Friday Offcuts 6 October 2017
The story probably strikes a chord with many of you. It’s exactly the sort of story our own industry should be running. It paints a glowing picture of the exciting opportunities that are open to the younger generation. It’s a positive upbeat story told by someone relatively new to the industry - and of the right age and its encouraging those looking at future career options to maybe look a little bit deeper at forestry as an option. Just as importantly, for the gate-keepers, the Mums and Dads who can still be helping their children to look at future training or employment opportunities, it certainly beats news that they're currently being fed by the media and our own industry on mill closures, logging truck accidents or on climate change announcements.
Related to impending skills shortages, we’ve also got a story from a NZ forestry company who are labelling the shortage of staff and workers as “the biggest challenge being faced by the industry”. The challenge is getting the message of the attractiveness of the sector out there to the wider community.” In this they say, “we’re not currently doing a good job”.
It doesn’t only relate to wood harvesting though. A log cartage contractor in the same article says that he’s currently unable to find enough drivers. At last week’s sawmilling event in New Zealand (and in Australia the week before), attracting sufficient saw-doctors to maintain and look after saws in local sawmills was to many attending, a major headache. Shortages apply also to other disciplines; silviculture, forest management, engineering, sawmilling, transport and logistics as any working in the industry will tell you.
In another story this week one Australasian wood products business has launched their own campaign to promote employment and career opportunities within their business. They're using the tag-line “big technology, big machinery, and big on safety and people”. It’s an issue that urgently needs to be addressed, co-ordinated and resourced. The message we’re getting is that it should be led, co-ordinated and resourced by major industry associations with active support coming from regional forestry groupings and individual companies.
Other news this week includes an update on the huge jump being seen in Australia of softwood log exports (export volumes climbing 300% between 2012 to 2016 and likely to set a new record this year) and we cover one rural economist who’s predicting that the record highs being experienced by the NZ forestry industry this year may ease off in 2018. Enjoy this week’s read.
This week we have for you:
Log jam: too many trees, not enough trucksThe New Zealand forestry industry is facing a frightening amount of work in the next few years, as it struggles to attract staff, a forestry management company says. PF Olsen business development manager Scott Downs said the shortage was the biggest challenge faced by the industry and unlikely to improve in the near future.
The amount of forest available for harvest is rapidly increasing as the surge of plantings in the 1990s are now maturing. The volume harvested could potentially rise by 15 million tonnes to just under 40 million a year by 2023. That was going to be a major problem, Mr Downs said.
"It is almost scary how much wood is coming on in New Zealand. All this wood [planted in the 1990s] is maturing now and the fact is we won't be able to harvest all that wood or cart all that wood."
The industry often suffered from a sometimes-unearned reputation that workers struggled for good pay and good conditions, he said. "But we're certainly seeing some very good pay rates for people in the industry and we're not very good at getting that message out to the community."
Meanwhile, a shortage of logging truck drivers was also playing a part in the industry's challenge. Simon Reid, who owns S J Reid and nine trucks, is based at Maungatapere on the outskirts of Whangarei. Attracting drivers was a huge problem because of the anti-social hours, he said.
He believed truck driving needed to be put on the government's critical shortage list, but was doubtful that would happen. "The government isn't interested in helping us. They don't see it as being a critical problem in the bigger picture of the economy. Everything you see in a shop is actually freight and it relies on a truck to get it to the point where it then becomes a retail item," he said.
Australia tripling softwood log export volumesTimberland owners in Australia are increasingly exploring opportunities for the exportation of logs as an alternative to selling logs in the domestic market. From 2012 to 2016, the export volume was up 300%, and 2017 is likely to set a new record high, according to the Wood Resource Quarterly. Rising log prices in the export market have been the key drivers of the increase in exports. Conversely, prices in the domestic market have stagnated the past few years.
