Friday Offcuts – 11 April 2014

growing trees cutting and milling timber forest products
Technology and innovation again provide the principal focus for this week’s issue. In a recent presentation at the Prefab NZ conference, David Chandler, Chief Executive of Sydney based construction advisory firm Resolution Services, said construction throughout the world increasingly was heading offsite. It’s becoming industrialised and globalised. Australia’s construction inputs, including engineered wood, are more often being sourced offshore which is holding back the development of domestic prefabrication capability, inhibiting productivity growth and driving up construction costs. His answer (and a copy of the full paper can be found in the story below) is to improve collaboration within the construction industry in this part of the world which will improve both productivity and innovation.

We’ve a story this week on the Seneca Sawmill Company, based in OR, USA. It was recently featured in IBM’s national publication for its visionary leadership and use of technology to build a thriving, sustainable business. It appears that recent success stories from sawmilling are few and far between so this one is a welcome change. According to IBM Systems Magazine, the key to Seneca’s success lies in its commitment to keep up with the times, particularly in the use and application of advanced technology to cut their costs, save time and reduce waste across its multi-company operation.

Technological innovation is embedded into Seneca’s corporate culture. It’s embraced organisation wide—from upper management to shipping operators to back-office personnel. Seneca’s approach to technology and environmental sustainability also go hand-in-hand in its culture of innovation. By seeking technological solutions to the difficulties that come with a large, complex organization, Seneca has proved that innovation can help a business thrive in even the most challenging industries.

Innovation, leading R&D and commitment to its customers has also seen a local company, WPI International named as one of the Top 10 Most Popular Market Pulp Brands in China in 2013. We’ve got another story on 3D printing this week with a machine now offering over a cubic metre of print space and we cover a new alliance being set up between the world’s three largest container shipping firms which is due to start operating mid-year. As outlined in the story, shipping and improving storage and handling efficiencies in local ports for logs and wood products will form part of this region’s upcoming Wood Flow Logistics 2014 series running in mid-June.

And yes – the Tasmanian forest debate is still going (see story below). It was announced this week that the State Government is going to introduce legislation to Parliament next month to repeal the Tasmanian Forest Agreement and set aside 400,000 hectares of forest reserves for future harvesting. However, Cabinet has agreed to impose a six-year freeze on harvesting in a move designed to calm the environmentalists (some hope). Some in the industry fear that the State Government is rushing its forest policy, that it’s unlikely to provide certainty for the timber industry in key export markets and it’s a move that’s likely to reignite Tasmania's forest wars. So yes – here we go again - more infighting, more negotiations, more protests and continued uncertainty.

Finally, as we approach Easter, the next two issues of Friday Offcuts will be going out a day early. Next week with Easter Friday the issue will be sent out on Thursday 17 April and for the following week, on Thursday 24 April before ANZAC day. If placing an advert in either of the next two issues, remember to get the ad posted on the Wednesday before the issue goes out.

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Australasia a premium timberland investment region

As part of this week’s Forest Investment & Market Outlook 2014 (FIMO 2014) series, David Brand, CEO of New Forests Pty Ltd gave an insight into Australia and New Zealand as an option for timberland investors. The New Zealand leg of the biennial update given to over 120 senior forestry and business managers and institutional investors finished in Auckland yesterday.

New Forests is a leading timberland investment manager for institutional investors with the company now managing over AU$2.3 billion in assets in funds in Australia, Asia and the United States. They’re currently managing investments of 400,000 ha of land and timber plantations in Australia, as well as the Timberlink Australia processing, sales and distribution business.

Investment activity in timberlands in this part of the world is still very active. The total asset pool according to David Brand is approximately AU$7-8 billion in Australia with New Forests forecasting $1.5-2.0 billion of asset sales expected during 2014-2016. A similar situation exists in New Zealand with $8-9 billion of forestry assets with $1-2 billion of asset sales expected over the same two-year period. Transaction values in both countries will continue to be strong over the next 2-3 years, and then likely decline.

