WoodWeek – 30 July 2014

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Greetings from your WoodWeek team. This week there’s not much in the way of informative news to give any indication of what the log export markets are doing just now. But it's safe to say from current banter around the place … nothing much. A short commentary from international banker HSBC offers a glimmer of hope about the Chinese economy in general.

Looking closer to home, there is more political action in Australian forestry than in New Zealand. But, financial commentary website, www.interest.co.nz, has taken the initiative to show publicly which political parties are saying what in their forestry policies. Now that's something you won't see covered on the 6 o'clock news anytime soon. Have a read and test your knowledge. Which party is saying what in their quest to win your vote. Then click on the website link to see if you guessed right. A bit of light entertainment to take the focus off the fact that for the most part we largely work in the proverbial political outback.

On a relevant note – with log prices down in the order of 25%, it’s probably now quite topical that the Forest Industry Contractors Association (FICA) has two more Logging Costing for Profitability Workshops planned for the remainder of the year. This workshop series has received excellent feedback from the regions where it has already been run. The first workshop will run on 24 September in Taupo. The second is planned for 8 October in Nelson.

Next week, forestry technical experts, on matters involving mobile technologies for all sorts of rural applications, will join other field experts from other primary industries in Brisbane for the first leg of the Australasian conference series at the MobileTECH 2014 conference. The synergies between users in forestry, farming and related fields caused a positive stir last year when the event sold out in Wellington. This year’s event series is bigger again. Check out www.mobiletech2014.com for updates.

Following the recent announcement that Madill has agreed to provide the services of a yarder engineer to attend the one-day workshop, there has been considerable interest from a range of people in our industry. The focus for the full-day programme will be to provide up-to-date technical information to assist inspectors in maintaining their skills at the highest levels for the benefit of FICA members in cable logging.

Meanwhile, a groundbreaking McKinsey report effectively backs the AFPA’s campaign to save CSIRO forest scientists. The Wilderness Society and the Liberal Government are at each other again in Tasmania, and a British paper and technical fibres company along with a Swedish forestry giant have unveiled a sustainable alternative to plastic.

Finally, we have news of a possible corporate sell-down of some of Graeme Hart’s heavily-leveraged businesses. Earlier this year, Hart sold out of the pulp, paper and packaging businesses of Carter Holt Harvey (CHH), although he continues to own the building products arm of CHH.

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Chinese economy regaining momentum

Banking group HSBC sees economic growth picking up in China and the momentum continuing into next year.

"In the first quarter we had a bit of a growth scare. Things really looked quite challenging," HSBC's chief economist, Asia, Frederic Neumann, told the New Zealand Herald. "But things have improved."

Last week's initial PMI index, an early indicator of manufacturing activity, rose to 52, an 18- month high, suggesting China's mini-stimulus is bearing fruit.

"Infrastructure in particular has started to pick up and that is helping the growth momentum, and in the second half we should have fairly robust growth," Neumann said. HSBC is forecasting the Chinese economy to grow 7.5 per cent this year and 7.7 per cent next year.

Neumann does not see the delivery of monetary stimulus whenever the Chinese economy shows signs of flagging as inconsistent with the broader objective of rebalancing the economy away from growth top-heavy in investment spending and towards greater reliance on domestic consumption.

"In many ways having an economy growing at a reasonably stable rate is helpful for the reform process because if things slow down too sharply immediately other concerns take precedence, employment stability for example," Neumann said.

"It's very difficult to go cold turkey on lending on investment in China. It is such a large part of the economy. The best you can hope for is for a very gradual shift away from investment to consumption," he said.

To read the full story click here

Source: NZ Herald

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Forestry policies and politics - Who's saying what?

Yes, indeed its election time again. Not that we have heard much from the candidates about how they would help forestry maximise its contribution to the economy and jobs etc. The good folks at www.interest.co.nz have kindly gathered the few bits of policy released to date relating to forestry from your wanna-be political representatives.

