Friday Offcuts – 2 March 2012

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This week we have a couple of stories looking at housing starts. It’s tough out there at the moment. The NZ market in particular has just reported a 46 year low last year in the number of building consents issued. On a much more positive note though, the International Wood Markets Group reports this week that the Chinese Government is attempting to “orchestrate” the country’s over-heated housing market.

In the short term they’re looking at implementing policies to drive down house prices on the excess inventories of new and existing homes. At the same time, they’ve got an aggressive longer term plan to build 36 million Government-financed “affordable” housing units over four years (this programme commenced in 2011). This is designed to meet the rapid urban population growth. If successful, the outlook for new housing starts, demand for wood products and prices over the next 2-3 years looks pretty promising to suppliers from this part of the world.

For upcoming events we’ve included details on the combined industry conference planned next month, ForestWood 2012 which is being pulled together by the four leading New Zealand industry associations and we’re announcing an extra bonus for those who will be registering for the three yearly Wood Preservation 2012 technology series being run in Melbourne this year on 23-24 May, tickets to the first State of Origin 2012 game. For Forest Industry Engineering Association (FIEA) members, we’ve also posted some key presentations on-line for you from the very popular remote sensing and forest inventory series that ran late last year, ForestTECH 2011.

Finally, forestry and financial companies from throughout New Zealand will be meeting in Auckland next week at the Future Forestry Finance 2012 event. At this stage, the New Zealand event is very close to SELLING OUT. For Australian companies, Future Forestry Finance 2012 runs in Sydney on 13-14 May and registrations for this venue are still being taken on . We look forward to seeing many of you at these Australasian events over the next couple of weeks.

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Opinion piece - Tasmanian Forests Agreement

Opinion piece - Tasmanian Forests Agreement - by David Pollard, AFPA

Lyndon Schneider’s opinion piece on the Tasmanian Forests Agreement (Weekend Australian, Feb 18-19) is quite right to counsel that it is time to step back from the brink...but it applies to both sides in the debate. Mr Schneider, the national campaign director of the Wilderness Society, and a protagonist in the negotiations, has attempted to characterise the complexities of the current situation as the result of industry and government mismanagement. On this count he is quite wrong.

The agreement reached between the industry and environmental signatories identified two fundamental transition requirements to apply while a long term solution was explored. It included guaranteed wood supply to the timber industry and an interim moratorium area of between 360,000 and 430,000 hectares, from which logging would be excluded pending their further assessment. Only about half of the previous industry capacity exists following the exit of Gunns from the native forest sector.

Contrary to Mr Schneider’s claims, Forestry Tasmania has consistently advised both governments and the negotiators, both before and after the agreements were reached, that remaining available forests resource capacity would not meet the goals sought by either side of the negotiations. Publicly available information reveals that Forestry Tasmania’s advice has been accurate and the new reports about to be concluded by the independent verification group will confirm this fact.

Despite the identified range of 360,000 to 430,000 hectares of forest to be temporarily set aside pending further assessment, environmental groups raised public expectations of cordoning off 430,000 hectares. Through considerable effort on the part of Forestry Tasmania, which (as acknowledged by facilitators Bill Kelty and Professor Jonathan West) has actively facilitated the process, it has been possible to place an interim moratorium on all but 2000 hectares of the 430,000 hectares sought by environmental groups. Access to this 2000 hectares is vital to the continued supply of guaranteed volumes to the remaining industry as originally agreed to by all parties. Despite the fact that environmental groups have now achieved well in excess of the minimum 360,000 hectares of interim protection areas, and that this somehow represents a breach of agreements, and requires ongoing protest action and market sabotage, is quite frankly incomprehensible.

In an attempt to force compliance with their views these groups have effectively targeted a single company and its customers to such an extent that the company has lost orders, had to reduce their production, and ultimately had to reconsider their not-inconsiderable investment in Australia. These mills are barely 5 years old and represent the sort of modern, high value-adding industry, based on regrowth and ultimately plantation resources, which the industry desperately needs to achieve the very transition which forest campaigners are looking for. Their failure to understand this not only threatens the forest agreement process, but undermines any confidence that such a transition can be achieved. Using Mr Schneider’s own words, this desire to have their cake and eat it represents a profound misunderstanding of why they are in their present predicament.