Australia and New Zealand are currently viewed as premium timberland regions explained David Brand. In fact, they are the second most attractive institutional timberland investment jurisdiction after North America. Low political risk, a good business climate, infrastructure and technical know-how are all attractive to investors. Exposure to the Asian growth story in a low risk environment and the prevalence of high quality assets in a “buyer’s market” over the past decade have also drawn investors to this part of the world.

As explained by David Brand, assets have been well priced to date. However, there are challenges with the long term fundamentals and a need for continuous productivity enhancement, market development and diversification. Other key presentation’s will be covered in future issues of Friday Offcuts. The Australian leg of the FIMO 2014 series starts in Melbourne on Tuesday next week. Last minute registrations can still be made on

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Closer alignment urged in local Prefab construction

In a recent presentation at the Prefab NZ conference, David Chandler, Chief Executive of Sydney based construction advisory firm Resolution Services, said construction throughout the world is increasingly going offsite and becoming industrialised and globalised, but a business as usual approach in Australia is holding back the development of domestic prefabrication capability, inhibiting productivity growth and driving up construction costs.

Chandler told the conference New Zealand was ahead of Australia in terms of embracing pre-fabrication, and that procurement practices throughout the industry in the latter had been held back by a cutting back of informed buyer capability within the public service, a lack of national insights over what construction costs should be, variations in construction quality and certification and declining on-site construction experience on the part of managers and the return of fragmentation of construction governance and governance of industry associations.

He said many of Australia’s construction inputs are increasingly being sourced offshore, a phenomenon which is leading to challenges associated with compliance of imported products with Australian standards as well as more employment positions going overseas.

“The rate at which construction inputs are being sourced off-shore is rising steeply,” Chandler wrote in his paper. “These inputs include steel, curtain walls, engineered timber and these days extend to complete buildings in areas such as housing, student accommodation and hospitals.”

To turn this around, Chandler argued for greater coordination between Australia and New Zealand, including the creation of an industry portal that enables the supply chain to collaborate and allows clients and construction imitators to view all that is on offer, incorporate inputs of their choosing, quickly build a project design, manage scope and specification and view real time pricing and delivery schedules.

See more by clicking here

A full copy of the paper David Chandler gave at the conference can be viewed here.

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Alliance of world's top three shipping lines

An alliance of the world's top three container shipping firms which could control more than a third of the market is likely to start operating in mid-2014, No.1 player Maersk Line said after the tie-up was approved by U.S. regulators reports Thomson Reuters.

The industry has been battling overcapacity since the financial crisis because new vessels ordered before the downturn have flooded the market. This has driven rates on the main route between Asia and northern Europe to loss-making levels.

The proposed alliance is between Maersk Line, a unit of A.P. Moller-Maersk, Switzerland-based MSC Mediterranean Shipping Company and France's CMA CGM. To cut costs, they have agreed to pool about 250 ships which will operate on three trade routes: Asia-Europe, trans-Pacific and trans-Atlantic. This would allow the firms, which currently run many of their vessels only partly laden to run larger ships - which are more fuel efficient - fully loaded.

The so-called P3 alliance will have more than 40 percent of Asia-Europe and trans-Atlantic trade and 24 percent of the trans-Pacific market, according to industry estimates. The approval from the U.S. Federal Maritime Commission (FMC) takes effect from Monday but will apply only to routes to and from U.S. ports. The alliance still needs approval from Chinese and European regulators before it can become fully effective. Maersk Line said it expected to receive Chinese and EU approval before the middle of this year. "We expect that the P3 can be started mid-2014," it said.

Shipping and improving storage and handling efficiencies in ports will form part of the upcoming Wood Flow Logistics 2014 series that will be running for forestry, harvesting and wood transport companies in both New Zealand and Australia in mid-June. Details on the event can be found on

Source: Thomson Reuters

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Tasmanian Government to scrap forest deal

Hundreds of thousands of hectares of Tasmanian forest have been earmarked for logging after the newly elected state government pushed ahead with the repeal of a historic forestry deal. The state government has unveiled its plans for undoing the Tasmanian Forestry Agreement - a deal reached in 2011 by industry groups and conservationists.

