WoodWeek – 12 September 2012

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Greetings from your WoodWeek team. "In by a whisker" - that's how it feels for the Woodco Strategic Action Plan as the Norske shutdown news hits the press. The New Zealand forest industry has banded together just-in-time and begun to act in the past two years. Just as one of the key projects on investigating value-added export options has begun we have been hit with the significant closure in Kawerau of one of the industries "rocks". Tasman Pulp and Paper - now owned by Norwegian giant Norske Skog - has long been a key part of the 'baseline' load for logs from our central North Island forests. Just as Rio Tinto is a baseline load for our treasured hydro-electricity assets.

Also in the mix this week we have a stable log price report - Prices are falling in India as supply has far outweighed consumption. Pacific North West (PNW) logs have been diverted from China to South Korea by more favourable prices. This run has reduced demand there for New Zealand radiata pine. These two factors leave New Zealand log prices very much following the currently favourable demand in China.

For FICA members, on 27 September in Nelson we have an afternoon meeting and industry discussion on key issues for contractors and their wives, partners and business partners. This meeting begins with lunch at the cafe next to the Loggers Shop in Brightwater. Lawyer Christie Hall will give a presentation on contractors in the aftermath of serious harm incident and things which can be done plan ahead of time to deal with such an eventuality.

Our PRACTICAL LEADERSHIP WORKSHOP in Nelson on the 28 September is a good opportunity for FICA members to send their foreman and up-and-coming leaders to another course with Pam Cronin. Call Christa in the Rotorua office (07 921 1382) now to register.

Finally, we have some very encouraging news, with two stories on tall timber buildings, which bodes well for market expansion for wood. It seems only recently we were telling you about the plans by LendLease in Melbourne to build THE world's tallest timber building - well the news is - IT'S UP ALREADY. This looks promising for a great new market for solid timber products in a potentially massive market.

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NZ Log Prices

In-market log prices are reduced slightly this month. However demand is still strong as shipping prices have lowered. The in-market log price has lowered 1-2% for the products Agrifax monitors, however the cost of shipping in $/JASm³ has lowered 5-6%. Inventories remain stable with supply and off-take well balanced. In the hot summer month’s inventories usually rise, however lowered supply from the Pacific North West has meant less build-up of stock. This is likely to lead to some increase in log prices in the short term as the seasonal demand increases and inventories are not yet built up to match.

Prices are falling in India as supply has far outweighed consumption. The decrease in supply of Pacific North West (PNW) logs to China has been caused by more favourable prices in South Korea. This has attracted a huge increase in volume of PNW logs in to South Korea. This in turn has meant lower demand from South Korea for New Zealand Radiata pine. This combined with India working its way through a large amount of logs in stock leaves New Zealand prices very much following the currently favourable demand in China.

The Agrifax Log Price indicator moved down 1 point to 82 points this month. Prices have been firm over most grades this year. While the New Zealand dollar has risen in the past month shipping rates are falling rapidly with the Baltic Dry Index falling 43% in the last month. This has helped exporters who are making the most of high pruned log prices.

In the North Island pruned grades are mostly up, as are structural and industrial grades. This however is being offset in the index by falling prices in the K export and pulp grades. Prices are mostly steady and changes are small so an index change of 1 point is not a large difference. The Agrifax Log Price Indicator is currently above both 1 year ago and 2 years ago levels. The Index is above the 2010 year to August average but below the 2011 year to August average. For more detailed reports contact NZX Agrifax at www.nzxagri.com/agrifax

The Agrifax log price data is a weighted average of prices collected each month from a range of New Zealand log buyers and sellers. Log prices shown in the table will vary regionally and by supplier and should only be used to provide a broad trend of log price movements.

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Tasmania's Gain is Kawerau's Pain - Norske Skog Closure

Government Subsidies beat free market / Tasmania beats New Zealand / Boyer beats Kawerau - Call it what you like but as Norske Skog gained an Australian government subsidy, they announced earlier this week their Kawerau plant is confirmed for partial closure. Norske Skog sought to put a positive spin on the decision emphasising they will invest AUD $84 million dollars at their Boyer paper mill in Australia. The capital will be spent to convert a machine at the Boyer mill in Australia to the production of coated grades. The other side of the story is that they have now confirmed the closure of one newsprint machine at the Tasman mill here in New Zealand.

