WoodWeek – 6 December 2017

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Greetings from your WoodWeek news team. Looking to markets where, in NZ commodity terms, forest products are bucking the primary industries trend as prices continue to gain. Wood pulp prices were up 13 per cent in the month on strong Chinese demand, low inventories and supply disruptions for other major suppliers. Log export prices were up 0.9 per cent.

Change is coming down south as OneFortyOne Plantations announces the purchase of Nelson Forests. It is currently 100% owned by investment funds, through Global Forest Partners. History suggests change comes down there in years ending in a ‘7’.

In the past week, the mainstream media has picked up a story portraying forestry poorly again – this time relating to employment standards in contract crews in a number of regions. Labour inspectors from the Ministry of Business, Innovation and Employment carried out audits of 34 forestry contractors across the North Island this year and found 20 of them didn't comply with at least one employment standard.

In Northland, national forestry leaders have welcomed a government move to make foreign forestry investors commit to processing more wood in New Zealand. Forestry Minister Shane Jones made the announcement at a meeting of forestry industry leaders in Whangarei late last week.

Mr Jones said the move was all about creating more jobs and ensuring there was more value added to the country's wood-processing sector. It would also go some way to helping the Government's commitment to plant one billion trees in conjunction with private industry.

In other encouraging market news, the New Zealand carbon price hit its highest level in more than six years on speculation the Labour-led government is likely to lift a cap on the maximum price emitters pay. It last traded at $19.85 per tonne, the highest level since May 2011, according to brokerage OMF.

Finally, we’ll take a bit of a break for the holidays after next week:
Last Woodweek issue for 2017: Wednesday 13 December
First Woodweek issue for 2018: Wednesday 17 January
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Nelson Forests sold to OneFortyOne Plantations

Nelson Forests Ltd is pleased to confirm that an agreement has been reached regarding the sale of the business to OneFortyOne Plantations (OFO), a leading Australian forestry company. The transaction is subject to Overseas Investment Office (OIO) approval and is expected to close during 2018.

Nelson Forests is currently 100% owned by investment funds, advised by Global Forest Partners LP, a US-based timberland investment management organisation.

Nelson Forests manages 78,000ha of forest in the Nelson/Tasman and Marlborough regions and the Kaituna Sawmill near Blenheim.

Lees Seymour, Managing Director of Nelson Management Ltd (the management company for Nelson Forests Ltd) indicated that this is a very positive outcome for everyone involved, noting that “we will continue to operate the business to the very high standards that we hold ourselves to while the OIO considers the transaction.”

“All arrangements with staff, customers and suppliers and contractors will continue on,” says Seymour. “Nelson Forests provides many benefits for the Nelson/Tasman and Marlborough communities and to the rest of New Zealand such as jobs and domestic supply of logs and timber. I am pleased with OFO’s committment to continuing and enhancing the benefits delivered to New Zealanders. This is a change of ownership but the business and its fundamental values remain the same.”

Looking back in history, change has come in years ending in ‘7’:

1927 - First planting in Golden Downs Forest;
1987 – NZ Timberlands was established to manage the commercial side of the business as Government separated conservation assets from plantation forest;
1997 – Joint venture purchase by Weyerhaeuser NZ Inc;
2007 – Global Forest Partners (GFP) formed Nelson Forests Limited (NFL);
2017 – Sale announced to OneFortyOne Plantations.

To see more of the history Nelson’s iconic forest company click here

Source: Nelson Forests

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Audit: Employment standards breaches

Forestry audit reveals 'widespread' breaches in employment standards - Up to 59 per cent of the forestry industry may be breaching employment standards and that may not even be the full extent of it, according to a Government audit of the some regions of the sector.

Labour inspectors from the Ministry of Business, Innovation and Employment carried out audits of 34 forestry contractors across the North Island this year and found 20 of them didn't comply with at least one employment standard.

Data from the audit, obtained by Stuff, revealed breaches were "widespread" within the forestry industry and of even greater concern was that further breaches of minimum employment standards were "likely to be hiding" due to "poor recording".

