Friday Offcuts – 13 January 2006
Click to Subscribe - It's FREE! Good morningWelcome back. It's great to be back at work isn't it? We're looking forward to the upcoming year - truly - and are pretty excited about the developments being planned for Offcuts in 2006. If it's a major issue that has arisen during the week - we'll report on it every Friday - directly to your inbox. I did notice a number of e-mails in amongst the pile requiring clearing on Monday that some of you were unable to make the links onto the Offcuts web page for our last issue. We can blame it on our ISP being down for at least half the day - Friday 16 December - through a major traffic accident in the region. I suppose the major talking point just as we finished up last year was the announcement that the NZ Government wasn't going to proceed with it's proposed carbon tax. As part of the pre-Xmas announcement, officials were asked to explore alternative measures to address the issue of greenhouse gas emissions arising from deforestation. This will form an integral part of the Government's review of its climate change policies. Initial advice back to Government is expected by March 2006. On the other side of the Tasman, the US, Japan, China, India, Australia and South Korea are meeting this week for the first meeting of the Asia Pacific Partnership for Clean Development and Climate - a pact we're told that is meant to complement, not rival, the Kyoto Protocol. The six member countries account for 45% of the world's population and 48% of the world's greenhouse gas emissions and energy consumption. The meeting is intended to promote clean energy technology as a way to tackle climate change without sacrificing economic growth. From what you can read between the lines, there appears that there will be no binding arrangements, no targets and no timelines that will come out of the meetings. To add fuel to the "global warming" debate, a story came out late yesterday reporting German scientists who have discovered a new source of methane, a second only to carbon dioxide in its impact on climate change, that is being produced by plants. Scientists in NZ commented that the findings were "startling and controversial" but account for the observations from space of incredibly large plumes of methane above tropical forests. As we move forward into the year, please keep sending in those stories and industry updates. If you have any questions, comments on the e-newsletter and it's development or recommendations for improvement, we'd love to hear from you.
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This week we have for you:
Technology events planned for 2006Mark the dates into your calendar as you start planning for this year. Full details of the programmes will be described as we move closer to each event. The forestry clinics running in conjunction with FI 2006 and ScanTech have now been designed. Planning for the Structural Lumber conference in New Zealand has alreadfy begun. Sponsorship options for upcoming events or an involvement in one of the later programmes can be discussed with Ken Wilson on +64 3 470 1903.FI 2006 Clinic Series 28 technology clinics for forestry, forest contracting, wood processing and manufacturing companies. Run in conjunction with the 4 yearly forestry trade show, FI 2006 9-10 Mar 2006, Rotorua, New Zealand ScanTech 2006 Sawmill Scanning & Optimisation Technologies 24-25 May 2006, Coffs Harbour, Australia 30-31 May 2006, Rotorua, New Zealand FIEA Annual Conference 2006 Structural Lumber - Building a Better Future for Timber Commodities 19-20 July 2006, Auckland, New Zealand Timber Preservation 2006 New wood treatment technologies and product opportunities 13-14 Sept 2006, Rotorua, New Zealand 18-19 Sept 2006, Brisbane, Australia DryTech 2006 Series of workshops, exhibitions and field visits covering kiln drying developments and technologies 23-24 Nov 2006, Taupo, New Zealand 27-28 Nov 2006, Melbourne, Australia Global benchmarking report released on sawmillsThis report was sent in to me by an Australian reader. Sawmills on the West Coast of the United States are the most profitable in the world, with 2004 earnings at average mills almost three times greater than the overall global average earnings of USD 24/m3. Mills in Australia held the number two spot with earnings of USD 58/m3, followed by British Columbia's Interior region sawmills at USD 55/m3. The lowest 'average sawmill' earnings in 2004 occurred in European countries as well as parts of Russia where they ranged from around break-even to a high of USD 15/m3 in the Baltic States.These and other findings were released recently in a lumber and sawn-wood cost benchmarking report covering over 250 sawmills in 24 major forest products producing countries or regions of the world. The Global Lumber/Sawn-wood Cost Benchmarking Report-2004 Basis was researched and produced by International WOOD Markets Research Inc. (WOOD Markets), PricewaterhouseCoopers LLP (PwC), and the Beck Group (Beck). The authors analyzed and compared operational and financial data from sawmills in Canada, United States, Brazil, Chile, South Africa, Europe and Scandinavia, Russia, China, Australia and New Zealand. The average cost of logs delivered to mills, the largest component of sawmill cost structure, was USD 56/m3 in 2004. The lowest