About 400,000 hectares of forest set aside in the agreement as potential reserves will be reclassified as "future potential production forest". However, there will be no logging in these zones for at least six years as the timber industry is rebuilt.

Paul Harriss, resources minister in Will Hodgman’s Liberal cabinet, said the government was acting on the overwhelming mandate it had received at last month's election. The government's planned changes also include that no further reservations of forest be made without a two-thirds majority support of both houses of the state parliament. Opposition leader Bryan Green said the move would plunge the forest industry into years of uncertainty and conflict.

Source: The Guardian

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WPI International voted in Top Ten

Commitment to its market and leading research and development saw New Zealand’s WPI International beat out a large field of global contenders to be named as one of the Top 10 Most Popular Market Pulp Brands in China in 2013.

WPI’s success with new grades of quality folding box board, developed through its own R&D programme, was recognised at a gala event at Shanghai’s Marriot Hotel at China Pulp Week 2014 in front of an audience of more than 600 industry representatives. The company was selected for the top honours from a field of over 60 international suppliers.

Industry commentator and member of the China Pulp Week 2014 organising committee, Brian McClay, said the award reflected WPI’s innovation and commitment to building strong ties with the Chinese market.

“WPI’s influence is recognised within the industry and it continues to make great strides by focussing on its customer’s needs in China and valuing the business opportunities there. It is an industry leader in providing the highest quality pulp products. China is buying up its Advanced Board and Advanced Board Plus grade carton board in large qualities”.

WPI International Managing Director, Dave Anderson said "we are delighted with this recognition at a key forum for the global industry. It reflects a great team effort and highlights the opportunities for New Zealand companies to build solid and loyal links in China by finding new ways to meet the needs of the market".

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Chinese economic update

China’s national economy was relatively stable in 2013 (but lower in comparison to previous years), and the outlook calls for a general slowing in GDP growth. Nevertheless, China did achieve GDP growth of 7.7% in 2013, representing a massive RMB 56.9 trillion (US$9.25 trillion). Of this total, the secondary and tertiary industries dominate:

- The value-added segment of the primary industry was RMB 5.7 trillion yuan (US$925 billion), an increase of 4.0% over 2012;

- The secondary industry was RMB 25.0 trillion (US$4.1 trillion), an increase of 7.8%; and

- The tertiary industry was RMB 26.2 trillion (US$ 4.3 trillion), up 8.3%.

China’s economy has been tied heavily to its soaring housing market, and to the industrial sectors of steel and cement. However, with the government strategy of slowing growth by tightening credit for some sectors in the last year, many property developers and primary industries have chosen to obtain loans from the unregulated “shadow banking” sector that can demand huge interest rates. The share of bank loans declined significantly — from 75% in 2010 to 50% by the end of June 2013. Financing through shadow banking instruments is now posing further challenges given that they are complex and often have mismatching maturities between assets and liabilities.

Beijing now appears to be more serious than ever about tackling the local debt issue. Besides short-term measures, it is starting to push forward on fundamental fiscal reforms for a longer-term solution to the debt problems. The Chinese National Audit Office released an update on Chinese government debt at all levels. It found that Chinese local government debt grew by 67% in the past two-and-a-half years — from RMB 10.7 trillion (US$1.75 trillion) to RMB 17.9 trillion (US$2.9 trillion).

A red flag emerged in early March. China’s first company bankruptcy occurred when government and state banks refused to bail out a heavily indebted solar cell manufacturer, requiring it to default on its bond interest payment. This missed payment (by Shanghai’s Chaori Solar Energy Science & Technology Co.) marked the first onshore bond default in China. This has raised questions about how far the government will go to make investors share the risk. Some analysts have suggested this could be China’s “Lehman Brothers moment,” but most dismiss the idea.

