Friday Offcuts 21 May 2021
In New Zealand this week we’ve built in several stories covering rising opposition being seen now at a Council level for mass plantings. In the lower South Island, the Waitaki District Council’s already seeking legal advice for a district plan change to “control the unintended consequences of carbon forestry” operations. The Otago Regional Council has also now voted to lobby central government to ensure that sufficient standards are in place to manage the land use change, impacts and risks associated with carbon forests. More on carbon-positive market solutions where forest owners and wood processors can collectively benefit are being put forward this week as an opinion piece in our lead story.
As well as being the “media darling” at the moment, Carbon Forestry is also capturing the interest of investors, emitters and a range of landowners with next month’s Carbon Forestry 2021 event already drawing in record numbers of delegates. It’s running in Rotorua, New Zealand on 15-16 June and because of the interest being generated from outside the country, for the first time it’s being live streamed to an international audience. Recently, interest has been piqued with some offshore commentators suggesting that EU carbon prices might well double by the end of the year. Places can still be secured at this event by registering here.
And finally, a couple of weeks ago we covered the importance of actively embracing diversity and inclusiveness within our businesses. A new initiative was launched and a public pledge website set up for this express purpose, to try and encourage current and future industry leaders to make themselves available to coach and support a wide diversity of talent to help grow our sector. For an industry (particularly in wood processing) that’s dominated by men, we’ve built in a refreshing look at two young women, both working for Timberlink, who’ve chosen sawmilling as their career. Over the next two weeks they’re asked about their careers, the challenges that they’ve faced and about why a career in timber is something that young women should consider. Enjoy this week’s read.
This week we have for you:
Mill closures: Government intervention or free market?As NZ workers and their families wake to the news that Norske Skog is now considering closure of their long-standing Kawerau pulp and paper mill, the debate between free markets and Government intervention comes into stark contrast. Or does it?
The possible closure of the Kawerau mill comes inconveniently close to the same potential fate for the nearby Whakatane Board Mill in the Bay of Plenty. While others may consider this a minor regional issue, there is a high multiplier effect throughout the Bay of Plenty and South Waikato regions in that these mills also support numerous supplier and service industry jobs such as engineering, maintenance and substantial indirect downstream local employment.
With the news coming inconveniently on Budget Day 2021, it brings to mind the potential for two different schools of thought on what, if anything to do. Should the Government intervene to save regional jobs or do nothing as the free market is operating?
The pulp and paper mill in Kawerau was originally conceived by the Government in the 1920’s. Mooted by Macintosh Ellis our original Director of Forests, the mill plan came to reality in the late 1930’s, driven by Pat Entrican, Director General of the NZ Forest Service. Since it was built in the 1950’s with a capital injection from taxpayers, it has generated considerable tax revenue. It was closely linked to the establishment of Kaingaroa Forest and many smaller forests in the region.
The establishment of the Tasman Pulp and Paper Mill, as it was originally known, was also key to the growth of one of New Zealand’s well-known corporates, started by Sir James Fletcher. While the Government of the day could see the potential for the country to profit from fast-growing forests, they were also quick to recognise the added benefits of establishing mills to process the wood into pulp, paper and timber for construction materials.
Mills, logs and free markets
During the 1990’s and 2000’s local forest production grew rapidly, and log exports grew disproportionately to local mill capacities. In fact, investment in pulp and paper and solid timber lagged, as our new foreign-owned forest owners found fast cash from another market. It was far less capital intensive to fell forests for export to countries willing to pay well for our fast-growing pine resources. Japan was a major market, then South Korea and now China.
The free market does operate, if with a slight power imbalance in favour of forest owners over more, but smaller mill owners. However, during this time sawmills have reduced in number but grown in size with Carter Hold Harvey (CHH), Red Stag Timber and Pan Pac Forests topping the producer list.
Today’s dilemma - intervention or free markets?
Fast forward to today where, through a series of non-strategic decisions, largely driven by Governments of the day, New Zealand’s forest ownership is largely in overseas equity ownership, managed locally for the interests of a range of pension funds.
