WoodWeek – 7 November 2018

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Greetings from your keen WoodWeek news team. We’ve got loads of great wood news for you today. Our lead story brings an update on log export markets in India. The Indian market for New Zealand logs closely follows the China market dynamics and an increase in the log price in China in should lift the morale of importers and spur renewed activity. Log exporters are thinking a turnaround could occur in Dec/Jan in demand and pricing. However, this is contingent on Indian currency stability against the USD and no more surprises in the China and US trade war.

This week in Wellington, the Ministry for Primary Industries and Red Stag Investments launched the PGP programme to boost innovation in wood construction with a new development. The new programme, launched on Monday, aims to boost mid-rise building construction using New Zealand engineered and panelised framing timber, and deliver a range of regional, social, environmental and other benefits.

With driverless trucks offering great potential for supply chain improvements, FPInnovations took truck platooning research a giant step further this week and earned a spot in history by successfully road testing the emerging technology in-forest, in the first trial of its kind in Canada. Their research leaders will be part of the upcoming Innovatek HarvestTECHX conference in Vancouver in March (see www.harvesttechx.events).

Ross Hampton of AFPA welcomed the launch of the new Processing Advanced Lignocellulosics (PALS) Hub, hosted at Monash University in Melbourne. The new research facility will focus on how to transform wood and other organic waste into new, useable and renewable products.

Finally, in China, forest plantations and harvests are growing. According to the eighth national inventory of forest resources, the area of national plantation was 69.33 million hectares accounting for 36% of the forest land area in China. The stocking volume of these plantations was 2.483 billion cubic metres, or 17% of China's forest standing volume.

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Log Export Statistics Update

The Indian log market is slowly adjusting to a new exchange rate of Rs 73 to 1 USD.

Two of the main New Zealand log exporters to India decided to not ship logs for October and this will help deplete unsold inventory. However, some of the more determined NZ exporters continue to ship without respite, putting immense LC pressure on the buyers. Many buyers have had to use third party LC opening agencies to stay afloat in terms of cash flow.

The Indian market for New Zealand logs closely follows the China market dynamics and an increase in the log price in China in should lift the morale of importers and spur renewed activity.

Log exporters feel a turnaround in demand and pricing should occur in Dec/Jan. However, this is contingent on stability of the INR against the USD, and no more surprises on the trade war situation between China and USA. The NZ pine inventory in Kandla sawmills is not very high (20-25 days stock) but there are recent arrivals of NZ cargo being discharged in the port where sales have been agreed, but LCs not received. Furthermore, there is more than 30,000 JAS m3 unsold stock being moved into the custom bonded area in Port of Kandla. This will be cleared from Custom Bonded Zone only when LCs are received.

Indian Banks continue with a generally cautious approach and LCs in USD are hard to obtain across different import categories in the country. The merger of Bank of Baroda, Vijaya Bank and Dena Bank- to cover up large quantum of Non-Performing Assets (NPAs or bad debts)- has not changed sentiments for Public Sector Banks. The need for good governance in the Indian banking sector has become paramount.

Source: PF Olsen Wood Matters

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Partnership to boost timber construction

The Ministry for Primary Industries and Red Stag Investments, one of New Zealand's leading wood manufacturers, are supporting innovation in wood construction with a new development - The new programme, launched this week, aims to boost mid-rise building construction using New Zealand engineered and panelised framing timber, and deliver a range of regional, social, environmental and other benefits.

Red Stag Investments Ltd, a company with its roots in forestry, wood processing and property development, has partnered with the Ministry for Primary Industries (MPI) to deliver Mid-rise Wood Construction, a four-year, $5 million Primary Growth Partnership (PGP) programme.

“Combining Cross Laminated Timber (CLT), glulam and panelised framing timber is a cost-effective, fast, resilient and sustainable system for mid-rise construction,” says Red Stag Group Chief Executive Officer Marty Verry. “Our PGP programme aims to encourage widespread adoption of precision-engineered timber in mid-rise building construction in New Zealand.”