Australia has rapidly become a major exporter of softwood logs and was the world’s sixth largest log exporter in 2016. During the 1H/17, the upward trend continued with shipments being 17% higher than in the 1H/16. In 2012, Australia’s annual exports totaled only 1.2 million m3. Just four years later, in 2016, exports had tripled to a record high of 3.6 million m3, of which 96% was destined for China. If the upward trend seen this far in the first six months of 2017 continues, export volumes will end up totaling over four million m3 in 2017, which represents approximately 25% of the total softwood timber harvest in Australia.
Obviously, exportation of logs has become an attractive alternative to domestic sales for timberland owners in Australia. Wood Resource Quarterly reports that in 2012, there were minimal price premiums for exported logs over domestic logs, but by 2016 and 2017, premiums had surged to between AU$35-50/m3. Despite these recent price increases, Australia is still considered to be a low-cost log supplier in the Chinese market as compared to other suppliers such as New Zealand, Russia and North America, mainly because of higher domestic sawlog prices in those markets.
Higher log export volumes have occurred at the same time as domestic log demand has gone up over 20% in four years, from 3.6 million m3 of lumber in 2012 to an estimated 4.4 million m3 in 2016. Although sawmill production fell slightly in 2016 from the previous year, the output from the Australian sawmill sector reached record high levels the past two years thanks to healthy domestic demand for softwood lumber.
Source: Wood Resources International, www.woodprices.com
A millennial with a real passion for loggingWith some stirrings now locally to finally do something about the skills shortages out in the forest and to address the real issue of attracting younger people into forestry, in particular logging, this story and footage from a young logger out of the US, we hope stirs some interest.
With the goal in mind to one day own his own logging company, 25-year-old Zackary Sheets operates a computer-automated processor, picking up a log, stripping it of its bark, cutting it to length and stacking it all while sitting inside the machine. Sheets was working on a logging site in Canyonville this summer for Gold Hill-based Estremado Logging. He lives in Glendale during the week, then commutes to his house in Albany for the weekends.
Though Sheets said logging companies have been struggling to recruit young people to work in the woods, he’s passionate about what he does. “That’s the path I’ve chosen. I saw where everybody was running and I ran the other way, which is modern forestry technology,” Sheets said. “It’s a mix of technology but still has a hard work aspect to it.”
Sheets is not only a Douglas County logger but has experience logging around the U.S. and the world. “I randomly stumbled across an advertisement for loggers who wanted to work in an extreme environment, and it seemed perfect for me,” he said. Three months after he applied, he found himself on a plane to Siberia. He spent six months there, working in harsh conditions while the Discovery Channel filmed him for the show, “Siberian Cut.” “It’s important to show kids the positive sides to working hard,” he said of starring in the show.
Last summer, he logged in Alaska for his stepfather Fred Hurt’s gold mining operation. Hurt, known as “Dakota Fred,” has also been featured on the Discovery Channel show “Gold Rush.” Through the Siberian trip, Sheets met Pekka Ruuskanen, the president of Ponsse for North America. Ponsse, a Finnish company with its North American headquarters in Wisconsin, manufactures and sells harvesters and foresters.
He said operating the machinery is like playing a big video game, using buttons to control the equipment, and he questions why more people in his generation aren’t interested in it. “If you have any work ethic and if you like video games, you would like running a processor,” Sheets said.
But according to Sheets, it’s hard to find other young people who want to do the work. “It seems nowadays people want to float through life,” Sheets said, adding he knows some people his age who want to get rich quickly by selling marijuana or drugs, but they don’t want to put in hard work.
“They don’t want to get their hands dirty,” said Don Walker, a contractor working with Sheets in Canyonville. Walker has been working in the woods for 54 years and cutting timber for 40 of them. When Walker’s generation retires, which could be within the next decade, the industry will need new loggers. “If we don’t have new guys coming up to take over these jobs and stay on top of how things are changing, we’re going to be in trouble,” Sheets said.
Check out the full story by clicking here. Featured below is also a video, just some of the footage that Zackary Sheets has taken and posted that will appeal to the young millennials.
