WoodWeek – 21 January 2015

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Greetings from your WoodWeek team.
We’re hot this week – well, who isn’t in this weather? Lots of hot forest news for you is more to the point. Export log prices in China remain lacklustre as demand continues to be weak heading into a seasonal slowdown for winter and Chinese New Year. Meanwhile, domestic sawn timber production in the third quarter was the highest in four years. This is amidst expectations for increased building activity with housing being even hotter than the weather.

In British Columbia, more favourable safety outcomes are being noted in the media. BC Forest Safety Council CEO Reynold Hert says it’s the positive changes in prevention and that the outcomes are a good example of the type of ownership and leadership taking place within the industry. The group’s initiatives build on earlier efforts and helped take safety to a new level according to Hert.

Those efforts included creating safety certification programs for companies, and tightening provincial workplace safety rules. There was also support from the BC government, which stipulated that only safety-certified companies could bid on Crown timber. A similar transformation is taking place in the Interior, he said. Reynold is a keynote speaker at the upcoming Forest Industry Safety Summit conference series in Rotorua and Melbourne in early March.

Closer to home, a recent forest contractor business survey showed that a significant number of companies are reporting higher administration and management costs for health and safety procedures. Gordon Anderson from HASMate in Napier has provided some transparency in this regard. He will also be a speaker at the Rotorua version of the FIEA Forest Industry Safety Summit.

Moving to forest products freight, we have two stories this week. Internationally, the family of ocean-going global wood chip carriers is becoming larger and newer reports the Wood Resource Quarterly. Meanwhile, domestically, the ANZ Heavy Traffic Index lifted 2.1% in December (seasonally adjusted), after falling 2.8% in November. The ANZ Light Traffic Index leads GDP by six months. It lifted by 1.5% in December (sa), largely reversing its November fall.

Staying with logistics, forestry can be exposed to unpredictability and variability. It’s a challenge to design supply chains to operate well in all conditions. Making adjustments to real world forestry operations can be expensive, risky and time consuming. Discrete event simulation (DES) now allows alternative states of the supply chain system to be examined without cost or risk. Scion is running an industry workshop soon for industry people.

Finally, a New Plymouth company has been fined $30,000 after an employee rolled a digger down a hill and ended up on ACC for a year.

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BC forestry safety record improves

The number of fatalities last year in the logging sector is the lowest ever in British Columbia, according to the BC Forest Safety Council. There were three on-the-job deaths in 2014, a number so low that the industry now has a goal to bring it to zero.

That’s a big change from 2005, when more than 40 workers were killed in the forestry sector, sparking public outcry. A decade ago, 22 forestry workers died on average each year, the highest of any industry in BC. As well as wood harvesting operations the statistics also include logging truck drivers and seasonal workers involved in tree planting.

Today, the culture of accepting death as a part of business is finally changing. “The culture definitely has done an 180 (degree turnaround) since 2005,” says Steve Kerrone, a veteran hand faller and supervisor.

Kerrone has worked for more than two decades on the coast of BC and has been hurt seriously himself. His neck was cut when his saw jumped back from a tree. Another time a log rolled on him. Training and certification are now requirements to work in the industry, making a big difference for the province’s 2,500 fallers, says Kerrone.

Today, to be a falling supervisor you need five years as a certified faller and two years of supervision experience. Front-line workers can also raise safety issues through recently established groups such as the Falling Technical Advisory Committee, of which Kerrone is a member.

That committee has the ear of the Coast Harvest Advisory Committee, which includes senior officials of major forest companies such as TimberWest, Interfor and Western Forest Products, timberland owners, logging contractors represented by the Truck Loggers Association and the United Steelworkers.

BC Forest Safety Council CEO Reynold Hert says it’s a good example of the type of ownership and leadership taking place within the industry. This initiative builds on earlier efforts and helped take safety to a new level, he said.

Those efforts included creating safety certification programs for companies, tightened provincial workplace safety rules and support from the B.C. government, which stipulated that only safety- certified companies could bid on Crown timber. A similar transformation is taking place in the Interior, Hert said.

Advisory groups there, which include senior officials of major forest companies such as Canfor, West Fraser, Tolko and Gorman Bros. are tackling issues such as driver training and overweight logging truck loads. More>>

Reynold Hert is a keynote speaker at the 2015 Forest Industry Safety Summit running in Rotorua on 3-4th March and again in Melbourne for Australian forestry contractors and managers on 10-11th March.

Full details of the programme and online registrations can be made on forestsafety2015.com.

Source: The Vancouver Sun
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Log export market update

New Zealand export log prices advanced for a fifth month in December as a decline in shipping costs bolstered local returns and offset weak prices from China, the country's largest market.