Forestry Minister Shane Jones has sent a warning to the industry saying it didn't end well for employers in the fishing industry "who were either oblivious to their legal obligations or took their employees for granted".

The breaches include employees being paid less than minimum wage, not being paid the correct holiday entitlements or the right public holiday pay.

Others included employers not keeping accurate time, wage or holiday records or having written employment agreements with all employees.

Jones said while the safety record in the forestry sector had improved from the "bleak times of five or six years ago" there was still a "long way to go" with getting the basics right.

That meant greater investment in the "safety culture" and training was needed.

More >>

Source: Stuff.co.nz

(Editor's note: The original reporting mentioned up to 90% breach. We have edited to reflect numbers reported: 20 of 34 companies audited is 59%.)

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Northland forest leaders welcome restrictions

Northland and national forestry leaders have welcomed a government move to make foreign forestry investors commit to processing more wood in New Zealand.

Forestry Minister Shane Jones made the announcement at a meeting of forestry industry leaders in Whangarei late last week.

Mr Jones said the move was all about creating more jobs and ensuring there was more value added to the country's wood-processing sector. It would also go some way to helping the Government's commitment to plant one billion trees in conjunction with private industry.

He said overseas investment in forestry that brings genuine benefits to New Zealand's economy and its environment will be welcomed.

The inclusion of a Forestry Directive in the new Ministerial Directive Letter issued to the Overseas Investment Office (OIO), sets out the Government's policy approach to overseas investment in sensitive New Zealand assets.

"The inclusion of a specific directive for forestry recognises the importance of forestry to the New Zealand economy and regional communities.

"As part of the coalition agreement, this Government has committed to an ambitious tree-planting programme that will require a partnership between the Crown and the sector itself. High-quality overseas investment can certainly help us achieve this goal,' Mr Jones said.

"Forestry, and the processing of forest products, are significant sources of employment in our regions and we want to build on that to get more people into a sustainable workforce.

"We want to encourage value-added wood processing to generate jobs and other benefits for our regions. This directs the OIO to place high importance on increased processing of primary products and the advancement of the Government's policies when assessing applications for consent.'

The minister said about 70 per cent of the Northland's and the country's forestry interests are owned by overseas companies and he has had enough of raw logs being 'scooped up and sent overseas, with no value added to the New Zealand economy'.

Tai Tokerau Maori Forestry Collective leader Pita Tipene said the plans would help to create jobs in Northland, both in planting more trees and in wood processing.

The collective owned about 60,000ha of forestry and Mr Tipene said Ngati Hine, which owned about 5500ha of land, had just submitted a proposal to the Government aimed at getting help to plant about 4000ha in forestry to be harvested and the rest in manuka to set up a manuka honey industry.

'We want to get the trees into the ground as soon as possible. But it will take 30 years to get a return on forestry so we want to get the manuka in so we can start making honey and benefiting our people,' he said.

Wood Processors and Manufacturers Association chairman Brian Stanley also welcomed the plans, saying this was an exciting time for forestry and wood- processing industries.

More >>

Source: Northern Advocate

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NZ Logger - Dec/Jan issue out now!

Harvesting steep slopes using winch-assist technology is now firmly established in this country and while NZ Logger has sampled most of the new systems on offer there was one notable gap in the magazine's coverage – the Remote Operated Bulldozer developed in Northland, which is the subject of an Iron Test in the December 2017- January 2018 issue.

Also covered this month is the annual ForestTECH conference in Rotorua, which highlighted some interesting ideas and technologies that will become part of the fabric of forestry in the future.

The magazine's quarterly focus on the New Zealand milling and processing sector looks at the recently upgraded sawmill at Millburn, now an essential part of the Pan Pac organisation.

And a pair of Nelson-based log truck drivers who have clocked up 94 years between them are profiled.

Plus much more, in the December 2017-January 2018 issue of NZ Logger, now on sale at selected service stations, or to subscribe for either the printed version and/or the digital version, visit www.nzlogger.co.nz.