Latest quarterly Timber Market Survey releasedThe June quarter 2017 Timber Market Survey has shown upward price movements for Australian untreated MGP10 and MGP12 products ranging between 1.8% and 2.4%, while treated F7 product prices remained stable. Price movements for panel products were upwards and ranged between 0.5% and 2.9%. Prices for engineered wood products have continued to decrease in 2017, with price movements down between 0.6% and 1.7% over the June quarter.
Kiln dried structural hardwood products recorded upward price movements between 0.8% and 2.4%, while price movements for green sawn structural timber varied within +/- 0.8%. Most hardwood flooring products recorded upward price movements, while prices for some Vic Ash and Tasmanian Oak flooring products remained stable.
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: www.indufor.fi.
Australian Construction Standards open now for commentThe following draft Australian Standards are now available for public comment and are free to download from the Standards Australia website: here.
These standards are primary referenced documents in the National Construction Code (NCC) and provide a means of complying, or a means for demonstrating compliance, with the performance requirements of the NCC. They are being publicly reviewed with a view to their adoption in the NCC 2019; a brief summary of timber relevant changes is provided below.
Draft Number: AS/NZS 1720.4
Title: Timber structures – Fire resistance of timber elements
- Project Committee: TM-010 Timber Structures and Framing
- Proposed Timber Relevant Changes: Proposed as a joint Australian and New Zealand Standard
- Describes the testing procedure for determining the ‘fire resistance for integrity’ of timber building elements
- Describes the procedure for determining the ‘fire resistance for insulation of timber building elements
- Describes the procedure for calculating the ‘fire resistance period’ of fire protected timber building elements
- Public Comment Closing Date: 30/10/2017 23:59
Draft Number: AS 3959
Title: Construction of buildings in bushfire-prone areas
- Project Committee: FP-020 Construction In Bushfire Prone Areas
- Proposed Timber Relevant Changes: A new vegetation classification of “rangelands” has been introduced across Australia (except in Victoria & Tasmania) that has similar requirements to the “grassland” in a number of FDIs and downslopes (typically >10 to 15 degrees).
- The timber crib size for use in the AS1530.8.1 test has been nominated as a (new) Type AA crib (based on work undertaken by FWPA) to better reflect the size of debris found in bushfire regions.
- Timber floors within 400mm of finished ground level are required to be constructed of bushfire-resisting timber in BAL12.5 and BAL-19 regions. - Public Comment Closing Date: 22/11/2017 23:59
If you have an interest and would like to make comment, please download the draft standard and submit any comments via the “Make a comment” button (also located via the above link) by the designated public comment closing date highlighted above. Please follow the process for submitting comments via the Standards Australia website otherwise your comments will not be considered by the relevant Australian Standards Project Committee.
Foreign investment crucial for forestry industryForeign investment in forestry is crucial and New Zealand could never afford to buy back all the forests it has sold the Forest Owners Association says. New Zealand First leader Winston Peters said the future of forestry and timber supplies for local mills is one of his party's priorities as it heads into coalition talks this week.
He wanted the next government to protect wood supply to domestic mills by creating a Forest Service, and had previously stuck-up for Northland wood processors who said they were being squeezed out of the market by foreign forest owners and buyers.
Commercial forestry is a much bigger industry than most people think, with NZ$25 billion to NZ$30bn invested in plantations, the association's president Peter Clark said. "It is widely acknowledged in Treasury, MFAT, and trade advisors, that we need foreign direct investment. Forests are pretty benign and logical place to have that investment."
Forestry has not been viewed as an attractive investment here compared to farming intensification. More government interest is needed in the industry, as well as new plantings, he said.
"There's been a market failure. We've had 20 years of virtually no new planting and this is the main problem. We have heard a lot from Winston's electorate in Northland about wood supply into sawmills and that is absolutely correct and the major cause of it is no new planting. So, there is a gap."
