WoodWeek – 25 November 2009
Greetings from Rotorua. First up, SILVICULTURE CONTRACTORS please note this week's meeting in Taupo has been re-scheduled to January - see details below. Having moved on from complaining about the cold all winter - time to moan about the heatwave - Australian temperatures added onto New Zealand humidity, whew, what a lethal combination! Never mind the weather, it has heated up politically ahead of Copenhagen with a rush to get global brownie points for having a completed emissions trading scheme, regardless of quality.
Having had plenty of quality time to make good law using the simple concept of punishing polluters and rewarding those in carbon credit, the politicians have made a hash of it in a last minute rush - coincidentally on both sides of the Tasman! The ETS debacle in New Zealand really demonstrates that if you try hard enough you can screw up just about anything - by trying to please everyone. Meanwhile the punishment in Australia is to keep the politicians from starting their summer holidays (yes, already!) until they agree on a 'different' set of rules from NZ to take to Copenhagen.
What does it mean for forestry contractors? On the positive side in silviculture - planting 35,000 hectares of DOC land in NZ has to be positive for demand, when and if it happens. As for logging in 'production' forestry - with all forested land economically locked in (in NZ at least) to that land-use - again it should be a positive, as long as export demand for our wood products remains strong. However, we will have to bear the added costs of production caused by carbon costs imposed on fuel etc..
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This week we have for you:
Contractors' Key Indicators
Check out this weeks changes in diesel prices, exchange rates and interest rates here.
NZ CONTRACTORS' KEY INDICATORS
25th November 2009 | | Interest Rates | Diesel Price Watch |  | 90-day bill rate = 2.79% |  | Average (excl GST / all regions) = $0.96 | | Exchange Rates | NC | Change (month) = +4% | | NZD/USD = 0.7320 | NC | Change(quarter) = +1% | | NZD/Yen = 65.12 | | Change (year) = -12% | | Labour Cost Index - Forestry/Logging | Consumer Price Index | | Sep 09 quarter = 1002 | | Sep 09 quarter = 1095 | | NC | Change (quarter) =+0.2% | | Change (quarter) =+1.3% | | N/A | Change (year) = N/A* | | Change (year) = +1.7% |
*Note:The LCI has been re-expressed on a June 2009 quarter base (=1000).
AUSTRALIAN CONTRACTORS' KEY INDICATORS
25th November 2009 | | Interest Rates | Diesel Price Watch | | 90-day bill rate = 3.93% | | VIC (excl GST) = $1.06 | | Exchange Rates | | NSW (excl GST) = $1.04 | | AUD/USD = 0.9220 | NC | TAS (excl GST) = $1.12 | | AUD/Yen = 81.95 | NC | SA (excl GST) = $1.07 | | Wage Price Index - All Industries | Consumer Price Index | | Sep 09 quarter = 102.0 | | Sep 09 quarter = 168.6 | | Change (quarter) = +0.9% | | Change (quarter) =+1.0% | | Change (year) = +3.4% | | Change (year) =+1.3% |
Gunns Proposes to Manage Great Southern
Gunns Limited have signed an Implementation Agreement with Great Southern Limited (GSL) and Great Southern Managers Australia Limited (GSMAL) in relation to a proposal to replace GSMAL as responsible entity of the 1998-2006 forestry managed investment schemes (Pulpwood Schemes). The proposal is subject to various conditions, including approval of resolutions by growers and appropriate court directions.
Gunns Chief Executive Officer Greg L’Estrange said the proposal was a compelling offer that would provide certainty to Great Southern grower-investors. “Our proposal will cause minimal disruption to the operation of the schemes, supported by Gunns’ strong financial position and experience in the management and operation of plantations under managed investment schemes,” he said.
Under the proposal, Gunns as responsible entity would receive a percentage of the 1998 – 2006 Pulpwood Schemes’ Net Harvest Proceeds when the timber is harvested. Gunns may investigate the 2007 Pulpwood Scheme and make a proposal involving, amongst other things, the replacement of GSMAL by Gunns as the responsible entity of the 2007 Pulpwood Scheme.
In addition, Gunns has substantially agreed, but not yet finalised or signed, an asset sale agreement with GSL, GSMAL and the Receivers, McGrathNicol, to acquire certain forestry assets of the Great Southern group for approximately $8.7 million. The assets comprise property, plant and equipment, water licences, insurance payment receivables and inventory. Gunns will make offers of employment to the forestry management personnel of the Pulpwood Schemes (other than those located in the Northern Territory). All sales contracts between the current responsible entity and the Great Southern group will be terminated.
Gunns would fund the costs of managing the plantations and operating the schemes through to harvest from internally generated cash flows. The fees payable by growers would be increased.
