WoodWeek – 23 January 2019

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Greetings from your WoodWeek news team. We’ve got plenty of industry updates for you this week. First up, after almost 30 years, John Deere and Hitachi have ended their distribution arrangement of Deere machinery in Australia. In other international wood news researchers have developed a new technique based on gasification, which offers a sustainable way to turn forest industry by-products, such as bark, sawdust and forestry waste, into transport fuels and chemicals.

Moving to markets, where, in December, the official China manufacturing purchasing managers index (PMI) fell below 50 for the first time in the past 12 months reflecting a slowing of manufacturing activity. The China PMI is widely regarded as a good leading indicator of economic activity. On the other hand we also have news today that China's forestry sector output reached 7.33 trillion yuan (about 1.1 trillion U.S. dollars) in 2018, 2.88 percent up from that in 2017 (and yes, that’s a lagging indicator).

Moving to international logging developments, we're seeing strong interest from loggers and foresters in both Canada and USA for our upcoming HarvestTECHX conference coming in March to Vancouver. Due to heavy demand, our partners for the field day are setting up a repeat second day to cater for more organisations. This event sold out when it last ran in Vancouver in 2016. Register now to avoid disappointment.

Our international line-up of speakers will outline how logging is set to get another boost from technology. Leading loggers in Canada, & USA have quickly adopted new mechanised machinery for harvesting steep slopes. Now a new generation of technologies for remote control machine operating is set to be unleashed. This paradigm shift in operation will bring both labour and safety gains.

Remote tree felling yarders and fully hydraulic controls are now being deployed in production operations. The next step - controlling machines remotely (on-site initially and then off-site) - will make logging safer. With no workers present on forest slopes as tree stems are felled, bunched and extracted, they can’t possibly be injured. Register now to get the best rates at https://harvesttechx.events.

One of last week’s stories on tree-planting worker challenges has generated further comment from Forest & Bird and workers’ advocates. Oddly, this is one area where labour-saving technologies have not been the subject of any commercial attention (that I’m aware of anyway …). Wonder why that is?

Finally, we have one story before today’s humour on the un-recyclability of plastics. It’s there as a thought-provoker. Just above that story is one about how wood in bio-plastics could change that.

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John Deere and Hitachi to end arrangement

From May John Deere Construction & Forestry and Hitachi Construction Machinery (Australia) Pty Ltd. (HCA) have agreed to end a successful 29 year distribution arrangement of Deere branded and manufactured construction, forestry, and compact machinery in Australia. As the joint businesses expanded over the years, so have each company’s priorities in various markets around the globe.

“John Deere Construction & Forestry Company (Deere) and Hitachi Construction Machinery Co., Ltd. (Hitachi) have a long and successful global partnership spanning multiple continents and product lines,” said Dan Fitzpatrick, global director of construction & forestry sales outside of the Americas.

“This partnership served both companies well and supported each company’s global growth over the multi-decade relationship. Over the course of the next five months Deere and HCA will work together to execute a seamless transition of business to John Deere Limited’s newly appointed construction and forestry dealers in Australia.”

As of May 1, 2019, RDO Equipment Pty Ltd (RDO Equipment) will be appointed the authorized John Deere Construction & Forestry Dealer for John Deere Limited in New South Wales, Victoria, Queensland, South Australia, Tasmania, and the Northern Territory. AFGRI Equipment Pty Ltd. (AFGRI) will be appointed the authorized John Deere Construction & Forestry dealer for John Deere Limited in Western Australia.

“John Deere Limited, HCA, RDO Equipment and AFGRI are committed to working together to ensure this transition has minimal impact on customers’ access to machines, parts, and/or service,” said Fitzpatrick.

“Similarly, John Deere Limited, HCA, RDO Equipment and AFGRI are committed to smoothly transitioning customers who have existing agreements and service contracts with HCA. We believe this change in distribution will allow both companies to increase focus on their respective brands and provide a world class experience to customers across Australia.”