Characterising Forestry Tasmania as the problem is not helpful and is diverting attention from the real complexity in resolving competing aspirations for limited resources. Forestry Tasmania has provided the parties with facts and evidence about resource capacity, and operational realities, which have not fitted the pre-conceived assumptions held by organisations such as the Wilderness Society. Regardless of the outcome of negotiations, there will be an ongoing imperative for professional management of our forests. Despite continuing misunderstandings on this point, there are no conflicts between regulatory and commercial functions inherent in Forestry Tasmania’s structure. It exercises no regulatory functions following the restructure to meet national competition principles over a decade ago.

The industry remains fully committed to the principles outlined in the agreement with the environmental NGOs, which included guaranteeing wood supply to the industry remaining following the exit of Gunns.

There has been give and take, on both sides, and more will be needed. Forestry Tasmania’s advice, largely unheeded to date, is being proved accurate, and as a result it will not be possible to achieve the outcomes originally intended in the agreement. Until both sides accept this reality, and all protagonists take a step back and allow some clear air, it will be impossible to achieve a result which all participants so desperately desire.

An interim moratorium area has been delivered as agreed by the participants. It is now up to the environmental side to remove the threat over interim supply and allow certainty to the families and communities whose livelihoods depend on the forests.

Dr David Pollard, Chief Executive Officer, Australian Forest Products Association

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Victorian Timber Industry Action plan released

Victorian native timber processors will be given greater resource security through long-term contracts of up to 20 years under the state government's timber industry plan. The policy, launched this week by the Minister for Agriculture, Peter Walsh, will allow VicForests to sell timber in a more flexible way other than by auction.

Victoria will continue to auction timber, but will urge the other states to end administered pricing and open up log pricing to the market. This would ensure that Victorian producers were not disadvantaged "through competing with businesses provided with logs at comparatively low administered prices", the plan says.

The action plan includes planning amendments that will allow plantations greater than 40 hectares to be planted in farming and rural activity zones without a permit. The government will also develop a farm forestry plan that aims to help boost the supply of hardwood timber.

For more information on the plan, click here

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China’s strong housing starts 2012–15

The Chinese government is attempting to orchestrate a housing-market situation in 2012 that is unheard of in the Western world: a reduction in house prices to balance out excess housing stocks in the short-term, in combination with a massive expansion of the number of “affordable” housing starts (mainly through government-financed low-cost housing) to accommodate a long-term plan to meet rapid urban population growth.

The key objective of the Chinese government’s five-year plan is to make new housing units (mainly apartments) more affordable for the average Chinese family, by increasing construction of government financed/subsidized (“affordable”) homes throughout China, while at the same time implementing new policies to reduce prices on the excessive inventories of new and existing homes. In a free-market economy, this is a virtually unheard-of feat; normally, falling house prices are an indication of supply exceeding demand (at given market prices), resulting in a decrease in housing units and often leading to a significant and sometimes long market correction as buyers stay on the sidelines until house prices have reached a bottom.

The new housing policy directives, implemented gradually during 2010 and 2011, began to have a noticeable impact in the third and fourth quarters of 2011. The question on the minds of major log and lumber exporters to China is whether a command economy like China’s can achieve what a free-market economy cannot even contemplate. With continued sluggish housing starts and soft lumber markets forecast for the U.S., and fragile lumber markets expected for Europe in 2012, any change in Chinese demand is bound to have a major impact on global log and lumber prices.

Although China’s implementation of the policies and initiatives detailed above would normally instigate a major house-price correction accompanied by a decline in construction, the government’s very aggressive plan to build 36 million government-financed affordable housing units from 2011 to 2015 is designed to mitigate these impacts. This plan will cause the private real estate development sector to undergo a serious downturn and consolidation in 2012, such that total housing starts and demand for building materials will be heavily supported by government construction in 2012 and 2013. The number of units built during 2011–2013 will be key to determining the overall impact on building products’ consumption and overall economic growth.

The beginning of 2012 has seen a return of Chinese demand for West Coast logs and lumber. Although prices are much lower than at the peak in 2011, it is encouraging that buyers have returned to the table. This is hoped to be a sign that China’s central government can successfully engineer its ambitious economic targets. If it does, the outlook for new housing starts, and therefore wood consumption, looks very optimistic indeed for the next four years.

