WoodWeek 21 July 2010
Greetings from Rotorua! Many people in the industry will be pondering the
state of log export markets/conditions, particularly as the much-predicted
rainy winter has not been a constraint in the last month. One analyst has
plucked an interesting predictor out of the market indicators generally
(meaning not just forestry) - and that is the Baltic Dry Index - which can
be a strong leading indicator of commodity export activity - and it is
diving fast. With forestry often bucking the overall general economic
trends this could keep returns positive for forest commodity
exporters.
Meanwhile, there is a view in this week's issue from experienced market
commentators in global wood trade - the team at International Wood
Markets Group in Vancouver - that long-term wood demand in China will
benefit many key exporting countries including New Zealand. That will be
reassuring to many - except local sawmillers.
This week FICA members in Whangarei will be
meeting and attending the Logging Costing Workshop. The day kicks off
tomorrow with a logging field trip - we will meet at the Kingsgate Hotel at
12 noon, before heading out to visit two Rosewarne logging crews in the
Hancock forest estate. All members are then invited to meet for
networking and drinks at 5:00pm at the Kingsgate Hotel. See full details
in the story below.
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This week we have for you:
Contractors' Key Indicators Now Monthly
Please note that "Key Indicators" will return next week and from now on will continue on a
monthly update frequency.
If you would like to see any changes to the indicators we report on, or indeed the
frequency, we would welcome your letter/comments to the editor.
Efforts to end Tasmanian Forestry Conflict
It's been reported recently that the Australian Government has offered to finance a
potential breakthrough between environmentalists and forestry companies to end the
decades-long conflict over native forest logging in Tasmania. In meetings in Tasmania
last week, Forestry Minister Tony Burke is understood to have told negotiating parties
some federal money is available for an agreement. He has asked for a deal to be
presented to him by early this week.
Over recent months, representatives of the timber industry and the environmental
movement have been working towards a negotiated agreement. The environment
movement is understood to want an almost immediate halt to logging of high-
conservation-value forests and a phased end, over a number of years, to almost all native
logging throughout the state except in rare circumstances. In return, the Tasmanian
timber industry is looking for a restructuring package to help industry move towards
certified plantation timber, financial help for new infrastructure and roads and support
for Gunns' stalled Bell Bay pulp mill.
Earlier this week, election commentators quizzed Australian prime minister, Julia Gillard
on whether the federal government had a role in a Tasmania forestry restructuring
package, but she suggested, without discounting any federal role, that it was too early to
tell.
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FICA Northland Meeting/Workshop this Thursday/Friday
The FICA regional field trip happens tomorrow leaving from the Kingsgate Hotel in
Whangarei soon after meeting there at 12 noon.
The FICA Members and Sponsors regional meeting will be held from 6:00pm on
Thursday night at the Kingsgate Hotel in Whangarei. This will be followed by dinner at
7:00pm - which is complimentary for FICA members and sponsors (there is a cost for
guests attending). Please call John on 027 275 8011 if you have not already registered
for the evening meeting and dinner.
There's just ONE SEAT left on the FICA Workshop this Friday. Every month these FICA
Logging Costing Workshops have been a hit with regional groups
of contractors. The content follows a mix of Mark Blackburne's list of 'must-know' key
costing issues for logging contractors - in addition to some excellent references to the
newly revised handbook for logging costing knowledge - the Business Management for
Logging book.
The whole handbook was revised recently and includes an excel
worksheet to make it easy to do some costing case studies for your own business - once
you've been on the course. See the attached PDF for details of the
Whangarei workshop.
Date: Friday, 23rd July
Location: Kingsgate Hotel, 9 Riverside Drive, Whangarei
(Tel 09 438 0284)
To download the registration PDF CLICK
HERE
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NZ Forest Scheme Reduction Draws Criticism
National chops scheme in half: Government budget documents show that
National will downscale the Afforestation Grant Scheme from $4m to $2m per year over
the next three years before eventually ceasing it, according to a news release from
Labour's forestry spokesperson Stuart Nash. The Afforestation Grant Scheme is a
contestable government fund designed to encourage the planting of new
forests.
Nash said that the axing of this scheme is foolish for three reasons.
1. Planting of trees is vital to New Zealand meeting its Kyoto commitments. The only
reason New Zealand doesn’t have any international carbon liabilities is because of the
amount of forests planted after 1990. Forestry will play a significant role in ensuring that
New Zealand plays its part in mitigating the effects of global warming, and to cut a
scheme that encourages people to plant forests defies logic.
2. Forestry has the potential to be a large employer at a time when unemployment figures
are still high due to the difficult economic times. Why would the Government end a
scheme with such potential to create jobs at a time of economic hardship?
3. The scheme has a high component of regional focus and initiative. Half of
the funding is available to regional councils to help them meet their sustainable land
management objectives. For example, the Hawke’s Bay Regional Council has proactively
marketed the Afforestation Grant Scheme as an opportunity for Hawke’s landowners to
establish new forests.
Nash said “The scheme encourages regional economic development and promotes an
activity in forestry where everyone wins: the landowner, the region and the country. Sadly,
given that there are so many winners, the scheme is now going to gone within 3
years."
