Friday Offcuts – 1 May 2020

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The devastating impact that COVID-19 has had on the kiwi forestry sector – in particular, on harvesting crews, wood transport operations and wood processing – has been well documented. After five weeks of no work, the sector has finally got some sort of reprieve with most heading back to work this week. The true impacts of no work over the last month or so on families, businesses and communities along with the loss of key markets has still yet to be fully understood. This is going to play out in the upcoming months.

Although not being closed down like New Zealand, forestry operations in other countries are also grappling with the impacts of COVID-19. In Canada for example, they’ve had the perfect storm. They’ve been hit with a crash in lumber prices, the pandemic-related halt to the North American economy (as well as Canada) and dealing with the impact of softwood lumber tariffs that they’ve been battling with over the last two years. The rest of 2020 they’re saying is going to be “brutal”. It’s going to be all about survival.

In Australia, we’re hearing that mills are going to be hit with a massive reduction in new house starts. AFPA is estimating that the decline in sawn timber demand for Australia’s sawmills will be more than 50% over the next six months. This prediction is being backed up by Master Builders Australia who found that 73% of their members have already reported a substantial fall of 40% in forward work. Unfortunately, recovery for the industry is anticipated to be some way off yet. We’ve included in this week’s issue, stories relating to both countries as well as a more detailed overview on the impact of COVID-19 on several key wood markets by FEA Canada.

Conferences, trade shows, seminars and exhibitions for the industry, both locally and internationally, likewise have been hammered. For everyone involved in forest workplace safety, very shortly we’ll be announcing details of our Forest Safety & Technology Webinar Series which will be running in mid-June. A richer and far more expansive experience has been planned with the series being delivered to Australian, New Zealand and international delegates simultaneously. Watch this space for full details. The WoodTECH 2020 series for wood manufacturing operations similarly is being redesigned with industry. Early details can be found in this week’s issue and we expect to have the full programme for dry-mill and wood manufacturing companies available in next week’s issue.

Some of the other casualties covered in this week’s issue is the postponement of the 2020 Green Triangle Timber Industry Awards to the same time next year as well as the AUStimber 2020 event, that had already had to be rescheduled earlier in the year because of the devastating bushfires, to November 2021. That’s it for this week. Enjoy this week’s read.



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Major decline in housing construction predicted

The Australian Forest Products Association (AFPA) is calling on Australia’s leaders to urgently put in place a stimulus recovery package for the housing construction sector to counter the massive reduction in new house starts and therefore the timber products used in their construction.

AFPA CEO Ross Hampton said, “Australia’s softwood timber processing industry supplies most of the renewable timber products for new houses built in Australia and a substantial portion of multi-unit and commercial construction. A survey of our members has laid bare the massive impact CoVid-19 is about to wreak. New house starts are plummeting and forward orders are drying up. AFPA is estimating that the decline in sawn timber demand for Australia’s sawmills will be more than 50% over the next six months.

“This is unbelievably bad news for regional Australia where the sawmills are located. There are more than 45,000 Australian’s employed in the sector and in many cases this job is the primary bread winner of the family. If sawmills begin to reduce production in response to plummeting demand, it will mean fewer shifts, regional job losses and a flow on downturn in spending on services in vital regional towns and States like Mt Gambier SA, Bell Bay TAS, Bunbury WA, Colac VIC, Maryborough QLD, Tumut, Tumbarumba, Oberon and Bombala NSW, where forest industries underpin the economy.”

“The housing construction sector is the engine room for growth and jobs in Australia’s economy, so a large recovery stimulus package focused on increasing new housing demand immediately will positively impact jobs, businesses and communities right across the nation and support broad supply chains.”

“Potential measures should include increasing new homeowners’ grants and other stimulus (for any new home built); bringing forward government-funded construction projects such as affordable housing commencements; and tax and land price support. The package should also include streamlining regulation to make the new house construction process simpler and reduce the time between approvals and construction to optimise the new house construction project pipeline.”

Mr Hampton said, “If local jobs are to be saved it will be important that policy makers grapple with the task of attempting to ensure that any stimulus delivered into this area flows to all those Australian businesses which are involved in all aspects of producing materials for local construction and that imports supporting overseas recoveries, do not undermine the policy intent,” Mr Hampton concluded.

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WoodTECH 2020 - NEW on-line interactive webinars

COVID-19 has changed everyone’s business plans and operations, almost overnight. World-wide, industry events, trade shows and exhibitions planned for 2019 have all been casualties of the virus. Social distancing, tightening of travel and border controls and restrictions on meetings have meant that WoodTECH 2020, originally scheduled for mid-late August 2020 had to be cancelled. Well, the conferences, workshops and exhibitions originally planned for Melbourne, Australia and Rotorua, New Zealand have.

Instead, an exciting new format has been designed for dry-mill and wood manufacturing operations. And, it’s going to run one month ahead of that originally scheduled. Short 60-90-minute interactive webinars are going to be run between 13-24 July 2020. Like the original event, the new webinar series will be showcasing local and international leaders as well as some of the early adopters of new and emerging technologies best suited to local wood manufacturing operations.