The changes announced in this press release have no impact on Deere and Hitachi’s partnerships or distribution arrangements outside of Australia.

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$36 million to tackle regional erosion

Te Uru Rakau (Forestry New Zealand) has announced funding of almost $36 million through the Hill Country Erosion Fund (HCEF) to enable much-needed erosion control in the regions.

The HCEF supports proposals to protect our most vulnerable hill country landscapes, where the main treatment is tree planting.

“We’re pleased by the level of interest from councils, with 12 applications received in this latest round – four of which were from regions that had not previously applied,” says Julie Collins, Deputy Director-General Forestry and Head of Te Uru Rakau.

“It shows the importance they are placing on sustainable land management and treating erosion in their regions.”

Ms Collins says the loss of productive land through erosion has a significant impact on the environment and the sustainability of New Zealand land.

“The annual cost associated with hill country erosion is estimated to be between $100 million and $150 million through lost soil, nutrients and production, and damaged infrastructure and waterways,” says Ms Collins.

“The 12 new HCEF programmes will take place between July 2019 and June 2023 and will deliver significant improvements in erosion control. For example, these range from building regional capacity and capability to plant trees, to farm planning and land treatments including planting poplars, willows and other indigenous and exotic species.

“We estimate that over four years, these programmes will result in more than 13 million trees being planted and treatment of more than 21,000 hectares of land,” says Ms Collins.

“These will contribute to the Government’s One Billion Trees Programme, and deliver environmental and a range of other benefits across the country.”

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China PMI: First fall in 12 months

China Purchasing Managers Index (manufacturing) for December 2018 – In December 2018, the official China manufacturing purchasing managers index (PMI) fell below 50 for the first time in the past 12 months reflecting a slowing of manufacturing activity. An index of 50 is the threshold between positive and negative sentiment.

The press release from the National Bureau of Statistics mentions that PMI for medium and small sized enterprises were both below 50.


So on one hand:Many of the leading indicators for the Chinese economy continue to show weakness on both the export and domestic manufacturing front. Weakness in domestic demand has been much more pronounced than anticipated.

But on the other hand:
The Chinese government has in place measures aimed at boosting disposable income through tax adjustments. There has also been talk of incentives for SMEs to try and avoid job losses. On the international trade front it seems as if some import tariff will be lowered.

While many observers anticipate a protracted economic slowdown, judgements on the direction of the economy solely on the manufacturing PMI can be misleading as this does not include construction which is covered in the non- manufacturing PMI. China’s PMI for all sectors was still above 50 in December 2018 from 52.8 in the previous month.

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Source: ITTO TTM Report for January and National Bureau of Statistics of China

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China: … and on the other hand

China's forestry output tops 7 trln yuan in 2018 – China's forestry sector output reached 7.33 trillion yuan (about 1.1 trillion U.S. dollars) in 2018, 2.88 percent up from than in 2017, according to the National Forestry and Grassland Administration.

The growth came amid the country's ongoing drive for environmentally-friendly development, as the government banned grazing on degraded grasslands, increased financial input and stepped up law enforcement in the sector.

China's desertified land has shrunk by 10 million hectares since 2012, while nearly 34 million hectares of forest has been planted, bringing the national forest coverage to 21.66 percent.

China unveiled a plan last November to enhance land greening and boost domestic ecological resources. Under the plan, China will increase its forest coverage to 23.04 percent by 2020, while the volume of forest resources will expand to 16.5 billion cubic meters.

Source: Xinhua Net

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Do you employ people? Read on …

If you employ people in New Zealand, then you should know about changes to the Employment Contracts Act that took effect in December 2018.

