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Friday Offcuts – 10 September 2010

Because of the small size of the country, most Kiwis will have had someone close to them affected by last Saturday morning’s 7.1 magnitude earthquake in Christchurch. All week we’ve been keeping a close watch on media reports from the Canterbury Region and our hearts go out to all those that have been involved in some way with the quake. Recent reports suggest more than 100,000 out of 160,000 homes in the area have been damaged. A rather perverse outcome is that most economists are predicting the cut in earnings caused by the earthquake will be 0.2-0.5 per cent of GDP in coming months, but that over the next 12-18 months the kick start to the reconstruction sector could add more than 1 per cent to economic growth.

This week, countering the news of Wilmott Forests collapsing in Australia we have a number of good news stories. Earlier in the week the NZ Government outlined its intention to develop National Plantation Standards for plantation forestry to improve consistency in local authority planning rules across the country. In addition, last night saw the NZ Forestry industry celebrating its outstanding training successes, news came out that more than AU$400 million is being invested by Amcor Australasia for a new world class paper recycling facility at Botany, NSW, we have a story detailing the significant growth NZ is experiencing in lumber exports – to match its log export boom, and Dr Robert Hill, well known for his work on beneficial fungi for the forestry industry has just picked up the 2010 Bayer Innovators Award for Agriculture and Environment.

Letters to the Editor continued this week. We’ve had one Australian reader who said stories and recent comments were spot on regarding the issue of the environmental mafia, but he thought the greatest threat for tens of thousands of smaller businesses through the wood supply chain was no longer legal cases instigated by green activists or even parliaments hung by “Green Parties”. Rather it was a silent death by “green tape”. Check it out – and by all means – feel free to contribute to the discussion.

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National Environmental Standard for Plantation Forestry

The New Zealand Minister for the Environment is seeking comment on a proposed National Environmental Standard for Plantation Forestry under the Resource Management Act 1991. The intent of the proposed standard is to improve national consistency in local authority plan rules relating to plantation forestry and to provide certainty for those involved in the management of plantation forests.

The following information is available online at www.mfe.govt.nz

• Proposed National Environmental Standard for Plantation Forestry: Discussion document
• How to make a submission on the proposed standard (submissions due 5pm 18 October 2010)
• Dates and locations of public consultation workshops.


NZ forest & wood industry stars at 2010 National Awards

Future stars and outstanding achievers in the New Zealand forest and wood industry were announced last night at the National Training Awards run by FITEC, the forest and wood industry training organisation. Ten outstanding individuals and companies from wood harvesting and processing to furniture making were recognised and received awards at a gala dinner and awards ceremony at the Rotorua Energy Events Centre.

The annual awards recognise the rising stars of the industry, celebrating the commitment that individuals have towards their careers and of companies in raising skill levels in the multi-billion-dollar industry. The winners were chosen from 29 finalists within the broader forest and wood manufacturing sector, which consists of some 20,000 employees in total.

The winners were:

• Modern Apprentice of the Year (Forestry) – Wesley Newton, GJ Sole Transport Ltd
• Modern Apprentice of the Year (Wood Manufacturing) – Bradley Webster, Kiwi Lumber Limited
• Trainee of the Year (Forestry) – David Joll, Blackstump Harvesting Ltd
• Trainee of the Year (Wood Manufacturing) – Wayne Ngarangione, Juken New Zealand Ltd
• Trainee of the Year (Furniture) (furniture piece entry) – Eden Simpson, Natural Timber Creations
• Training Company of the Year (Forestry) – Makerikeri Silviculture
• Training Company of the Year (Wood Manufacturing) – Pedersen Holdings Limited - Roundwood
• Training Company of the Year (Furniture) – Jones & Sandford Joinery Ltd
• Outstanding Business Performance through People Development – Norske Skog Tasman
• FITEC Training Leader of the Year – Trevor Wilson, Pedersen Holdings Limited - Roundwood.