“Speaking to industry, the overwhelming feedback that we’ve had is not to roll back another year but to pick out a selection of presentations planned in August and offer them up to a much wider cross section of dry-mill and wood manufacturing operations across the region – and further afield” says FIEA Director, Brent Apthorp.

There are a number of key advantages to wood manufacturers still struggling to get back to pre-COVID19 conditions using this new format. Being short sessions, they’ll ensure only a short time for production or operational staff from their work station or business, multiple employees from the same site or operation will be able to be involved and there are significant reductions in attendance costs as there will be no travel, accommodation or two-day conference registration rates involved.

“The other big advantage when speaking to the industry is that timing has been set up so they’re going to be run at 9am (Australian EST), 11am (NZ Standard Time) and 4pm (Pacific Standard Time). This for the first time, will enable Australian, New Zealand and North American wood manufacturing operations to be involved – from their own site, office or home - at the same time – and, during their normal working day” says Brent Apthorp.

So, what will the new wood manufacturing series cover?

The series will be highlighting a raft of disruptive technologies already boosting the operational performance of manufacturing operations. It will include insights into the first large scale operational deployment of robotics being used in mills in New Zealand and Australia along with an inspirational case study of a mill that’s been able to turn their timber manufacturing business on its head by focussing in on the culture of the business. We’ve also built in an invaluable troubleshooting session for all timber planing and machining operations.

Further information and the full programme will follow shortly.



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Canadian forestry industry bracing for 'brutal' 2020

Canada’s struggling forestry companies and its hard-hit sawmilling sector need federal support to get them through to the end of this year. The crash of lumber prices, the pandemic-related halt to the North American economy, combined with the pain felt by softwood lumber tariffs over the last two years has many industry players facing a “brutal” next couple of financial quarters, said Derek Nighbor, president-CEO of the Forest Products Association of Canada (FPAC).

Nighbor appeared as a witness before the House of Commons Standing Committee on Finance on April 17 to lay out the landscape of what the industry is experiencing. “We just need some help to keep our heads above water and keep as many people working as possible over the next few months,” he said. “The rest of 2020 is going to be about survival.”

FPAC represents Canada’s wood, pulp, paper, and wood bio-products manufacturers, a $73-billion industry employing 230,000 in northern and rural communities. In recent weeks, lumber markets have plunged with a nearly 40 per cent drop in prices, causing the temporary closure of 39 sawmills across Canada, including 24 in British Columbia.

Newsprint and paper markets are also collapsing with offices, stores and schools locked up, and advertising revenues dropping. Nighbor called sawmills the “heartbeat” of a highly integrated sector that feeds pulp and paper mills. The stoppage in wood chip production is already being felt downstream with a handful of pulp operations scheduling down time, despite their order sheets looking healthy.

“They can’t get the chips they need to make their in-demand products,” said Nighbor. “If we don’t have chips flowing, our industry’s biggest artery is cut off – and thousands more will be out of work.” With log yards full coming out of the winter harvest, Nighbor said an improved wage subsidy program would go a long way toward being able to process those inventories.

More >>.

Source: northernontariobusiness

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Back to work for the NZ Forestry industry

See attached a video produced by FICA that went alongside a number of resources, designed to help NZ forestry workers that started work after more than four weeks off on Tuesday this week. As detailed by many across the sector last week, moving into Alert Level 3, the industry has had the opportunity of getting back into work but it has been important to get work protocols right in order to make it successful, safe and secure.



Source: Forest Industry Contractors Association

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FGLT commits to support NZ forestry industry

The New Zealand Forest Growers Levy Trust is anticipating borrowing and using reserves to maintain as much of its yearly work programme as possible. The Trust decided on 29 April to reduce its work programme by a million dollars, following disruption to forest exports and production caused by the international spread of coronavirus.

But the Chair of the FGLT, Geoff Thompson, says it’s anticipating covering an even larger fall in its revenue and is planning on using reserves and borrowing so as not too significantly disrupt its funding of industry good activities. The FGLT had previously budgeted to spend NZ$8.5 million in 2020, mostly in forest research, but also other projects, such as health and safety and biosecurity.

Income for the FGLT is from a levy on harvested logs, set currently at 27 cents per tonne. Geoff Thompson says the outlook for forestry over the short term is highly volatile. “The current market in China for log exports appears healthy, but we know other countries have sought to fill the gap in China which New Zealand has left while we have been in lockdown.”

“The beetle salvaged spruce trade out of Europe into China is looking to resume, and there are quantities of bushfire damaged logs now being shipped out of Australia. Likewise, the domestic timber market has been shut-down too and nobody is sure what the local demand will be in the new economy which will emerge when coronavirus is under control.”

“The FGLT is going to constantly review and revise its budget over the next few months. That may mean we are able to reinstate the budget-cut we have made if the markets go well enough to fill the gap of the past two months. We are committed to the least disruption as possible to indicate our commitment to the forest industry.”