Norske Skog announced they are committed to a future in Australia. Somehow that's not surprising considering their AUD $84 million attracted almost 50 percent more money in government subsidies to avert closure there. Substantial funding support from the Australian government meant that Norske Skog chose the operations at Boyer over Kawerau. Clearly the future growth opportunities for the Norske Skog group are now in Australia. The machine conversion project will see the $84 million invested over two years at Norske Skog's Boyer Mill in Tasmania over the next two years to enable the production of coated grades among other things suitable for catalogues. The Australian Federal Government will contribute AUD $28 million in grants to help fund the project, and the Tasmanian State Government is providing an AUD $13 million loan. Completion is targeted for the first quarter of 2014.

The company said they needed permanent closure of the paper machine which provided 150,000 tonnes of annual capacity at the Tasman mill in New Zealand in order to create a better balance between demand and supply for newsprint in the region.

According to company sources there is currently considerable surplus capacity of newsprint in the region. Despite years of great efforts of the staff, the decision is unfortunately unavoidable. The implementation arrangements and timeframes will be subject to consultation with employees and other stakeholders. Final restructuring costs will be determined once the consultation process at the Tasman mill is complete.

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Government’s Free Market Approach Naïve

“New Zealand’s primary industries have this week been dealt another blow to value-added forestry products as Norske Skog has favoured re-building their Tasmania paper machine, over the one in Kawerau, and the reason is clear – government subsidies bought the deal for Australia,” said Forest Industry Contractors Association CEO, John Stulen.

The National government has led us to believe that the market will take care of everything which is a naive approach when all around the globe individual countries’ economic leaders are now having to use direct subsidies to repair the damage done by “free-marketers” in the 2000’s boom that preceded the current ‘bust’.

Norske Skog announced they are committed to a future in Australia. Somehow that's not surprising considering their AUD $84 million attracted almost 50 percent more money in subsidies to avert closure there. Substantial funding support from the Australian government meant that Norske Skog chose to refurbish the operations at Boyer over Kawerau. Clearly the future growth opportunities for the Norske Skog group are now in Australia.

"It is questionable whether the people of Kawerau were even consulted by the Norske Skog international operations team. Norske Skog management would be well aware that the current administration in New Zealand is not open to discussing subsidies,” added Mr Stulen.

The Forest Industry Contractors Association is part of Woodco – the forest and wood products industries strategic group which is looking for new ways to add value and produce greater earnings and GDP through exporting more processed wood products.

“This decision from Norske Skog makes it clear that private money is looking for some government funds to prop up their investment decisions on which mills to keep and which to close,” said Mr Stulen, “I just hope that either the Kawerau Economic Agency or the Bay of Connections groups got a shot at trying to keep Norske Skog’s next capital injection here, but I doubt they even had a look-in.”

Sadly, for forest contractors and many other vital New Zealand businesses in the forest and wood products supply chain, this is step in the wrong direction.

"How much tax have mill workers paid over the years? Don't they deserve the chance of a short-term hand-UP? Maybe we are wrong to think that a bit of government money to save an industry is better than 10 or 20 years of paying the dole to displaced workers – but I see the start of a nasty downward spiral here,” commented Mr Stulen.

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FICA Nelson Meeting

Following the success of the recent FICA meetings in Tokoroa and Gisborne we will be continuing with the afternoon meeting timing and subject matter for later this month in Nelson.

The venue will be the Cafe next to the Loggers Shop in Brightwater. Seats for this contractors' lunch and afternoon meeting will be strictly limited to FICA members and their partners, wives, spouses - who will be very keen to hear from our legal speaker (see below) if they are involved in the running of your contracting business. Also at the Nelson meeting will be a discussion on industry training and safety culture.