“Aside from its natural beauty, engineered timber provides a very strong, low carbon and comparably low cost alternative to steel and concrete. It’s easier to transport, relatively light and has outstanding earthquake and fire resilience. The use of prefabrication can speed up construction by as much as 30 percent and reduce cost to help meet New Zealand’s acute need for more accommodation.

“Globally, there has been rapid growth in the use of engineered timbers such as cross laminated timber (CLT) and glulam for construction. However, New Zealand is behind other countries such as Australia, Austria, Canada, England and the USA in adopting engineered and panelised timber for construction.

“This is due to factors such as limited production capacity and little knowledge of engineered wood use and prefabrication in mid-rise building construction.”

“Through our PGP programme, we want to create this wider understanding to double demand for engineered and panelised wood products in New Zealand buildings, and develop domestic manufacturing capacity.”

The programme will assemble a Collective of Excellence – a pool of New Zealand professionals experienced in mid-rise wood building design and construction – to help share and grow knowledge and expertise within the broader industry. Red Stag will design and build two mid-rise wooden buildings to showcase engineered timber construction, to act as reference sites and inform case studies. The first will be the Clearwater Quays (quays.co.nz) five level apartment development at Clearwater Resort Christchurch, to be constructed in 2019 (see attached image).

Construction costs associated with the programme will be covered by Red Stag. MPI investment provided through the PGP will contribute to other aspects of the programme, such as design, collating and sharing information, and establishing the CoE.

Steve Penno, Director Investment Programmes at MPI, says benefits from the Mid- rise Wood Construction PGP programme will be felt beyond the co-investors.

“Engineered timber provides the opportunity for New Zealand to add significant value to New Zealand grown timber,” says Mr Penno. “It’s also a natural and sustainable resource.

“The Mid-rise Wood Construction PGP programme aims to substantially increase demand for engineered wood products in buildings, which will have associated flow- on benefits across the entire supply chain.

“This will create new regional jobs and renewed investment in forestry, processing, manufacturing, construction and prefabrication. Achieving the programme’s goals will significantly advance New Zealand’s engineered timber industry.”

The Mid-rise Wood Construction PGP programme was launched in Wellington on Monday with Minister of Agriculture, Hon Damien O’Connor, and Minister of Forestry and Minister for Regional Economic Development, Hon Shane Jones.

Listen to the Rural News report about the PGP (from 3:04)



Sources: RadioNZ and MPI

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Platooning: Driverless log truck trial

Canada: FPInnovations and partners make history in log truck platooning - FPInnovations and its partners took truck platooning research a giant step further this week and earned a spot in history by successfully road testing the emerging technology in the deep forests of Quebec in the first trial of its kind in Canada.

The day-long trial took place in Rivière-aux-Rats, Quebec and signals the beginning of a transformation of the forest transportation industry on a scale not seen in decades. It could also solve the chronic issue of a skilled-driver shortage that’s plagued the industry for years and shows no signs of abating. The tests involved two platooned trucks hauling logging trailers on resource roads between a Resolute Forest Products saw mill and the company’s logging site 75 km away. Drivers were at the wheels of the trucks but in the future, only the lead truck will have a driver and the following trucks will be fully automated.

“These tests are a major accomplishment,” says FPInnovations lead scientist, Francis Charette. “To the best of our knowledge, no one has tested platooning in a forest environment before. As a respected forestry R&D organisation, FPInnovations is ideally positioned to bring together specialised research organisations and commercial industries to further our common goal of introducing platooning on forest roads.”

Truck platooning is an emerging vehicle technology in which trucks are linked by a computer system that maintains the desired distance between trucks, as well as controls acceleration and braking, reacting faster than a driver typically can. Platooning uses a dedicated short-range radio communications (DSRC) protocol approved for communications at high-speeds, as well as a GPS system, and radar technology. Highway platooning is already legal in several U.S. states, including Tennessee and Georgia. However, platooning is only in the testing phase in Canada.

FP Innovations research experts will be speaking at Innovatek's upcoming HarvestTECHX conference on 12-13 March in Vancouver. See www.harvesttechx.events to register.