Source: Forest Growers Levy Trust

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More lives at risk without bushfire prevention

Australia should urgently accept that bushfire prevention rather than suppression is the only way to avoid the widescale loss of lives, property and biodiversity experienced last summer according to the Institute of Foresters of Australia and Australian Forest Growers (IFA/AFG). The organisation representing over 1,000 professional and scientific forest land managers have stressed the need to prioritise broadscale fire preparedness instead of expensive and sometimes unreliable fire suppression tools as they put forward their submission to the Bushfire Royal Commission.

IFA/AFG President, Bob Gordon said the IFA/AFG was deeply concerned the current focus of Australia’s forest fire management on fire suppression instead of prescribed burning that reduces flammable forest fuels had led to devastating consequences. “Prioritising fire suppression activities while failing to effectively reduce fuel levels through prescribed burning has unintentionally increased human and wildlife deaths, caused greater damage to assets, increased environmental degradation and led to spiralling total fire costs,” Mr Gordon said.

“Despite previous Royal Commissions recommending a greater focus on fire prevention and preparedness including prescribed burning, we have seen expenditures on fire suppression, especially aircraft related activities skyrocket relative to expenditure on fire prevention activities. “While in the short-term a fire suppression focus drives down the area burnt by wildfire, over time it allows forest fuel levels to increase over the majority of the forest, thereby increasing the intensity of wildfires when they occur, and in turn the human, environmental and economic costs incurred.

“It is imperative Government turns their attention towards managing forest fuel levels across the entire forested landscape if the number and costs of wildfires are to be reduced.” The IFA/AFG’s submission put forward 25 recommendations in response to the Commission’s terms of reference, including prioritising prevention and amelioration measures such as off-season fuel reduction burning, maintaining strong forestry and timber industry sectors in rural areas in order to have experienced and skilled forest managers on hand to mount early attacks on fire-fronts as they emerge and developing performance measures to align and regulate the activities of each state and territory.

Mr Gordon said the IFA/AFG welcomed the Royal Commission but stressed the importance of its final recommendations being implemented. “The Royal Commission is a welcome opportunity for stakeholders to have some influence on long overdue improvements to forest fire management in Australia,” Mr Gordon said. “However, we have made submissions to many previous bushfire inquiries throughout Australia and subsequently watched in concern as recommended changes have not been fully implemented”.

“One of the IFA/AG’s recommendations calls for the Commonwealth Government to audit the implementation of the 58 bushfire inquiries, reviews and Royal Commissions held since 1939. Unfortunately, you can’t minimise the impact of wildfire with words alone and It’s imperative that real action starts being taken now. Active forest management can play a vital role in increasing Australia’s capacity to mitigate the social, environmental and economic costs of future bushfire seasons”.

“Maintaining a strong native forest timber industry is integral to reducing the risk of catastrophic wildfire events, which is more important than ever as Australia faces hotter and drier conditions as a result of climate change. This fire benefit is two pronged. Firstly, active forest management significantly reduces potential fuel loads of fires and secondly, having experienced forest managers and contractors on the ground and equipped with the skills, resources and knowledge of local landscapes to mount rapid attacks is an ideal first response to any fire outbreaks.”

A full copy of IFA/AFG’s submission to the Bushfire Royal Commission can be viewed here

Source: IFA/AFG

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Northern Australian forestry industry could treble production

A Cooperative Research Centre for Developing Northern Australia (CRCNA) study has identified the Northern Australian forestry and forest products industry could potentially treble its production value to up to AU$300 million per annum and create 600 new jobs over the next five to ten years. The report found the sector could make these increases through the sustainable management of northern forestry areas for timber harvesting and within a framework which conserves the natural values of the forest.

The Northern forestry and forest products industry situational analysis is the result of a collaboration between the CRCNA, Timber Queensland (TQ), the Northern Territory Department of Primary Industry and Resources (NT DPIR), Queensland Department of Agriculture and Fisheries (DAF) and the University of the Sunshine Coast (USC).

Timber Queensland’s CEO Mick Stephens said the project identified the industry supports around 1200 direct jobs with an annual production value of over AU$80 million. “Importantly, key sectors of the industry have until now been largely based on establishing the underlying plantation forest resources of around 100,000 hectares for downstream processing and export markets.

“This is the case for the maturing plantation forest resources of African Mahogany, Indian sandalwood and Acacia, that are now approaching or only recently transitioning to harvest age and sale into markets. The exception is the softwood plantation estate in Far North Queensland, which already supplies into domestic sawmilling and building markets with good scope for expansion”.

“With forecast increases in demand for forest products both domestically and globally, the industry is poised to take advantage of growing Asian and domestic markets for a range of plantation wood fibre and timber products,” Mr Stephens said. “A significant opportunity also revolves around the development of indigenous native forestry, with 73% of the forests in Northern Australia under indigenous ownership or management. Northern Australia has 63 million hectares of native forest, with 13 million hectares identified as having commercial timber potential.

“To make good on these prospects, the analysis shows government and industry must focus on removing barriers for downstream processing and value-adding for forest product and timber markets - and addressing barriers to new plantation investment.” CRCNA CEO Jed Matz said the project reviewed the potential policy, investment and other solutions to barriers preventing industry development and identified strategic research projects for further investment.