1. Here are some tidbits. To test your knowledge and expertise go ahead and guess who they belong to:
- Reintroduce an R&D tax credit to encourage stronger private investment in high-quality R&D.
- Placing an immediate ban on the import and sale of all illegally harvested timber and wood products.
- Work with industry to have at least 30% of the plantation forestry portfolio in superior high value species in 10 years.
- Institute a Minimum Domestic Log Price to discourage the export of raw logs. This will ensure that local sawmills have access to sufficient supplies, and further encourage the processing of timber and wood products in New Zealand.
- Make suspensory loans available (repayable on harvest) to cover the costs for planting new forests, with the option of joint planting ventures with iwi.
- Assist the forest sector to move up the value-added chain through research and development and industry partnerships, so that value-added products derived from our forests, rather than unprocessed chips or logs, are exported to the greatest extent possible.

2. Next question ... Which three political parties have not even bothered to put their forestry policies on their website yet?

3. Final question ... Which political party doesn't even make it onto the www.interest.co.nz website to list their policies if they have any?

More >>

Source: interest.co.nz

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Contractors ALERT - Logging Costing in Taupo & Nelson

The Forest Industry Contractors Association (FICA) has two more Logging Costing for Profitability Workshops planned for the remainder of 2014. This workshop series has received excellent feedback from the regions where it has already been run. The first will run in Taupo on 24 September at the Taupo Yacht Club on the lakefront. The second is planned for 8 October in Nelson. Both events are open for registrations now.

Led by Mark Blackburne of Blackburne Group accountants, in conjunction with Forme Consulting, the workshop programme is extensive and is driven by discussion focused on key logging costing issues affecting profitability. The practical topics covered will appeal to both young and old forest contractors alike. There is also room for supervising foresters to attend to gain perspectives on the practical issues affecting logging costings and how these can affect decisions that need to be made jointly between foresters and contractors.

The workshop is free to FICA members but prior registration is essential to confirm numbers for catering and workshop material preparations. Non-members are also invited to register and pay to attend the 1-day workshop. Call Tahlia in the FICA office on 07 921 1382 to get registration details.

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Yarder Tower Workshop proving popular

Following the recent announcement that Madill has agreed to provide the services of a yarder engineer to attend the one-day workshop, there has been considerable interest from people in the industry. The focus for the full-day programme will be to provide up-to-date technical information to assist inspectors in maintaining their skills at the highest levels for the benefit of FICA members in cable logging.

"This workshop will be of interest to more than just the inspectors themselves" said FICA spokesman, John Stulen.

Attendance at this workshop is mandatory for those inspectors who are registered with the Association. The review of inspector skills takes place at the same time as the workshop through Jack Mains, a chartered professional engineer from Mainmech.

However, the content and agenda may also appeal to others in the industry who are working towards gaining their inspector qualification. Cable logging technical personnel from logging contractors may also attend out of general interest.

To register for this workshop call the FICA office on 07 921 1382. Alternatively email Tahlia at office@fica.org.nz to receive a workshop flyer and registration document.

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China real estate commentary

China’s banking regulator said on 30 May it was stepping up oversight to prevent risks from some failed property developers from spreading into the broader financial system, but said overall risk from property loans was controllable.

The China Banking Regulatory Commission (CBRC) also urged commercial banks to work out emergency plans to mitigate risks stemming from the property sector, in a bid to ease investors’ worries that the cooling real estate market could fuel an increase in bad loans.

Chinese property developers are feeling the pinch from slowing property sales and climbing borrowing costs in recent months, with some smaller players reported funding difficulties or even cash chain breaks over the past months.

Official figures showed home price growth in China slowed to a near one-year low in April while property investment also lost steam in the first four months, fanning concerns of a further downturn in the sector, which has become a drag on the broader economy.

Growth in real estate investment in China slowed in the first five months of 2014, while property sales and new construction fell, adding to signs of cooling in the property market that has become a persistent drag on the broader economy. The sluggish performance in real estate comes as the world’s second-largest economy faces its weakest pace of growth in 24 years this year.