However, if the government began to dictate to forest owners who they can sell logs to, and at what prices and ages, it would discourage new plantings and investment, Mr Clark said.
Roughly 80 percent of the country's forests are owned by 22 companies, most of which are offshore, according to Warrick Searle, director of agribusiness at CBRE, a real estate and investment firm. "There is certainly a lot of North American companies and investment managers. They like NZ forestry because it is a stable and long-term investment, so it fits with their investment model."
Foreign capital is beneficial for the industry, he said. "They pour huge amounts of money into operating expenses which flows directly into the New Zealand economy, so I don't see what the downside to New Zealand is and ultimately we need them to be reinvesting in more forestry, replanting, more pruning and all those operational things. "The economy thrives off it, it provides jobs."
Timberlink launches employment campaignTimberlink’s growth and reinvestment has been significant over the past 5 years and the plans are for this to continue. With this strategic imperative of growth and sustainability, the company has recently launched a campaign promoting the employment and career opportunities at the Australasian company.
Since becoming Timberlink, the business has increased its employment by 151 additional full- time equivalent employees over the past 5 years and these additional people have joined the business from a range of industry backgrounds, technical disciplines and skills sets.
Timberlink’s CEO, Mr Ian Tyson, commented that “we are very proud of our growth and the exciting new opportunities with our business, both for internal promotion and external recruitment. The one common ingredient in all of this is our commitment to our personal and professional culture. It’s those ingredients that will help us continue to be successful with our customers and also provide rewarding jobs and careers with Timberlink.”
The new employment campaign was launched in August and includes both traditional and on- line media to promote the Timberlink business as being “big technology, big machinery, and big on safety and people”. The themes are obvious and probably could and should apply to the whole industry, especially when you look at our whole supply chain.
Timberlink is proud and pleased to be leading the charge on promoting these aspects of their company and the overall timber industry.
Year out of the box for NZ forestryThe NZ forestry sector is heading into 2018 with some speed wobbles, following stellar times during the past almost two years according to ASB. Chinese demand and an easing in competition from some other countries has seen forestry notch up some its best log export prices in years, but as with much of the agricultural sector, the strength of the New Zealand dollar is weighing heavy.
ASB rural economist Nathan Penny last week ran the rule over commodities and the forest sector in recent reports, outlining some moderation in several areas which had recently enjoyed strong demand and prices. Mr. Penny said 2017 had been "a year out of the box" for forestry, with log prices at or near record highs for most of 2017.
"However, forestry’s banner 2017 year is unlikely to repeat over 2018," Mr. Penny said in a statement. Mr. Penny outlined a triple whammy of concerns facing the sector next year, from the dollar strength, to Chinese demand and shipping rate rises, which had been a crucial element of costs for exporters in recent years.
While the New Zealand dollar was weak it had been supportive of prices, but he predicted it would rise from around US72c at present to US75c by mid next year and US77c by the end of 2018.
In China, Mr. Penny said there was concern about a decline in the growth of house prices, translating into its construction, which meant "consistently firm" demand may "soften". He said shipping rates were continuing to rise off last year’s lows, with the key Baltic Dry Index prices in September more than 60% higher than September last year.
Mr. Penny also highlighted a "positive" in that domestic demand around the country was "likely to remain firm". "The NZ construction backlog is long and likely to continue to drive activity and demand for logs and timber for years to come," he said. "All up we expect forestry prices to ease over 2018.
"However, prices are likely to remain high by historical standards with local construction still underpinning prices," he said.
Source: Otago Daily Times.
PF Olsen to manage Kangaroo Island forestryKangaroo Island Plantation Timbers has appointed PF Olsen Australia to manage its plantation estate on Kangaroo Island. PF Olsen will be responsible for the supervision of plantation maintenance, harvest planning and operations, haulage contract management and replanting and coppicing after harvest.
PF Olsen will also be a source of high-level analysis and advice on measuring and maximising overall estate productivity and maintaining Forestry Stewardship Council certification. PF Olsen had previously been responsible for plantation management in respect of the recently-acquired FIT Estate on Kangaroo Island and already has an experienced employee based on Kangaroo Island.