delivered log costs at average mills in the regions surveyed were found in Russia at under USD 25/m3. By contrast, Finland reported the highest average delivered log cost at over USD 85/m3. In Canada, the BC Coastal Region had the highest log costs at over USD 60/m3. The US West Coast region, with the highest average sawmill earnings in the world, still reported one of the highest delivered log costs at over USD 75/m3. Compared to 'average mills', top quartile sawmills in each region surveyed produced much lower total costs and higher earnings - a key attribute of the report is profiling the significant sawmill operating and financial differences. The report found revenue from lumber was highest in Australia, one of the strongest markets over the last five years. The United States Inland West region and West Coast region, which have a more unique species mix, held the second and third spots in terms of lumber revenue, both in the USD 250/m3 range. The lowest lumber revenue found by the report occurred in Siberia - achieving only half the results of the US West. The lower revenues were due, in part, to weak domestic prices and small volume of exports. The report points to emerging threats from Russia, with the world's lowest cost timber, and China, with the lowest sawmilling cost- where workers earn on average about USD 100 per month. Currently China produces only small volumes of lumber, but as they ramp up, it may be extremely tough for mills producing commodity lumber in other parts of the world to compete on price, especially in China's own domestic market. Woodco formation widely welcomedThe formal establishment just before Xmas of a new single pan-industry body for forestry was welcomed by industry and government leaders as a vital step forward for the entire forestry sector. Woodco, the Wood Council of New Zealand, is an "association of associations", whose formation has been on the agenda of sector leaders for more than a year. It will provide all forestry operators with a single voice for the first time.At its inaugural meeting in Auckland on Monday, 19 December 19, Woodco elected Council members representing major forestry sector organisations, and appointed Tony Johnston, a leading forestry executive with national management and international marketing experience, as its Executive Chair. "This is an important first step in building a stronger sector," said Council member Lees Seymour who is also on the Executive Council of the Forest Owners Association and Managing Director of Weyerhaeuser NZ Incorporated. "Woodco brings new unity on common issues and in areas of shared market opportunity. It also provides a single point of contact with the Government, who we look forward to working with closely through the Forest Industry Development Agenda process which will be a key to further development in the sector. Members of the Council Board are: Peter Berg, Phil Langston and Lees Seymour (of the Forest Owners Association); David Anderson, Peter Springford and Marty Verry (Wood Processors Association); Mike Halliday (Farm Forestry Association); John Stulen (Forest Industry Contractors Association), and Owen Griffiths (Pine Manufacturers Association). Their organisations represent the bulk of New Zealand forestry operators. The Wood Processors Association of New Zealand (WPA) was itself formed recently as part of a process of enabling the creation of Woodco. It announced the appointment of its first CEO last week, Peter Bodeker, who took up this position after being the inaugural Chief Executive Officer of Dairy InSight. Tony Johnston is Principal of Mainsail Services Ltd, a consultancy. He was formerly CEO of the Thames Group and Thames Timber, and, among other executive roles was a General Manager for Fletcher Challenge Forests Ltd, responsible for production and distribution operations in the United States, New Zealand and Chile. He said Woodco would complete its incorporation process in the new-year. He will take up his new role, operating from the Association's Wellington office immediately. New software to help Australian plantation industryEnsis, the joint venture between CSIRO and Scion, has developed a software model called CABALA that will help managers make better plantation management decisions. This comprehensive model has been developed over six years in partnership with the CRC Sustainable Production Forestry and is now being used by over three-quarters of the blue gum growers in temperate Australia.Chairman of Commercial Plantations WA, Gavin Ellis, says: "CABALA has proved a very valuable part of the decision-making process. It allows an insight into plantation performance in new regions where actual plantation performance data may be minimal or non-existent". Using daily climate information along with tree growth modelling and forest health information, CABALA can make predictions to help with decision-making on issues such as plantation site establishment, rotation length, optimum wood and fibre production and the production of non-traditional forest products such as carbon and salinity credits. Ensis scientist Dr Michael Battaglia says: "By understanding trees" basic building blocks, such as photosynthesis and nutrient cycles, risks like drought can be better understood. "If you want to optimise the selection and management of