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China: Plantation harvests rising

Plantation harvests on the rise - According to the eighth national inventory of forest resources, the area of national plantation was 69.33 million hectares accounting for 36% of the forest land area in China. The stocking volume of these plantations was 2.483 billion cubic metres, or 17% of China's forest standing volume.

Between 2009 and 2013 the average annual harvest volume from China's plantations was 155 million cubic metres. The harvest volume from plantations accounted for 46% of the total harvest, up by 7% on the period of the seventh national inventory.

Source: ITTO MIS Report October



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Happy Birthday Red Head

Waratah Forestry Equipment is proudly celebrating 45 years of innovation and serving customers in the forestry industry. The company pioneered mechanised harvesting with first-class products paired with unparalleled customer support.

Established in Tokoroa, New Zealand in 1973 by entrepreneur Dave Cochrane, the company transitioned to meet local loggers’ heavy-duty delimbing needs creating a delimber-feller-buncher featuring a four-roller fixed head. Following that innovation, a red grapple processor for the Canadian markets marked the beginnings of the 600 Series and solidified its place as the original red head in the industry.

Today, Waratah heads are found in all logging applications from felling on steep slopes, to cut-to-length hardwood harvesting at the stump, to processing on a landing or debarking on endless plantations.

“We’re dedicated to serving loggers around the globe,” said Heather Robinson, general manager of worldwide distribution, Waratah. “As an industry leader and the manufacturer of the original red head, we’re in a unique position to offer customers experience, expertise and innovation. We’re excited to celebrate the past 45 years and look forward to the next 45.”

Since its inception, Waratah, which has factories in New Zealand and Finland, has grown to support a global market. “Waratah is based on quality, innovation and many years of experience,” said John Alemann, general manager, Waratah, New Zealand. “With 45 years under our belts, we are able innovate better and use our expertise to push the envelope.”

The company’s dedicated people have continued to innovate by finding new ways to increase productivity and provide customer solutions including reliability and durability. For example, the Waratah HTH622C 4x4 and HTH624C 4x4 help minimize waste and maximize profits as powerful four-wheel drive heads that offer multi-stemming, independent log shuffling, 360-degree rotation and more.

A recent innovation is the TimberRiteTM H-16, Waratah’s measuring and control system. It gives unique versatility with configurable settings for improved head performance, productivity and measuring accuracy.

In addition to the TimberRiteTM H-16 system, Waratah developed WaratahMateTM – a phone app tht works with TimberRite to wirelessly share the machine’s production data in real-time. Developed exclusively for Waratah customers, the new app makes it faster and more reliable to send measuring system data back to the company.

“We’ve got a huge legacy in this business,” said Alemann. “We are looking forward to developing and providing opportunities that will keep our customers ahead of the competition.”

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Kawerau set to get new mill

China’s Fenglin gets greenlight for Kawerau mill land - China’s Guangxi Fenglin Wood Industry Group has been given a green light to lease land to build and operate a $100 million-plus particle board factory in Kawerau.

Fenglin last year announced plans to establish a plant in Kawerau by 2020 to produce 600,000 cubic metres of panel board a year and generate around 100 new jobs, at an expected cost of $180 million.

According to the Overseas Investment Office, the new factory is likely to create approximately 110 full-time jobs in the Kawerau region and will "introduce new technology and increase export receipts." No price was disclosed for the leasehold, although the office noted the proposed development was expected to cost more than $100 million and be completed by 2024.

Fenglin has approval to lease approximately 33 hectares of Maori freehold land owned by Putauaki Trust.

When the proposal was first made, the Wood Processors & Manufacturers Association of New Zealand raised concerns that timber mills in the region didn’t produce enough wood fibre to supply the proposed plant as well as the existing Kinleith and Tasman pulp mills near Tokoroa and in Kawerau respectively.

However, an evaluation of wood fibre availability for New Zealand Trade and Enterprise by Finland forestry consultancy Indufor concluded there is more than enough wood available to support an additional 700,000 cubic metres of domestic fibre demand.

Fenglin’s proposed plant is expected to initially produce particle board and later expand to medium-density fibre board.