The average wharf gate price for New Zealand A-grade logs rose to $101 a tonne, from $98 a tonne in November, according to AgriHQ's monthly survey of exporters, forest owners and sawmillers. The AgriHQ Log Price Indicator, which measures average log prices weighted by grade, advanced to 94 from 92.7 in November.

New Zealand log returns were bolstered in the month by a fall in shipping costs following a collapse in oil prices, and a decline in the New Zealand dollar. The kiwi averaged 82.42 US cents in December, from 82.78 cents in November and a peak of 88.35 cents in July, according to Reuters data. Still, prices in China remained lacklustre as demand continues to be weak heading into a seasonal slowdown for winter and Chinese New Year.

"Returns to New Zealand exporters increased due to further drops in shipping costs brought on by the drop in global oil prices," said AgriHQ forestry analyst Ivan Luketina. "In China, building activity is going into its seasonal low patch, which will put further downward pressure on prices there.

"Currently prices in China are below October's price, but it's being more than offset by the fall in shipping costs and the New Zealand dollar. This creates the potential for oversupply in China," he said.

In the New Zealand domestic market, sawn timber production in the third quarter was the highest in four years amid expectations for increased building activity over the New Zealand summer, Luketina said, citing Ministry for Primary Industries figures.

Wood is New Zealand's third-largest commodity export.

Source: BusinessDesk via Scoop News

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The burden cost of health & safety compliance

A recent forest contractors business survey showed that a significant number of companies are reporting higher administration and management costs for health and safety procedures. Depending on the size of the business, the cost of health and safety compliance can range from $30,000 to $200,000 plus, per annum.

Have you ever taken time to calculate this cost as one of the key expenses to your business? More importantly, have you looked at ways of how to reduce this cost? With the pending changes to health and safety legislation this year, this cost has the potential to increase substantially over the next 12 months.

Note: When calculating the hourly/time cost do not apply the hourly rate of the employees, use what is known as your company “burden cost”.

The burden costs are the indirect costs associated with employees, over and above gross payroll costs. Typical costs associated include kiwi saver, ACC and insurance costs, interest rates, loan repayments, legal costs, paid time off, training, PPE, meeting costs travel expenses, vacation and sick leave etc.

If you don’t know what the burden cost is to your business I recommend that you ask your accountant to work it out for you. By establishing this cost you will then identify what the actual hourly cost it is to operate your forestry contracting business.

As a starting point to put a cost the cost of health and safety, consider the following points.

As this is only an estimated amount, there will be other costs you may not have considered so the above estimation could be 10-30% higher than you first thought. Are you surprised and concerned?

If so, your challenge should now be is “How can I lower these costs by 20-30% for my business? If this could be achieved what would be the benefit to you and your business?

To answer this important questions, a number of innovative ideas with an emphasis on to 21 century technology will be made available to you in the presentations and at stand No 8 at the Forest Industry Safety Summit on the 3-4th March in Rotorua.

Source: G Anderson, Hasmate Ltd

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Wood chip carriers newer and larger

International trade of wood chips has steadily increased over the past decade and will likely reach a record high of approximately 36 million tons in 2014, according to the Wood Resource Quarterly (WRQ). This has occurred because pulp and wood panel production capacity has increased in regions with a lack of sufficient supply of domestic wood fiber at competitive costs, and between neighboring countries when opportunities exist for pulp mills to cross country borders in search of marginal wood fiber volumes. This type of inter-continental trade flow can be seen between the US and Canada, Russia and Finland, and the Baltic States with the Nordic countries.

However, as much as 70% of the global chip trade is overseas with the major consuming countries being in Asia. This trade, valued at over 4.5 billion dollars, is handled by vessels that are specially built for carrying wood chips. There are currently 145 of these specialty ships circling the globe with a majority of them either sailing towards or en route from ports in Japan or China.

The oldest chip vessels are from the 1980’s, but it is expected that within a few years the world’s entire woodchip fleet will be less than 20 years old, according to the wood chip ship-brokering firm Arc Chartering. Looking ahead towards 2017, the chip vessel fleet will not only be younger, but will also contain fewer ships, and the average ship will be bigger than in 2014.

Between 10-15 smaller older ships are likely to be scrapped in the next few years, while roughly 5-10 new larger vessels may be built during 2015-17. With a declining number of chip vessels traveling the seas, there are currently fewer spot shipments and a high utilization of the existing fleet.