Source: International Wood Markets Group,

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Building activity update

US building activity
US building activity remained flat in December with almost no change on the month before. New builds are giving way to renovations in the US as many large building firms have moved from new builds to renovation work. Firms have bought up houses that were owned by banks after owners defaulted and vacated their homes. This has meant work for firms and will push up the demand for new builds as fewer are being built.

Australian building activity
Australian building activity is also very flat right now, with a slight drop in the number of consents issued in December on the previous month, and well below the year before, which actually topped the 5-year average for the month of December.

New Zealand building activity
Building consents issued in 2011 hit a 46 year low for New Zealand. This coupled with New Zealand’s increasing population could result in s housing deficit. Like in the US, renovations are supposed to dominate building activity in New Zealand. This will come from the Christchurch rebuild and leaky building repairs in Auckland. Source:

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Event Extra – State of Origin Tickets

Details of the Wood Preservation 2012 event have been circulated now to industry. We’re delighted to be able to bring this extra bonus for those attending the Australian Wood Preservation 2012 event. The 2012 Harvey Norman State of Origin Rugby League Series will kick off at Melbourne's Etihad Stadium on 23rd May. Coincidentally, this coincides with Wood Preservation 2012.

The 2011 State of Origin series was one of the best ever. The 2012 series is also expected to be fiercely contested. Instead of a conference dinner on the first night of the Melbourne event, Wood Preservation 2012 delegates will instead be going to the game. Block bookings of 70 seats have been made and for those registering.

Note: Bookings will need to be made on a first in – first served basis. Only one ticket per delegate can be booked. To save a space, please register for Wood Preservation 2012 early.

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First half year loss posted by Gunns

Timber company Gunns this week announced a AU$173.3 million loss on the back of impairments and asset write-downs for the six months to 31 December. This was down from a AU$4.65 million loss in the same period in the previous year. Revenue in the six months to December of AU$217.4 million was also down 40 per cent from the previous corresponding period. Contributing to the first-half loss were costs associated with Gunns' restructure, which involves the sale of non-core and native forest assets. The company was in the process of finalising the sale of the Green triangle forests for $120 million and the Heyfield hardwood mill. Forest products revenue was AU$63 million compared with AU$177 million last year.

The company said market conditions for its wood fibre business would remain difficult while the Australian dollar maintains its strength against the US dollar. Despite the gloom, Gunns' debt facilities were successfully restructured, an underlying EBIT guidance of AU$30 million for the full year has been maintained.

Managing director Greg L'Estrange pointed to the AU$150 million equity investment proposal with Singapore-based private investor Richard Chandler Corporation as strengthening the balance sheet ahead of a pulp mill investment decision. The future value of Gunns is clearly driven by the completion of the pulp mill project," Mr L'Estrange said. The share price of Gunns following the announcements closed 0.7 of a cent up at 18.2 cents. For more details click here

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Forest inventory papers now on-line

Together, around 200 forest resource and inventory foresters attended ForestTECH 2011 series that ran in both New Zealand and Australia in December last year. The technology series provided this region’s most comprehensive platform for foresters to learn first-hand from those who had completed trials in the last 12 months and were using collected data from remote sensing, to hear how they had integrated the new technology and what it had meant operationally and financially to their company.

ForestTECH 2011 delegates have been able to access on-line 26 presentations that were given in both countries. Forest Industry Engineering Association (FIEA) members can also now access and download a cross section of presentations from the series via the FIEA website.

Presentations loaded include;

Airborne LiDAR Resource Inventory in NSW Softwood Plantations. Russell Turner - Research Forester – Remote Sensing, Forest Biosecurity & Resource Assessment Science & Research, NSW Department of Primary Industries.

Space Missions for Sustainable Forest Management and Operations. Dragos Bratasanu – Consultant, Poyry Management Consulting (NZ) Limited.

Case Study - Resource Inventory Assessment. Troy Sawyer – Manager Southern Plantations, FPC WA & Ross Lewin – Director, Outline Imagery.

Forest Information Management and Decision Support Tools to Improve Forest Planning & Operations. Megan Costello - Harvest Engineer, Ernslaw One.

How Effective are LiDAR based Inventory Systems. Jonathan Dash – Consultant, Interpine Forestry Ltd & Hamish Marshall - Senior Consultant, Interpine Forestry Ltd.