Founded in 2000, Fenglin was one of the earliest engineering board manufacturers in China and the first in Guangxi Province, according to its website. Listed on the Shanghai Stock Exchange, Fenglin has three MDF plants and one particle board plant in China with total capacity of 810,000 cubic metres a year. It also owns about 14,000 hectares of forests to secure wood supply.

With plants in China’s Guangxi and Guangdon provinces, the company said it began to explore more international opportunities from 2015.

Source: BusinessDesk via Scoop

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Melbourne: New hub to transform wood

The Australian Forest Products Association (AFPA) welcomes the launch of the new Processing Advanced Lignocellulosics (PALS) Hub, hosted at Monash University in Melbourne. The new research facility will focus on how to transform wood and other organic waste into new, useable and renewable products, Chief Executive Officer of AFPA, Mr Ross Hampton said last week.

“A total of $6.8 million over five years will be invested into PALS, including $2.65 million from the Australian Research Council, $2.65 million from supportive industry and $1.5 million from Monash University. This is a very worthwhile and collaborative effort which should yield excellent and innovative outcomes. It’s a great vote of confidence in the pulp and paper products industry,” Mr Hampton said.

“The money will fund research to convert wood residues, plant-based matter and other biomass into products like hydrogels for personal medicine, nanocellulose films to replace non-renewable packaging as well as nanogels to help farmers maintain crops. It will also look for breakthroughs to create new renewable products that can rival single-use plastics.

“AFPA member companies, Norske Skog, Visy and Circa are partnering in this Hub, and they, along with the rest of the industry partners should be congratulated for this future looking renewable investment.

“Australia’s forest industries are well placed to take advantage of the emerging opportunities, coming about through ground breaking research and development in the bioproducts space. The possibilities for renewable wood fibre and residues are enormous, especially when they can end the scourge of single-use plastics.

“I look forward to the progress of PALS and will watch the research and outcomes with great interest, as will the rest of Australia’s forest and bioproduct industries,” Mr Hampton concluded.

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Rayonier: Analyst update/expectations

New Zealand (NZ). Better than expected. Adjusted EBITDA was $24mm, above BMO’s $21.2mm estimate; 2Q18 $25.8mm, 3Q17 $27.8mm. Q3 harvest vols 2% below BMO and -6% y/y. Export log prices -5% q/q (3% below BMO); domestic -6% y/y (5% below BMO).

RYN pointing to U.S./China trade tensions. Lower log/haul costs aided results. 2018 outlook? 2.6-2.7mm harvests (in line with prior guidance) and adjusted EBITDA “modestly above” prior guidance of $84-89mm. YTD EBITDA = $71.4mm.

Source: BMO Capital Markets

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ANZ Commodity Price Index

The ANZ World Commodity Price Index fell for a fifth consecutive month, down 2.4% m/m in October. The drop was identical to the monthly fall recorded in September. Annual growth (-5.6% y/y) is the weakest since mid-2016. The index was driven down by weaker prices for most commodities.

Weaker world prices were partially offset by the softer NZD, which was down 0.2% m/m on a trade-weighted basis. The NZD index fell 1.6% m/m. Annual growth in the NZD index still remains positive for now, slipping from just under 6% in September to 1.6% y/y.



Dairy prices fell 3.1% m/m (-12.3% y/y) and are now at the lowest level since September 2016. Lower prices were recorded for milk powders, cheese and milkfat products. Casein was the only dairy category to lift in price, due to tighter supply of this product relative to other dairy commodities. WMP prices softened 3.3% during the month as seasonal supply put downward pressure on prices. SMP prices continue to bounce around at low levels but gave up the gains recorded in September. High global stocks of SMP will keep the price of this commodity contained until these clear, which isn’t expected to occur until the latter part of 2019. Butter prices softened by 4.4% m/m and are now down 28.6% y/y.