Historically, wood chip carriers have been built in Japan for Japanese trading houses and forest companies. However, in recent years Chinese shipyards have also built large vessels for Chinese customers. Japanese companies currently own approximately 75% of the world’s chip vessels, while Chinese companies own about 14% of the fleet, while other countries such as South Korea, Turkey, Thailand and Indonesia account for the remaining 11%. The share of non-Japanese owned chip carriers is likely to increase in the coming years.

Global lumber, sawlog and pulpwood market reporting is included in the 52-page quarterly publication Wood Resource Quarterly (WRQ). The report, established in 1988 subscribers in over 30 countries and tracks sawlog, pulpwood, lumber and pellet prices, trade and markets in key regions of the globe.

For more information see www.woodprices.com

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ANZ Truckometer points to positivity

The ANZ Truckometer is a measure of economic activity using real-time traffic data. It is timely and contains hard activity data as opposed to sentiment.

  • Both the Heavy and Light traffic indexes showed recoil from dips in the month prior. It’s typical to see intra-month volatility across such indicators.

  • The ANZ Heavy Traffic Index lifted 2.1% in December (seasonally adjusted), after falling 2.8% in November.1 The ANZ Light Traffic Index leads GDP by six months. It lifted by 1.5% in December (sa), largely reversing its November fall.

  • The broad trends for growth remain solid, albeit at what appears to be a moderating pace.

  • To read the full report click here: ANZ Truckometer

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    Competenz announces new qualifications

    Competenz has advised that the new forestry qualifications have been approved for listing by NZQA. This is the culmination of a lot of work by representatives from industry, training providers and Competenz staff. NZQA were very complimentary about the high standard and clarity of the information supplied throughout the process which reflects positively on all those involved.

    The qualifications are unlikely to show on the NZQA website before January. Once they are listed we will send out a link to the relevant page on the NZQA site.

    This is not quite the end of the process and Competenz is working through the remaining steps.

    Next Steps

    1. Industry Training Programmes (ITPs) must now be submitted and approved.

    Once the qualifications are listed, anyone who wishes to deliver training leading to the qualifications must submit a training programme for approval by NZQA. It is anticipated that this process will take a further 3 months.

    Competenz has drafted programmes for use by anyone training with us. These will be flexible enough to suit all our customers and there is no need for companies to develop their own programmes. Full details of the new programmes will be distributed nationally before they are finally released for use.

    2. Revision of unit standards must be completed.

    The first batch of 63 has already been submitted to NZQA and a further 30 unit standards are marked for review early next year. Many of the changes are minor and relate to changed references to legislation and the Approved Code of Practice. Others will require greater input from industry.

    What this means for trainees

    Once the ITPs are available, new trainees will be enrolled straight into the new NZ Certificates. In the meantime, existing trainees can continue to work towards completing their National Certificates as usual.

    Thanks to all of you for your input to date and we look forward to your continued support in these final stages.

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    Supply Chain Modelling Workshop by Scion


    Workshop: The use of discrete event simulation tools in forestry applications

    Forestry operations are often exposed to unpredictability and variability. It is challenging to design a robust supply chain that will operate well under different conditions. Making adjustments to real world forestry operations can be expensive, risky and time consuming.

    Discrete event simulation (DES) now allows alternative states of the supply chain system to be examined without cost or risk. DES models have been evolving slowly over the past three decades; recent advances in object oriented programming however have made significant improvements in usability. DES software is now relatively inexpensive, with easy to use interfaces that enable inexperienced users to rapidly start designing sophisticated, integrated systems.

    After the completion of a small research project, the goal of this workshop will be to:
    - Introduce DES to operations managers and other interested people within the forestry industry;
    - Demonstrate a number of small forestry applications that were developed as part of our research;
    - Give participants a hands-on experience of the technology; and
    - Open a general discussion about the way forward and how DES could be deployed in the industry.

    This workshop is open to anybody, but is particularly aimed at middle management involved with operations planning, technical support staff and supply chain managers.

    For more information visit: www.scionresearch.com

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    Western USA log prices ease

    Log prices in Western US fell in the 3Q because decreasing log exports to Asia, reports the Wood Resource Quarterly

    For many years, the sawlog market in Western US has been impacted by the demand for logs and lumber in Asia. With the constant increase in log exports, domestic sawlog prices have more than doubled over the past five years, reports the Wood Resource Quarterly. However, from the 1Q to 3Q in 2014, this upward trend was broken as log prices fell almost ten percent because of a weakening log export market.

    There has been a constant upward pressure on domestic sawlog prices in the US Northwest for the past five years as a result of an increase in the exportation of sawlogs and softwood lumber to Asia. In just over four years, log export volumes to China, Japan and South Korea have almost doubled to reach close to an all-time high of 2.5 million m3 in the 2Q/14. As a consequence of the higher demand for logs from the export market, average prices for sawlogs at local sawmills have more than doubled from early 2009 to the 2Q/14, according to the Wood Resource Quarterly (WRQ).