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BC Forest Industry Sees Positive Trend in Safety
FATALITY AND INJURY RATES DOWN IN FORESTRY INDUSTRY - The average number of
fatalities in the harvest industry has been cut in half since 2004/2005. That according to BC
Forest Safety Council CEO Reynold Hert.
On average there are 11 deaths per year in the industry in the BC industry. Hert says
industry leaders got the ball rolling, by stating the amount of injuries and deaths on the job
is far too high. He says the industry and it's leaders have now realized that they can make a
change to make their workplaces safer without affecting productivity, and have done
so.
Employment Law Changes Considered Moderate
Planned changes to employment legislation are thoughtful, moderate, and will be more
likely to foster productivity, says BusinessNZ Chief Executive Phil O’Reilly. “The changes
will relieve pressure points currently experienced by many of the parties involved in
employment relations, including employers, employees, labour inspectors, union reps and
mediators."
“And far from being skewed in favour of employers, the changes will put stiffer
requirements on employers in a number of areas and increase penalties for employer
non-compliance in others. “Overall, the changes demonstrate fairness to all
parties.”
Mr O’Reilly’s comments on some of the key changes are:
Extending trial periods to all workplaces: Will give employers more confidence to
hire,
particularly people at the margins of the workforce
Union access requiring employer consent, which cannot be unreasonably withheld:
Fair
to both parties, demonstrates good faith; still substantially more permissive than in other
countries we normally compare ourselves with
More focus on substance rather than process in personal grievance cases: For
employees, will help bring clarity around dismissal cases; for employers will reduce
vexatious and opportunist personal grievance claims
Simplifying Holidays Act: Will make it easier for employees to understand their
rights; will make it easier to comply, especially for small firms, reducing payroll
administration costs
Holiday pay and other entitlements calculated based on the average of an
employee’s
pay over the past year: Will make it easier for employees to understand their rights; will
remove incentives to ‘game’ entitlements
Employees able to cash in the fourth week of annual leave, at employee’s request
only:
Employers commonly report requests for this ability; this will make the option
available
Employers and employees able to agree to transfer the observance of public holidays
to
another working day: Will increase flexibility; recognises cultural diversity in the
workplace
Employers able to ask for proof of illness or injury more quickly, at employer’s
expense:
Will reduce pressure on employees to cover for others Early mediation services
without representation, prior to any formal mediation; Will help
the parties involved assess the risks involved prior to formal mediation; will help bring
faster resolutions at less cost
Removing reinstatement as the primary remedy in dismissal cases: Recognises that
reinstatement is often not realistic
A code of ethics for employment advocates: Will address some questionable
practices,
including no-win-no-fee ‘fishing’ cases
Formal definition of the role of Labour Inspector: Will help foster professional
practice,
however, must be accompanied by adequate training and resourcing
Allowing Labour Inspectors to issue improvement notices: Will help achieve
compliance
without litigation
Allowing employers and employees to communicate directly during collective
negotiations: Will help foster better understanding and communication and will reduce
misunderstandings during bargaining
Forestry Tasmania to End Portside Fumigation
Forestry Tasmania says it will no longer fumigate its logs with methyl bromide in
Tasmania, after a storm of controversy over a shipment that departed Burnie last week.
There was some opposition in Burnie when locals found out state-owned enterprise
planned to fumigate a shipment of logs bound for China with methyl bromide at the
Burnie port.
It eventually decided to conduct the process offshore, before sending the shipment last
week. Forestry Tasmania's general manager of operations Paul Smith said they had
learned from the incident. "We have listened to the community and decided that in future
we will avoid the use of methyl bromide in Tasmania," Mr Smith said on
Monday.
To read the full story click HERE
(Source: Sydney Morning Herald)
Logging Career Promotion Wins US Media Award
The Telly Awards is an international competition that recognizes the work of media
professionals in the Advertising, Broadcast, Online and Multimedia fields. Much like the
Academy Awards, the entries are judged by industry peers and past winners and
evaluated on messaging and production values.
The Telly Awards receives over 11,000 entries annually from ad agencies, production
companies, TV stations, cable companies, interactive agencies and corporate video
departments. In this, the 31st annual Telly Awards, the Pacific Forest Foundation's new
video "This Is My Office" was entered into the category of Online Recruitment and was
awarded the Silver Telly, the highest award offered in the competition.
The video traverses the forests of California, Oregon, Washington and Canada to capture
the sights and sounds of what foresters and loggers do every day and package it in an
entertaining and informative way aimed at attracting young people into our
industry.
To see the "This Is My Office" DVD visit PFF's website at www.pacificforestfoundation.org
(Source: Pacific Logging Congress)

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China Wood Deficit Tipped to Benefit Exporters
Wood deficit in China to create major opportunities for Pacific Rim exporters: Big winners
expected to be BC and Russian lumber, and New Zealand and West Coast North America
logs. A new five-year outlook report quantifies China’s growing demand for imported
wood and shows how tight supplies will drive prices higher for exporters.