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Robotics research for forestry work

Robots could soon take over dangerous forestry jobs - Some of the most dangerous and labour intensive jobs in the primary sector could soon be done by robots.

Researchers from Lincoln Agritech, Scion, and several universities around the country are working to develop robots that can be trained to work alongside people in the sector, and in manufacturing.

The $2 million project will take place over the next two years.

Agritech's group manager in precision agriculture, Armin Werner, said they would investigate how sensors and artificial intelligence could be used to help robots understand their surroundings and adapt to them.

He said they would provide enormous benefits to the primary sector, especially in dangerous industries such as forestry.

"We have so many hazardous working conditions. In forestry for example, felling trees, pruning trees in very steep and harsh environments, it is a very risky work area and in the future we need to support that work with robots that can adjust to the different situations in the forest," he said.

Dr Werner said robots would also prove helpful in fruit production and helping apple, kiwifruit and grape growers with pruning.

More >>

Source: Radio New Zealand

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Southern harvesting training boost

Skills shortages and attracting new entrants into harvesting operations is a major issue within the forestry industry right now. It’s been this way for some time and it’s not unique to any one region. In fact, the same issue is being grappled with in every other country with an active forest industry. Harvesting crews are continually being challenged by the lack of young skilled people available to work in rural areas.

To address the issue, some forestry companies and contractors are now working alongside some of the technology institutes. The aim is get younger people trained in practical operating skills, particularly around mechanised harvesters. "We’re looking for early risers, hard workers and those interested in running and operating multi- million dollar forest harvesting machines" says the Southern Wood Council Chairperson, Grant Dodson.

Monday this week saw the start of a new scheme in the lower South Island of New Zealand. It’s aimed at helping train the future generation of forestry machine operators in Otago and Southland. In Otago alone, it’s estimated that another 40 logging crews will be required in just the next 6 years.

One logging contractor, Mike Hurring, frustrated with the lack of trained youngsters coming into the industry, a couple of years ago purchased his own training simulators based on a John Deere mechanised harvester. It was set up in a purpose-built facility at Balclutha. The centre’s 12ha property in addition to the simulator and training room, allows hands-on experience on a loader, harvester, forwarder and a processor.

With the backing of local forestry companies and Competenz, the first group of six apprentices (photo) drawn from logging crews across the region started a new course at Mike Hurring Logging, under the experienced eye of Neville Muir. The apprentices will come together for five one-week training blocks over the next 10 months. They will concentrate on theory units, basic machine and chainsaw operation in the first week, with time each day set aside to use the simulators that have been set up in a designated operator suite.

Following the 10 months of centralised training, apprentices who pass the course will come out with two level 3 qualifications, basic machine operator and manual processing. The intention is then they continue with normal assessments back in their crews working towards level four machine operator qualifications. "It’s hoped that if successful, that a second stream of apprentices will be put through the same training programme after 10 months" says Mr Dodson.

This new venture could not have got off the ground without the financial support of forest owners and management companies these young people work for, Rayonier- Matariki Forests, Log Marketing, IFS Growth, and Ernslaw One.

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Change needed in forestry industry

Mechanisation change needed - A major step change must occur to take mechanisation to a whole new level to help improve forestry safety, a forestry safety seminar has heard.

Forest Enterprises’ Dan Fraser, who has been involved in the forestry industry here for close to two decades said it was time to lift the bar.

Forestry in Europe has been using remote controlled equipment — yarders, skidders and forwarders for more than 25 years.

“On my first trip to Europe, a large-scale German logging contractor said to me ‘Daniel, I feel very sorry for your loggers — you dress them up like popsicles and you call that safety’.

“I was taken aback by that, and he went on to say Europe had problems with the cost of labour being too high, a shortage of people — too many people getting hurt — the same problems as us.”

In response, they engineered new harvesting systems, Mr Fraser said.

Here, we were not keeping up. European yarders have tension-monitoring systems on every rope to prevent overloads, ropes last for six years and are part of the hauler, not a consumable.