Integrating Strategic Forest Estate Modelling with Tactical Planning. Mike McLarin- Senior Forest Resource Planner, Forestry Tasmania.

Multi-Sensor Unmanned Aerial Vehicle Remote Sensing for Forest Mapping and Inventory. Luke Wallace - PHD Student, School of Geography and Environmental Studies, University of Tasmania.

The use of LiDAR for Forest Engineering. Dean Neilson - National Engineering Manager, PF Olsen Ltd.

Web-Based Tools using Intelligent Processing of Satellite Imagery. Christine Stone - Program Leader-Forest Biosecurity & Resource Assessment, NSW Department of Primary Industries.

FIEA members who have forgotten your code to access these – and the other 400 plus technology presentations and papers availble on-line, please make contact with our FIEA offices.

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NZ industry associations join for ForestWood 2012

On 21 March at Te Papa in Wellington all four of the major forest and wood products associations in New Zealand are combining to bring the ForestWood 2012 to town. The ForestWood 2012 Conference programme has been developed around the conference theme "A New World in Wood".

The programme comprises three sessions that will outline the strategic intent of our industry and the opportunities that lie ahead. The first theme is "Strategies for Success" and will lead out with how NZ and its major trading economies are travelling in tough economic times. The second session is all about "Seismic Shifts" with the third on “Game Breaking Changes”. Full details on the event can be found here

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Wood. Naturally Better.™ message back on TV

The successful TV commercial, under Planet Ark’s Environmental Edge brand, will be on free-to-air and pay TV across the national starting this week. Featuring Peter Maddison, award-winning architect and host of Grand Designs Australia, the commercial explains that wood stores carbon and that carbon is better locked away in wood than free in the environment. He ends by suggesting that by choosing wood, people are doing good.

The Wood. Naturally Better.™ commercial is co-branded with Planet Ark’s Environmental Edge, a series of advertisements designed to provide people with facts to help them make more informed environmental decisions.

Running on metropolitan and regional free to air and pay television from March – April 2012, the commercial is targeted at environmentally conscious people and renovators aged 18 to 54. On free to air TV, the spot will feature in program such as Revenge, Australia’s Got Talent, My Kitchen Rules, Seven News, Better Homes & Gardens, Jamie’s Kitchen, Myth Busters and The Chaser’s War on Everything. It is expected that it will be seen by more than half of all people aged 18 to 54.

The pay TV schedule includes sponsorships of brand new Grand Designs Revisited and Great Australian Homes. Research following the last TV campaign showed that the advertisement had a prompted recall of 23%. This is nearly twice the recall of the previous Wood. Naturally Better.™ print advertisements.

Even more encouraging, 76% of respondents believe the campaign communicated the message that ‘Wood stores carbon for life’ and 77% believe that it communicates ‘Wood is a better environmental choice’. Overall, the advertising was viewed to be believable, relevant and informative.

The commercial can be viewed here

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Asian customers committed to Tasmania

The Tasmanian opposition leader has returned home from an Asian trade mission arguing against locking up the state's forests. Will Hodgman joined the Deputy Premier, Bryan Green, on a trade mission to Singapore, Japan and China to drum up business for the state's struggling forest industry. Mr Hodgman says Japanese and Chinese customers remain committed to buying timber products sourced from state forests. Japan appears concerned about consumer and customer perception of Tasmanian timber, but he says China is price and market driven. Source: ABC News

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Rubicon loss widens as strong kiwi hits Tenon

Rubicon, the forestry-based biotech company, sank deeper into the red in the first half as a strong kiwi dollar and tepid US housing market weighed on subsidiary Tenon’s earnings, and its debt costs rose. The Auckland-based company made a loss of US$8 million in the six months ended 31 December, from a loss of US$1 million a year earlier.

Revenue from wood mouldings vendor Tenon was unchanged at US$162 million and the company’s ArborGen unit, a tree seedling company that abandoned a float on the New York Stock Exchange last year, reported flat earnings as its shareholders injected new funds to pay for research, offsetting its commercial tree operations. More >>

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Heart strings guitars auction fetches $111,000

Seven hand-made guitars commemorating the loss of life and buildings in the Christchurch earthquakes fetched total of $111,000 at an auction in Christchurch at the weekend. The Heart Strings guitars were crafted by Bruce Pickering and were created using timber from important historical buildings that fell in the Christchurch earthquakes.