trees, you need to have a system that responds to all parts of a tree's world. So we've tried to understand the broad way that trees grow and respond to their environment and incorporated this into an easy-to-use modelling system." According to Ensis Forests general manager Dr Clive Carlyle: "Being able to situate a plantation for maximum benefit with minimum disruption to the environment is essential for a sustainable forest and plantation industry." "Generalisations are impossible due to different regions, soil types, water availability and tree species, so it is very exciting that we now have a system that can, and is, being used by our industry and environmental managers to help with their important decisions." NZ Government to re-evaluate carbon taxOfficials have been asked to explore alternative measures to address the issue of greenhouse gas emissions arising from deforestation, as part of the government's review of climate change policies, the Minister of Forestry, Jim Anderton, announced in the week leading up to Xmas. Under the Kyoto Protocol, deforestation creates large emission liabilities because the carbon previously stored in the forest is released as carbon dioxide into the atmosphere. "Up until now, the Government's policy has been to cap the liabilities that it will accept for deforestation at 21 million tonnes CO2 equivalent over the first commitment period of the Protocol (2008-2012). Decisions are yet to be made about what happens if the cap is breached," Jim Anderton said. For more information on this and other releases detailing reaction to the announcement check out www.scoop.co.nz, www.scoop.co.nz and www.scoop.co.nzClouds on the horizon for US panel industryThe expected decline in housing starts foreshadows some clouds on the horizon for the North American structural panel industry. After several uneventful years of limited investments in new mills, the North American structural panel industry, particularly OSB producers, are now in the midst of a major expansion phase, just when the housing market has begun to slow down. North American OSB producers have recently made several announcements of new mills and capacity expansion. Several companies also plan to include more value added or engineered products (e.g. I-Joists and LVL) in their OSB capacity growth.The number of new plants or major capacity expansions in the North American structural panel industry announced so far this year is 8. If they all are completed, 8 billion bf2 of additional capacity could be added by 2008. Furthermore, softwood plywood and OSB imports are also growing at a fast pace. Last year's imports totalled 1.89 billion ft2, representing 4% of the North American market. Imports are expected to reach 2.4 billion ft2 by 2010. A considerable proportion of the proposed new capacity is in the southern USA. Also, vast volumes of timber have become available in Canada's British Columbia. To deal with the massive pine beetle epidemic, the government has raised the annual allowable cut in the interior of the province by 27%. This makes this region an investment hot-spot for wood processors not dependent (as sawmills are) on good quality wood. Most of the new investment announcements so far have been made by smaller private companies. The biggest players - including Louisiana Pacific Corp., Norboard Inc. and Weyerhaeuser Co. - have restrained from re-investing the substantial profits made during the past OSB boom. Some analysts think it will be difficult for the additional panel capacity to be absorbed, even if housing starts grew again in 2007. Due to the increased supply and sagging demand for panels, analysts expect OSB prices to drop sharply from the healthy levels seen up to mid-2005. Some analysts even think it is possible that prices could fall to cost levels next year. Analysts are concerned about the share values of companies heavily exposed to structural wooden panels. Only a significant housing market correction could bring OSB prices and earnings of OSB producers back to a healthy stand. Unfortunately, this is not likely to happen any time soon. Experts think it is almost certain that some of the proposed new mills will fall by the wayside or be postponed. By 2007, some of the smaller mills will be under pressure to survive and several plywood mills and older OSB mills could close. Plywood producers would likely be squeezed first, not just by increased OSB capacity, but by the investment needed to meet the new MACT (maximum achievable control technology) regulations, which come into force in early 2006. The best survival strategy is to emphasize more value -added OSB items. Such products would weather the price decline better than commodity-like structural panels. Source: ITTO Tropical Timber Market Report 10/20 1-15 December 20 Key science appointment at ScionCrown Research Institute Scion, based in Rotorua, has announced the appointment of Dr Elspeth MacRae as its Group Manager Biomaterials Research. The GM Biomaterials Research will oversee Scion's three biomaterials science units - Cellwall Biotechnology, Biomaterials Engineering and Eco Smart Technologies.Scion Chief Executive, Tom Richardson, says Dr MacRae will also oversee science quality and science strategy across the group. "Dr MacRae has a broad and wide ranging experience in research and