Source: International Wood Markets Group,

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DFI Postgraduate Scholarships available for 2014

The New Zealand School of Forestry is a foundation partner in the New Zealand Dryland Forests Initiative which is breeding select eucalypts adapted to NZ drylands that produce naturally durable timbers. The DFI vision is for New Zealand to be a world-leader in breeding ground-durable eucalypts, and to be home to a valuable sustainable hardwood industry based on eucalypt forests, by 2050.

The School of Forestry is offering scholarships for postgraduate research on five different projects to support the DFI research programme. These scholarships are supported by the NZ Forest Owners Association and Farm Forestry Association on behalf of the Forest Growing Levy Trust Board.

Scholarships are primarily for students to enrol in an MForSc at the University of Canterbury. However applicants for PhD study will also be considered. Scholarships will cover fees (at the domestic rate), a stipend (NZ$15,000 p.a. for an MForSc and NZ$20,000 p.a. for a PhD) and research costs. Students will be supervised by staff in both the School of Forestry and other relevant UC departments.

Applicants should have a BSc or BForSc. Ideally applicants would commence study in July 2014 although applicants who cannot commence until early 2015 will be considered. For more information on the scholarship visit

Applications should be sent to Applications close on 5 May 2014.

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Ex NZFP employees meeting at Labour Weekend

Calling all those who worked in forestry and forest engineering for NZ Forest Products and its successor NZFP Forests in the Tokoroa area. This Labour Weekend in October 2014 we are having a reunion in Tokoroa. Initial interest has been good with enquiries already coming in from Australia, Fiji, Canada and the UK as well as New Zealand. We envisage that the weekend will start with a ”meet and greet” on the Friday night, a field trip to look at current silvicultural regimes among other things on Saturday and dinner on the Saturday night. If you wish to know more please contact

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Personal tragedy drives ACC worker representative

ACC announced this week that following a nationwide ballot of forestry workers, Wiremu Edmonds and Neil Thomas will be the worker representatives on its new injury prevention programme, aimed at encouraging safer practices in New Zealand's forestry sector.

Both are experienced forestry workers and passionate, experienced health and safety advocates – and in Wiremu’s case, his passion is strengthened by the personal tragedy of having lost a son to the industry.

The ‘ACC Forestry Sector Injury Prevention Programme’ is being developed and implemented in collaboration with WorkSafe NZ, the NZ Forest Owners Association (FOA), the Forestry Industry Contractors Association (FICA) and the Council of Trade Unions (CTU).

Wiremu and Neil will join other key forestry sector stakeholders on the programme’s steering committee, which will meet regularly to act as an advisory group, supporting and advising ACC on how best to design and implement the programme.

ACC’s Head of Insurance Products and Injury Prevention, David Simpson, says the worker representatives will play a crucial role on the steering committee. “They will give a voice to those working on the ground in the industry, and contribute their understanding of what the safety issues are that confront the sector, and how these issues can be best tackled.”

The ACC programme involves eight streams of work, aimed at developing clearer, effective guides and resources for decision-makers and workers on the ground, to influence them to make safer choices in their day-to-actions.”

Mr Simpson says “likely outputs of the programme include workshops, educational resources, assessment tools, videos and case studies, designed to address high risk tasks and situations that workers face on the job.”

The ACC programme is intended to complement the independent review of forestry safety, launched in January by FICA and FOA, which will address a broader palette of issues affecting safety in the sector.

More >>

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Seneca Sawmill recognised for it’s innovation

Seneca Sawmill Company is transforming the way timber companies operate. The Eugene-based company in OR, USA was recently featured in IBM’s national publication, IBM Systems Magazine, for its visionary leadership and use of technology to build a thriving, sustainable business.

