Friday Offcuts 10 September 2021
To add to timber supply issues, Western Australia this week put up its hand to become the first State to end native forest logging. Plans were announced to stop logging in early 2024. With no consultation, as expected, the decision has been roundly criticised by the industry from all quarters this week. It's blindsided everyone and left timber businesses, employees and regional communities across the State reeling. The AU$350m investment in the softwood plantations sector promised will help but of course, the real issue here is that there's a 25-year wait between planting and harvesting. Hardly a boost that's going to help meeting the 2030 planting goal along with the timber shortages being predicted.
A late story we built in to last week’s issue was the surprising resignation of industry champion, Forest and Wood Products Australia Managing Director Ric Sinclair. Having held the position for some 13 years, Ric’s achievements and his ability to deliver results for forestry and wood products companies across Australia has indeed been impressive. In fact, there won’t be any part of the wood supply chain or part of the industry that won’t have benefitted in some way from Ric’s leadership and his teams work whilst he’s been at the helm of FWPA.
On the same day, another industry stalwart, Stacey Gardiner, GM of the Australian Forest Contractors Association tendered her resignation after six and half years in the role. With a raft of achievements over her time with AFCA she was well known and respected for her tireless advocacy for the ever increasingly under fire Australian forest contracting industry. It was never an easy tenure with bush fires, ongoing timber supply issues as a consequence, rejigging the AUSTimber event (not once, not twice, but three times), environmental protests, wood harvesting reviews and of course, the pandemic and associated shutdowns. We’d like to thank both Ric and Stacey for their time in our industry and we wish them both well in their future endeavours.
And finally, in North America, the unprecedented rise in lumber pricing has captured headlines around the world. An all-time high in the US was reached on 7 May. It appears now though that the tide may well have turned. Lumber prices have fallen 75% since that all-time high in early May and lumber production from mills as a consequence, are being reduced. Approximately 80% cut backs in production for example were announced for Canfor’s mills across B.C. this week. From massive shortages to excess lumber inventories in less than 100 days! Certainly interesting times in which we live. Enjoy this week’s read.
This week we have for you:
Australia’s billion tree goal well behind targetAt the present rate of planting, it will take more than 300 years to hit the target In September 2018, the Australian federal government unveiled a plan to radically expand Australia's timber plantations by one billion trees over a decade. Today, less than 1 per cent of that goal has been planted.
"At this rate, forget hitting the 2050 target; it will take 357 years to hit a billion trees," independent senator Rex Patrick told parliament. Despite the pledge to grow the national estate, Senator Patrick said plantation land had declined in Australia since a peak of more than two million hectares in 2008.
Statistics from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) show only 2,800 hectares of new plantation trees have been planted. "That's roughly 2.8 million trees against an annual target of 170 million that is needed [to meet the goal]," Senator Patrick said.
"I think the government knows the billion trees is not a possibility — they ought to admit that."
Source: ABC News
Native forest logging in WA banned from 2024Logging of native forests in Western Australia’s South West will be banned from 2024 thanks to a state government decision lauded by environmentalist groups.
But the forestry industry lobby claims the sector has been blindsided by the move, which it claimed came without consultation and would impact jobs despite a proposed AU$50 million transition fund from the government.
Premier Mark McGowan announced on Wednesday the state’s next 10-year forest management plan would see the end of native forest logging in three years, with the timber industry limited to softwood plantations which would be expanded as a trade-off.
WA was the first state in Australia to stop logging in old-growth forests – relatively untouched environments where trees have aged without being cut down – in 2001, but the new plan would mean a further 400,000 hectares of karri, jarrah and wandoo would be protected.
A total of about two million hectares of native forest in the South West, the region where the logging industry is located, would be locked up as part of the plan. Thursday’s state budget will include an AU$350 million provision to develop new softwood plantations in the South West to support the 1980 existing forestry jobs. The government claims 140 new timber jobs will be created through its plan.
The McGowan government initiative comes one year after former Greens MP Diane Evers introduced a private members bill in Parliament to stop native forest logging, which was not progressed.
For further coverage on this week’s announcement click here and here.
Source: Brisbane Times, the Guardian, WA Today
WA forestry industry blindsided by State GovernmentThe WA forestry industry has been blindsided by the State Government’s sudden decision to end the native forestry sector by 2024. The announcement came with no industry consultation, leaving businesses, employees and regional communities shocked.