“Timber Queensland and their industry and research partners have developed a strong set of recommendations which will deliver a pathway for realising forest industry potential in Northern Australia”. Project partners Forest Products Commission Western Australia, Plantation Management Partners, Midway, HQPlantations, Ravenshoe Timber, DTM Timber/Branch 95, Quintis and Alpha Santanol, have established an Industry Development Alliance which includes several relevant state departments, industry bodies and research providers.

“This alliance will help ensure researchers and policymakers prioritise the development and growth of the forest products industry in Northern Australia, and the CRCNA is pleased to be a stakeholder to facilitate well-targeted R&D for further industry growth,” Mr Matz said. The CRCNA’s Northern forest and forest products industry situational analysis project is one of five industry situational analyses currently funded by the CRCNA examining the aquaculture, rice, cropping, beef, health and communication sectors.

Source: CRCNA, Timber Queensland

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NZ manufacturers offer blueprint for economic recovery

A new report released yesterday (30 April) by a group, including WPMA, and representing New Zealand’s manufacturing industry associations, outlines a blueprint to work with Government to strengthen manufacturing capability and reduce trade barriers to support the nation’s post-pandemic economic recovery.

The New Zealand Manufacturing Alliance’s Manufacturing Matters report includes a range of policy proposals in the areas of innovation, capital and investment, trade, skills, procurement and achieving sustainable growth in a low-carbon economy. The proposals are designed to address challenges to the sector’s future including growing trade protectionism, the importance of adding value to basic commodities, transition to zero carbon, skills shortages, and the shift to the fourth industrial revolution.

The report highlights the crucial contribution manufacturing makes to the economy, accounting for 10 percent of New Zealand’s GDP and employment, more than half of exports and a third of business R&D expenditure it also underpins the success of other key sectors. The Manufacturing Alliance says a strong manufacturing sector is crucial to New Zealand’s future prosperity. The pandemic has highlighted the weaknesses of globalisation, the frailties of international supply chains and the vulnerability of relying on income from tourism and international education as major sources of export revenue.

A vibrant domestic manufacturing sector is going to be critical to New Zealand’s economic recovery, building resilience against future global shocks whether they be pandemics, recession or the challenges of climate change or natural disaster. In particular, as New Zealand moves into the recovery phase, it will be critical that as a nation we continue to work with others in ensuring international trade laws are upheld in the face of a rising tide of protectionism and other unfair trade practices.

New Zealand’s manufacturers are ready to work with Government to develop an industry transformation strategy to support the nation’s post-pandemic economic recovery. The Manufacturing Alliance represents the NZ Wood Processors & Manufacturers Association, The Manufacturers Network, Metals New Zealand, Plastics NZ, and the NZ Maintenance Engineers Society.

The Alliance says that the invitation to the Government is now on the table to implement these policy recommendations and do what many other advanced economies have done – develop a cohesive strategy to grow the role of manufacturing in our economy.

Brian Stanley, WPMA Chair, says "that NZ needs to grow its wood manufacturing industry and create more good jobs in the regions. We’re now inviting the Government to work with us to make this happen.”

Please find attached the Manufacturing Matters Report and the Report Summary

Source: WPMA



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Six reasons to continue advertising during a market downturn

What we know about the role of advertising in a market downturn

Thirteen years on from the Global Financial Crisis, the world has been hit with another. And while New Zealand and Australia comes to grips with the fallout of our own lockdown to combat Covid-19, advertising can seem like the last item to spend money on for businesses fearful of a recession.

During a downturn or period of uncertainty, prioritising hard costs and delaying spending are among the first understandable tactics businesses will take. But there can be several advantages to continue advertising during a recession, according to global research going back nearly a century.

Here are six reasons to continue advertising during a dip in the market:


1. History has shown advertising during a downturn works

According to a report quoted by Forbes magazine, during six significantly unstable global periods from the 1920s to the 1990s, companies that cut back on advertising during downturns lagged behind those that didn’t.

In a 1985 study of 600 businesses, sales grew 275% more for those who aggressively advertised. And in 2009, Amazon sales grew by 28% following the Global Financial Crisis - largely attributed to them continuing to push on with the release of their game-changing Kindle.

2. Your business could gain a competitive edge

Businesses have limited advertising budgets - and your competition may be more nervous than you about spending it. By advertising when others are holding back their dollars, you could gain a competitive edge.

Whether you are continuing to operate now, or gearing up for restrictions to be lifted, your services or products will still be needed - so the right time could be now to get your message out before others do.

3. It’s a way to prepare for the longer-term

Though you may be nervous to part with cash right now, a look into recession psychology by the Harvard Business Review in 2009 showed that consumers tend to take a long-term positive approach during a slump, knowing that they will spend again sometime in the future.

Though sales might not go through the roof just yet, advertising during a quiet time can allow a business to rethink its messaging - and cut through the usual clutter, building competitive brand awareness and trust. When customers do spend again, you’ll be more front of mind than your competitors, and have solidified your customer base.

4. Advertising during a slump shows brand stability

Rather than becoming invisible, advertising during a market downturn can portray business stability and instil confidence. An American Business Media report summarised a number of studies on advertising during market downturns, which found that it not only rewards aggressive advertisers by protecting and enhancing their market position but also illustrates corporate stability. Being visible during a downturn will show your business is strong enough to survive.

