Friday Offcuts 7 June 2019
International news this week includes a couple of “sit up and take notice” stories. The first is a number of articles that are now coming out of Canada that are pointing to a significant slow-down in the heart of Canada’s forest industry, British Columbia. Along with US tariffs, falling lumber prices, slowing markets, work on harvesting and sawing beetle infested timber drawing to a close and the wildfires that have hammered the province over the last two summers appear to be now having an impact on wood production.
In recent weeks companies have reported that they’ve been cutting back shifts and closing mills as the lack of log supplies and low prices really kick in. Industry heavy-weights Interfor, Canfor, West Fraser. and Tolko have all cut back on production or have closed mills. In the story below we provide a link to an article that appeared this week that details mills that have either closed or have cut back on their shifts. Unfortunately, more closures are expected to be announced with the Council of Forest Industries publicly stating that between eight and 10 mills could close this summer across B.C.
From China, we’ve included a short piece this week on the impact that the current US-China trade spat is having on businesses. Typically, we hear from the US and how it’s hurting. Importers of American hardwoods into China though are being hit just as hard. Duties of up to 20 percent are hurting. Along with the currency being driven down, the disruption of trade flows is already pushing many Chinese importers to look to other sources for their wood supplies. Some have already gone bust and it’s anticipated that if the tit-for-tat tariffs between the world’s two largest economies goes on much longer – or escalates – that more closures on both sides are going to follow.
We better finish with some good news. We had this week the first launch of Australia’s “Wood. The Ultimate Renewable™” brand. As outlined in a recent issue, the goal of the rebranding is to reframe forestry through consistent messaging in the eyes of the public. As well as the story behind the brand, those attending the Melbourne launch this week were able to view for the first time the new The Ultimate Renewable™ TV consumer advertisements which are being launched as part of a multi-platform, AU$1.8m campaign that is meant to start from the first week of July. On that note, enjoy this weeks read.
This week we have for you:
Wood. The Ultimate Renewable™ launchedForest and Wood Products Australia (FWPA) hosted a launch event in Melbourne on Tuesday evening, unveiling a new brand to the industry ahead of a consumer advertising campaign next month.
The Ultimate Renewable™ (detailed in a lead story two weeks ago) will promote the sustainability and environmental advantages of Australia's forest and wood products industry, with the goal of reframing forestry in the eyes of the public.
The messages underpinning the brand will aim to educate the public that Wood is The Ultimate Renewable™ resource, as it can be replanted and will continually grow back. The brand offers a universal, positive communications message for the sector to share and was warmly received by more than 100 industry representatives in attendance.
Speaking at the event was Ric Sinclair, Managing Director of FWPA, John Simon, Chairman of FWPA, Peter Maddison, award-winning architect (photo) and host of Grand Designs Australia, and Howard Parry-Husbands, CEO of research consultancy Pollinate, which oversaw the consultation process that informed the brand.
The Ultimate Renewable™ brand resulted from extensive collaboration between FWPA, the industry and consumers. Through a number of focus groups and extensive data analysis, the consultation found that the most impactful messages were the idea of forestry being renewable, providing a wealth of benefits for the environment and tackling climate change, at a time when environmental issues are becoming increasingly important to Australian businesses and consumers.
Parry-Husbands said The Ultimate Renewable™ will galvanise stakeholders across the sector to unite with the singular focus of positively changing public perceptions around forestry. “Our initial analysis showed that, while the mainstream media was concerned with the perceived negative environmental impact of forestry, what was missing from the narrative was a focus on replanting”.
“During our extensive consultation about potential ways of turning negative perceptions into positive ones, a common theme emerged ... the fact that Wood is The Ultimate Renewable™. “If the industry can properly demonstrate this, we can change the world to one built on sustainable resources! Everybody will benefit if we work together,” Parry-Husbands said.
Sinclair said The Ultimate Renewable™ is a concept built on an ethos of collaboration, and urged stakeholders to become champions of the brand by promoting the benefits of using sustainably sourced and well-managed forest products.
“We operate in an incredibly diverse sector. But no matter where our stakeholders sit across the supply chain, the reality is that we all share a common resource, which is renewable. What we have created is a brand that everyone can embrace and incorporate into their own collateral, in turn amplifying the message,” Sinclair said.