The sustainable industry employs more than 500 people and contributes over $220 million to the WA economy each year, as well as underpinning many small businesses, suppliers and service providers. Forest Industries Federation WA (FIFWA) Executive Director Melissa Haslam said the AU$50 million Just Transition Plan offered by the State Government as compensation was miniscule compared to the level of investment in the sector.
Mrs Haslam said one company alone had invested well over AU$50 million in the past two years and there was a further Au$100 million of investment pending, which would now be lost. “This is heart breaking for our industry, and the biggest initial impact is likely to be felt in our regional communities, but this will impact most West Australians – anyone who enjoys products from timber furniture right through to firewood,” Mrs Haslam said.
“We are shocked at this rushed and bizarre decision, which came without any consultation. “The irony is this does not even protect our forests; forest management protects our forests. For forests to cope with a drying climate, to control and minimise dangerous wildfires, they still need to be thinned and managed. This will now come at a huge cost to taxpayers where previously the costs were offset by timber production.”
Mrs Haslam said while industry welcomed the AU$350 million investment in the plantation sector, that investment would do nothing to help the native timber sector, as the two were not interchangeable. “This decision will result in an increase in timber imports from countries which do not share our high environmental and management standards,” she said.
“Right now, we need more detail about what comes next for these businesses, who have been shattered by a reckless decision.”
Source: Forest Industries Federation WA
Future refinements planned for NZ's ETSThe New Zealand Government recently announced two consultations relating to market governance and industrial allocation in the New Zealand Emissions Trading Scheme (NZ ETS). They propose further refinements to the NZ ETS, to ensure a fair and efficient market. Designing a governance framework for the NZ ETS
The Government is seeking feedback on a range of options for designing a market governance framework for the NZ ETS market. The options address risks associated with three themes: governance of advice, governance of trading and governance of market conduct. To read the consultation document and for information on how to submit your views, visit the market governance consultation page.
Reforming industrial allocation in the NZ ETS
This consultation looks at options to reform industrial allocation policy to ensure it is aligned with New Zealand’s international and domestic emissions targets while continuing to mitigate the risk of emissions leakage. To read the consultation document and for information on how to submit your views, visit the industrial allocation consultation page.
Both consultations end on Friday 17 September 2021 at 5.00pm.
Note - ETS Workshop: Te Uru Rākau – New Zealand Forest Service will be running a short workshop between 9am and 12.00 noon that will be focusing on changes to the Forestry Emissions Trading Scheme and as well as providing an update on National Environmental Standards for Plantation Forestry. It’s timed to run the morning before the ForestTECH 2021 event, on Monday 22 November. It's open to all ForestTECH 2021 conference delegates who will be in Rotorua and industry about the central North Island. Full details can be found here.
Source: Ministry for the Environment
Industrial lockdown plan fell on deaf earsThe first Level 4 lockdown hit big NZ manufacturers hard. But when one came up with a plan to allow plants to stay open safely, the Government wouldn’t listen
Last year, after New Zealand came out of our first Covid-19 lockdown, Tony Clifford went to the Government with what he thought was a pretty good idea. An idea which might save manufacturers millions of dollars if we went back into Level 4.
Clifford, managing director of big forestry and wood products company Pan Pac, proposed a Covid certification system. Government would draw up a set of standards which a manufacturer had to meet to operate under Level 4 lockdown. Companies would be audited independently and if they passed, they could stay open through lockdown. Think of it like a Covid WoF for factories.
“I advocated for it strongly,” Clifford says. “But there was no appetite at all.” Once New Zealand went back into Level 4 lockdown, Pan Pac had to shut down its whole operation. Clifford says he approached a range of government agencies with his accreditation plan, including the Ministry of Health and the Ministry of Business, Innovation and Employment. He also got in touch with ministers, including Forestry Minister Stuart Nash, who also has the economic and regional development portfolio.
“I said: ‘Why not prepare for the future?’ They basically told me there wouldn’t be another Level 4, so we didn’t need to worry.” It cost Pan Pac NZ$45 million when it had to shut down operations during the last Level 4 lockdown, Clifford says, although the company recovered about half of that when prices lifted.
But the company also let down local and international customers, many of which are part of essential supply chains. Housing and infrastructure projects, for example. Now it’s happening again.
“I was always fearful another lockdown would occur and my gripe is we lost a full 12 months where we had the opportunity to put in place a regime to prepare for it.” Clifford says managing risk isn’t new for wood manufacturers - they deal with factors like high voltages, natural gas and chemicals all the time.