5. You could grow market share through earning valuable trust

Though New Zealand and Australia is in uncharted territory with our lockdown and essential business operating levels, all recessions have shared ingredients for marketing success, the Harvard Business review reports.

Clever advertising and ‘shiny’ products may be less likely to increase sales in a downturn as priorities shift for consumers. Having a disposable income, feeling optimistic about the future - and trusting in businesses is vital to people in a new ‘normal’, so choosing where to advertise your business is an important consideration.

According to a recent survey of 25,000 people in 30 countries by data insight company Kantar, national media is four times more likely to be trusted than social media, such as Facebook.

6. Consumers expect brands to ‘do their part’ during Covid-19 and beyond

During a market downturn, people need messages of positivity, and stability. A recent “Trust Barometer” released by communications giant Edelman showed consumers wanted brands to protect their employees, work with governments and use resources to help solve problems during the crisis.

Any brand or small business able to show they are continuing against all odds to deliver a service or product and keep people working will earn high regard - but they’ll be remembered even more for what they’re doing. If you have a good story, now’s the time to tell it.

There has never been a more important time to get your advertising message out to local forestry and wood products companies. Remember, in addition to this newsletter ( www.fridayoffcuts.com), we have an extensive array of well established and widely read weekly and monthly newsletters for the industry including www.woodweek.com, www.woodtech.news, www.foresttech.news and www.harvesttech.news that will help you in these uncertain times.

For further information on advertising opportunities, please contact Gordon Thomson on gordon.thomson@innovatek.co.nz or Tel: (+64) 27 275 8022.

Source stuff.co.nz



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Wood products market trends amid COVID-19

2020 Q2 is going to be a struggle

In the new world of managing COVID-19, there are emerging issues, disruptions, dislocations and chaos almost daily as wood products buyers and sellers adapt to a new world order. The challenges are endless, and include the following (and others too numerous to list):

In the forest: For employees in terms of logging, trucking, ports, etc.
In mills: To maintain mill employees and log supply to mills.
In end-use market supply chains: From mills to ports to reloads to distribution to retail to contractors to building sites — the impacts go on and on.
In logistics: As highlighted in Timber.Exchange, there are many “blank sailings” (void sailings) for container shipments, meaning a vessel may skip a port or the carrier has cancelled the entire journey.

From country to country, the role of government is changing and becoming harder to predict. Below are some quick updates from around the world supplied by FEA (dated 20 April). These snippets are taken from various discussions with industry experts and a variety of other sources (including Holzkurier, Timber-Online, EUWID, ITTO, EOS, DeSH, Forest Industry Intelligence, etc.).

RUSSIA: As a result of the oil price war, the Russia ruble devalued from 62 rubles to the U.S. dollar to as low as 78 before settling back at 74; this has increased the competitiveness of log and lumber exports.

To combat the economic fallout from COVID-19, the Russian government has allowed quotas for log exports to rise by 2 million m3 for companies in the application stage, with a 0% export tariff (versus 13%) for pine logs. However, new log fumigation requirements were put in place this year for log exports to China, so this is an extra cost being paid by Russian log exporters. This benefits Siberia and the Russian Far East, but northwestern Russia is facing a tight sawlog supply and high log prices due to a mild winter. Lumber exports to China have been steady for larger mills (less so for smaller Chinese mills in Russia), but demand is still considered slow. On the other hand, higher Chinese prices (higher than selling to Egypt) are helping.

EUROPE: The European Organization of Sawmills (EOS) reports that the construction sector has taken a hit in such countries as Spain, Italy, the United Kingdom and France. In Scandinavia, Germany and the Netherlands, the local construction sector has been doing better. Sectors connected to logistics, e.g., pallets, are performing comparatively better than sectors connected to manufacturing, e.g., furniture. Double-digit production curtailments have been introduced by some mills due to slowing demand, with reductions in Scandinavia somewhat milder than in Central Europe. The DIY sector is one bright spot as people spend more time at home.

UNITED KINGDOM: The British government has announced that its lockdown will stay in place until the first week of May. This has caused several building materials’ merchants and importers to curtail operations, impacting one of the largest import markets in Europe. Bans against travelling are hindering the construction sector, e.g., in Greater London, it is estimated that 50% of construction employees are foreign workers.

SWEDEN: Some sawmill companies have announced temporary layoffs, while others continue to operate close to normal. A key reason: for many Swedish and Baltic mills, Great Britain is their largest export market for lumber, and demand has plummeted in both the U.K. and Ireland. Mills are adjusting their output in order to maintain a healthier balance between supply and demand, but curtailments appear to be looming. To replace the U.K. market, some firms are exploring markets in MENA and the U.S.

JAPAN: Japan began a month-long state of emergency on April 8, with strict government measures proposed for Tokyo and nearby Kanagawa, Saitama and Chiba prefectures, as well as Osaka, Hyogo and Fukuoka (the latter the worst-hit areas in terms of COVID-19). Several other prefectures had gone ahead and announced their own states of emergency.