As well as hearing the story behind the new brand, attendees were treated to a sneak peek of the new The Ultimate Renewable™ TV consumer advertisements featuring Peter Maddison. The ads share the key messages behind the brand and will be launched as part of a multi-platform, AU$1.8m campaign from the first week of July.
FWPA will act as the central point for the coordination and marketing of The Ultimate Renewable™, with variations of the logo available for use by different areas of the sector. FWPA will be hosting similar events for industry stakeholders in Sydney, Brisbane, Perth, Adelaide and Hobart over the coming days and weeks.
NZ forestry farm prices increaseThe median price of forestry farms across New Zealand has increased by 45% over the last year from NZ$6,487 per hectare to NZ$9,394 per hectare according to the Real Estate Institute of New Zealand (REINZ) source of the most complete and accurate real estate data in New Zealand.
This increase may be largely the result of the Government incentives to plant trees making forestry land more desirable and leading to increased sales of sheep and beef farms. Interestingly, the North Island is seeing a greater impact on forestry prices than the South Island.
Bindi Norwell, Chief Executive at REINZ says: “Over the last few months there has been a growing voice from the rural community that the Government’s incentives towards planting trees are favouring forestry sales and leading to increasing sales of beef and sheep farms. With the price of forestry farms across New Zealand increasing by 45% when compared to the same time last year, the data tends to suggest that the rural community is correct in its assertions.
“The North Island has seen a greater impact on forestry prices than the South Island, with prices rising by 95% in the North Island yet actually falling in the South Island by 4% year-on-year,” continues Norwell. The incentives may also be the reason for a reduction in farm sales. The number of farms sold across New Zealand fall by 29% when compared to the same time last year, however, the South Island has seen a greater impact than the North Island with falls of 32% and 26% respectively.
“Unsurprisingly, the number of forestry farms sold over the past year has fallen too, as investors are seeing forestry farms as a highly sought-after investment. Those investors are holding on to their farms which is also contributing to the price rises,” points out Norwell.
“Feedback from farmers and rural salespeople around the country, is increasingly one of concern with many saying that once beef or sheep farms have been converted to forestry, they will never be converted back again because of the loss of infrastructure and the high barrier to entry should re-conversion be considered in the future,” concludes Norwell.
Incentives towards forestry assets were introduced October 2018 and changes to the Overseas Investment Act that now prevent foreigners (with the exception of Australians and Singaporeans) from buying existing residential or lifestyle properties means that it may now be easier for foreigners to invest in forestry.
B.C.’s forest industry feeling the squeezeAfter a year of record-breaking profits, British Columbia’s forest companies are bracing for a hard crash. And many small towns in rural B.C., where economies rely on the sound of saws ripping through timber, could be on the precipice of extremely challenging times.
“That keeps me up at night,” Premier John Horgan admitted to me in an interview this week in his office. The Council of Forest Industries (COFI) has publicly stated that between eight and 10 mills could close this summer, costing thousands of jobs and devastating small communities across the province. This looming disaster is the result of a confluence of factors.
In recent years, the province incentivized companies to ramp up production and revamp mills to clear forest ravaged by the devastating pine beetle infestation. That work is pretty much done now, with the amount of timber that companies are allowed to cut annually reduced along with it. The market in the United States, meantime, which had helped B.C. companies reap record returns last year, has fallen dramatically.
Forest fires the last couple of years have diminished the amount of merchantable timber by 2 million hectares, according to the Premier. And this summer blazes in the Interior and north are expected to be the same or worse than 2017 and 2018. Some climate experts predict this is the new normal. Meanwhile, a government plan to protect caribou herds would also severely restrict logging, and stumpage rates charged by the province are scheduled to increase on July 1.
Mr. Horgan doesn’t deny that there could be closings and tough times ahead, but he doesn’t believe government is in any way to blame. “I don’t feel any ownership for the crisis in the forest industry nor should I,” he said.
While the looming problems are partly the result of factors outside anyone’s control – forest fires – Mr. Horgan and others believe the industry must bear some responsibility for the situation. For years now, forest companies have been shipping two-by-fours out the door and getting the best price possible for them. That was being done, however, against the advice of many who saw writing on the wall and believed the industry needed to be transitioning from a volume-based model to one favouring value instead.