Since Labour came to power again, they have started to change the conversation to encouraging industry development. Te Uru Rakau - NZ Forest Service officials are working on an industry transformation plan to process more wood locally with bioenergy and biotechnologies to balance our carbon liabilities.
The question is whether a plan can or will be put into action in time to save jobs and the prosperity of our forest-based regional communities.
Luckily, for the Government potential solutions for keeping jobs and growing taxable earnings here may be eased by carbon market growth. There are several positives in place already.
Carbon markets already exist around the work and are rapidly growing. They are becoming more profitable while helping to counter climate change. The commitment to balancing carbon has bipartisan support here. So, there is a potential combined solution. Government can incentivise a new direction for wood-based processing industries and industry will be ready and willing as markets and profitability are already in sight.
Other carbon-positive market solutions are already well-developed overseas and beginning to grow here: engineered wood products (or mass timber).
Red Stag Timber is now manufacturing cross-laminated timber (CLT) for carbon-neutral building solutions. Several others including CHH have already established the sister product, laminated veneer lumber (LVL), for building tall carbon-friendly multi-residential and commercial buildings that conveniently withstand earthquakes better as well.
Perhaps the solutions to these mill closure problems will now be facilitated by carbon making for a less polarised and more rapid solution than before.
Source: John Stulen, Innovatek Limited. Disclosure of interest: John Stulen is a Director of Innovatek Limited, a forest and wood products technology transfer company.
Profile - Women in timberThe timber industry has been historically dominated by men, but things are changing fast both inside the mill and in the office. In the latest issue of Timberlink's Newsletter, they spoke in depth with Denise Morrison and Carley Murphy, both working with Timberlink mills about their careers, the challenges they have faced and about why a career in timber is something young women should consider.
Q. What is your background and how did you enter the timber industry?
Denise: I moved to take up my current role as Operation Excellence Manager at Timberlink’s Tarpeena Mill in Dec 2019. Prior to that, originally from Melbourne, I moved to Tumbarumba for family reasons and had a personal training business. I began working nightshift at Hyne and moved my way up to be the production manager of the Dry Mill.
Q. How did you end up in your current role - Operational Excellence Manager?
D: My original goal at Hyne was to become Dry Mill manager but my interest in lean manufacturing to help minimise waste in the business led me into a Business Excellence role supporting all managers and personnel on site, to implement change and improvements. My lean manufacturing journey is now continuing as Operational Excellence Manager at Timberlink and I’m really enjoying getting stuck into the role.
Q. What are some of the challenges as a woman working in the industry? What can be done to improve this? What steps have been taken in your time that you have seen improve things for women?
D: From where I started in a small town, the boys were very “boysy”. It wasn’t until some people came from outside the town that women began to be promoted through the business. However, I’ve been very lucky in that the people I’ve worked with and companies have been great. There are always some guys around that try to be more dominant, but I won’t put up with it. I’m probably one of the lucky ones in that it hasn’t affected me.
Q. What advice do you have for women who are thinking about entering the timber industry or male dominated industries in general?
D: Be yourself, do the right thing, work hard, you will be acknowledged, there are no limitations on what you can achieve. It is about hard work and putting your best foot forward. Be confident and speak up when the opportunities are there.
Q. People often assume working at a sawmill involves a lot of lifting and manual labour. Can you talk a bit about the automation of the industry?
D: Typically mills were about manual labour a long time ago, but with the automation there is no limitation to what we can do in any role. A timber mill is a highspeed manufacturing plant. We are there to oversee the machinery, not to run the machinery, there is minimal manual work. It is hands off not hands on. Your physique is not an issue, it is about your mind. There is mechanical, electrical, HR, sales, safety and admin not just operators. So, I encourage anyone to get involved in timber. It is a great career, and it feels good knowing you are working with a renewable resource.
We’ll cover the short interview with Carley Murphy, Timberlink's Dry Mill treatment re-wrap operational Excellence Manager in next week’s issue.