“Winning is a real achievement,” says FITEC Chief Executive, Ian Boyd. “These are the individuals and companies from all corners of the country who show passion and commitment to the industry. The wood industry is big business, contributing to annual earnings throughout the industry sector of around $3.7 billion, and training is a crucial part of our future success".


Another major MIS goes to the wall

Following the collapse of managed investment scheme (MIS) operators Timbercorp and Great Southern and more recently, Forestry Enterprises Australia of Tasmania that went into administration, forestry projects operator Willmott Forests Ltd has also been placed into receivership owing about AU$520 million according to media reports this week. Willmott Forests manages more than 56,000 hectares of pine, silky oak and she-oak plantations in NSW, Victoria, Queensland and the Northern Territory. About 8,000 grower-investors had provided about AU$400 million to fund the plantations.

It’s reported that Willmott owes something like AU$120 million to its bankers - the Commonwealth bank and St George - and was unable to meet the timelines set by the banks to restructure. Mark Korda, Mark Mentha and Bryan Webster of KordaMentha were appointed receivers and managers of the Willmott Forests group of companies on Monday.


Consistent forest standards remove a barrier to investment

The New Zealand forestry industry strongly supports the proposed national environmental standard for forestry released by environment minister Hon Dr Nick Smith last week. “For the first time, land owners will know before they plant a single tree what harvesting and earthworks standards they have to meet,” says Forest Owners Association president Peter Berg. “Owners of existing forests will draw comfort from knowing they will be able to actually harvest the forests they may have planted decades ago. Sure, they will have to meet strict standards for roading and harvesting – but the rules will be consistent wherever they operate, and well attuned to the regional geology, climate and land use capability.

“The FOA supports robust standards based on science, good forest planning and good engineering practice, applied consistently throughout the country. In some regions this means forest owners will have to meet tougher conditions than they do now. But that’s a reasonable price to pay for investor certainty.”

At present, rules vary from region to region and between districts within many regions. In many cases land owners have to apply to both regional and district councils for costly and time-consuming resource consents for normal forest operations.

“This can be extremely frustrating for farmers who have forests divided by a district council boundary. They may have to apply for two harvest consents, with all the attendant legal costs,” says John Dermer, president of the Farm Forestry Association. “If the NES becomes law, farm foresters may not have to pay for a consent at all so long as they meet permitted activity standards. Or, if the land is erosion-prone, the consent conditions are likely to be the same on both sides of the boundary. This will be a big step forward.”

Mr Berg says getting consents can be hugely costly. He points to the $1 million it cost the owner of a 10,000 ha forest on the Coromandel Peninsula to secure and defend his operating consents and the $100,000-plus a year he shells out for compliance.

“These sorts of costs have become significant barriers to new planting by commercial forest owners. Hopefully Dr Smith’s announcement will lead to the adoption of a national approach for managing forestry that in turn will encourage the new planting needed if New Zealand is to meet its 2020 emission reduction targets.”


NZ Government’s timber treatment proposal welcomed

The Wood Processors Association of New Zealand (WPA) and the Frame & Truss Manufacturers Association (FTMA) welcomed the proposed changes to the rules for the use of treated timber in houses announced on Monday by the Minister of Building and Construction Maurice Williamson.

“We congratulate the Minister and his staff on the proposed amendments, which are part of the program underway to significantly improve the experience of New Zealanders building timber-framed houses”, says WPA CEO, Jon Tanner.

“The leaky homes crisis has raised questions in consumers’ minds and we’ve recognised that changes are needed to restore confidence in the use of timber framing. This is the first in a series of initiatives that improves the industry-wide processes for delivering fit-for-purpose timber”.

“We consider this “single treatment standard” to be both responsible and vital for New Zealand's timber industry” says Cameron Scott, General Manager of Kop-Coat New Zealand Ltd. “For too long there has been diverse and complex practice and requirements and this announcement will help simply matters enormously”.

“There is a strong performance history of H1.2 types of treatments for all of the framing within the building envelope and boron has a 50 year history as an effective and safe treatment. Wood has labored under a significant commercial disadvantage as a result of the multiple framing requirements within a single structure (untreated, H1.2, and H3.1) relative to the steel and concrete alternatives”.