“Tethered machines are new technology in New Zealand but every machine you could imagine is tethered in Europe and has been operating like that for many years. Remote control is often the normal, not the exception.” 'You dress them up like popsicles and you call that safety'

Mr Fraser said in Europe, they continue to leap ahead and now have electric operating, based on the original remote-controlled design.

“The power output of electric is phenomenal. It is cheaper to operate and an environmental step forward.

“We are right at the cusp of this technology being available in and suitable for New Zealand.”

However, Mr Fraser said right now it is not a simple step of ordering a machine.

“European logging equipment is smaller and designed for harvesting smaller, lighter trees, so needs development.

“Our Gisborne terrain has often difficult soil types and slopes posing further significant challenges,” he said.

“There is some great innovation and progress with New Zealand manufacturers but many contractors/companies are just hanging back watching.”

In the short-term, contractors needed to be banging on these manufacturers’ doors and showing the demand in New Zealand.

“As forest owners/managers we must be planning and facilitating this new technology, employing only certified contractors who embrace taking these steps quickly as possible.”

Mr Fraser said future training demands should move away from basic chainsaw skills and incorporate sophisticated machine-operator training and teleoperation.

“That is the future of this industry. We need to lift the bar so we are attracting more great people into this industry. Wouldn’t it be great to have more young people finishing university and choosing to work in the forest?

A lot of excellent work had been done around safety but more rules and more audits were just another administrative control and in his point of view more “fluff around the edges”.

“The real control is engineered systems, mechanisations, teleoperations and it’s not pie in the sky stuff. It’s already happening elsewhere and if we can adopt this strategy, accident rates will come down, the environmental footprint will reduce and forestry can be a highly-respected industry that all kinds of people will want to work in as a life career.”

Source: Gisborne Herald

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Tier 4 engines for John Deere 900 series

John Deere equips certain tracked carriers with Final Tier 4 engines - The 900M-Series tracked feller bunchers and 900MH-Series harvesters have the new engines.

With the required emissions change, John Deere indicate that their FT4 engines maintain power density, torque, and transient response; resulting in improved productivity, uptime, and more value for the machines. Fuel economy has improved and the design of the engine after-treatment system results in low Diesel Exhaust Fluid (DEF) usage. Deere state that one can no longer just talk about the improved fuel consumption of the FT4 final engines, but one must refer to overall fluid economy. If less fluid is used, there is less handling and storage requirements.

John Deere has also made changes to the machine line-up, and improved the structure, design and horsepower on select machines. John Deere offers three 900M-Series tracked feller buncher models, the 903M, 953M flat bottom and 959M leveling machines, as well as two 900MH-Series harvesters, the 953MH flat bottom and 959MH leveling machines. All of the 900M-Series and 900MH-Series machines feature a redesigned engine enclosure, improving structural strength while maintaining good serviceability. In addition to all of the 900M-Series and 900MH-Series machines now having 330 horsepower (224 kW), the 959M feller buncher and 959MH harvester continue to have a good leveling envelope, maximizing operator comfort and performance requirements in demanding steep slope logging applications.

Other updates include an improved LED work lighting option, and the expansion of the Disc Saw Felling Head option availability. This includes the 22-inch (56 cm) felling head, which is now available for all of the 900M-Series tracked feller bunchers. The John Deere M-Series and MH-Series machines are available with JDLink™ five years in base. JDLink remotely connects owners and managers to their machines and dealers, providing alerts and machine information to better manage where and how equipment is used.

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Government recognises land differences

The Forest Owners Association says the government would be jeopardising its billion-tree target if it hadn’t separated forest and farmland in its ministerial directive to the Overseas Investment Office.

The government has just publicly released a ministerial directive to the OIO, with separate provisions for forestry.

Forest Owners Association President Peter Clark says he doesn’t want to comment on direct foreign investment in farmland, but he says the government has been realistic in separating out forestland use.

“The great majority of our forestland is owned by New Zealanders and I can’t see that ever being changed,” Peter Clark says.