China’s potential fibre-supply gap (the difference between total demand and total
domestic supply) is projected to reach approximately 150 million m3 (roundwood
equivalent) by 2015 — or a volume that is more than the entire Canadian timber harvest
in 2009 — a strong indication that China’s wood imports must continue to rise in the
short- to medium-term period to match with projected consumption.
China’s surging wood products industry is becoming raw material constrained due to its
heavy dependence on logs from Russia (65% of China total log imports over the last four
years). Russian logs have become more expensive and scarce with the imposition of the
Russian log export tax (currently 25% on softwood and 40% on hardwood sawlogs). The
global supply of incremental logs is not large enough to replace the declining Russian log
supply in the short term. China needs to grow its raw material supply at 8-10% per year
to achieve its desired growth rate, but WOOD MARKETS forecasts a potential global log
(export) supply that will only allow China to grow its import supply at just a 3%–4% annual
growth rate after 2011.
As a result of these dynamics, there are four exporting regions that should see the
greatest benefits from the projected tightening of the wood supply and rising prices in
China:
Canada (mainly British Columbia) has increased lumber exports to China by almost
800%
in the last four years. With a tightening global export supply of low priced softwood logs
available to China, low grade softwood (and now higher grades) of BC lumber imports
have surged. The outlook is for rising volumes and higher prices for BC interior SPF and
coastal lumber species.
Russia has increased lumber exports by about 185% in the same four years as a
result of
new Russian and Chinese sawmill capacity installations in Eastern Russia.
New Zealand has benefited from the reduced Russian log imports – its radiata pine
log
exports have grown by almost 400% in the last three years to attain 22% of China’s
softwood logs imports (4.4 million m3) in 2009 and radiata exports are forecast to
increase even further over the next five years.
The US Pacific Northwest, Coastal BC and Alaska have recently seen substantial
increases
in log exports and this is expected to more than double in the next 2-3 years (albeit
from low levels).
(Source: International Wood Markets Group, Vancouver, BC)
US South a Biomass Source for Europe
Energy companies in Europe show increased interest in sourcing biomass from the US
South, reports the North American Wood Fiber Review. Woody biomass in the US South is
attracting interest from European energy companies in their search for long-term, reliable
and competitively priced supply sources, reports the North American Wood Fiber Review.
The increased competition for wood fiber has pushed pine pulpwood prices upward in the
Southeastern states this past year.
Demand for woody biomass, in the form of wood chips, wood pellets and torrified pellets
will increase substantially in Europe over the next ten years, exactly how much though, is
unclear as the size of the increase depends on policies and subsidies implemented by
governments in individual countries within the European Union. The cost of locally
sourced biomass on the continent has gone up for many energy plants, resulting in
increase interest in importation of wood chips and pellets from neighboring countries or
from overseas.
The US South is on the top of the list as a long-term biomass supply source for a number
of energy companies. This is because the region has a stable supply of pulpwood, a well-
functioning infrastructure, and competitive wood fiber costs as compared to most other
markets in the world. According to the Wood Resource Quarterly, only Chile and the
Western US had lower softwood pulpwood prices than the US South during the 1Q/2010.
Hardwood wood fiber prices were well below the global average hardwood price index
(GHPI).
Two large-scale, export-oriented pellet plants are currently on the drawing boards.
German company RWE has a plant in southern Georgia under construction with plans to
commence production in the 3Q of 2011. Magnolia Biopower has announced plans for an
export wood pellet plant to also be sited in Southern Georgia.
This expanding green energy sector is situated within a stronghold of the traditional
southern pulp industry with seven pulpmills within this Southeastern sub-region. The
high concentration of wood fiber consumers within a fairly limited area has pushed wood
costs higher the past few years. Pine stumpage prices have increased faster in this region
than the average price across the South. In the 2Q/2010, prices were more than 50
percent higher than two years ago. With the expected increase in wood consumption by
the energy sector in this sub-region it is likely that pulpwood costs will continue to be
higher in this sub-region than the average for the US South.
(Source: Wood Resources International)
Buy and Sell
... Bless me Father - I have sinned ...
'Bless me Father, for I have sinned. I have been with a loose girl'.
The priest asks,
'Is that you, little Seamus Murphy?
'Yes, Father, it is.'
'And who was the
girl you were with?'
'I can't tell you, Father. I don't want to ruin her
reputation'.
"Well, Seamus, I'm sure to find out her name sooner or later so you
may as well tell me now. Was it Mary O’Sullivan?
'I cannot say.'
'Was it
Tamara Dickson? 'I'll never tell.'
'Was it Aine O’Brien?'
'I'm sorry, but
I cannot name her.'
'Was it Catherine Reilly?'
'My lips are
sealed.'
'Was it Peggy Kelly, then?'
'Please, Father, I cannot tell
you.'
The priest sighs in frustration. 'You're very tight lipped, and I admire that.
But you've sinned and have to atone. You cannot be an altar boy now for 4 months. Now
you go and behave yourself.'
Seamus walks back to his pew, and his friend Paddy
slides over and whispers, 'What'd you get?'
'Four months vacation and five good
leads.' 
That's all for a Wednesday - hope your week is a prosperous one - Any
contributions are welcomed to the Editor Cheers
John
Stulen
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