Founded in 1954, Seneca has continued to grow through challenging economic times for the timber industry, expanding to 650 million board feet of lumber per year—that’s 35 times its production in 1954. Seneca is now one of the largest timber companies of its kind in the United States. Originally started as a one mill operation, it has grown to four mills and now employs a multi-company structure that includes Seneca Sawmill Company, Seneca Jones Timber Company, Seneca Noti and Seneca Sustainable Energy.

According to IBM Systems Magazine, the key to Seneca’s success lies in its commitment to keep up with the times, particularly in the use and application of advanced technology to cut costs, save time and reduce waste across its multi-company operation.

Technological innovation is embedded into Seneca’s corporate culture and embraced organization wide—from upper management to shipping operators to back-office personnel. Nearly every aspect of Seneca’s workflow is hosted on advanced, user-friendly operating systems that integrate back-end transactions, order tracking, and sales and support efforts. Forklift operators are equipped with iPads to access and manage orders, paperless kiosks are used by suppliers and customers checking-in at various locations, and salespeople can give customers real-time shipping information, as well as update orders seamlessly. At its mills, laser technology ensures that Seneca wood is the straightest, most accurately cut wood in the industry.

Seneca’s approach to technology and environmental sustainability also go hand-in-hand in its culture of innovation. IMB reports that the company’s environmentally sustainable business practices help separate it from its competition. Nearly 100% of the company’s byproducts are repurposed for other uses. Items such as bark, chips, and sawdust are resold on the market. They are also turned into renewable energy to help fuel Seneca’s mills, as well as sold to local utility companies as energy sources. A company spokesman said the energy produced from Seneca’s byproducts can fuel 13,000 homes annually.

The result of Seneca’s commitment to innovation is that it continues to grow, even as many of its competitors struggle or have closed in recent years. By seeking technological solutions to the difficulties that come with a large, complex organization, Seneca is proving that innovation can help a business thrive in even the most challenging industries.

Source: Natural Resource Report

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3D printer creates whole pieces of furniture

Consumers and small businesses certainly have a handle on using 3D printers to create small mock-ups of bigger products, but there’s few options for creating true-to-size models or even finished products without having access to an industrial printer. German company BigRep aims to break that boundary with its RepRap-based BigRep ONE 3D printer, which offers over a cubic meter of print space.

The BigRep ONE prints in a volume of 1.3 cubic meters, with each side at or exceeding a meter in length, but really, at that point who’s counting? This large size allows for creating 1:1 prototypes, larger mechanical parts and prototypes, or even designer home furnishings.

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C$6.1 million to develop global markets for wood products

The Government of British Columbia is investing C$6.1 million to build new markets around the world for B.C. wood products, including priority markets in China, Japan, India and South Korea. The funding is being provided to eight industry trade associations that operate market development programs in Asia, the United States, and other major markets, including Europe. Market development support is also being provided by the federal government, through Natural Resources Canada, and by industry.

British Columbia’s contribution is being distributed through Forestry Innovation Investment (FII), the province’s market development agency for forest products. FII also manages the Wood First program, which fosters the innovative use of wood and wood building systems in British Columbia, and other programs that promote the many environmental benefits of B.C. forest products.

Collaboration with industry and the federal government in the delivery of international marketing programs has been a successful model for B.C. Since the government and industry set up a joint program in 2003 to target the Chinese market, B.C. softwood lumber exports to China have increased by close to 2,000 per cent, totalling C$1.4 billion in 2013.

Through the joint delivery model, provincial funding of C$6.1 million will be leveraged with additional contributions from industry and the federal government.

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California issues first forestry offsets for carbon market

California air regulators on Wednesday issued the first carbon offset credits for a forest protection project, credits that power companies and others large emitters can use to meet their compliance obligations under the state's greenhouse gas reduction program.

The California Air Resources Board, which administers the program, issued 836,619 offset credits for the Yurok Tribe Sustainable Forest Project, which covers about 8,000 acres of tribal land in California's Humboldt County.

In return for the credits, the landowners have agreed to maintain or increase carbon stored in the trees for more than 100 years. The land is the ancestral homeland of the Yurok Tribe. The credits are currently worth about US$10.25 each, according to one carbon market participant.