    In the 3Q/14, US export volumes to Asia were down by almost 25% from the 2Q/14, with Chinese shipments down by over 32% to their lowest quarterly volumes since the 1Q/13. The total volume shipped to Asia in the 3Q was at its lowest level in over two years. The two major factors influencing the decline in log shipments from the US to China are decreased demand for wood from the housing sector and high log inventories within China itself.

    The weaker demand for logs in the export market has resulted in lower log export prices during the summer and fall. The average export value reached an all-time high in the first quarter this year and has since fallen over six percent (see the WRQ for more detailed price information). The slowdown in the log export shipments has been welcome news for sawmills on the US west coast.

    Prices for Douglas-fir sawlogs in the 3Q/14 were down nine percent from their eight-year high in the 1Q/14. Despite the recent decline, current price levels in the Northwest are still 13-25% higher than the ten-year price averages, depending on species and sub-region. Interestingly, the price decline that was experienced in 2014 may be short-lived. There are reports that both domestic and export log prices stopped falling during the 4Q, mainly as a result of higher production levels at the region’s sawmills.

    Global lumber, sawlog and pulpwood market reporting is included in the 52-page quarterly publication Wood Resource Quarterly (WRQ). The report, which was established in 1988 and has subscribers in over 30 countries, tracks sawlog, pulpwood, lumber and pellet prices, trade and market developments in most key regions around the world.

    To subscribe to the WRQ, please go to www.woodprices.com

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    Charges laid after excavator rolls on logging site

    A New Plymouth company has been fined $30,000 after an employee rolled a digger down a hill and ended up on ACC for a year. Mangorei Sawmills Ltd (MSL) was sentenced in New Plymouth District Court today after pleading guilty to a charge of breaching the health and safety of an employee, laid by WorkSafe New Zealand.

    In January last year MSL managing director Clive Allen, driver Mark Chapman and the farm owner met to discuss some logging work on the farm near Stratford.

    On April 13 Chapman began work building a track to access the work site. He filled out a "tool box meeting" form, aimed to identify hazards and set out a plan to deal with them. He identified the hazards as the digger, steep hill and track and controls being "to use your brains" and "no cowboy shit".

    As he excavated up the hill he noticed he was getting close to a wet papa rock face, so climbed out of the digger to check it, deciding it was safe to proceed with care.

    He got back into the digger and continued, but the digger lost traction and slid and rolled down the bank. Chapman was knocked out as a result, but later regained consciousness and was able to phone for help and was helicoptered to hospital. He suffered muscle damage to his thigh, bruising and mild concussion.

    Lawyer Andrew Laurenson said MSL was in a difficult financial situation, which would affect its ability to pay the reparation. He said the wet papa rock was not a hazard that could have been foreseen before the day of the accident.

    Prosecutor for WorkSafe NZ Sanya Woodhead said the risk of harm was significant, increased by the fact Chapman was working alone with limited means of communication. Woodhead said MSL had not made sufficient checks that Chapman was qualified, although it was aware he had 14 years experience operating a digger.

    Judge Stephanie Edwards imposed a fine of $20,000, taking into account MSL's ability to pay it, and ordered the company to pay $10,000 in reparation to Chapman. Edwards accepted there had been a departure from industry standards, and specific hazard management plans needed to be implemented.

    MSL has no previous history of health and safety breaches. The company no longer carries out forestry work and as a result Chapman was made redundant.

    Source: Taranaki Daily News

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    Labour party concerns on inbound forest investments

    20150106 Labour Party complains about overseas investment in forests

    New Zealand's Labour Party has alleged that over 500,000 hectares of New Zealand forests have been sold to overseas interests, in the last three years. Labour Party's Forestry spokesperson Stuart Nash told media that despite approval by the Overseas Investment Office, the sight of ever-increasing volume of unprocessed logs heading overseas from foreign-owned forests without a cent of value addition is causing concern.

    Nash called up the National government to strictly enforce the norms in the Overseas Investment Act to ensure adequate value addition to the commodities under the forest land ownership of New Zealand, reported Scoop News. He said section 17 of The Overseas Investment Act 2005 is very clear on the desired criteria that the government must follow in approving an application for the purchase of 'sensitive land.' These include the overseas investor requiring to create new jobs, introduce new technology and innovate the processing of primary products.