And some of Pan Pac’s plant is highly automated, meaning staff don’t need to be in close contact with each other. Equipment like loaders have only one person in. Even if Pan Pac could operate at 60-70 percent, it would be a massive improvement on being closed altogether, Clifford says.
“We could have been certified against any standard, but there was no process in place for businesses to be assessed. Government didn’t want to put resources into it, because they said it wouldn't be needed."
NZUs hit new highsLast week was a big week for the NZ carbon market. Wednesday's Government auction saw all scheduled volume (4.75 million NZUs) and the entire cost containment of 7 million taken out at $53.85. This means the last auction of the year will take place with no cost containment reserve.
That news saw the secondary market kick on up immediately, closing at $59.00 the same evening. And by close of play Friday on Carbon Match, NZUs had changed hands at $60.00. So, what next? There is a lot going on in the space, with the market honed in on any new filament of information. Two consultations are underway - one on ETS governance and another on the reform of the industrial allocation. Both of those can be found here and responses are due no later than 17 September.
Meanwhile, the Government's own economy-wide emissions reduction plan for New Zealand is keenly anticipated, and expected to draw on efforts and analysis from almost every part of the Government. Public consultation on the plan was originally expected to run from late August to early October, but appears to have been held up with the Delta outbreak.
At $60, NZUs are up $10 over the last fortnight, and $20 since early June, just three months ago. Stay tuned.
Source: Carbon Match.
Forestry Awards programme impacted by CovidWe recently covered the rejigging of two Wood Council Forestry Awards programmes in New Zealand, the Canterbury West Coast and Northland regions. Both at this stage are planned for later in the year. Another annual awards evening casualty has been the Green Triangle Timber Industry Awards night that was scheduled to run on 29 October. It’s now been transferred to early next year.
GTTIA chairman Adrian Flowers in a statement said the past 18 months had seen significant challenges due to the covid-19 health crisis. He said with circumstances continuing to remain uncertain and with the health and safety of attendees in mind, the GTTIA committee had made the decision to postpone the awards evening.
Initially planned for 29 October the event will be rescheduled to early 2022 to allow the current situation to stabilise. Mr Flowers said that the committee recognised that sponsors, attendees, and nominees from Victoria had been significantly impacted by current government-imposed restrictions.
“To continue forward and hold the event in their absence would undermine the event’s primary purpose to unite industry players and celebrate the outstanding achievements of award nominees and winners,” he said. “The committee is looking forward to announcing a revised event date and continuing with plans to hold an extremely successful evening celebrating award winners and showcasing the industry’s innovative, sustainable, and environmentally friendly practices within the region.
Hunt on for large-scale mass timber buildingsDesign funding is now available for qualifying yet-to-be-built wooden buildings in New Zealand as part of a partnership between the Ministry of Primary Industries and Red Stag. Funding of several hundred thousand dollars is potentially available for a select number of projects that qualify for the scheme, explains Red Stag group CEO Marty Verry.
“What we are trying to do with MPI is showcase different types of mid-rise wooden structures that push the boundaries in terms of scale or height. As part of that, we want to share the knowledge and design with the New Zealand design and construction sector.”
“Typically, this will involve open sourcing of design reports, site visits and case study write-ups. We’re looking for demonstration projects such as 6-plus level apartments or aged care, mid-rise office buildings, large format retail, industrial or warehouse projects, as well as educational and cultural projects that are going to be constructed in the next two years”, adds Verry.
The programme is part of the ‘Mid-Rise Wood Construction’ partnership between Red Stag and MPI, originally set up under the Primary Growth Partnership scheme. The scheme is connected to the government’s initiatives to deliver a zero-carbon construction sector by designing out carbon-intensive materials used in construction.
“This ‘Embodied Carbon’, as it is known, is estimated by the Green Building Council to account for 10 percent of New Zealand’s CO2 emissions, mainly in the form of steel and concrete usage”, says Verry. “With the development in recent decades of products such as Cross Laminated Timber (CLT) and glulam, it is now possible to eliminate Embodied Carbon in New Zealand’s buildings.”
The demonstration building programme is already underway with its first project in Christchurch, a 5-storey apartment development built in CLT, LVL and pre- fabricated timber walls. (pictured) Over 120 developers, engineers and architects poured over the building under construction in May and heard the quantity surveyor findings that the wood solution was cost comparable with high emission materials such as steel and concrete, yet it was carbon negative. More open days are planned for late October.