“The single treatment will be more cost effective. It will eliminate the confusion and expense incurred by builders, contractors, retailers, and consumers that currently arises from the present multiple framing requirements in the same interior structure. The single H1.2 framing treatment requirement will minimise failures due to use of untreated wood and dispense with the unnecessary use of expensive and volatile solvent treated (LOSP) framing for some frame components (e.g. H3.1)”, says Mr Scott.


Amcor to build AU$400M paper recycling facility

The NSW Government has helped secure an investment of more than AU$400 million by Amcor Australasia for a new world class paper recycling facility at Botany supporting 130 jobs and more than 800 jobs during construction. This will consolidate Amcor's entire recycled paper production for Australia and New Zealand, creating an Asia-Pacific centre for paper making in NSW.

Amcor, a publicly listed Australian company, is one of the largest packaging companies in the world and manufactures a broad range of corrugated cartons, folding cartons and specialty displays from recycled paper. Premier Kristina Keneally said the NSW Government helped secure the project with an assistance package from Industry & Investment NSW. Treasurer Eric Roozendaal said, "this investment of more than AU$400 million will be the largest proposed capital investment in the 140 year history of Amcor.”


Forestry Biocontrol earns Bayer Innovator Award

Biologically-based inoculants that reduce chemical use and save the forestry industry millions have earned Dr Robert Hill the 2010 Bayer Innovators Award for Agriculture and Environment. Dr Hill, from the Bio-Protection Research Centre, Lincoln University, in New Zealand has worked on beneficial fungi for the forestry industry for many years.

His research led to the development of ArborGuard™, a Trichoderma-based inoculant which is now commonly used on cuttings and seedlings in New Zealand forest nurseries. ArborGuard™ reduces chemical inputs, increases nursery survival rates and produces larger, healthier seedlings. On top of this, nursery inoculation also reduces Armillaria induced Pinus radiata mortality in forest plantations disease by around 30%. These factors add up to significant cost savings and improved environmental outcomes.

The success of ArborGuard™ in New Zealand led to collaborative partnership with Sarawak Planted Forests Sdn Bhd and Grand Perfect Sdn Bhd in the Planted Forest Zone (PFZ) of Sarawak, Malaysia where the results have been even better. Just two years after his first visit to the PFZ’s Samarakan Nursery, Dr Hill has developed and trialled a bioinoculant from local Trichoderma isolates which has proved so successful that standard nursery practice has changed from chemical use to Trichoderma inoculation.

A purpose-built facility design by Dr Hill is now turning out sufficient Trichoderma inoculum to treat all of the nursery’s 30 -50 million Acacia mangium seedlings/annum. Investigations have now moved beyond the nursery to the forest itself where pilot-scale plantation trials of seedlings treated in the nursery are under way, and the early results are very promising with a 20% to 40% reduction in mortality from the best Trichoderma treatment.


China drafting forestry bio-energy plan

A ten-year plan (2011-2020) to boost bio-energy development in the forestry industry is being drafted by Chinese government authorities, which would put forward a goal that some 20 million hectares of forestry farms be planted to provide feedstock for bio-energy over this ten-year period, the State Forestry Administration (SFA) has said.

Wu Jian, the chief engineer of SFA, said at a press conference that the projected forestry farms could reduce carbon dioxide emissions equivalent to burning some 20.25 million metric tonnes of standard coal every year, and contribute to some 3 percent of the country's total renewable energy consumption.

According to Wu, the government would develop policies to encourage private sector investors to invest in developing these resources and to support the growth of forestry bio-energy companies to form raw material bases for the country’s bio-energy industry. Relevant scientific research, technological innovations and demonstration projects as well as international cooperation would also get firm support from the government, he said.


Australian certified timber - results from recent survey

From a survey of participants across Queensland, NSW and Victoria in the recent Timber Market Survey undertaken by URS (reported in Friday 27 August issue of Friday Offcuts), 55% of Australian timber merchants surveyed said they buy certified timber products. However, only 29% said certified timber products achieved a premium price in the market. More than 20 timber certification programs operate in the Asia-Pacific region, said forestry consultant group URS.