    Down Stream
    The Labour spokesman noted that his party is of the view that Foreign direct investment is vital in driving the growth of the timber processing industry, but what is happening now is, investment in downstream processing is getting ignored. Downstream investment is very essential in the growth of timber industry. As of now, this is very minimal from the foreign investors and needs strict adherence to the norms of the Overseas Investment Act in letter and spirit.

    Labour listed out the foreign countries who achieved ownership of forest land in the last three years. They included Malaysia, United States, Switzerland, China, Germany, Japan, Austria, Canada, Liechtenstein, UK, Italy and South Korea. Nash pointed out that the single largest investment in downstream processing was undertaken by a wholly-owned New Zealand company at the Red Stag mill outside Rotorua. Similar investment by overseas investors is a must in bringing value addition to the industry. "This is vital in provincial areas, which are struggling yet have a large forestry resource, like the East Coast of the North Island, " he said.

    Finished Products
    The Green Party also echoed similar views with regard to downstream processing. Green's forestry spokesperson Steffan Browning had stated recently that instead of sending huge volumes of low value raw logs overseas, New Zealand must develop the infrastructure to process the logs into finished products such as structural timber. Such products have the ability to control carbon emissions and bring the desired value to log exports. Such a policy can also create more jobs and local wealth. But the National Party's policies have reduced New Zealand to be a low value commodity producer with ownership in foreign hands, the Green Spokesperson noted.

    Source: International Business Times

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    Oregon project to use forestry waste for jet fuel

    Red Rock Biofuels, based in Fort Collins, Colorado, is investing $200 million in a biofuel refinery in the rural city of Lakeview, about 95 miles east of Klamath Falls in Southern Oregon.

    Jeff Manternach, the Portland-based co-founder and CFO of Red Rock, highlighted plans for the ambitious project in December during the annual Oregon Leadership Summit. Attendees devoted a great deal of energy to discussing initiatives to boost rural economies like Lakeview's, including through the development of alternative energy projects.

    Manternach's timing was fortuitous. Just last week, Environmental Entrepreneurs (E2) issued its annual Advanced Biofuel Market Report, noting that U.S. biorefining capacity has doubled since 2007 and will double again by 2017.

    Oregon is poised to be a big player in the growing clean fuels movement, and Red Rock could be a big player in the state.

    The Red Rock project will convert up to 140,000 tons of woody biomass gathered from the Fremont-Winema National Forest and a local lumber mill into 12 million gallons of biofuel, notably jet fuel.

    The project got two major boosts in September. Red Rock was one of one of three companies to receive grants from the Departments of Navy, Energy and Agriculture to build biorefineries that collectively will produce up to 100 million gallons of "drop-in " alternative fuels that can be blended with traditional fossil fuels to reduce carbon emissions.

    Red Rock received about $70 million for its refinery project.

    Second, Red Rock signed a contract to supply jet fuel to Southwest Airlines.

    Manternach told Oregon business leaders Red Rock chose tiny Lakeview because of its proximity to a reliable supply of woody waste, also commonly referred to as slash. About 500,000 acres in the Fremont-Winema are part of what the forestry industry calls a "stewardship unit," meaning it is managed to produce timber for local mills.

    For the full story, click here

    Source: Portland Business Journal

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    Buy and Sell

    … and finally… texting shortcuts for older folks

    Confused about all of that social networking stuff? Like YouTube ... Twitter and Facebook ... don't worry - once they sort it all out they'll all merge >--> to make YOU-TWIT-FACE!

    Mind you, the "older" generation is getting in on the NEW media act - if fact with more older people texting nowadays they have even developed their own code:

    STC (Senior Texting Code)
    Since more and more Seniors are texting and tweeting there appears to be a need for a STC (Senior Texting Code).

    If you qualify for Senior Discounts this is the code for you:
    ATD: At The Doctor's
    BFF: Best Friend Farted
    BTW: Bring The Wheelchair
    BYOT: Bring Your Own Teeth
    CBM: Covered By Medicare
    CUATSC: See You At The Senior Centre
    DWI: Driving While Incontinent
    FWB: Friend With Beta Blockers
    FWIW: Forgot Where I Was
    FYI: Found Your Insulin
    GGPBL: Gotta Go, Pacemaker Battery Low!
    GHA: Got Heartburn Again
    HGBM: Had Good Bowel Movement
    IMHO: Is My Hearing-Aid On?
    LMDO: Laughing My Dentures Out
    LOL: Living On Lipitor
    OMMR: On My Massage Recline
    ROFL... CGU: Rolling On The Floor Laughing... and Can't Get Up
    TTYL: Talk To You Louder
    WAITT: Who Am I Talking To?
    WTP: Where's The Prunes?
    WWNO: Walker Wheels Need Oil

    Have a safe and prosperous week.

    John Stulen

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