Broken election promise on carbon farmingNZ Federated Farmers has been checking the calendar - six months on from last year’s election and the government has broken an election promise to protect productive farmland. Labour pledged if re-elected it would take less than six months to protect productive farmland from the rampant spread of large-scale exotic tree planting across the country.
"We were told they would revise the National Environmental Standards for Plantation Forestry to require forestry blocks intended to be larger than 50 hectares on elite soils, that means Land Use Capability Classes 1-5, to have to get a resource consent," Federated Farmers president Andrew Hoggard says.
"We’ve been reading the papers, but this hasn’t happened yet. In fact, there are no signs at all that they are seriously moving forward on this." At the time it was made, the election promise was cheered by Feds’ members.
"It was a sign the government finally acknowledged there was an issue with large-scale exotic tree planting, and the damage the free-for-all to plant pines was doing to rural communities," Andrew says.
The focus on LUC classed land 1-5 was far from ideal with a lot of sheep and beef farms classed LUC 6 and higher falling to forestry. "But it was at least an opportunity to consider how we regulate to get the right trees planted in the right places, for the right reasons."
The government is also yet to initiate a long-expected review of the special forestry test for overseas investment. Feds says the loose requirements of the special forestry test encourage overseas investors to purchase productive farms for wholesale conversion to forestry rather than keep those farms in agricultural production.
"Blanket forestry for carbon farming shuts down rural communities. Employment to plant the trees and that's the end of it. No pruning, and no timber ever again from the land," Andrew says. "Short-term thinking by government is creating permanent damage to rural communities and the national economy”.
"What farmers need to see from the government is a widespread review of the full range of policies that are leading to the loss of productive farms, export income, employment and the undermining of rural communities. "The Minister has said he’ll keep moving on this. We’d like to see him and his colleagues move a little faster."
Source: Federated Farmers
Saw-doctoring 101: 2021’s saw of choiceIn any business, we tend to speculate as to what changes will occur or what new technology will come along. Throughout 2020, I began to notice a change in sawing taking place – more filers are sawing with circle saws. And it appears that trend will continue in 2021.
New mills are not installing many bandsaws and a lot of mills that are upgrading are using circle saws and taking bandsaws out. Circle saws seemed to be the saw of choice with new mill start-ups during 2020. Of course, many of the older mills continue to run bandsaws. But, among those mills moving towards circle saws, we are seeing a push for improvements in the guided saw.
What improvements are we seeing? Better quality plate from the steel manufacturer, tighter tolerances at almost every step of manufacturing, and improvements in tipping (methods and product). Filing rooms are setting stringent guidelines with regards to radial and tangential angles to improve the sharpness of the tooth.
Saw design is becoming more critical in order to make sure the gullet design and capacity removes the chip and meets the mill’s needs. Today’s filing equipment is allowing the filer (and saw manufacturer) to hold the tightest tolerances, thus allowing the mill to cut quality, high-grade lumber at faster feed speeds. Going into 2021, we understand there are no shortcuts in the filing room. In the past, we have learned that a saw can run with less side clearance than old-school information suggested, especially with the new saw plates being manufactured today.
The very latest technologies being employed in the saw shop and a raft of troubleshooting sessions for local saw-doctors this year have been built into the 2021 sawmilling event, WoodTECH 2021. This year it will run in Rotorua, New Zealand and then streamed live into sawmill sites throughout Australia and further afield on 3-4 August 2021.
”The tech series has been run for close on 20 years now” says FIEA Director, Brent Apthorp. “Feedback from the 350 or so local mill delegates that attended the last event, back in 2019, highlighted to us the importance of this part of the industry getting together on a regular basis. The once strong saw-doctors associations that used to run and meet on both sides of the Tasman no longer are being run".
"The age of skilled saw doctors is increasing and it’s so much tougher to attract younger people into the trade. These two-yearly events where saw-doctors and mill staff can get outside their production environment to learn from the technical expertise brought in and from each other are such an essential part of this industry now”.