“The overall industry provides employment in regions that critically need jobs, such as Northland and the East Coast, and we have become a major export industry.”

But Peter Clark says there is also a strong case for direct foreign investment in forestry on environmental grounds.

“My understanding is that the new government’s intention to see a billion trees planted in the next ten years was largely reasoned on plantation forestry being the only immediate and available tool to reduce New Zealand’s net greenhouse gas emissions to a level anywhere near Paris Agreement commitments.”

“Most of the land to plant the extra trees on, to meet the billion-tree target, will be Maori or farmer owned.”

“But overseas investors bring capital and market connections which can stretch the government dollar a lot further and will ensure what is harvested has been well managed.”

Peter Clark says the provisions in the ministerial directive requiring the OIO to ensure overseas forestry investors support the local processing industry are probably not necessary.

“We already support local processing. New Zealand processors acknowledge forest companies offer supply to them,” Peter Clark says.

“Even though some grades and ages of logs are of no interest to New Zealand processors, forest growers need a diversified marketplace, and that includes supply to local processing.”

“We’ve spent a lot of time in the past few weeks engaging with sawmill and other processing industry people in Northland, where a declining production curve, as forests are harvested, cause particular supply problems for that region.”

“The largest forest companies in Northland, where the log supply profile is most critical, are already doing what they can to make sure obstacles to equitable local supply are removed.”

“The success of domestic wood processing depends in part on consistent supply. That is only possible if there are consistent policies over at least 25 years, so that an even-aged forest is established and replanted.”

“Doubling the planting rate, which is the government’s aim, will help future-proof wood supply for domestic processors,” Peter Clark says.

“We anticipate an active participation from government, and a Wood First government construction policy to back it up. Forest owners, some of whom are foreign, need a supportive OIO approach to enable them to amalgamate small forest and land holdings and grow stands on to an age that local processors can use.”

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NZ carbon price hits 6 year high

NZ carbon price hits highest level in more than 6 years as govt seen lifting price cap - The New Zealand carbon price hit its highest level in more than six years on speculation the Labour-led government is likely to lift a cap on the maximum price emitters pay.

The price for a New Zealand carbon unit under the Emissions Trading Scheme last traded this morning at $19.85 per tonne, the highest level since May 2011, having traded in a range around $19.30 a tonne for the past couple of weeks, according to brokerage OMF.

New Zealand is reviewing its emissions trading scheme, which currently includes a $25 per tonne cap on the price emitters have to pay the government for liable emissions. Green Party leader and climate change minister James Shaw told industry publication Carbon News that he expects to announce before Christmas the process to establish a climate commission, and that officials are about to begin work on outstanding issues from the latest review of the ETS, including the carbon price cap. Shaw told Carbon News that he believes carbon prices need to be higher than $25, although he noted the commission will have some say over those prices.

"That's a pretty massive hint that it might be his intention to raise the $25 cap," said OMF carbon dealer Karl Arns. "The big question mark is around the government and what tweaks they will be making to the emissions trading scheme in the new year", Arns said, noting that Shaw's comments, although his personal view, are "a good signal".

Arns said there was little volume available at current prices, with many sellers having traded their units prior to September's election for around $17-to-$18 a tonne.

"There is not a whole lot of supply out there at these levels. The market is trading up because there are more buyers than sellers," he said. "A lot of sellers have done their volume and the market is just trying to find the level where there is more volume available."

While emitters have to buy, foresters flush with cash from high log prices were in no rush to sell given the positive outlook for carbon prices, Arns said.

Under Shaw's predecessor, National's Paula Bennett, the $25 cap was expected to stay for now to ensure major industrial emitters didn't face a spike in carbon prices, although Bennett had signalled it could be reviewed in the future.

"That cap price was extremely likely to be raised at some point," Arns said. "Under National it was later rather than sooner, but under the new coalition government it's probably looking like sooner rather than later and it could be as early as next year. If they push that out to $30 or higher, then you are going to see carbon prices react immediately on the back of that."