“Some companies have taken decisions recently that are going to be devastating for some communities and we need to be prepared for that,” Mr. Horgan said. “There is no magic solution to overcut and under supply of fibre. We need to find ways to take the fibre we have and do more with it. On the coast, we’ve been exporting logs at an unprecedented rate”. More >>.
For further coverage of the projected downturn click here.
Check out this link for a list of mills that have either closed or have cut back on their production.
WoodSolutions assists with 8 storey timber buildingFWPA’s WoodSolutions Mid-rise Advisory Program helps GPT to raise timber to new heights in Melbourne’s CBD.
The announcement of a new 8-storey timber office tower vertical extension by developers GPT Group and ARM Architecture is the culmination of more than 12 months advisory work by the FWPA advisers who worked with the GPT project team, providing solutions to a wide range of issues relating to building with timber.
“Over the course of many meetings we have assisted in the selection of an ECI (Early Contractor Involvement) to progress design and pricing,” said Gerry Neylan, WoodSolutions Mid-rise Advisory Lead Program Manager, “we also provided advice on timber products and suppliers, general advice on structural, acoustic and fire engineering and responded to questions from the GPT senior management through the project team.”
Information provided by the team also included assessment of overseas projects and the applications and availability of engineered timber products including cross laminated timber (CLT), laminated veneer lumber (LVL) and Glulam.
“A project such as this demonstrates the value of the WoodSolutions Mid-rise Advisory Program, not only to the program partners who I would like to thank for their support, but to the industry as a whole,” said Ric Sinclair, FWPA’s Managing Director.
“We expect a significant growth in opportunities to drive new demand for timber building systems as companies involved in development, design and construction become more familiar and confident with using timber.”
Australia’s largest timber building announcedDiversified property major GPT Group has unveiled plans to build Australia’s largest timber building that will sit atop Melbourne Central mall at 300 Lonsdale Street.
The new building will be a 19,400sq m tower comprising a frame structure that will be exposed through a glass facade and made of cross laminated timber, a lightweight factory manufactured material used in innovative timber structures.
The office extension, known as Frame, Melbourne's first premium office tower to use timber will sit among rivalling towers being currently built by Mirvac, Dexus and Charter Hall in the city's central business district. The ARM Architecture-designed building will deliver a 5 Star NABERS Energy and Water Rating, a 5 Star Green Star, and WELL Gold Standard.
ARM Architecture principal Ian McDougall said Frame’s design would showcase a workspace integrated effectively with its surroundings targeted at “socially conscious workers”. The building's amenities will promote wellness and encouraging positive social exchange through green open spaces and dedicated wellbeing retail offerings.
Construction of the building is anticipated to start by the end of 2019 with GPT aiming for completion in late 2021.
Hines, one of the world’s largest privately-owned global property groups, is also making its foray into Australian development, with plans for a timber tower of its own in Collingwood.
Hines paid AU$28.5 million for the site north-east of the Melbourne CBD and has set plans in motion for a T3 commercial tower using timber, transit and technology.
Photo: ARM Architecture
Source: the urbandeveloper
Keith Lamb takes the reins at KIPTKangaroo Island Plantation Timbers has announced that Keith Lamb will commence as its new Managing Director next month. This is part of a long-planned transition as KIPT anticipates moving into port construction, forestry production and export operations.
Current MD John Sergeant will remain in an executive capacity and will continue as a director while Mr Lamb takes overall responsibility for the next phase in the Company’s transition to profitable and sustainable operations.
KIPT chair Paul McKenzie said Mr Sergeant had piloted the growth of the Company from a sub-scale timberland owner, with a mixed collection of stranded assets, to a sustainable producer of quality timber, poised to deliver a significant infrastructure project.
“During that time, KIPT’s market capitalisation has grown from AU$3 million to about AU$120 million. We thank John for his stewardship of the Company and we are glad that he will continue to assist in the next stages of the company’s development.”
He said Mr Lamb was one of the most respected forestry professionals in Australia, “with a history of deploying institutional capital to create value for forest owners, and with a genuine commitment to the role that forestry can play in building resilient and prosperous regional communities”.