KIPT also employs several staff members on the Island and will continue to do so. In addition to their care and maintenance role at the Company’s sawmill, these employees will act as an internal contractor, working with PF Olsen, alongside other forestry contractors.
The appointment of PF Olsen to manage forestry operations is a further step in preparing the Company to become a sustainable export forestry operation. Partnerships have already been established with Mitsui for marketing, with Commonwealth Bank Australia for asset finance and with Maritime Constructions for the Smith Bay Wharf development. The Company now awaits development consent for its proposed wharf so that construction and operations can begin.
Source: Kangaroo Island Plantation Timbers
What's hurting our forestry distribution chain?A recent industry survey in New Zealand (see table for outcome below) formed part of the Value Chain Optimisation team’s most recent log price outlook and shows how businesses are reporting being affected by different factors that influence transport efficiency.
Around 54 participants completed this part of the survey. Infrastructure and driver availability concerns are evidently the main disruptors in our forestry distribution chains.
In addition the commentary was mainly focused around solutions to infrastructure problems, the outlook from participants was quite positive. Particular mention was also made of harvesting capacity as well as congestion on and around the various ports.
The VCO team in Scion are happy to entertain conversations to see where researchers could work in this space to help alleviate some of the problems. If you have any thoughts regarding the outcome of the survey we are keen to hear them.
Northland wood processors call for log export controlsNew Zealand’s Seven Sharp reported this week that 15-years after the government called for investment in forestry, 'the great wall of wood' that was predicted is about to collapse, putting local livelihoods under threat.
"They said there was a wall of wood coming and they wanted processors here to process it for them," said Garth Mortensen of North Sawn Lumber. "We believed we had long-term sustainable harvest no matter what happened." But Mr Mortensen says a review has found that 3.2 million tonnes of logs is sustainable, down one million tonnes from what was originally expected.
Even less is currently being planted, and Shane Horan of Waipapa Pine says supply of logs will taper off in five years. "If you don't have a tree in the ground there is no future for manufacturing," Mr Horan said.
The Northland processors say many foreign companies with cutting rights here are taking pine early before locals have a chance, and they're focusing on getting the government to step in. "The short-term issue is how we manage slowing down the volume of logs getting harvested in Northland so that we've got sustainability to protect all the jobs," Mr Horan said.
Mr Mortensen said: "The only way now for Northland is to regulate the amount of export log going across the port." He says 59 per cent of the harvest in Northland is going across the port this year, "and that's our jobs and that's our future going across the wharf". At the moment 1400 people in Northland make their living from wood manufacturing, an industry worth $750 million a year.
53 m cubic metres lost to BC industry through firesOf all the business sectors in B.C. affected by this summer’s forest fires, one of the hardest hit is – for obvious reasons – the forestry sector. In what government officials say was the worst forest fire season on record, fires have scorched 1.19 million hectares in B.C.
It’s still not known what the total economic impact will be, though it’s a given that the forestry sector will take a serious hit. In terms of actual damage and costs, however, it’s likely a fraction of what Fort McMurray experienced last year. Whereas the insurance claims for B.C.’s wildfires are estimated at $127 million, Fort McMurray’s totalled $3.7 billion, according to the Insurance Bureau of Canada.
Of the total area burned in B.C. this year, an estimated 53 million cubic metres of merchantable timber was lost – equivalent to one year of annual allowable cut – and a number of sawmills in the Cariboo region had to shut down, although no sawmills were lost to fire.
But will the economic fallout from natural disaster in B.C. be offset by the natural disasters that have ravaged the southern U.S.? Hurricanes in the U.S. destroyed or damaged an estimated 227,000 homes, prompting the National Association of Home Builders (NAHB) to call for a “permanent solution” to the U.S.-Canada softwood lumber dispute, which has resulted in duties placed on Canadian lumber exports – duties that the association fears will only push lumber prices even higher when rebuilding begins.