Details on the event and the WoodTECH 2021programme can be found on the event website
FPC welcomes new Director OperationsThe Forest Products Commission this week announced the recruitment of new Director Operations, Mr. Islay Robertson. With over 30 years of experience in forestry, Mr. Robertson brings a wealth of knowledge to the FPC and the forestry industry of Western Australia.
Mr. Robertson is a Forestry School graduate of the Australian National University and has previously held operational, management and executive roles in forestry in Queensland, South Australia, Tasmania, Victoria, Western Australia.
Mr. Robertson replaces FPC’s former Director Operations Gavin Butcher, who retired earlier this year. Mr Robertson began in the role Monday 10 May 2021.
Source: Forest Products Commission
Lifeline for Whakatāne mill?Whakatāne’s packaging mill, one of the town's biggest employers, may yet be saved from imminent closure. The mill’s Swiss owner SIG has announced that a consortium led by Dr Dermot Smurfit, a European investor with long experience in paper packaging, is in talks with it to buy the mill.
“A successful sale may result in the continued operation of WML. However, negotiations are ongoing and, until such time as an agreement is signed, no further comment will be made by either party,” SIG continued. It's understood that two parties have been doing due diligence on the mill, one a local company, after SIG announced in March that it had lost its main client and was closing in June.
According to the Irish Times, Smurfit's father Jefferson was an early owner of what is now cardboard box-making giant Smurfit Kappa Group. SIG said at the time that it had been trying to find a new owner for two years without success.
Behind the scenes, NZ government agencies, local MPS and the council have been working for months to save the business and keep its 210 skilled staff in the region. The mill's prospective closure comes at a sensitive time for the wood processing industry, as mills struggle with high power prices and to compete for logs at high export prices.
Lumber futures skyrocketThere is a construction boom taking place around the world, as governments look to build themselves out of the pandemic's economic woes.
• Iron ore and Lumber Futures hit record highs this week
• Timber supplies in Australia are very low and imports are falling
• The federal government's HomeBuilder Scheme is said to be putting 'extreme pressures' on building supplies
It has pushed the price of building-related commodities through the roof, with timber and iron ore — which is used for making steel — hitting record prices this week.
Lumber futures skyrocket
Last week, lumber futures in the US broke a record, surging beyond $US1,700 per thousand board feet for the first time, a meteoric rise for a commodity that was sitting below $US400 this time last year.
The rocketing price is being driven by America's housing boom but also appears to have accelerated in recent weeks as investors pile in. Activity on the futures market has lumber's price chart looking more like a cryptocurrency than wood.
According to the US National Association of Home Builders, the soaring lumber price could add an extra $US36,000 to the price of building an average single-family home.
What about Australia?
Timber prices in Australia are also up this year but for a variety of reasons. Independent forestry consultant Rudolf van Rensburg said Australian softwood prices had increased between 5 and 15 per cent.
"Australia faces a situation where there hasn't been any significant expansion of the softwood plantations since the 1990s, so the supply from current plantations is fairly static and demand is increasing with a rising population," he said. "What is also exacerbating [the price] is a scarcity in imports.
"With lumber prices in the US being very attractive, exporters are focusing on that market ... and with freight [shipping] rates very high, it's making the distant Australian market less attractive." Mr Rensburg said Australia traditionally imported about 20 per cent of its timber needs.
To get your head around exactly what the shift in lumber pricing means, check out the image below sent in by one of our readers this week. It shows what you would have got in the form of housing one year ago if you’d spent $50k on lumber compared to today.
ForestTECH 2021 - Expressions of InterestForestTECH – What is it?
ForestTECH is Australasia’s premier annual forest technology event. It’s being run now for 14 years, principally in New Zealand and Australia. It’s aimed at resource managers, remote sensing, GIS and mapping specialists, inventory foresters and more recently, tree crop supervisors and forest establishment and silvicultural managers.
What happened last year?