“The objective is to educate and prepare the New Zealand design community for the changes government will be making with its ‘Building for Climate Change’ programme next year. Those designing for government departments will also benefit, as they need to comply with the recently- announced procurement requirement to select the lowest carbon design option available.”
“We welcome anyone with potential demonstration projects in the pipeline to get in touch”, says Verry.
Note: A reminder that registrations are still open for New Zealand's 6th Annual WoodWorks Conference on 3 November. The event has grown by over 50 percent already as embodied carbon accounting rules for new construction are being mooted. With a BRANZ pre-conference workshop and over 70 percent of delegates booked for the Red Stag CLT plant tours on Tuesday, 2 November, the organisers are committed to providing you with an in-person experience for this event. To register or see more details click here.
5 million trees start their journey in GraftonOver five million pine and eucalyptus seeds are being sown this year at Forestry Corporation of NSW’s Grafton nursery. Grafton nursery staff are currently planting around 130,000 seeds a day to supply the 2022 planting program, said Forestry Corporation Nursery Manager Kath French.
“Our softwoods program will see around four million cells of Southern Pine, Hoop Pine and Radiata Pine seeds sown, which will eventually be planted in areas such as Grafton, the north coast, Walcha and Bathurst,” Ms French said. “We are also sowing hardwood seeds, which will ultimately see 1.1 million of these seedlings go out the gate in 2022.”
Ms French said the nursery is a crucial component of Forestry Corporation’s operations. "We've dispatched more than 80 million seedlings from Grafton nursery over the last 25 years, which have ultimately helped build people’s homes and vital infrastructure.
“Each year we dispatch seedlings to be replanted in our forests. We also supply a further 200,000 seedlings to private industry, including private forestry and revegetation/restoration organisations.” Forestry Corporation is the largest producer of plantation-grown radiata pine in Australia, managing more than 240,000 hectares of plantations around the state.
AFCA General Manager steps downThe Australian Forest Contractors Association (AFCA) has announced that General Manager (GM) Stacey Gardiner had tendered her resignation on Friday of last week after six and half years in the role and a range of achievements.
Adan Taylor, AFCA Chair, said, "Stacey has made a significant contribution to AFCA during her time as GM, and she has led the organisation through significant change. Stacey was responsible for establishing AFCA's first strategic plan, which gave AFCA a new focus and communicated clear commitments to our members and sponsors on how we would support and represent them throughout forestry and with governments."
"Her efforts in restructuring AFCA's administration and service delivery functions have greatly streamlined the organisation, and she certainly leaves the organisation in a great position to move forward", added Adan.
As GM, Stacey collaborated with a range of stakeholders to deliver projects that promote and improve safety outcomes and create sustainable business outcomes for members and forest contracting businesses nationally. She has also represented AFCA and our members on various industry and government committees, showing her commitment to ensuring members have a strong voice.
Adan said, "On behalf of the AFCA Board and the team, we thank Stacey for all her hard work and the commitment she brought to the role and wish her well for the future". Stacey will finish up later this month, and AFCA has commenced recruitment to appoint a new General Manager.
Source: Australian Forest Contractors Association
Lumber Pricing - what goes up – must come downIt was inevitable that US lumber prices would eventually return to some state of normalcy. I wrote an article less than 50 days ago noting that futures and cash prices, despite having quadrupled in slightly over a year, had dropped 40% in June 2021.
Pandemic measures were being lifted, the effect of stimulus payments were receding, and owing to completion or returning to work home improvement projects were wrapping up. High prices, as they do, drew more wood into the market; mills increased weekly hours for sawmill employees, and substitutes for timber, whether different types of wood or composites, were used where possible.
But over the last week or two, the delirium which began in the summer of 2020 and reached a crescendo in April and May of this year has been utterly inverted. A late July 2021 poll reported that 49% of lumber dealers were suddenly reporting excess lumber inventories. And whereas in April 2021 40% of lumber dealers had reported low stocks, in late July/early August none of the respondents indicated such.
Lumber prices have fallen 75% since the all-time high of $1,686 per thousand board-feet on May 7, 2021. All the price gains since the summer of 2020 have been given back, and at under $500 per thousand board-feet the front month futures price is actually below the average price of lumber back to 2017.
Needless to say, the first and second quarters of 2021 were heady times for owners of timberland, mills, and other forestry-related businesses. In mid-July 2021;
West Fraser Timber recorded net income of $1.49 billion for April, May and June, an amount the company has historically needed years to earn…
PotlatchDeltic, which owns timberland in six states and mills in four, said its wood products division was more profitable in the latest quarter than it was during all of last year…
Canfor, which operates 10 mills in western Canada and 12 in the US South, followed suit reporting its own record quarter on Thursday.