When: 12 December 2018

What: Changes to the Employment Relations Act now in effect include the following:

  • Union representatives can now enter workplaces without consent, provided the employees are covered under, or bargaining towards, a collective agreement.
  • Pay deductions can no longer be made for partial strikes.
  • Businesses must now enter into bargaining for multi-employer collective agreements, if asked to join by a union.
  • Employees will have extended protections against discrimination on the basis of their union membership status.

What you need to do: To learn more about these and other changes coming into effect on 6 May 2019 click on the link below or get your HR person to do it.

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Log exports contrast other commodity pricing in Dec

ANZ: NZ commodity price slide slowed in December - New Zealand commodity prices fell for a seventh straight month in December, with gains in log, beef and lamb prices not enough to offset weaker dairy returns, ANZ Bank’s monthly commodity price index shows.

The world price index fell 0.2 percent last month, the smallest of the recent declines, and ended 2018 3.4 percent lower than a year earlier.v In local currency terms, the index fell 0.9 percent in December and was down 2.2 percent for the year.

“A strong year for forestry prices was not sufficient to offset the weaker prices recorded in the dairy, horticulture and aluminium sectors,” ANZ agri-economist Susan Kilsby said.

The fact forestry returns have continued to push higher, despite increased harvest volumes, is “pretty positive for the industry,” she said.

Dairy prices, which have since shown signs of recovery, fell 2.5 percent in December. They were down 6.2 percent for the year and at their lowest level since mid-2016.

ANZ said the recent improvement in the dairy market will likely be captured in the bank’s January report.

“Global dairy markets are benefiting from a slowing of milk production across the main dairying regions, and a decrease of in-market stocks,” Kilsby said.

Prices rose 2.8 percent at Fonterra’s Global Dairy Trade auction this week, the first for 2019. It was the third consecutive increase in the fortnightly auction’s index.

ANZ’s report showed aluminium prices continued their recent slide, down 2 percent last month and 8.7 percent for the year.

Kilsby noted that prices peaked in April and have trended down since. Sanctions on Russian producer Rusal are expected to be lifted later this month, which may put further downward pressure on prices.

“Rusal, which is responsible for about 7 percent of global production, is reported to have about 200,000 tonnes of aluminium currently warehoused in Rotterdam. A slowdown in global market activity, particularly in China, is expected to limit demand for aluminium, putting further downward pressure on prices.”

About 90 percent of the production from Tiwai Point, the country’s sole aluminium smelter, is exported. Last month, the smelter formally marked the resumption of production from the site’s fourth pot line after a six-year break.

On the plus side of the export ledger, ANZ’s meat and fibre index rose 2.7 percent in December, having gained 1.1 percent the month before. It ended the year up 0.8 percent.

ANZ said returns for both lamb and beef lifted in December, while venison pricing was also “upbeat”. International lamb prices ended the year 6.1 percent higher. Beef prices were still down 3.3 percent from the prior December, despite improved demand from the United States for manufacturing beef.

“Wool prices remain in the doldrums, falling 2.3 percent in December to end the year down 3.6 percent.”

The horticulture index rose 0.9 percent but was still down 9.6 percent for the year. Apple prices fell 14.8 percent during the year, with kiwifruit also down 7.4 percent, despite a lift in December as the last of this season’s fruit was sold through European markets, ANZ said.

Forestry prices rose 0.8 percent in December, having fallen 0.3 percent in November. They ended the year up 3.3 percent.

ANZ said the recent positive trend is expected to continue into 2019, given log stocks on wharves in China – New Zealand’s biggest market – are “very low”.

“The strength of this market has helped absorb the increase in the supply of logs being harvested in New Zealand,” Kilsby said. “Other main markets for New Zealand logs, such as Japan and India, are not as buoyant as China but need to pay competitive rates in order to secure supplies.”

Source: BusinessDesk via Scoop News

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Finland: Promise in new process for waste to energy

New technique based on gasification – VTT Technical Research Centre of Finland Ltd has developed a new technique based on gasification, which offers a sustainable way to turn forest industry byproducts, such as bark, sawdust and forestry waste, into transport fuels and chemicals. The new technique reduces carbon dioxide emissions by approximately 90% compared to fossil fuels.