In the June-quarter URS survey, participants bought certified timber products that included structural hardwood and softwood, hoop pine, cypress pine, plywood and imported hardwood timbers. About 48% of timber merchants said demand for certified timber products had increased over the past two years with around 30% reporting that demand had stayed the same. State and local governments accounted for about 50% of the push for certified timber and consumer concerns over the sources of tropical timber imports for about 32%, according to the survey.

For further information, and to access a copy of the latest report, please visit the URS Forestry website at www.ap.urscorp.com/Sectors/Forestry.


Chinese lumber production increasing 60% in five years

Despite the fact that China has a simple, unsophisticated and labour-intensive sawmill industry, the country is ranked as the world’s third-largest lumber producer (after the U.S. and Canada), with over 28 million m3 of reported sawn lumber production in 2007 and 2008, and 32.3 million m3 (20 billion bf, nominal) in 2009. Due to the nature of China’s sawmill industry — thousands of very small sawmills producing lumber for furniture factories, local builders, interior finish, packaging, construction, etc. — it is likely that official sawn lumber production is grossly understated. The total volume is estimated to be as much as 40 or even 50 million m3 per year.

Major reductions in the domestic timber harvest (from 1995 to 2002) led to a declining domestic lumber production trend between 1995 and 2000. However, expanding log imports (mainly from Russia) and rising domestic log supply have supported fast growth of sawn lumber output since 2001. Since 2008, as a result of a major decrease in Russian log imports due to the Russian log export tax and higher delivered log prices, Chinese sawmills have had to depend more heavily on other countries (e.g., New Zealand and North America’s Pacific coast), and domestic plantations, for softwood logs.

Domestic lumber production is forecast to expand from 32.3 million m3 in 2009 to more than 50 million m3 by 2015 (60%+, or an average increase of more than three million m3 per year).

Source: International Wood Markets Group, www.woodmarkets.com


EWPAA president elected for third term

A New Zealand-based innovator for plywood, LVL and panel products has been elected a third-term president of the Engineered Wood Products Association of Australasia. Plywood, LVL and wood panels were a $500 million industry and supported more than 5000 jobs on both sides of the Tasman.

Rene deVries, quality and improvement manger at Carter Holt Harvey Woodproducts, Tokoroa, served as president in 2002-2006 and 2006-2009. He returned to the position this month after Ben Sawley stepped down following management changes at Boral Ltd.

Mr Sawley, who was general manger of Boral Plywood, has taken a regional management position in Boral’s building and construction division. Mr deVries has served more than 40 years in the plywood industry in New Zealand, arriving from the Dutch West Indies in 1967.


NZ lumber exports on the rise

NZ lumber exports to China and South East Asia have been growing. To China, they are 35% above the 5-year average for the 12 months to June 2010 and 88% above the same period 2 years ago. To South East Asia, they are 11% ahead of the five-year average and 21% above the same period two years ago.

The decline in Chinese log imports from Russia has been offset by an increase in lumber imports. For the calendar year to date, China has imported 34% more >6mm thickness softwood lumber from Russia than the same period in 2009, and more than double that of 2008. This can be attributed to export taxes on logs in Russia encouraging more processing of raw materials prior to export to China. Source: Agri-fax


Forestry Tasmania drops land value of SF assets

Forestry Tasmania has written down the value of its state forest assets by AU$277 million after a recommendation from an independent valuer. Managing director Bob Gordon said American-based firm James Sewall had recommended that FT's assets comprise standing timber rather than a combination of the value of timber and the land on which it stood. "FT's directors have accepted Sewall's recommendation and as a consequence the book value of land managed by FT has been set at zero, down from AU$277 million," Mr Gordon said.

It’s reported that Sewall set the value of FT's production forest at AU$362.5 million, based on the commercial value of the standing timber. The revaluation was initiated by the board of Forestry Tasmania after the Legislative Council last year suggested greater transparency would be achieved by separating FT's commercial activities from the non-commercial obligations imposed on it by the Forestry Act.