commercialisation, as well as a long history in collaborative work with New Zealand and international organisations." "Our BioMaterials Futures Strategy, announced in 2003, sets our direction in providing research for renewable, plant-based materials and products. Our vision is to be recognised as a leader in plant based biomaterials science and Dr MacRae will help drive us towards that goal." Dr MacRae is currently the Science Leader-Industrial Biotechnology at HortResearch and she will join Scion in early March. BC releases Forestry TruckSafe Action PlanCiting an alarming number of deaths among logging truck drivers, the BC Forest Safety Council has released an Action Plan for its Forestry TruckSafe program. Nine drivers have died this year, bringing the total of forest worker deaths this year to 43. The 20 action items to be put in place under the program include a training and qualification program for drivers, and a call for the provincial government to implement a comprehensive Resource Road Act to improve safety on the province's more than 400,000 kilometers of gravel resource roads. More >>NZ timber drying company poised to open new marketA New Zealand timber drying technology is poised to open new global markets for its Wellington developers, after independent endorsement of recently completed trials in Italy. Windsor Engineering had identified significant potential for uptake in Europe for drying plantation softwoods, such as Sitka spruce. The biggest limitation facing European companies is that their combination of un-pressurised hot water boilers and low specification kilns were unable to produce the correct controllable environment for faster, high quality drying.Windsor recently undertook drying trials in the research laboratory of Italian company, Nardi, which specialises in drying hardwoods. The two businesses have a marketing partnership which sees them provide contacts, introductions and support for their complementary technologies. Half of the Sitka spruce trial timber was sent to Italy for drying with Windsor's methods, with the other half dried using conventional technology in Scotland. The United Kingdom's Building Research Establishment (with functions comparable to those of BRANZ, Forest Research, and the Department of Building and Housing) independently assessed the trial outcomes. Windsor's sales manager, Stephen Carr says the results were impressive, showing that Windsor's system can reduce current drying times in the UK by between 70% and 80% while maintaining quality levels. Windsor is now negotiating the sale of both its kilns, and its computer-based control technology in the UK with anticipated revenue from the contracts of NZ$4 million. New Zealand Trade and Enterprise (NZTE) supported the drying trials with a grant through its Growth Services Fund. Stephen Carr says the company intends to use the UK as a springboard for developing markets in the European Union, which produced around 87 million cubic metres of sawn softwood each year. In contrast, New Zealand production is around 4.5 million cubic metres annually. Plans for new sawmill in AustraliaIt has been reported that Tasmanian tree farmer Forest Enterprises Australia plans to build an AU$25 million sawmill and wood-fibre plant near Ipswich, Brisbane. FEA was founded in Tasmania in 1985 and has since grown to become a leading player in the Australian plantation forestry sector. In 2000, during a climate of strong woodlot sales and increasing competition for land in Tasmania, FEA, following extensive research of state forestry operations in NSW, embarked on a program to extend their forestry MIS project to the mainland. In 2005, this program had under management 14,000 ha of eucalypt plantation in the Brisbane and Newcastle regions. The company is reported to be well on track to reach their target of 25,000 ha in this area by 2010.The new mill will be established to process its expanding eucalypt plantations in Queensland and NSW. Canada to charge a 60% tariff on imported Chinese furnitureThe Canadian Furniture Manufacturing Association (CFMA) has recently applied to the Canada International Trade Court for special protection for the industry to avoid the damage caused by imported Chinese furniture. Currently, Chinese furniture accounts for 41.8% of the imported furniture in Canada. CFMA has asked if special tariffs can be charged on imported Chinese furniture for a period of three years. They have asked the government to charge 60% tariff for the first year, 50% for the second year and 25% for the third year. The Chinese furniture companies are paying close attention to the situation. This could potentially affect New Zealand or Australian companies who export lumber to Chinese manufacturers who in turn export furniture to Canada.Source: NZT&E Market Report, 22 December 2005, www.marketnewzealand.comJobs
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...and one to start the year on...cab talk
A man walks into the street and manages to get a taxi just going by. He gets into the taxi, and the cabbie says, "Perfect timing. You're just like Frank." And on that note, have a great weekend. Cheers. Brand PartnersOur Partners & Sponsors Friday Offcuts is made possible through the generous support of the following companies.
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