Christie Hall, Senior Associate, Minter Ellison Rudd Watts.

Christie is an employment law specialist, whose practice covers the full range of both contentious and non-contentious employment law issues.

Her work spans equal employment opportunities (discrimination, harassment, diversity etc.), injured employee management, executive remuneration and occupational health and safety.

Christie will speak on employers’ rights in the events following workplace accidents. This presentation will be of interest to all contractors as procedures in this matter are otherwise only learned the hard way – through experience – which can be a difficult teacher.

To register for this meeting, contact Christa on 07 921 1382 or email office@fica.org.nz.

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FICA Practical Leadership Workshop Nelson

Practical Leadership Workshop

This popular workshop, led by Pam Cronin, gives delegates the skills to successfully lead a forest contracting team.

The next workshop will be in Nelson on the 28th Septmember 2012.

For more information, or if you would like to attend, please contact Christa on 07 921 1382 or email office@fica.org.nz.

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TimberSafe Buildings go ahead

New Zealand knows all too well the economic and social costs of building design that stands up to an earthquake, but then sees the building subsequently demolished. So it's fitting that a locally developed timber building system that enables fast re-occupation after an earthquake has emerged as world-leading at a recent gathering of international timber engineering experts.

The World Conference of Timber Engineering (WCTE) was held last month in Auckland, bringing together more than 500 researchers, engineers and designers in a global forum of research, innovations and developments.

Standing tall amongst the hundreds of presentations was research from the Structural Timber Innovation Company (STIC), a research consortium made up of New Zealand and Australian commercial and academic partners. STIC is behind the development of EXPAN – a unique post-tensioned laminated veneer lumber (LVL or glulam) building system that offers superior seismic qualities and lateral stability for multi-storey buildings.

In the event of an earthquake, an EXPAN building stays structurally intact through a controlled rocking mechanism and timber components that give strength without weight to minimise acceleration loads caused by ground shaking.

Professor Pierre Quenneville, STIC Research Team Leader and WCTE Technical Programme Chair, says he received numerous comments at the conference that New Zealand is leading the way in timber engineering.

“The rest of the world is now waking up to New Zealand’s recent advances in low-damage seismic design of timber structures. Much of the design philosophy in other countries is still based around an acceptance of some structural failure, where people get out safely in an earthquake, but the building is not able to be saved, or major repairs deem it unusable for a long time. It was clear from the conference that the EXPAN building system is currently the only one in the world that offers the certainty of low-damage design using engineered timber.”

STIC Chief Executive Dr Robert Finch says it’s fantastic to see New Zealand leading the world in this hugely significant area.

“As we see thousands of buildings being demolished in our second largest city, this design philosophy becomes ever crucial. Commercial building owners, and tenants, no longer need to accept that a major earthquake means they’ll be out of their building for a long period of time, or not get back in at all. Here we have a comprehensively- researched, proven damage- avoidance seismic technology that enables buildings to remain serviceable after a sizeable quake.

“Massey University’s CoCA building has just become the seventh building in the country to utilise this cutting-edge building system, and we’re looking forward to seeing Christchurch’s first two EXPAN buildings go up in coming months.”

(Source: Timber Design Society)

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ANZ Commodity Price Index

The ANZ Commodity Price Index registered a 0.5 percent rise in world price terms in the month of August. While relatively modest in magnitude, the latest increase follows seven consecutive monthly declines in the series. The rise in New Zealand’s commodity prices contrasts a 3 percent fall in the RBA’s index of commodity prices for Australia. Nevertheless, commodity prices in both countries are roughly 15 percent weaker than a year ago.

A lift in global dairy prices was the catalyst for the turnaround in the New Zealand index, even though the number of commodities that dropped in price was greater than the number that rose. Five commodity prices increased in August, five were unchanged and seven prices decreased. Skim milk powder prices rose 5 percent in August, followed by beef, butter and whole milk powder prices, all of which rose 3 percent, and kiwifruit prices which ticked up by 1 percent. The price of pelts recorded the largest fall across the commodity basket in August, with an 8 percent drop. Wool prices fell 5 percent, wood pulp prices eased 3 percent, and logs, casein, apples and aluminium prices all declined 2 percent. Prices for lamb, venison, seafood, cheese and sawn timber were unchanged.