The meat and fibre index fell 2.0% m/m (-4.3% y/y) in October. Lamb prices moved higher during the month but this wasn’t sufficient to offset a further fall in beef prices. Beef prices fell 4.2% m/m (-14.5% y/y) as demand from the US for NZ beef remains weak – a trend that will only be accentuated by the seasonal lift in supply which is now occurring. Lamb prices continue to benefit from limited supply, which is helping to keep in-market prices high. At the farmgate level, lamb prices are being held up by low supply as the new season lambs are just beginning to come on stream. The wool industry remains in the doldrums, with prices down a further 5.6% m/m. However, wool prices are currently marginally higher than a year ago (+0.6% y/y).

The horticulture index fell 4.3% m/m with annual growth dropping to 4.5% y/y. Apple prices were down 15.2% m/m as late season product ages, impacting on quality. Kiwifruit remains buoyant, up 0.8% m/m.

Forestry prices fell 1.5% m/m, but prices are still higher than a year ago (+6.1% y/y). Log prices dropped 2.4% m/m. Logs are now starting to clear from wharves in China as the cooler weather allows for more building activity.

Aluminium prices lifted 0.3% m/m. Prices are down 4.4% y/y with tit-for- tat trade retaliation between China and the US continuing to disrupt the flow of scrap aluminium from the US to China and product back to the US.

The softening in the NZD during October wasn’t sufficient to offset weak global sentiment prevailing in commodity markets. Trade disruption has dented confidence in NZ’s main export markets, with the impact on China of particular concern, given our exposure to this market. The CPTPP that takes effect in 2019 will be welcomed by exporters, with a particular benefit being levelling the playing field with Australia for beef exports to Japan.

Source: ANZ

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Seed banks won’t save NZ trees

Don’t bank on seed banks to save New Zealand’s trees - New Zealand can’t rely on seed banking to save many of its iconic trees, such as kauri, from disease, a new international study shows.

The study by scientists from the Royal Botanic Gardens, Kew, will soon be published in the international journal Nature Plants (published on November 3). Lead author Dr Sarah Wyse now works with New Zealand’s Bio-Protection Research Centre.

The scientists analysed whether seed banking could achieve the international goal of conserving 75% of the world’s threatened species ex situ – meaning away from their natural habitat. Ex situ conservation offers a type of insurance policy, in case localised disruption or disaster threaten a species.

However, the scientists concluded seed banking could not achieve this goal, because many seeds don’t survive the storage process.

Twenty-one percent of New Zealand’s trees and shrubs, including iconic species such as totara, rimu, and tawa, fit into this group of plants with “recalcitrant” seeds, says Dr Wyse. Swamp maire, which is threatened by myrtle rust, also has recalcitrant seeds.

And while kauri seeds are not recalcitrant, they are viable for less than 10 years after seed banking, so they also cannot be stored this way.

“Most of the plants with recalcitrant seeds are from canopy trees from tropical rain forests,” says Dr Wyse. “New Zealand has quite a high number of plants with recalcitrant seeds because many of our North Island trees are closely related to tropical species.”

Seed banking remained a good way to conserve crop and medicinal plants, and also worked for most New Zealand trees and shrubs, including, for example, pohutukawa and southern rata, Dr Wyse said. But with the other authors she said it was vital to develop alternative conservation methods, such as cryopreservation, for many plants.

For seed banking, seeds are dried and then frozen at -20°C. Once thawed and planted in soil they grow just like fresh seeds. However, cryopreservation involves removing the embryo from the seed then using liquid nitrogen to freeze it at an extremely cold temperature (-196°C). Once thawed, the embryo then has to be grown in a culture in the laboratory.

“It is a much more complex process than seed banking, and requires many more resources,” says Dr Wyse.

In the paper, the scientists say “intensifying research efforts into cryopreservation as a conservation tool” is vital to improve the chances of conserving many of the world’s tree and shrub species ex situ.

However, they say, “it may even be naive and dangerous to assume that ex situ conservation is a valid means of safeguarding a high proportion of threatened tropical moist forest trees from extinction”.

The same is true of many of New Zealand’s endangered endemic species, says Dr Wyse. “If we are serious about wanting to save our unique trees, we need to do everything we can to save them in their natural environment, because other methods may simply not work.”