“He is the right person, at the right time and we are proud to have him as the new leader of the business.” Mr Lamb was Director of Operations and Portfolio Manager for New Forests Asset Management from 2005 until 2017, with responsibility for AU$2.5 billion in timberland and related agricultural and industrial assets, including the blue gums on Kangaroo Island later bought by KIPT.
Mr Sergeant would continue to be involved in the current development approval process, enabling Mr Lamb to focus on the company’s medium to long term growth.
Recognition at H&S AwardsThe psychologist who helped create Safetree's Growing our Safety Culture programme has been honoured at the NZ Workplace H&S Awards. Dr Hillary Bennett was given the Lifetime Achievement Award for her contribution to improving safety culture and safety leadership in forestry and other industries.
Dr Bennett developed the Growing our Safety Culture programme with support from forestry companies. The programme helps ensure workers are involved in decision-making about health and safety and also improves front-line leadership.
The programme was also a finalist at the awards in the Leadership of an Industry category. See more about the programme.
Trade war leaves china importers strugglingXu Xuebing began importing U.S. wood products into Shanghai two years ago, anticipating sizable profits reselling to Chinese furniture manufacturers. Then the China-U.S. trade war started. Since Beijing began to impose retaliatory tariffs on U.S. goods last year, Xu has halted imports, his profits have plummeted, and he may soon need to raise his prices just to survive—which could kill off sales for good.
Xu, who is 42 and owns Shanghai-based company Sam Wood, doesn’t mince words over who’s to blame. “Trump is so bossy and irrational, it forces us to fight back,” he said. “Even though [China’s tariffs] do harm to our economy, we strongly support Uncle Xi and China’s tough stance in the trade negotiations,” he added, using the government-encouraged term of endearment for President Xi Jinping.
The world’s two largest economies have levied tit-for-tat tariffs on hundreds of billions of dollars worth of each other’s imports since President Donald Trump launched the trade battle last year, seeking to pressure Beijing to change trade policies he calls unfair. But the impact on small- to medium-sized Chinese businesses caught in the crossfire typically gets little attention, partly because China’s Communist government suppresses bad news.
Xu, who also exports clothing to Russia and meat to Mongolia, began in March 2017 to import black walnut wood from the U.S. states of Wisconsin, Missouri and Iowa. But after the tariff slugfest broke out last year, Xu’s bottom line was ravaged by duties of 20 percent that China slapped on the rough-cut woods that he had originally imported. So, he switched to semi-finished woods, which had been hit by tariffs of only five-percent.
The trade turmoil has also driven China’s currency down, making Xu’s imports even more expensive. Overall, his import costs are up 20 percent so far this year. “Our sales target for 2018 was 50 million yuan ($7.25 million), but we only brought in 13 million yuan,” Xu said. “The trade war has had a huge and direct impact on our business.” More >>.
First satellite fleet to monitor CO2Europe is readying a new fleet of satellites that will monitor CO2 emissions at every point on earth, creating the first worldwide system to independently track polluters.
The fleet of three satellites is slated for launch in 2025, in time to inform the UN’s global stocktake of greenhouse gas emissions three years later, the European Space Agency (ESA) confirmed to Climate Home News.
The project is well advanced. The ESA has begun consultations with industry on building the newly-designed Sentinel 7 spacecraft, which will cost an estimated €633 million. Funding depends on the EU’s 2021-2027 budget, which needs to be agreed by the European Parliament and member states.
Guido Levini, the manager of the ESA’s Copernicus space segment programme, said he had a “high level of confidence” the funding would be secured, as the project had received blanket support from EU governments.
Once in orbit, the satellites will create the first global observation system for the gas most responsible for warming the planet. The project has deep implications for the Paris climate agreement and the global politics of pollution.
Right now, much of humanity’s CO2 is measured by proxy, with data supplied by countries on the fuels burned within their borders. These are known as inventories and can give a good approximation, particularly in highly developed countries. But things get muddy where governments aren’t able to track and measure their economy in detail; that is the case in a large part of the world.
“Globally inventories are not yet capable of providing a complete picture of greenhouse gas emissions of human origin,” said Dominique Blain, a member of the Intergovernmental Panel on Climate Change’s (IPCC) taskforce assigned to improve this reporting. Both approaches have strengths and weaknesses, she added, but could be mutually reinforcing.