While the Japanese market for logs and lumber is considered “stable,” house construction activity has slowed dramatically. In new housing starts, “owners’ units” (approximately 30% of total starts) were at their lowest pace in 57 years during the first two months of 2020, the result of poor timing and other issues; this follows a steady decline that had been already been underway for seven consecutive months. “Rental unit” starts (38% of total new housing) have seen 18 consecutive months of decline, while “2x4 housing” units (12% of total housing) have declined for 11 consecutive months. The pace of annual Japanese housing starts is now below 900,000 units for the first time in five years.

VIETNAM: COVID-19 has seriously affected Vietnam’s economy and wood processing industry. As of early/mid-April, some 80% of all export orders had been suspended, and producers had stopped taking new orders. Exports to some major markets have mostly ceased; this includes the U.S. and EU, which accounted for 51% and 9%, respectively, of the total wood export value in 2020Q1. Similarly, the cancellation/delay rate of orders in South Korea and Japan is reaching 60–80%. Furthermore, imports of wooden materials and accessories have decreased by 70–80%.

CHINA: With China now in recovery mode following COVID-19, forestry enterprises are getting back to work (with the exception of those in Hubei province, including Wuhan). According to the State Forestry and Grass Administration, the rate of resumption of work in forestry enterprises nationwide (excluding Hubei) exceeded 90% by March 22. However, the Chinese media has reported that many private employers are operating at a fraction of normal levels due to employees’ inability to return from their home provinces.

At present, there is strong pressure on some export-oriented furniture enterprises (e.g., in Vietnam), as offshore sales have slowed. Chinese sawmills operated at around 60–70% of capacity in March, but this has slipped to about 50% in April. The reason: rising log prices against relatively flat lumber prices, putting mills into a margin squeeze. The construction market for new apartments is still slow, with demand for construction lumber sluggish in kind.

The government’s ongoing strategy to replace shanty towns with new buildings appears to be changing, with the new plan being to renovate existing buildings. This shift is likely to result in lower construction lumber demand for use in concrete forming applications. In addition, while log and lumber inventories are coming down, it looks as if a ramp-up of New Zealand and European logs should be in full force by May; this points to a glut of arrivals by June/July.

China’s gross domestic product shrunk by 6.8% in 2020Q1 from a year earlier. China’s three major engines of growth — consumer spending, exports and fixed-asset investment — all sputtered as large swaths of the country were placed on lockdown in late January and February in an attempt to contain the spread of COVID-19. Retail spending dropped by 19% in 2020Q1, exports plunged by more than 13%, and fixed-asset investment declined by 16%. It appears that economic growth in China will depend partly on the strength of government stimulus policies, with fiscal policy playing a leading role; monetary policy will be modestly expansionary.

INDIA: As part of India’s general lockdown, ports in the country are closed to both imports and exports. Export containers cannot be moved given that the receiving-end ports are also closed in most cases, and import containers wait to be discharged, held up due to an inability of workers to travel. Until restrictions are lifted, nothing will really move in the country.

According to Indian importers, despite some factories in China being back at work, others have deferred reopening, reducing the flow of import (not only of furniture, but also of panel) products used by Indian manufacturers. Indian retailers, who turned to domestic manufacturers in response to the disruption, discovered that they are also unable to work (due to the Indian lockdown).

U.S. AND CANADA: Details are available in FEA’s Monthly Advisor Reports on macroeconomics, lumber and panels.

The global trend is clear: a slowdown is occurring around the world in early 2020Q2 — and will get worse before it gets better. The time for countries to relaunch their economies is moving nearer. A “V” (or quick) recovery remains the desired outcome, but many wild cards are in play.

Source: Russ Taylor, Managing Director, FEA-Canada

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AUSTimber having to reschedule again

Unprecedented became part of our January conversations as communities across our region and Australia experienced a devastating bushfire season. Now a mere three months later as many communities and businesses are still in bushfire recovery mode, all of us are expanding our vocabulary to include social distancing and self-isolation as we experience the impacts of a global pandemic.

The Australian Forest Contractors Association’s (AFCA) General Manager Stacey Gardiner said “given the uncertainty around ongoing restrictions both now and over the next 12 months or more, including travel within Australia and internationally we have made the difficult decision to reschedule AUSTimber2020 until 2021.”

She added “we want to ensure the show has every opportunity to be a great success and that means giving our supporters, exhibitors and partners the space now to focus on managing their way through these unprecedented events and time to recover. Deciding upon which dates to host AUSTimber2020/21 required careful consideration of the impact on commitments already in place for the show. Ms Gardiner added “we consulted with all of our supporters, exhibitors and partners to identify a suitable date that has support, it was clear from this feedback that later in 2021 was preferred.”

AUSTimber is owned by AFCA, which is a non-profit, member organisation run by a volunteer Board of Directors, and they remain committed to delivering the show. AUSTimber Coordinator, Ms Dionne Olsen said “AUSTimber is the largest timber industry show in the southern hemisphere and even though we have already commenced planning to facilitate a seamless transition to the future show in November 2021 we are dealing with the compounding financial impacts of now twice having to reschedule.”