For full details on the proposal click here.
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ETS Deal an Opportunity Lost
The Government has secured the support of the Maori Party to enable New Zealand to implement an emissions trading scheme next year. “New Zealand has been going round in circles for a decade on how to impose a cost on carbon pollution. This agreement will enable the necessary amendments to be passed through Parliament this week so that from 1 July next year there will be a price on carbon and an incentive for afforestation,” Minister for Climate Change Issues Nick Smith said.
According to Mr Smith, the revised ETS is consistent with National’s pre-election commitments. He believes it aligns NZ more closely with Australia and provides incentives for industry to reduce emissions without encouraging an exodus of industry and their skilled staff overseas.
However, the Forest Owners Association say pre-1990 forests are likely to be worth next to nothing because of the ETS. Owners have been landed with the massive liabilities of being part of the scheme, but can’t earn carbon credits. “Compensating iwi by giving them access to DoC land to plant forests for carbon and wood recognises this fact, but iwi are the only ones getting this special compensation. It’s unjust, as well as being an opportunity lost,” says Peter Berg, president of the Forest Owners Association.
“The compensation will cost taxpayers hundreds of millions of dollars in real and opportunity costs. It will cost far more than the package the industry has been asking for: the right to offset these forests; to plant them somewhere else after harvest.” He says that offsetting, if it was adopted before it was provided for in an international climate change agreement, would result in the government paying for the emissions resulting from deforestation on existing sites. But the government would get this money back as the offset forests grew on their new sites.
“Providing offsetting would be a win all round. It would provide a badly needed confidence boost for the forest industry and the long-run cost to the taxpayer would be small. Indeed, if the offset plantings were designed to maximise carbon storage, the government could actually make a profit on the transaction. Instead, the government has chosen to give one sector of the industry free access to DoC land for planting and full ownership rights of the carbon and wood produced,” Mr Bery says.
Mr Berg points out, it is important to recognise that iwi who didn’t get their forests as part of a treaty settlement won’t benefit from the deal. They are in the same boat as other pre-1990 owners.
“The only positive the industry can take from the deal is that the government has recognised the very real valuation issues relating to pre-1990 forests. None of these forests have been sold since the detail of the ETS became clear. But if, as the experts expect, they have zero or very low value this is going to have huge effects on the balance sheets of many forestry companies. It is also going to create major issues for local bodies in forestry areas, when a major chunk of their rating base evaporates.”
The Government will be moving a Supplementary Order Paper to address technical and drafting issues raised in submissions. The only policy changes to the Bill are the exclusion from the scheme of the burning of wood waste and improved provisions to ensure the removal of tree weeds is not captured by the ETS.
View the agreed measures to address Maori Party ETS concerns here.
These measures include:
Treaty settlements pre-ETS where iwi were unknowingly disadvantaged
Crown/iwi partnerships for afforestation programmes
Review of Permanent Forest Sink Initiative
(Source: Forest Owners Association & New Zealand Government)
FICA Silviculture Workshop Rescheduled
FICA Silviculture Contractors Workshop – Improving your Contracting Profitability
Rescheduled to Thursday 28th January 2010 at Taupo Cosmopolitan Club.
Work priorities for FICA on behalf of silviculture members. Includes a discussion session on potential cost-saving new technologies specifically for silviculture contractors.
No charge to FICA members. All silviculture contractors invited to attend. Please register so that we can cater for the correct number of attendees.
Call Susan on 07 921 1382 to register or email Susan.
Hitman Scientist Gains Royal Recognition
IRL Research Engineer Paul Harris has been awarded the Royal Society of New Zealand R.J. Scott medal for his significant contributions to the development and application of electronic devices in New Zealand.
The Royal Society said Paul Harris had made a number of significant contributions to the development and application of electronic devices in New Zealand. He had led the development of a novel teeth imaging system, a high resolution 3-D ultrasonic device for imaging bone and Hitman - a sonic hand-held device for wood quality testing in the forest. His research directly resulted in the establishment of three companies that manufacture equipment invented by him, with substantial economic benefit for New Zealand.
IRL Chief Executive Shaun Coffey said the award recognises Paul Harris’ significant achievements over many years. “He is an inspiration to the team of colleagues who work closely with him and is dedicated to the practical application of science and engineering. Time and time again Paul Harris has showed that he understands the needs of industry and has been able to focus his talents to ensure they realise significant economic benefit for New Zealand,” he said.
Court Decides in Council Favour on RMA
In a landmark decision issued last week, District Court Judge Jeff Smith found that convictions can be recorded against parties found guilty of breaches under the Resource Management Act 1991 (RMA).