Non-compliant EWP legal minefield

In one of the harshest ever revelations to Australia’s timber industry, a legal authority has counseled traders that merchandising falsely represented products to consumers exposes them to the risk of claims for damages for personal injury. Noted barrister Nicholas Ferrett, a specialist in commercial law and trade practices, warns that any business or individual importing or selling wood products that do not meet Australian standards, including those requirements for formaldehyde emissions, risks prosecution under the Trade Practices Act. Mr Ferrett states this is a breach of ‘consumer protection’ provisions and timber importers and traders could be liable for personal injury damage.

“In my view, it can also raise concerns for the importers and sellers,” Mr Ferrett said. “My primary concern would be the potential breaches of consumer protection provisions of the Trade Practices Act and corresponding provisions in the state fair trading statutes – legislation that prohibits misleading and deceptive conduct and false and misleading representations about the characteristics of goods.”

The counseling by Mr Ferrett is timely; a new raft of imported products, including plywood panels and flat-pack furniture components, have failed to comply with Australian standards after accredited laboratory tests. Mr Ferrett said where a wood product was sold to a consumer (for example through a hardware store), a court might well hold that there was an implied representation that the product was safe for the sorts of uses a consumer was likely to put the product – small construction jobs, building furniture and the like. In other words, uses which were likely to leave the product in close proximity to the consumer.

“Where a non-compliant wood product is sold to the consumer the seller may well be taken to have falsely represented that the product is safe for ordinary consumer uses when it is not,” Mr Ferrett said. “This would leave the seller potentially at risk of not only refunding the price of the product but also liability for damages and personal injury.” Source: EWPAA




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...and one to end the week on...comments from 1955

That's only 55 years ago!

'I'll tell you one thing, if things keep going the way they are, it's going to be impossible to buy a week's groceries for $20.00.

'Have you seen the new cars coming out next year? It won't be long before $2,000.00 will only buy a used one.

'If cigarettes keep going up in price, I'm going to quit. 25 cents a pack is ridiculous.

'Did you hear the post office is thinking about charging 10 cents just to mail a letter

'If they raise the minimum wage to $1.00/HR, nobody will be able to hire outside help at the store.

'When I first started driving, who would have thought gas would someday cost 29 cents a gallon. Guess we'd be better off leaving the car in the garage.

'I'm afraid to send my kids to the movies any more. Ever since they let Clark Gable get by with saying DAMN in GONE WITH THE WIND, it seems every new movie has either HELL or DAMN in it.

'I read the other day where some scientist thinks it's possible to put a man on the moon by the end of the century. They even have some fellows they call astronauts preparing for it down in Texas .

'Did you see where some baseball player just signed a contract for $75,000 a year just to play ball? It wouldn't surprise me if someday they'll be making more than the President.

'I never thought I'd see the day all our kitchen appliances would be electric. They are even making electric typewriters now.

'It's too bad things are so tough nowadays. I see where a few married women are having to work to make ends meet.

'It won't be long before young couples are going to have to hire someone to watch their kids so they can both work.

'I'm afraid the Volkswagen car is going to open the door to a whole lot of foreign business.

'Thank goodness I won't live to see the day when the Government takes half our income in taxes. I sometimes wonder if we are electing the best people to government.

'The drive-in restaurant is convenient in nice weather, but I seriously doubt they will ever catch on.

'There is no sense going on short trips anymore for a weekend, it costs nearly $15.00 a night to stay in a hotel.

'No one can afford to be sick anymore, at $35.00 a day in the hospital, it's too rich for my blood.'

And on that note, have a great weekend. Cheers.

Brent Apthorp
PO Box 904
Level Two, 2 Dowling Street
Dunedin, New Zealand
Ph: +64 3 470 1902
Fax: +64 3 470 1904
Web page: www.innovatek.co.nz

This week's extended issue, along with back issues, can be viewed at www.fridayoffcuts.com

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