Arns said the outlook for the market was positive.

"The price has reacted for a reason and with the government's review in mind it's hard for NZUs not to rally if that cap is lifted."

Source: BusinessDesk via Scoop News

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Northport launches vision for growth

Northport is celebrating its 15th anniversary. Cargo volumes at Marsden Point have more than doubled since the port opened in 2002 to a record 3.64 million tonnes last financial year. Ship calls have increased from 93 a year to 250 a year over that period, with berth occupancy now at a record 66.4 percent, up from 52.9 percent just five years ago.

The company, a 50/50 joint venture between Marsden Maritime Holdings Ltd and Port of Tauranga, is marking these milestones by launching a public discussion about the potential future size and shape of the port.

It has published its ‘vision for growth’ online at www.vision4growth.co.nz and is inviting people to ask questions or make their views known to its management team via the website.

Chief executive Jon Moore stressed that the vision was not a confirmed plan, or even a formal proposal. No decision has yet been made by Northport’s Board to grow the port.

“It’s a conversation-starter; a vision based on what we believe is possible here,” he said. “At this early stage all we’re doing is prompting a discussion among tangata whenua, other Northlanders, our neighbours, customers, port users, suppliers and other stakeholder groups with an interest in what happens here, about what role they see Northport playing in the future of our region.”

Mr Moore said that in recent years, and particularly in the run-up to the recent general election, there had been much discussion about what should happen at Northport. Although Northport Ltd had no firm growth plans at this stage, its management team wanted to make public their vision for future growth.

“Some of the most frustrating narrative we’ve listened to over recent months has been around the perception that it’s not possible to grow Northport beyond its existing size,” Mr Moore said. “Our vision for growth demonstrates clearly that this is not the case. It introduces some reality to the discussion and shows that we are, in fact, well positioned to support economic growth both in Northland and in Auckland.”

Mr Moore said Northport would need to grow if it was going to play a key role in the future growth of the upper North Island. “Importantly, we don’t need to expand northwards into the harbour. Instead, we can extend our existing linear wharf east and west,” he said.

Northport Ltd’s vision for growth at Marsden Point includes 1,390m of linear berth, more than twice its current length, and involves growing its overall footprint from 48ha to 75ha.

Mr Moore said his team felt this was necessary if Northport was to play a meaningful role in developing Northland's economy and supporting Auckland's growth.

“Growing a port is an expensive and complex undertaking. To support economic growth and meet the forecast demand for shipping across the upper North Island we need to plan and build for the future, not just today.”

The vision Northport Ltd is making public today is based on many years of research, technical planning and engineering input from a raft of experts in this field. The company now has a good idea about what is physically and technically possible at Northport, and what isn’t. It has not put any dates to its decision-making process around possible growth.

“We know full well that what we look like in the future will be shaped to some extent by our communities and our customers,” Mr Moore said. “So first we want to hear from these groups about what role they see us playing in Northland’s and the upper North Island’s growth.” This initial discussion period will be followed by further technical and environmental studies and modelling, and if there are no surprises the company will then embark on a detailed stakeholder consultation exercise.

Source: Northport
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Buy and Sell

... and finally ... Welsh pronunciations

Three tourists were driving through Wales.
As they were approaching Llanfairpwllgwyngyll on the Welsh island of Anglesey, They started arguing about the pronunciation of the town's name.
“LLan-fair-poo-wee…” said the first.

“No no – it’s llan-fair-pi-well…” argued the second.
“I think we need to ask a local about this,” the third sighed.
They argued back and forth until they stopped for lunch.

As they stood at the counter, the third asked the blonde employee:
"Before we order, could you please settle an argument for us? Would you please pronounce where we are... very slowly?"
“Sure!” said the girl behind the counter. She leaned toward them and said: “Burrrrr-gerrrrr-Kinnnnng.”

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

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John Stulen
Innovatek Ltd
PO Box 1230
Rotorua, New Zealand
Mob: +64 27 275 8011
Web: www.woodweek.com

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