Last year ForestTECH, against all odds, ran in Rotorua, New Zealand. In the lead up to the annual technology event, most within the industry would have thought that it would have been a very hard (in fact, nigh near impossible) task to get forestry resource and tree crop managers together from across Australasia at any physical event.
Despite COVID-19, country border restrictions, tight health and safety requirements for running physical events and a minor scare in Auckland the week before the event, ForestTECH 2020 ran in Rotorua, New Zealand on 18-19 November 2020.
Well over 300 attended ForestTECH 2020. Workshops, meetings, field demonstrations and a two-day technology conference and trade exhibitions all ran for the wider industry over the week. The live and virtual hybrid format for ForestTECH 2020 also enabled a much wider cross-section of international presenters and delegates to be involved.
Delegates from 20 different countries for the first time were involved as part of the online streaming of the event out of Rotorua, New Zealand. Companies located in; New Zealand, Australia, Sweden, Finland, Norway, Germany, Brazil, USA, Canada, Columbia, Chile, Ireland, Malaysia, Indonesia, Japan, China, South Africa, Latvia, Singapore and the United Kingdom were involved in ForestTECH 2020.
What’s planned for ForestTECH 2021?
Content: For the first time, last year, ForestTECH 2020 was split into two main technology streams; 1. Remote sensing, data capture and inventory management, and 2. Forest establishment, mechanised planting and silviculture.
Format and location: The 2021 event will again be run in Rotorua, New Zealand. Uncertainties around country borders being open, international travel and a reluctance still by many individuals and companies to travel outside New Zealand means that the format used in 2020 (physical delegates in New Zealand with the full event being streamed to Australian and other international delegates) will be used for ForestTECH 2021.
ForestTECH 2021 will cover;
• Remote sensing/ satellite imagery technologies
• Mechanised & automated planting systems
• Advances in silvicultural treatments
• Data capture technologies and operational use
• Inventory management
• Big data management IT solutions
• Drone based imaging and data capture
• Options for AI and deep learning
Interested in presenting?
Thanks to the many who have already responded to the first call for interest. If still interested in presenting at the ForestTECH 2021 this year (either in person in New Zealand or remotely), please register your early interest by emailing email@example.com by the END OF TODAY, Friday 21 May 2021.
Hardware store shelves stripped bareVictoria is in the midst of a serious timber shortage which is driving up construction costs at a staggering rate. The shelves at several Bunnings stores have been stripped bare.
Housing Industry Association Melbourne East Metro Branch chair, Tim Renwick, says the shortage is reaching crisis point. “We’re now starting to see site theft of timber … out on building sites,” he told Neil Mitchell. “It’s a real thing and clients are facing hold ups out there on sites.”
Mr Renwick says the pandemic affecting timber imports, and local bushfires, are behind the shortage. “We import 80 per cent of our timber and that just stopped overnight,” he said. “We’re looking at about an 11 per cent increase overall in building materials this year alone. The cost of containers bringing stuff in from overseas has gone up 300 per cent”
Photo: Empty timber Bunnings, Croydon
Norske Skog reviewing Tasman mills futureNorske Skog, the owner of the Tasman newsprint mill in Kawerau, has begun talks with staff over the mill's future, following a lengthy review. Unionists have been expressing concern for some months about the mill’s viability, given the declining world demand for newsprint.
A spokesman for Norske Skog, David Quin, said the mill had about 160 staff, and they were briefed on Wednesday about the outcome of a strategic review that was initiated last September. He said the company did not want to say what the review's conclusion was until the consultation process was complete, but stressed that “no decisions have been made.”
It's believed the consultations will take at least a fortnight. Newsprint production at the Tasman Mill has been expected to end in the first quarter of this year, meaning some publishers will have to switch to imported paper. In February the mill started making paper for packaging for supply to markets in Asia, citing “rapid, negative and likely irreversible” impact of Covid-19 on the newsprint industry.