Real estate investment, which affects more than 40 other sectors from cement to furniture, rose 14.7 percent in the January to May period from the same period a year ago, down from an annual rise of 16.4 percent in the first four months, official data showed.

Newly started property construction fell 18.6 percent in the first five months from a year earlier, the fourth consecutive period of decline. Analysts predicted the worst is yet to come. “The trend of slowing property investment growth is likely to continue in coming months as more and more home buyers stay the sidelines,” said Tang Jianwei, an economist at Bank of Communications in Shanghai.

Property sales dropped 7.8 percent in the January-May period from a year earlier in terms of floor space and fell 8.5 percent in terms of value, the National Bureau of Statistics also said in a statement on its website. That compared with annual drops of 6.9 percent and 7.8 percent, respectively, in the first four months.

As the sector accounts for more than 15 percent of China’s annual economic output, a prolonged cooling of property market will likely influence whether the economy suffers a shallow or deep downturn. “The biggest uncertainty in the economy this year is the property sector,” said Tang.

Source: Canada Wood Today, Reuters and Economic journals
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AFPA - Report backs forest science case

Groundbreaking McKinsey report effectively backs campaign to save CSIRO forest scientists - The Chief Executive Officer of the Australian Forest Products Association (AFPA) has congratulated the Business Council of Australia for commissioning a vital report by global leaders McKinsey and Co, into the areas of greatest potential growth for Australia.

McKinsey discovered that Agriculture (which McKinsey says includes forestry and fishing) is the absolute stand out leader in terms of competitiveness, skills and natural endowments, and has massive potential to add jobs and growth to our nation. In McKinsey’s terms it is an ‘advantaged performer’.

According to the McKinsey report, Government should therefore not take a laissez faire approach to policy setting - treating all sectors as equal - but understand that getting the policy settings right in agriculture, forestry and fisheries, is by far the most cost effective way of growing the economy.

Mr Hampton said, "Australia has been crying out for such a report. These findings reinforce the absolute madness of the CSIRO choosing to effectively axe its forest science capability as it searches for budget savings. The forest products industries of Australia employ 80 000 people – most in regional communities. In a carbon constrained global economy which is rapidly rediscovering the advantages of renewable timber and fibre, Australia must back our comparative advantage and not back away."

Launching the report Business Council of Australia President, Catherine Livingstone said, “balancing the budget is not a vision: it is a means to an end.”

Mr Hampton added, ‘Balancing the budget by removing our forestry research capacity in CSIRO is far from visionary, it is contrary to everything this McKinsey report recommends. As this report says, “Australia faces a stark choice. It can take a purposeful path to regain its competitiveness, or risk a painful correction.” (p.54 Compete to prosper: Improving Australia’s global competitiveness) ‘A step on that purposeful path is for the Government to tell CSIRO that it makes no sense to lose its last 33 forestry scientists to our competitor nations such as Chile, Vietnam, China, Canada and New Zealand’, said Mr Hampton.

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Wood experts converge for FIEA conference series

Like it or not, thermally and chemically modified wood along with wood plastic composites (WPC’s) are now a commercial reality. They’re already being produced in commercial quantities in both Australia and New Zealand. They’re competing with - but can complement - traditional preservative treated wood products in the local market.

Wood Innovations 2014 will be providing local timber treatment and wood manufacturing operations with a rare global insight into these new technologies. What are they, just how much does it cost to set up manufacturing or treatment operations, what are the market trends and what are the opportunities for your own business?

These and other questions are going to be answered by an incredible line-up of local and international specialists. Look up the programmes on www.woodinnovations2014.com to check out the content and presenters lined up for this biennial programme.

Just a taste of who’s presenting

- Edward Pratt, Director of Business Development for Accsys Technologies, UK. Eddie founded Accsys Technologies (then named Titan Wood) in 2003 and led the development of the business from the acquisition and development of its original intellectual property through to the company’s flotation on the London stock exchange and start-up of its full-scale production plant in 2007.

- Duncan Mayes, VP R&D & Technology, StoraEnso Oyj, Finland, was one of the original developers of the ThermoWood product in Stora Enso and has had an active involvement in both its and other wood modification technologies development.