A recent review of the science of inventories noted that satellites “could potentially be used to validate the emissions reported [by power stations and other major sources] for a certain time period”, said Blain. More >>
Latest quarterly Timber Market Survey releasedThe March quarter 2019 Timber Market Survey (TMS) has shown downward price movements for untreated MGP12 products ranging between 0.7% and 1.0%, while untreated MGP10 prices remained stable. Treated sleeper and treated decking prices declined over the quarter with price movements ranging between 0.2% and 0.5%.
Most panel products recorded upward price movements ranging between 0.7% and 1.8%, while particleboard products price remained relatively stable. Price movements for most engineered wood products were downwards, ranging between 0.2% and 0.5%, while price movements for some I joist/I beam products recorded stronger upward price movements.
The TMS collects price data through quarterly surveys of a representative sample of timber market participants in eastern Australia. All quarterly TMS reports contain price movement information for softwood timber, panel and engineered wood products. The June and December quarter editions also include price movement information for hardwood timber products surveyed over a six-month period.
The TMS is prepared by Indufor and funded by nine major Australian forestry organisations: Forestry Corporation of NSW; VicForests; Hancock Victorian Plantations; HQPlantations; OneFortyOne Plantations; Queensland Government Department of Agriculture and Fisheries; Green Triangle Forest Products; AKD Softwoods; and Sustainable Timber Tasmania.
Further information and the latest Timber Market Survey report is available at: Download the March quarter 2019 TMS report.
Source: Indufor Asia Pacific (Australia)
Landowners focus on native tree plantingNew Zealand’s One Billion Trees Fund is ramping up native tree planting across the country as landowners take up nearly NZ$1.5 million in planting grants, Forestry Minister Shane Jones says.
Launched in November 2018, the Fund includes NZ$118 million for tree planting grants, with a target of supporting two-thirds natives. In total, NZ$2.2 million in grant funding has been approved.
“We’re focused on supporting landowners – particularly farmers – to get the best out of their land by integrating trees into the landscape. The purpose of the Fund is not to enable whole farm conversions.” Shane Jones said.
“This is clearly reflected in the criteria of the grants scheme and all grants so far approved have been for areas of land under 140 hectares. About two thirds have been for applications under 50 hectares.
“Over 80 percent of the planting projects approved to date will support landowners to establish native trees on their land. All of the funding will support tree planting that allows landowners to diversify income, improve land productivity, address environmental issues like erosion, water quality and climate change, increase habitats for a range of native species and enhance our natural landscapes”.
“In total, the Fund has received 237 applications for tree planting grants and approved 36 grants covering 1100 hectares,” Shane Jones said.
Northland Forestry Awards call for nominationsMoving into the fourth year of the Northland Forestry Awards, the Northland forestry industry in New Zealand can step up once again and celebrate those that contribute to a vibrant sector contributing to the regions GDP.
Recognizing those that punch above their weight with commitment, a high standard of work competency and a credible work culture is something that the region has not been short of over the last three award campaigns. Organisers continue to promote the positive outcomes of this initiative in bringing the industry on this occasion to celebrate together, to encourage those on the cusp of their careers to continue training and development and to reward our industry hero’s.
The awards have been moved to Friday September 20 and Jackie Clarke; singer & celebrity will be mistress of ceremonies for the night at the ASB Kensington Stadium, Whangarei. There is an expectation to sell-out once again to a crowd of over 500.
Northland Forestry Health & Safety Group encourage the industry to get nominations in sooner than later. “We have allocated a two-month window to get your nominations lodged as they close 1 August”, says group spokesperson Andrew Widdowson. “There are too many great people out there to ignore in this process and it’s quite acceptable to nominate yourself and your company too,” he confirmed.
New to this year’s line-up of categories is Woman in Forestry celebrating the diversity of our growing workforce and the great workmanship that females are bringing to a typically male dominated workplace. P F Olsen put their hand up to sponsor this category as they certainly recognise the contribution and increase in females in the industry today.
Nominations opened on 1 June and can be completed online, check out our website at: www.northlandwoodcouncil.co.nz for all information and the nomination form.
Buy and Sell
... and one to end the week on ... setting your password
A couple of elderly men were venting their frustrations about the woes of modern technology.
And on that note, enjoy your weekend. Cheers.
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