Although it was looking for alternative long-term options for the site, the company ruled out making products other than converting grade paper and mechanical pulp on reel. Norske Skog has also previously spoken out against high power prices in New Zealand which led it to periodically curb production.
The company is the second mill to face financial difficulty in recent months, following the announced closure of Whakatane mill in March, although a last-minute potential buyer has since emerged.
NZ Council seeking controls over carbon forestryFollowing concerns raised by the public and a visit to the site of October’s Livingstone fire, Otago Regional Councillors and iwi representatives on the council’s strategy and planning committee discussed tree planting for carbon sequestration (carbon forests) during a meeting last week.
"Unlike plantation forestry, carbon forests are planted and left in perpetuity," Cr Kevin Malcolm said. "As forestry for carbon sequestration is currently a permitted activity in the Otago region, there’s not the same level of maintenance and hazard management expected for forests planted for harvest. This can lead to pest problems, depleted river flow in water-short catchments, and increased fuel loads for bush fires."
National policy had created unintended consequences that would have "potentially dire environmental consequences" and locally, there was particular concern about activities in the Kakanui catchment in the Waitaki district, Cr Malcolm said.
The committee resolved to lobby central government to ensure sufficient standards were in place to manage the land use change, impacts and risks associated with carbon forests. "Both regional and territorial authorities need central government support to urgently resolve these issues," Cr Malcolm said.
Otago Regional Council staff will also pursue opportunities to manage land uses, including tree planting for carbon sequestration purposes, as part of the development of the land and water regional plan, which is due to be notified by December 2023.
The Waitaki District Council was also seeking legal advice for a district plan change and hoped to have another public meeting on the issue later this month.
For further coverage on this issue click here.
Source: ODT, Otago Regional Council
Rates for forestry vs other land uses raised againGisborne's mayor says the tool used to rate forestry blocks is not realistic, while the deputy mayor says the district council is “hamstrung” on legislation. Gisborne District Council wants the Valuer General to address “growing disparities” between the rating valuation of forestry land and other land uses, and has been backed by Wairoa District Council.
As NZ farms rapidly turn to forests, Gisborne councillors say “very low land valuations” of forestry properties result in other ratepayers unfairly carrying the rates burden.
But Eastland Wood Council (EWC) says it is not fair to single out forestry and to assume all forestry is the same. It says councillors should be calling on the Valuer General to look at mechanisms that ensure “fairness, transparency and stability” for all landowners, irrespective of industry.
Forestry properties are rated on land value, which does not include the value of the trees or other property improvements like roads. Figures in a GDC report that came before councillors last month, showed over time the rateable land value of pastoral land more than halved after being turned to forestry.
Source: Gisborne Herald
New Forests announces new independent directorNew Forests Pty Ltd, the international sustainable forestry investment manager, has announced the appointment of Christine Loh as an independent director to its board. Her appointment supports New Forests’ global growth aspirations and desire to scale environmental and social impact in the forest sector.
Ms. Loh brings to New Forests a wealth of international experience across government and public policy, finance, and academia with a focus on energy, climate change, and environmental issues. Christine previously served as Under-Secretary for the Environment for the Hong Kong Government (2012-2017) and is currently Chief Development Strategist at the Institute for the Environment, Hong Kong University of Science and Technology. She holds a number of Board and advisory positions, including Director and Trustee of CDP Worldwide, a London-based organisation that runs a global disclosure system for companies, cities, states and regions to manage environmental impacts.
Ms. Loh said, “I am excited to be joining the board of New Forests at a time of expansion for the business in Asia, the US and other markets. I have been impressed by New Forests’ track record and feel strongly aligned with its vision of seeing forestry as a key sector in the transition to a sustainable future. Joining the Board of New Forests gives me an opportunity to bring together my experience in public policy, environmental issues, and the finance and corporate sectors in supporting New Forests’ growth strategy over the coming decade.”
Ms. Loh’s appointment is effective from 1 May 2021.
Source: New Forests
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... and one to end the week on ...
And on that note, enjoy your weekend. Cheers.
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