Weyerhaeuser Co., the largest US timberland owner and operator of mills in the US and Canada…said it had its most profitable quarter ever by 40%, with net income of $1.03 billion.
Some market commentators are also predicting that sawmills and pricing will bounce back to a level where sawmills are making money again.
Impact of stress on wellbeing and productivityForestry researcher Trevor Best has written a summary of research he was involved in at Canterbury University on the impact of stress on the wellbeing of forestry workers, and how it affects productivity and business profitability.
For the past 18 months, I have been asking machine operators in harvesting crews to tell me about the conditions or situations that result in them feeling some form of stress (positive or negative) at work. The objective has been to build a picture of the ways stress impacts the health of operators to identify what could be done to make their work healthier.
The sorts of questions I asked have been about what was liked about their work, what was disliked and what situations generated whatever they identified as stress. I took that approach because I wanted to build the picture from the perspective of the operators. Nothing about them without them.
Responses have been quite consistent. By and large, the operators I talked to LOVED their work. If there was a good fit between them and the specific work they were doing (harvesting, shovelling / skidding / hauling, processing, sorting / fleeting / loading), the work itself added to their sense of self and wellbeing. It enhanced their life. They felt better about themselves through the mahi.
The same could not be said, necessarily, of the way the work was organised. When questioned about situations that left them feeling “stressed”, the operators pointed to long work hours, the pressure to produce (particularly if the crew did not work well together), uncertainty over work and income continuity and not having a say over aspects of the work that were important to them. Most significantly, apart from the crew culture and its impact on who has a say on the job, these outcomes were the result of decisions made outside the crew environment before anyone turned a key.
Let me give you an example. The key resources impacting on the number of hours worked appear to be the length of the trucking day, the size of the skid and the number of log sorts expected to be stored, the targeted daily production and the length of the contract term.
Those factors dictate when the logging service is required to start and finish in the workday and the number of machines available to provide that service versus the targeted production.
Anything constraining flexible machine capacity meant that the inevitable bottlenecks could only be solved by working longer hours and limited the crew’s capacity to use even the most basic forms of job rotation like covering breaks or sharing early load outs. Those key resources are all part of the harvest planning and management process.
What is tricky about working long hours is that most of the operators spoke about the benefits they had received from working those hours. It improved their ability to provide for their family. It helped to establish their place as a hard worker within the logging fraternity, able to be relied upon by their crew mates. Working long hours enabled them to fit in and move up the ladder.
The issue then, was not just the problems they faced as result of working long days, it was also the lack of control they had over those hours. They had little ability to actively balance their recovery requirements or the time they spent with their whanau against the production needs of the contract. It points to a need to consider health in the design of our logging work places and to broaden who we involve in the process.
Read the full research in the NZ Journal of Forestry Science
Production cutbacks at B.C. sawmillsProduction will be cut back to approximately 80% at all of Canfor’s mills across B.C., starting last week, impacting over 200 workers in the East Kootenay. According to Canfor, the reduction in hours is in response to an unstable lumber market.
“Due to challenging market conditions, we are implementing reduced operating schedules at our B.C. sawmills that will remain in place until demand and pricing meaningfully improve. We recognize the impact that volatile lumber markets have on our employees, contractors and communities and we will make efforts to mitigate the negative effects,” said Stephen Mackie, Executive Vice President, North America, Canfor. “We will also leverage our global operating platform to minimize disruptions in supply to our customers.”
This comes after lumber producers were benefiting from a high-priced market. “As close as two months ago, they were getting record-high prices for their products into the U.S. market. Then the supply and demand law of economics came into play and a lot of supply came back onto the market from the mills,” said Jeff Bromley, Wood Council Chair with United Steelworkers. “Then the market crashed, it actually fell off a cliff. They were fetching anywhere in the neighbourhood of $1,500 U.S. or more per 1,000 board feet a few months ago, and now that number is down to between $500 and $600.”
Bromley said stumpage fees are also making an impact on Canfor’s bottom line, as they are still priced based on market conditions of about four months ago. The union, however, feels this cutback is unjust to sawmill employees. Bromley added that the cutbacks will likely be in place until the market rises once again.
Buy and Sell
... and one to end the week on ...
And on that note, enjoy your weekend. Cheers.
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