Dairy prices have now lifted to a three-month high, but remain 29 percent below the peak measured in March 2011. Last week Fonterra announced a reduced dairy payout for the 2012/13 season, but noted improving prices in recent dairy price auctions. The recent turnaround in dairy prices may indicate that a floor has been reached in the international marketplace, but this strength is being tempered somewhat by a strong New Zealand dollar. The rapid appreciation in wool, lamb and pelt prices experienced last year has been mirrored on the down-side, with prices for these commodities now at levels not seen for nearly two years.

The value of the New Zealand dollar appreciated last month, rising against all our main trading partners – apart from a modest dip against the Australian dollar. As the rise in the value of our currency was greater than the overall lift in world commodity prices, the NZD Commodity Price Index eased 0.8 percent in August.

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Blackwoods Protector wants to give you the BOOT

Introducing the 'new' Class/level 3 leather cut resistant boot from Skellerup and available through BlackwoodsProtector forestry branches nationwide.

The forest Industry has, reportedly, one serious foot cut every two months with the damage resulting in complex surgery followed by a sustained period of rehabilitation. We, as a supplier to Industry have two options, a) sit back and continue down the same road, or, b) continue to look at ways to help in supporting the Industry look for additional ways to improve PPE options. It goes without saying that we take ownership of the on-going issue and that safety is paramount, and everyone has the right to feel safe and go home to their respective families each day.

As we all know, Skellerup spiked and un-spiked orange gumboots (which are great for winter use), are certified to level 3 for cut resistance (highest International standard of 28m/s), and yet the majority of leather boots available in the N.Z. market have little or no cut resistance at all, but are extensively used by chainsaw operators. Seems ludicrous that the winter option offers Class/level 3 protection and yet the summer leather option offers little, if any.

The Europeans have been aware of this fact for years and actively use a cut resistant leather boot, the only problem for us is that the Europeans predominantly only have non-spiked options, whereas in NZ we like to use both a non-spiked as well as a spiked option. The Lavoro boot has been initially released in a non-spiked option (to get it to market), with the Intention to release a spiked option next year. The spiked option needs to be developed, trialled under NZ conditions, certified and then manufactured, all which takes time to get it right.

Call into your nearest BlackwoodsProtector forestry branch and view the "Lavoro" boot for yourself.

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ETS changes a farce – Environment Commissioner

Parliamentary Commissioner for the Environment Dr Jan Wright says planned changes to the Emissions Trading Scheme will be a costly and environmentally damaging mistake. The changes are part of the ETS amendment Bill currently before select committee. Dr Wright has submitted on the Bill yesterday. Dr Wright says she is particularly concerned with subsidies to polluters being locked in.

“Right now we’re subsidising ninety-five percent of big polluters’ emissions. That was due to be phased out, albeit too slowly, but the Bill will leave those subsidies in place indefinitely. I am very concerned that the review process that would address these subsidies along with other ETS issues will no longer be compulsory but will occur only if the Minister wants it to."

“Heavily subsidised polluters have no incentive whatsoever to reduce their emissions when the tab for them is being picked up by the taxpayer. And if polluters are not paying for their emissions they’ve no incentive to reduce them. The Government’s own estimate of the cost of this Bill to the taxpayer in just the next four years is over $330 million.

“The ETS is the main system New Zealand has for reducing our greenhouse gas emissions. Hollowing it out like this makes a farce of our climate change commitments.”

A copy of the submission is available here.

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Snippets & Diary Notes

FICA Big Day Out now 4th December
A reminder to contractors to mark 4-5th Dec in your diary to come to Rotorua for the FICA Annual Field Trip and Conference. The field trip and safety and productivity sessions are on the 4th followed by FICA Annual Dinner - and also the FICA Export Market Breakfast and AGM are on the 5th Dec. Flyers will be mailed to members and sponsors shortly.