In the first case of its type relating to the RMA to be heard by the District Court, Judge Smith stated the decision of whether to issue an infringement notice or prosecute summarily lay with regional councils or other relevant local authorities.
The decision about jurisdiction was raised in a case before the Environment Court in which Environment Bay of Plenty is prosecuting one of New Zealand’s largest forestry management consultancies, PF Olsen Limited. The prosecution is the result of PF Olsen allegedly breaching its resource consent relating to forestry operations in the Waiotahe Forest, near Opotiki.
If the judge had found in favour of the defendant (PF Olsen Limited), the decision could have had serious ramifications for convictions recorded against parties under the RMA during the past nine years.
PF Olsen Limited is facing charges under the RMA arising from the collapse of piles of forestry debris in Waiotahe Forest in April 2008. The case was adjourned in September to allow Judge Smith to deal with the jurisdiction issue, but with this now resolved, Judge Smith has directed a teleconference with the parties on 1 December to address the next steps in the case.
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Safety Corner - Quick Clot
A WoodWeek reader recently came across the “Quick Clot” and thought it was worth sharing the details of this product with the rest of our readers. Its primary function is the clotting of major bleeds like those associated with chainsaw cuts.
Quick Clot is approved by the NZ Ministry of Health and Med Safe NZ for use in cases of severe bleeding. A chainsaw can do a lot of damage but even the humble Silky will give you a nasty cut if the saw bounces on a branch on the pull stroke. The granules packed in sterile surgical mesh are designed to mould into severe wounds, significantly reducing the risk of bleeding out or death through heart failure relating to loss of blood.
The Quick Clot is available from www.treetools.co.nz for $24.90 each.
Future Forestry Finance 2010 Attracting Keen Interest
So, how does post-recession forestry in Australasia stack up financially? The timing is right and the pre-programme interest is already very high. This new programme is now being designed by leading forestry companies and financiers and is going to be run in Sydney, Australia on 1-2 March 2010 and again in Auckland, New Zealand on 4-5 March 2010.
Registrations are now open on www.forestryfinanceevents.com and advance materials on the programme content and format can be found in the attached PDF. Some early keynote presenters confirmed for the March Australasian series already include;
Eva Greger, Managing Parter, GMO Renewable Resources, Boston, USA. Over a twelve year period Eva has completed purchases involving US$1 billion of forestry assets in three countries, as well as analyzing single transactions valued up to US$1 billion. She founded GMO's timber group along with Eric Oddleifson.
Russell Taylor, President, International Wood Markets Group, Vancouver, Canada. Russell's twenty five year background in the forest industry encompasses forestry, manufacturing, marketing and consulting positions. International WOOD Markets Group has for many years been providing high quality research, analysis and strategic planning to the international wood products community.
Bob Flynn, Director, International, Timber, RISI, USA. RISI is a leading information provider for the global forest products industry. Bob has more than 30 years experience in the forest industry as a forester for Champion International in Oregon and the past 20+ years as a consultant to the industry, with a focus on analysis of timber supply and demand trends outside of North America; international trade of logs, woodchips, and biomass; and trends in international timberland investment.
More detailed information on Future Forestry Finance 2010 will follow. Registrations as mentioned are open to this forestry financial event of 2010 and early-bird registrations close on Friday 18 December.
BC Lumber Now Part of China's Stimulus Package
BC took a step forward to open up the Chinese market to the province's wood products with a memorandum of understanding signed earlier this month by BC's Forests Minister Pat Bell. The memorandum with the Shanghai Housing Bureau is aimed at hitching BC and Canada to a $141-billion urban housing initiative that's part of China's $586-billion stimulus package.
At the same time, the Shanghai civic government officially adopted a wood-frame housing building code. BC and Canadian agencies have been aiding Chinese officials in developing a building code that provides assurances that wood products meet specified building standards.
The Chinese government is committed to building six million new affordable housing units by 2012. The BC-Canada contribution is small in terms of the scale of the Chinese housing program -- $800,000 from Natural Resources Canada -- but significant. It marks the first time BC wood products will be used in the Chinese program.
The money will go towards three demonstration projects:
New wood-framed commercial buildings -- the first application in China of so-called hybrid housing which combines a concrete main floor with two upper storeys of wood above.
New walk-up apartments with wood-truss roofing, the first time BC technology will be used in new apartment construction in Shanghai.
Wood-frame partition walls in apartments.
"It focuses on the new applications of wood," Bell said in an interview. "Shanghai is looking at the use of wood from an environmentally friendly approach. It's too early to say this is a breakthrough but today's signing opens the door. Now we have to demonstrate that wood is cost-effective, durable and easy to construct."