- Tam Tekle, President & CEO, Tekle Technical Services, Canada who heads a fibre products development company specialising in the commercialization of natural fibre-based composites, including North America’s only biocomposite fibre mat plant.

Designed specifically for local companies, Wood Innovations 2014 will run in Rotorua, New Zealand on 17-18 September and again in Melbourne, Australia, in the following week on 23-24 September 2014.

Further details can now be viewed on the event website, www.woodinnovations2014.com. Remember discounted early-bird registrations FINISH on Friday 15 August. Group discounts and industry association discounts are also available.

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FIMO2014 information now available

FIEA's conference series in April was well-attended in both Rotorua and Melbourne. This major biennial gathering drew an audience of major forestry managers, fund managers and institutional investors in New Zealand and Australia, and on focused on forest investment and the outlook for international wood markets.

Over 200 industry leaders met in both New Zealand and Australia as part of the Forest Industry Engineering Association’s Forest Investment and Market Outlook (FIMO) 2014 series. Some of the key drivers and investment trends shaping timberlands investment, both in this region and globally were discussed by forestry investment specialists from across Australia, New Zealand, the USA and Canada.

From the significant number of recent acquisitions in Australasia, equity investors have been very focused on this investment class. The two-day programmes in both countries provided an insight into just where forest owners need to be positioned in the current environment to make the most of their own businesses. All presentations, where speaker approval was given, were made available immediately after the event finished. A selection of key presentations from the FIMO series are now available to FIEA members to download. Well over 500 presentations from recent technology related events are also available.

Presentations include:

Why did Forestry fall off the New Zealand Investment Map?, Paul McBeth, Journalist, BusinessDesk, NZ

Focus on China: Guigang - Anatomy of a Hardwood Revolution, Bill Lu, Chief Representative China Operations, Indufor, NZ

Wood Processing as a Catalyst in Maximizing NZ Forest Returns, Brian Johnson, Senior Principal & George Goroyias, Senior Principal, Poyry Management Consulting, NZ/AU

Important Distinctions between Forest Managers and Investment Managers - Global Trends for Both Groups, Gary A. Myers, Principal, TimberLink LLC, Georgia, USA

National Outlook for Housing Starts - Outlook, Expectations and Outliers - What's Changed since the Recession/Global Financial Crisis, Geordan Murray, Economist, Housing Industry Association, AU

Australian Forestry in the Port-MIS Era - How can the Australian Hardwood Plantation Sector Move Toward a Sustainable Future?, Michael Barbara, Manager - Investments, New Forests, AU

Understanding China from the Australian Perspective - Forget the Shadows, Focus on Substance, Jonathan Wu, Associate Director, Premium China Fund Management, AU

If unsure of your FIEA membership access code to the Technology Updates section of the website, please make contact with Jeannette.dekker@fiea.org.nz.
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Snippets - Tasmania + Wood replacement + Hart sales possible

The Wilderness Society has said it will withdraw support for international recognition of Tasmania's public forestry company if a Government bill clears Parliament. The State Government is planning to discard Tasmania's "forest peace deal", brokered after decades of conflict and four years of negotiations.

The Liberal Government pledged to tear up the deal during its campaign for election earlier this year. Now only the state's Upper House stands in its way, although it appears likely to back the reforms in some form.

Resources Minister Paul Harriss has urged Upper House members to allow the bill to pass quickly. The only thing that's changed since the election is the Liberal Party is now in government and we are prepared to the back the industry and not shut it down.

Green groups have been trying to persuade MLCs not to reclassify 400,000 hectares of native forest so it can eventually be logged. Mr Harriss said the land was protected under the deal but would be opened up to logging after six years if the bill passes the Upper House.

"Let's be clear, these are exactly the same trees, from the same forest, producing the same wood that was non-contentious prior to the election," he said. "The only thing that's changed since the election is the Liberal Party is now in government and we are prepared to the back the industry and not shut it down."