FICA Yarder Tower Inspector Workshop - 4 October in Rotorua
Current yarder tower inspectors should be registering now for this workshop. Just call Christa on 07 921 1382 to register.

Canfor Corporation, the second-largest North American softwood producer, is “excited” about the increase in “high-value” shipments of Canadian wood to China, said Wayne Guthrie, of Canfor's sales and marketing team.

“We’re pretty excited about the shift in value,” Guthrie said at a recent Bloomberg Canada- Asia Conference in Vancouver. “It’s been an exciting 10-year ride since we started in China with no sales.”

The influence of Chinese lumber demand on North America’s wood-products market will get stronger as the U.S. home-building industry continues to recover, Guthrie added. Without sales of 3 billion board feet of wood a year to China, “we’d have considerably lower prices.”

China is emerging as a critical market for Canfor, West Fraser Timber Co. and other Canadian wood-product makers after they were faced with losses, mill closures and layoffs following the U.S. housing collapse. Canfor’s exports to China have soared to 25 percent of total lumber sales by volume, up from 4 percent in 2008.

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Top Completed on World's Tallest Timber Building in Melbourne

The world’s tallest residential timber building has topped out in Melbourne, builders lifting the last timber panel to complete the structure. Taking shape near the water’s edge in Melbourne’s Victoria Harbour, Forté is being built with Cross Laminated Timber (CLT) which has a structural strength akin to the traditionally used concrete and steel.

While CLT has been popular in Europe for more than a decade, developers Lend Lease point out that Forté will be the first residential development in Australia in CLT. The 32-metre building, which rises over 10 storeys, is due to be completed in October.

Managing director of Lend Lease’s project management and construction business in Australia, Murray Coleman commented on the environmental benefits of using timber. “Concrete and steel buildings are carbon intensive but timber, as well as being renewable, has the advantage of storing carbon. Timbers used are also sourced from certified sustainably managed forests.

“With the structure being built entirely from CLT, Forté will reduce CO2 equivalent emissions by more than 1,400 tonnes when compared to concrete and steel – the equivalent of removing 345 cars from our roads.

“Designed and produced in a factory environment, Forté will be built 30 per cent faster, safer and with higher precision than its material counterparts. It will also result in reduced construction traffic to and from site, cause less disruption to the community and produce less waste,” said Coleman.

He added, “Using CLT offers better thermal performance and requires less energy to heat and cool – which means reduced energy and water costs which averages savings of $300 per year or up to 25 per cent less than a typical code-compliant apartment.

“The benefits of the CLT structure, along with design elements such as dual aspect apartments where bedrooms and living areas have abundant natural light and fresh air, reduced chemical emissions from paints, carpets, joinery and wood products all make it a healthier and more enticing living option,” said Coleman.

The building will offer 23 boutique residential apartments and four townhouses with prices ranging from $430,000 to $795,000.

To see full details of this exciting new timber development click here.

(Source: Architecture & Design)

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... and finally ... Single female seeks companion + a couple more...

This has to be one of the best singles ads ever printed. It is reported to have been listed in the Cornish Guardian.

SINGLE BLACK FEMALE seeks male companionship, ethnicity unimportant.
I'm a very good girl who LOVES to play. I love long walks in the woods,
riding in your pickup truck, hunting, camping and fishing trips, cosy
winter nights lying by the fire. Candlelight dinners will have me eating
out of your hand. I'll be at the front door when you get home from work,
wearing only what nature gave me. Call 01272-6420 and ask for Annie,
I'll be waiting...

Now scroll down...

Over 150 men who responded found themselves talking to the Truro RSPCA.

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almost finally ... So, you're telling me ...

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Buy and Sell

Finally, finally... What we all hated about EXAMS!

That's all for another Wednesday.

We hope you enjoyed the news and this week's joke.

Have a safe and prosperous week.

John Stulen
Editor - WoodWeek

PO Box 6160
Building X91, Scion Campus
99 Sala Street, Rotorua, New Zealand
Tel +64 27 275 8011
Web www.woodweek.com

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