Source: Lincoln University

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Mill worker injury brings hefty fine

Maintenance work leads to crush injuries - WorkSafe New Zealand says businesses must learn from previous health and safety failings to ensure workers are protected.

Carter Holt Harvey Limited appeared in Whangarei District Court last week following an October 2016 incident at their Ruakaka plant. A worker suffered life changing injuries after he was crushed by part of a machine he was working on.

The worker was undertaking maintenance work on the machinery that makes laminated veneer wood products. Believing the machine was secured against inadvertent movement, the worker leaned into the machine to make adjustments. Part of the machine moved and collided with his chest and shoulders, resulting in significant crush injuries.

WorkSafe’s investigation found that Carter Holt Harvey had inadequately guarded machinery, despite having identified the risks, hazards and the options to control those risks.

WorkSafe’s Deputy General Manager for Investigations and Specialist Services Simon Humphries said the company knew the risk existed as a Prohibition Notice had been issued previously to another of the company’s sites involving the same piece of machinery and three prohibition notices had been issued at another site for inadequate machine guarding.

“The company knew of the risks of this machine as early as 2002 but it took them 15 years to prioritise the necessary guarding.

“A worker’s life has changed irrevocably because of the company’s inexcusable delay in dealing with the issue. It is only a result of good luck, and certainly not good management, that more of Carter Holt Harvey’s employees were not seriously harmed,” he said.

> A fine of $371,250 was imposed.
> Reparation of $55,000 was ordered.
> Carter Holt Harvey Limited was sentenced under sections 36(1)(a), 48(1) and 2(c) of the Health and Safety at Work Act 2015. (Being a PCBU, failed to ensure, so far as was reasonably practicable, the health and safety of workers who worked for the PCBU, while the workers were at work in the business or undertaking, and that failure exposed any individual to a risk of serious injury or death.)

> Under the Act, the maximum penalty is a fine not exceeding $1,500,000.

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... and finally ... the lighter side of worklife ...

A toothpaste factory had a problem: they sometimes shipped empty boxes, without the tube inside.

This was due to the way the production line was set up, and people with experience in designing production lines will tell you how difficult it is to have everything happen with timing so precise that every single unit coming out of it is perfect 100% of the time. Small variations in the environment (which can’t be controlled in a cost-effective fashion) mean you must have quality assurance checks smartly distributed across the line so that customers all the way down to the supermarket don’t get ticked-off and buy another product instead.

Understanding how important that was, the CEO of the toothpaste factory got the top people in the company together and they decided to start a new project, in which they would hire an external engineering company to solve their empty boxes problem, as their engineering department was already too stretched to take on any extra effort.

The project followed the usual process: budget and project sponsor allocated, RFP, third-parties selected, and six months (and $8 million) later they had a fantastic solution - on time, on budget, high quality and everyone in the project had a great time. They solved the problem by using high-tech precision scales that would sound a bell and flash lights whenever a toothpaste box would weigh less than it should. The line would stop, and someone had to walk over and yank the defective box out of it, pressing another button when done to re-start the line.

A while later, the CEO decides to have a look at the ROI of the project: amazing results! No empty boxes ever shipped out of the factory after the scales were put in place. Very few customer complaints, and they were gaining market share. “That’s some money well spent!” he says, before looking closely at the other statistics in the report.

It turns out, the number of defects picked up by the scales was 0 after three weeks of production use. It should’ve been picking up at least a dozen a day, so maybe there was something wrong with the report. He filed a bug against it, and after some investigation, the engineers come back saying the report was actually correct. The scales really weren’t picking up any defects, because all boxes that got to that point in the conveyor belt were good.

Puzzled, the CEO travels down to the factory, and walks up to the part of the line where the precision scales were installed.

A few feet before the scale, there was a $20 desk fan, blowing the empty boxes out of the belt and into a bin.

“Oh, that” says one of the workers. “One of the guys put it there ’cause he was tired of walking over every time the bell rang.”



That's all for this week's wood news.

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John Stulen
Editor
Innovatek Limited
PO Box 1230
Rotorua, New Zealand
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Web: www.woodweek.com

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