Utilities such as Pacific Gas and Electric and Southern California Edison, a subsidiary of Edison International , have recently expressed interest in buying offset credits to help them meet their compliance obligation under the program.

Those companies as well as oil refineries and large manufacturers will be required in November for the first time to turn over allowances and offsets to account for their output of heat-trapping greenhouse gases. "The issuance of these forest offset credits signifies a legal commitment to long-term forest protection and demonstrates the effectiveness and benefit of market mechanisms to encourage environmental action," Linda Adams, chair of the Climate Action Reserve board of directors, which registered the project and did its initial verification.

Source: Reuters

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Environmental impact of bio-adhesives encouraging

Scion scientists Drs James McDevitt and Warren Grigsby have calculated that the benefits of bio-based adhesives extend beyond addressing health concerns. They have an environmental footprint 22 per cent lower than their traditional counterparts and this is increasingly sought by customers of forest products.

For several years New Zealand manufacturers of medium density fibreboard (MDF) have been working to reduce formaldehyde emissions of products in response to regulatory pressure from overseas markets. Health concerns in the United States and Europe around these emissions have resulted in higher demand for “green” panel products. Responding to this challenge and to ensure markets remain open for New Zealand wood composite products, Warren is developing adhesives from natural sources such as tree bark.

The scientists used a Life Cycle Analysis (LCA) to calculate the environmental impact of producing either conventional adhesives or adhesives from biological sources. The bio-adhesives had a 22% lower environmental impact over their entire lifecycle than conventional adhesives derived from petrochemicals. The main reason for lower environmental footprint was because they were created largely from New Zealand forest products. In contrast, conventional adhesives are created from petrochemicals that are transported from distant Middle East oilfields.

These findings can create marketing opportunities and possibly price premiums for new MDF products incorporating bio-adhesives. For the New Zealand wood processing industry, this sort of LCA quantifies the environmental impact of new products and can help bolster the industry’s licence to operate when it can be demonstrated that new products are environmentally superior to their traditional counterparts.

Source: Scion Connections,

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Scion innovation centre funding signed off

Scion and Bay of Plenty Regional Council have signed an agreement to build an innovation centre at Scion’s Te Papa Tipu Innovation Park. The centre’s purpose is to foster innovation in forestry and wood processing industries.

The Rotorua-based Crown research institute successfully bid for funding through the Regional Council’s Regional Infrastructure Fund (RIF), a contestable fund set up to support economic development in the Bay of Plenty. Scion was allocated up to NZ$2.5m from RIF’s inaugural funding round towards the construction of a proposed innovation hub for forestry and wood processing-related businesses.

Scion’s project was one of four to receive funding in the 2013 RIF round. Since announcing the funding Scion and Bay of Plenty Regional Council have been working on contractual requirements for the project. This week, representatives from Scion and the Regional Council signed a Funding Agreement to formalise the project.

“This project has the potential to provide a significant boost to not only the Rotorua economy, but that of the wider region, bringing employment, economic benefits and innovation,” Regional Council Chief Executive Mary-Anne Macleod says.

Scion CEO Warren Parker says the funding will enable Scion to get going with securing tenants and, all going well, to have construction underway by late this year or early 2015. It is anticipated the building will be completed by December 2015.

The new building will be a centre for both start-up businesses and small-to-large operations with the aim of fostering collaboration and innovation across the forest and wood processing value chain and with Scion. “The innovation centre is part of wider efforts to establish Rotorua as a forestry and wood processing industry centre of excellence,” Dr Parker says.

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Product Showcase


Transcut II Station

Log Turner 750 E

OLI-CS3 Optimized Infeed

Transcut II

Curve Sawing Gang Wiggle Box

Pull Down

...and one to end the week to everyday problems

And on that note, enjoy the weekend. We look forward to meeting up with many of you at next week's Forest Investment & Market Outlook 2014 event in Melbourne. 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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