the Kiwi's. Cheers.

Brent Apthorp
Editor, Friday Offcuts
PO Box 904
Level Two, 2 Dowling Street
Dunedin, New Zealand
Ph: +64 3 470 1902
Fax: +64 3 470 1904
Web page:

This week's extended issue, along with back issues, can be viewed at

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