To read the full story click here

Source: ABC News


British firm and Swedish forestry giant unveil 'sustainable' alternative to plastic - A British paper and technical fibres company and a Swedish forestry giant have unveiled a sustainable alternative to plastic which they claim is strong enough to carry the weight of an adult and can be composted within 100 days. DuraPulp was developed by James Cropper in partnership with Södra, a Swedish forestry cooperative.

The bio-composite material is made from pulp and a renewable polymer which, after additional processing, becomes moisture resistant, rigid and strong enough to carry the weight of an adult. James Cropper claims that DuraPulp is the only composite material of its kind that is completely biodegradable and derived from 100% renewable resources.

Södra, which will licence the product, aims to establish its viability in premium markets such as luxury fashion, cosmetics, automotive and interior design.

James Cropper chief technology officer Patrick Willink said: "Sustainability has to be at the heart of manufacturing for the future, both for cost-effective production and the responsible protection of the environment for future generations.

"This is an ethos we know we share with Södra as both companies work hard to provide products that have a low carbon impact, going so far as to each generate our own electricity. This partnership is driven not only by the desire to help DuraPulp take on the global burden of non- degradable plastics, which are still widely used, but also to apply our key strengths of an unrivalled colour palette and international marketing expertise to a game-changing product."

Södra has explored the adaptability of DuraPulp in a series of design-led commissions, including a paper-thin, waterproof chair, moulded packaging to cradle delicate objects in transit and an electric desk lamp.

According to Södra, its biodegradability has been embraced as a feature, being made into a seed pod from which plants will grow after the fibre has perished, proving that DuraPulp exists not only as the fibre of product packaging, but of the product itself.

Source: www.edie.net


New Zealand billionaire Graeme Hart's Reynolds Group is considering the sale of three units that make up more than a third of his global packaging empire's earnings. Last month Reuters reported Hart's Rank Group was looking at selling its US autoparts businesses in a bid to reduce debt. Rank acquired UCI for US$980 million and FRAM Group for US$950 million in 2011. Earlier this year, Hart sold out of the pulp, paper and packaging businesses of Carter Holt Harvey, although he continues to own the building products arm of CHH.

Reynolds is reviewing ownership of its Evergreen and Closures businesses and is also mulling whether to sell its SIG packaging unit after being approached, it said in a filing to the US Securities and Exchange Commission. Last month reports emerged that Reynolds was looking to sell its SIG unit, which makes carton packaging for drinks and liquid foods, for some US$5 billion.

The review of Evergreen and Closures "is part of a review and possible reallocation of capital and resources within its business portfolio," the company said. "Both reviews may result in a decision to sell some or all of those businesses, although no decision has been made at this time to do so."

Source: BusinessDesk/Scoop News

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Buy and Sell

... and finally ... Golfing miracles

Father Murphy woke up Sunday morning and realizing it was an exceptionally beautiful and sunny early spring day, decided he just had to play golf.

He told the Associate Priest that he was feeling sick and persuaded him to say Mass for him that day.

The moment the Associate Priest left the room, Father Murphy headed out of town to a golf course about forty miles away. This way he knew he wouldn’t accidentally meet anyone he knew from his parish. Setting up on the first tee, he thrilled at having got away with it. He was completely alone.

After all, it was Sunday morning and everyone else was in church! Completely transfixed as they watched him tee up from the heavens, Saint Peter leaned over to the Lord and exclaimed "You're not going to let him get away with this, are you?" The Lord sighed, and said, "No, I guess not.”

Just then Father Murphy hit the ball. It shot straight towards the pin, dropping just short of it, rolled up and fell into the hole. IT WAS A 420 YARD HOLE IN ONE!

St. Peter was astonished. He looked over at the Lord and asked, “Why did you let him do that?"
The Lord smiled and replied, "Who's he going to tell?”

Have a safe and prosperous week.

John Stulen
PO Box 1230
Building X91, Scion Campus, 99 Sala Street
Rotorua, New Zealand
Tel +64 27 275 8011
Web www.woodweek.com

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