Wood for the guitar was donated by was donated by owners of the uildings such as Deans family home (Homebush), the Great Hall at the Christchurch Art Centre (Graduate), Southern Blues Bar (Southern Blues), a Heritage residential home in Chester Street (Chester), Gunyah Lodge (Gunyah) and Ohinetahi homestead built in 1858 in Governors Bay (Ohinetahi).

An eighth guitar, named Kia Kaha, was built out of timber from the historical Lyttelton Time Ball building. A scroll holding the names of those who lost their lives has been gently laid to rest inside the guitar, donated by her husband Jason and his father Bruce Pickering. The guitar has been featured at an exhibition in the Canterbury Museum. More >>

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SW Queensland floods impacting smaller businesses

Major job losses are imminent with flood affected businesses in South-West Queensland poised to close after being largely ignored by Government. Rod McInnes, CEO of Timber Queensland said that the Queensland Government must provide immediate short term financial support to help small businesses help themselves. Mr McInnes said timber businesses that have already been struggling are now facing ruin.

“Take the case of family owned sawmiller, N.K. Collins Industries. They have five mills in South West Queensland providing Cypress Pine to domestic and international markets. The GFC and local building slump has reduced their market demand by more than 50%,” he said. “Just when some local orders turn up so does the rain and flooding cuts roads, shuts forests and generally makes life difficult for business owners and employees alike.”

With one mill (Mungalala) functioning, N.K Collins have been daily transporting employees from Mitchell to Mungalala and trucking the logs from Tambo (450km away) where flooding has been of lesser impact. “This costly, logistical dance is a grave attempt to generate some cash flow to keep the business afloat, no pun intended,” said Rod McInnes. Mr McInnes said that N.K. Collins have been seeking some financial assistance to meet at least some of these additional logistical costs until other mills are usable and flooding has subsided.

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Buy and Sell

...and one to end the week on way back then


The following will boggle your mind!

************ ********* ***********

The year is 1910
One hundred years ago.
What a difference a century makes!
Here are some statistics for the Year 1910:

************ ********* ************

The average life expectancy for men was 47 years.

Fuel for this car was sold in pharmacies only.

Only 14 percent of homes had baths.

Only 8 percent of homes had telephones.

There were only 8,000 cars and only 144 miles of sealed roads.

The maximum speed limit in most cities was 10 mph.

The tallest structure in the world was the Eiffel Tower !

The average US wage in 1910 was 22 cents an hour.

The average US worker earned between $200 and $400 a year ..

A competent accountant could expect to earn $2000 a year, a dentist $2,500 per year, a veterinarian between $1,500 and $4,000 per year, and a mechanical engineer about $5,000 per year.

More than 95 percent of all births took place at HOME .

Ninety percent of all Doctors had NO COLLEGE EDUCATION!

Instead, they attended so-called medical schools, many of which were condemned in the press AND the government as 'substandard.'

Sugar cost four cents a pound.

Eggs were fourteen cents a dozen.

Coffee was fifteen cents a pound.

Most women only washed their hair once a month, and used Borax or egg yolks for shampoo.

Canada passed a law that prohibited poor people from entering their country for any reason.

The Five leading causes of death were:

1. Pneumonia and influenza
2. Tuberculosis
3. Diarrhea
4. Heart disease
5. Stroke

The U.S. flag had 45 stars ....

The population of Las Vegas , Nevada , was only 30!!!!

Crossword puzzles, canned beer, and iced tea hadn't been invented.

There was no Mother's Day or Father's Day.

Two out of every 10 adults couldn't read or write and

Only 6 percent of Americans had completed high school..

Marijuana, heroin, and morphine were all available over the counter at local pharmacies.

Back then pharmacists said, 'Heroin clears the complexion, gives buoyancy to the mind, regulates the stomach and bowels, and is, in fact, a perfect guardian of health'

( Shocking? )

Eighteen percent of households had at least one full-time servant or domestic help .

There were about 230 reported murders in the ENTIRE U.S.!

Try to imagine what it may be like in another 100 years.

Makes you think huh? And on that note, we wish all those in NSW and in the North Island of New Zealand a dry weekend. 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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