“The show must go on, and thanks to our supporters, exhibitors and partners’ positive and proactive response to the decision to reschedule it will go on. We want to assure everyone that tickets already purchased will be honoured and the program remains unchanged for the new dates” said Ms Olsen. Ms Olsen added “Everyone’s continued commitment means our communities will still have the opportunity to benefit, in November 2021.”

Source: AFCA

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Grafton nursery to dispatch 2.3 million seedlings

A record 2.3 million seedlings will be sent out the gates of Forestry Corporation’s Grafton Production Nursery this month, to replant the region’s timber plantations. Member for Clarence Chris Gulaptis said the NSW Government is remains committed to the future of forestry in the region.

Forestry Corporation of NSW’s Grafton Nursery Manager Kath French said “each of these 2.3 million seedlings was individually sown here at our Grafton Production Nursery back in September from a carefully selected seed, and we have spent the past six months carefully watering, weeding and fertilising this crop”.

“Throughout April, the 12-person team at Grafton Production Nursery will be sorting and grading the seedlings to ensure only the hardiest seedlings are sent out the gate to our plantations.

“With the 2.3 million seedlings from Grafton we’ll be restocking more than 2,000 hectares of hardwood and softwood plantations on the north coast. The seedlings we have grown this year are an even mix of pine and eucalyptus species, to restock both softwood and hardwood plantations throughout the region”.

“The nursery also grows large numbers of seedlings for private customers with large orders. This is the largest seedling crop our Grafton team has managed to date, as the impacts of drought and fire in 2018 required us to double production of southern pine”.

“Following this summer’s fires, we are preparing to double the nursery’s output next year to replant affected plantations, allowing our production teams time to harvest affected timber and prepare the sites for planting in 2021 so we can replant and regrow all the burnt plantations with renewable timber.”

Source: Forestry Corporation of NSW

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Green Triangle cancels 2020 Awards evening

Recognising the widespread and continued impact of the COVID-19 pandemic, the Green Triangle Timber Industry Awards (GTTIA) committee has made the difficult decision to cancel the 2020 Awards program. Whilst we recognise the disappointment of the many individuals that support the forestry industry in the Green Triangle, the decision was not made lightly.

There is a significant amount of effort that goes into creating an awards program for our industry from the sponsors to the judges and the many local businesses and individuals involved in making it such a fantastic event. While we are deeply disappointed to make this decision, it was simply not feasible to proceed with the planning for the 2020 Awards.

We are committed to ensuring that the awards will take place in 2021 and once again be the forum to recognise individuals and companies in the Green Triangle timber industry for their dedication to best practise, continuous improvement and excellence in their respective roles and businesses“.

We will also use this time to ensure the awards remain both highly respected and relevant for the timber industry and community. “On behalf of the GTTIA committee I would like to sincerely thank all sponsors, judges, industry professionals, businesses and the community that have supported the Green Triangle Timber Industry Awards from the outstanding success of the inaugural awards in 2018 to the sell-out event in 2019. We look forward to working with you all again in the future” said Adrian Flowers, GTTIA Chairman.

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John Deere announces new NZ dealerships

John Deere Construction and Forestry Equipment has a new home at two of New Zealand’s most respected machinery dealers to bring a greater range of sought-after machinery and cutting-edge technology to operators and contractors across the country. From 1 July, the full line of premium Construction and Forestry Equipment will be available at AGrowQuip (AGQ) in the North Island and Drummond & Etheridge (D&E) in the South Island. This transition follows March’s announcement John Deere would end its former distribution agreement with CablePrice.

Both New Zealand-owned and operated, AGQ and D&E are established John Deere Ag & Turf dealers and, given the superior sales, parts, service and support systems already in place, are ideally positioned to extend their offering. John Deere Construction & Forestry Division Managing Director for Asia Pacific and Africa, Jeff Kraft, said he was excited to collaborate with AGQ and D&E to keep New Zealand construction and forestry customers running at a new level of efficiency.

“We know both these dealers will offer world-class after-sales support because they already have a proven track record of doing so across their existing John Deere customers,” Mr Kraft said. However, the Construction and Forestry Equipment range has more than just moved to a new home, it has also been extended to several John Deere machines never-before-seen in the New Zealand marketplace.

“In addition to our motor graders and crawler dozers, the New Zealand market will see wheel loaders, articulated dump trucks, compact excavators, compact track loaders, skid steer loaders and the brand-new range of mid-size hydraulic excavators added to the line-up available,” Mr Kraft said.

“We’re also looking forward to working with New Zealand customers to help them take full advantage of our suite of technology solutions such as John Deere WorkSightTM for construction and John Deere ForestSightTM for forestry to make their businesses more profitable by maximising uptime and optimising machine performance, while decreasing the need for physical service call outs.”

These technologies will be further supported by in-country parts availability and machine telematics to provide the ability to monitor machine health, detect potential problems, and to provide remote diagnostics and remote programming.

“The announcement of AGQ and D&E as Construction and Forestry Equipment dealers is a new era for John Deere in New Zealand and we’re delighted to partner with them to bring our customers premium service and world-leading technology to support more efficient, productive and profitable construction and forestry businesses,” Mr Kraft said.