“In the aftermath of the devastating storm, demand for softwood lumber is expected to increase dramatically as homebuilders and remodellers repair and replace housing in Houston and across Texas,” NAHB chairman Granger MacDonald said at the end of August.
“This crisis makes it more important than ever that the United States quickly achieve a lasting trade agreement regarding U.S. imports of Canadian softwood lumber.” It is assumed that B.C. lumber producers will benefit from soaring demand and prices for Canadian lumber.
The most immediate concern at the moment for B.C.’s loggers and sawmill owners is getting back to work. “Some of the contractors have been shut down since June, with no revenue coming in,” said Wayne Lintott, general manager of the Interior Logging Association. “They’ve maybe got a couple of machines out on fires, but as far as the log harvesting goes, they’ve been shut down since June.”
Even some working forests on the West Coast that were untouched by fire were closed to logging. “Only about 35% to 40% of the entire contracting force on the B.C. coast was operating this summer because it was so dry,” said David Elstone, executive director of the Truck Loggers Association.
So, while some loggers were still working throughout the fire season fighting fires, they weren’t falling trees for sawmills. When combined with a curtailment of logging that typically occurs in the Interior between February and March, it all adds up to a looming fibre shortage.
Local Council has another crack at forest harvestingForestry workers are up in arms over a proposal to restrict heavy vehicles from using Rangitikei roads unless compensation is paid for any damage they might cause. The Rangitikei District Council bylaw would provide officials with the scope to charge a fee based on the frequency of the road's use – a power it did not previously have.
It could also charge a bond to cover the potential damage trucks may cause on unsealed roads, which are particularly vulnerable during winter months. This fee would be charged directly to the logging company. Those restrictions would create difficulties for landowners and truck drivers as forestry throughout the district required harvesting, Road Transport Forum chief executive Ken Shirley said. Council chief executive Ross McNeil said heavy vehicles from forestry blocks caused extensive damage to low-volume, rural roads, but Shirley said they already paid enough road user charges.
Shirley said a regional road tax would be impossible to police and was not sustainable. Instead, the council needed to target costs through a property tax, Shirley said. "It's outrageous what they're doing up in Rangit?kei. It's absolute nonsense. They're going down a blind avenue." He questioned introducing a charge based on the number of truck movements. While forestry logging was "intensive", they only operated on a particular patch every 30 years. Dairy tankers used the roads every day.
Marton-based forestry consultant John Turkington said such a bylaw would impose "unnecessary" and "unfair" costs to forest owners and transport providers. He said the council could use the proposed tolls to benefit the roading network as a whole, while spending a minimum amount on the tolled roads. This could lead to the council charging again through the proposed bond.
Many forestry blocks were on erosion-prone land, such as coastal sand and hill country, and were established with help from the Government and Horizons Regional Council. The goal was to change the land use while providing an ongoing income stream from the land over a long timeframe.
"The land owners, when establishing these forests, assumed free access to the public roading network," Turkington said. "We feel that the toll proposed... adds uncertainty and risk to the forest industry and is an impediment to future forest development."
Land owners had paid rates for 25-30 years and it seemed unfair when road maintenance was required the council imposed an unspecified toll, Turkington said. McNeil said the problem lay with harvesting in winter, when unsealed roads were prone to damage. Although, based on forest locations, there were only a handful of unsealed roads where this would be an issue, he said.
The issue could be avoided if landowners, foresters and trucking companies co-ordinated to harvest in summer, he said. "The fundamental question here is – if roads are badly damaged as a result of intensive use, should the cost of repair or reinstatement be borne by all ratepayers or should those who created the damage bear some cost responsibility?" The council is reviewing public submissions on the proposal.
Buy and Sell
...and one to end the week on ... it started with a dead parrot
At dawn the telephone rings, "Hello, Senor Roy?
And on that note, enjoy your weekend. Cheers.
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