(Source: Vancouver Sun)
Caption Competition Winner
A few weeks ago we ran the WoodWeek/PF Olsen Caption Competition. The winner of this competition was announced at the recent ForestTECH event held in Rotorua. Congratulations to John Barker of GMO Renewable Resources Limited for this humorous insight.
TFCA Executive Officer Resigns
Tasmanian Forest Contractors Association Executive Officer, Ferdie Kroon, has resigned effective 11 December 2009. “I have certainly enjoyed the opportunity to represent contractors and assist with maintaining high service levels during what has been an increasingly difficult period for the contracting sector,” said Mr Kroon. “That said, I have made a decision to move into a different role and this in turn may provide someone else with an opportunity to continue the critical responsibility of advocating contractors’ interests.”
TFCA’s Board is scheduled to meet on 30 November 2009 to determine the way forward.
TFCA’s Administration Manager, Chris Rudland will now be working Tuesday thru Thursday from 8:30am thru 2:30pm. You can contact him via e-mail and mobile outside of these hours.
Australian Forest Contractors Association AGM Report
The Australian Forest Contractors Association recently held its Annual General Meeting and election of office bearers. Chairman Colin McCulloch was re-elected for his eighth term as Chairman of the Directors. Mr McCulloch (BVL Logging Pty Ltd Tasmania) has been Chairman of the Association since its inception in 2002. Greg Coverley (Pine Hauliers Pty Ltd) in W.A was re-elected Vice Chairman, and Barry Fennell (GRGroup Mt Gambier), Garry Leeson (GN & VL Leeson Victoria) and Ian Reid (AusTimber Victoria) were all re-elected for a further term as Directors.
AFCA would also like to acknowledge the contributions of Andrew Mahnken (Mountain Logging Pty Ltd Victoria), Victor McGuire (McGuire Logging Tumut NSW) and Greg Weber (Eden NSW) who have been Directors of the organisation, but who did not seek re-election this year in order to spend more time concentrating on their own particular business interests.
The Auditors report showed another successful year for the organization.
Speaking after the meeting, Manager David Drane said that “Although it had been a successful year we cant afford to sit back on our laurels and we will continue to strive to make our association viable and worthy of the support of the members”.
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Buy and Sell
…and finally…the back of a tree?...
A Maori fella from Te Kuiti decides to travel across the land to see God’s country. When he gets to Tokoroa he likes the place so much that he decides to stay. But first he must find a job!!!
He walks into the international paper company office and fills out an application as an experienced log inspector. It’s his lucky day!!! They just happen to be looking for someone, but first, the log foreman takes him for a ride into the forest in the company pickup truck to see how much he knows.
The foreman stops the truck on the side of the road and points at a tree. “See that tree over there? I want you to tell me what species it is and how many board feet of lumber it contains.”
The Maori fella, Hori, promptly answers. “That ‘fellaz’ a pinus radiate mate, 383 board feet of lumber in ‘er.”
The foreman is impressed!!! He puts the truck in motion and stops about a mile down the road. He points at another tree through the passenger window and asks the same question. This time it’s a bigger tree of a different class.
“That’s a rimu and she’s got about 456 clear board feet.”
The foreman is really impressed with the ol’ Maori boy. He has been quick and got the answers right without using a calculator!!!
One more test. They drive a little further down the road and the foreman stops again. This time he points across the road through his driver side window and says, “And what about that one?”
Before the foreman finishes pointing, Hori says, “Douglas fir bro, 242 board feet at best mate….”
The foreman spins the truck around and heads back to the office a little ticked off because he thinks the Maori fella is smarter than he is. As they near the office the foreman stops the truck and asks Hori to step outside.
He hands him a piece of chalk and says, “See that tree over there? I want you to mark an X on the front of that tree”.
Hori says, “Is this the signing of the treaty all over again?”
The foreman thinks to himself, “Idiot, how would he know which is the front of the tree?”
When Hori reaches the tree he goes around it in a circle while looking at the ground. He then reaches up and places a white X on the Trunk. He walks back to the foreman and hands him the chalk. “That’s the front bro,” Hori says.
The foreman laughs to himself and asks sarcastically, “How in the hell do you know that’s the front of the tree?”
Hori, with a little smile on “hez face” and wiping his boot on the grass says, “Cuz some fella just took a dump behind it!”
He got the job.
And on that note, enjoy the rest of your week. Cheers.
John Stulen
Innovatek Ltd Rotorua Office
PO Box 6160
Rotorua 3043
New Zealand
Ph:+64 7 921 1382
Fax:+64 7 348 1420
Web page: www.innovatek.co.nz
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