AGrowQuip

New Zealand-owned, AGrowQuip has four branches spanning the North Island, and with more than 120 trained staff in John Deere products and services, offers exceptional customer support. AGQ has invested in education to deliver specialised construction and forestry expertise, just as they have been providing to the Ag & Turf industry for over 50 years.

Drummond & Etheridge

Drummond & Etheridge has operated in New Zealand’s South Island for over 85 years. The dealership is well equipped to meet the daily needs of the construction and forestry industry with more than 200 trained staff, including a group service department consisting of more than 80 factory-trained technicians with in-house mechanical and technical support experts.

The family-owned and operated business has 10 locations across the South Island, with a centralised parts warehouse that replenishes dealerships overnight, ensuring parts are always on-hand locally. This is part of D&E’s longstanding commitment to after-sales support, guaranteeing operators and contractors the ability to maximise uptime while reducing operating costs.



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Queensland timber industry calls for economic stimulus

The organization representing the Queensland timber industry has backed calls by the building sector for targeted economic stimulus to avert a looming cliff in future building activity as the pipeline of existing projects starts to dry up. Timber Queensland CEO Mick Stephens said recent industry surveys have warned of a dangerous decline in building activity that will affect up to 240,000 Queenslanders working in the construction sector.

“These concerns have been laid bare by Master Builders Australia who found that 73% of their members have already reported a substantial fall of 40% in forward work. Similarly, the Australian Forest Products Association has predicted a 50% reduction in sawn timber demand across Australian sawmills in the next six months as demand for forward orders decline,” Mr Stephens said.

“Given that timber and wood products are a major input into the state’s construction sector, any fall in building demand will cascade down through the supply chain to the 25,000 direct and indirect workers supported by the Queensland timber industry,” he said. “We are echoing calls from Master Builders Queensland for well-targeted stimulus, who are warning that the industry is facing thousands of job losses as Queensland builders and tradies are set to run out of new work if nothing is done.”

Timber Queensland says the current economic uncertainty is clearly affecting consumer and building confidence in new investment. It is therefore crucial that the Queensland Government acts now to boost future building work, subject to adequate health and safety protocols. There are a range of measures the Government can introduce to help shore up activity over the next few months.

These include:

• incentives to assist with new building projects (e.g. new home owner and investor grant schemes) and measures to boost the household renovation sector;
• streamlining red tape and delaying non-critical regulation; and
• increasing State Government capital expenditure on public buildings and housing projects.

Mr Stephens said as part of any building stimulus program, priority should be given to local suppliers and manufacturers of construction materials for public works, in order to maximise the impacts of the stimulus measures on the Queensland economy and local jobs. “We are not asking for a hand-out from Government, but rather a hand-up, to keep the construction sector operating and sustain these essential jobs during the COVID-19 situation. The housing and construction sector is an engine room for growth in Queensland’s economy, and will be critical in sustaining jobs, communities and the timber industry,” he said.

Source: Timber Queensland



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Jobs



Buy and Sell



... and one to end the week on ...

A guy is driving around the back woods of Montana and he sees a sign in front of a broken down shanty-style house: 'Talking Dog For Sale '

He rings the bell and the owner appears and tells him the dog is in the backyard. The guy goes into the backyard and sees a nice looking Labrador retriever sitting there.

'You talk?' he asks. 'Yep,' the Lab replies.

After the guy recovers from the shock of hearing a dog talk, he says 'So, what's your story?'

The Lab looks up and says, 'Well, I discovered that I could talk when I was pretty young. I wanted to help the government, so... I told the CIA. In no time at all they had me jetting from country to country, sitting in rooms with spies and world leaders, because no one figured a dog would be eavesdropping.''

I was one of their most valuable spies for eight years running... But the jetting around really tired me out, and I knew I wasn't getting any younger so I decided to settle down.

I signed up for a job at the air-port to do some undercover security, wandering near suspicious characters and listening in.

I uncovered some incredible dealings and was awarded a batch of medals.' I got married, had a mess of puppies, and now I'm just retired.'

The guy is amazed. He goes back in and asks the owner what he wants for the dog. 'Ten dollars,' the guy says. 'Ten dollars? This dog is amazing! Why on earth are you selling him so cheap?'

'Because he's a Bullshitter. He's never been out of the yard'



One more. A sweet little Girl goes into a Pet shop and asks the man behind the counter with her dear little Lisp, " Excuthe me Mither, do you keep wittle wabbiths.?"

The man gets down on one knee to the little girls level and asks " We do, we have wittle white wabbys or soft and brown wabbys. What one would you like "

The little Girl replied " I don't fink my python would wheely give a hit "









And on that note, enjoy your weekend. Cheers.

Brent Apthorp
Editor, Friday Offcuts
Distinction Dunedin Hotel
6 Liverpool Street, Dunedin 9016, New Zealand
PO Box 904, Dunedin 9054, New Zealand
Tel: +64 (03) 470 1902, Mob: +64 21 227 5177, Fax: +64 (03) 470 1906
Web page: www.fridayoffcuts.com


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

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We welcome comments and contributions on Friday Offcuts. For details on advertising for positions within the forest products industry or for products and services, either within the weekly newsletter or on this web page, please contact us.

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