The new approach uses gasification to turn biomass into intermediate products - liquid hydrocarbons, methanol or methane - in production units integrated with communal district heating plants or forest industry power plants. The intermediate products are processed further in oil refineries to make renewable fuels or chemicals.

VTT developed and piloted the new gasification process and evaluated the competitiveness of plants based on the technique in the course of a recently concluded project called BTL2030. The distributed generation process developed by the project team makes efficient use of the energy content of biomass. Approximately 55% of the energy content is turned into transport fuels and a further 20-25% can be used to provide district heating or to produce steam for industrial processes. The new technique reduces carbon dioxide emissions by approximately 90% compared to fossil fuels.

The process is based on VTT's low-pressure, low-temperature steam gasification technology, simplified gas purification and small-scale industrial syntheses. Thanks to the small-scale approach, the heat generated by the process can be used throughout the year, and the process can be fuelled with local waste. Finland's previous plans have involved considerably larger gasification-based diesel plants, the raw material demands of which could not have been satisfied with locally sourced waste.

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Source: VTT Finland

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Why no one wants to plant trees for $400 a day

Last week in Friday Offcuts we ran a story on the shortage of workers for planting trees. (see www.fridayoffcuts.com). It went like this: Pay rates of $400 a day are not enough to attract workers to plant trees, potentially putting a brake on the Government's one billion trees by 2028 campaign. Forest nurseries have doubled plantings to 100 million tree seedings in response to Government incentives, but finding staff is the biggest hurdle to getting them in the ground.

Forest Management director David Janett said the bottleneck was not so much acquiring seedlings from forest nurseries, but finding people to plant the trees. "We are fully booked up for this year." Planting rates in the North Island were reaching 60 cents a tree, which equated to pay rates of $300 to $400 a day. "And we still can't get people."

The story has had two reported feedbacks with RNZ running a response from Forest & Bird challenging the MPI programme itself (see here) and a worker advocate challenging the worth of the roles: Here's why no-one wants to plant trees for $400 a day - New Zealanders aren't taking short-term jobs because it's not worth their time to do so, workers' advocate say. They were responding to reporting last week of a shortage of people to plant the trees required by the Government's one billion trees by 2028 campaign.

Pay rates in the North Island are up to 60c a tree, or up to $400 a day if workers plant a tree a minute over 10 hours. There have also been reports of shortages of staff for meatworks, construction and agricultural roles.

First Union general secretary Dennis Maga said it was disingenuous to claim there were not enough willing workers.

"If you look at the industries that are claiming a worker shortage they're all low paid, some have even broken the law through the exploitation and human trafficking of migrant workers," he said.

"There's a reason no-one wants to work in these jobs, their time isn't worth the money and they often cannot afford to live on what some of these unethical businesses choose to offer. And it is a choice, right, what's really disheartening is that it's not like the money isn't there. Horticulture for example is one of our highest export earners."

He said many of the industries struggling to find workers had previously been staffed by international students but the number of students coming to New Zealand had dropped significantly.

In the 2017/18 financial year, there were 104,781 approved student visa applications. For 2018/2019, it was 44,970. "We end up with a split labour market. Kiwis won't do the dirty, dangerous low-paying jobs." He said employers finding it hard to hire should look at their strategy. "If they want to sustain their business in their industry they need to attract the young ones."

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Ixom seeks clearance to buy chemical plant

Ixom seeks clearance to acquire chemicals plant from Oji - The Commerce Commission has received a clearance application from Ixom Operations Pty Limited to acquire chemical manufacturing assets in Kawerau from Oji Fibre Solutions (NZ) Limited.

Ixom is headquartered in Australia but has chemical manufacturing, supply and distribution operations in several countries around the world. In New Zealand, Ixom supplies chemicals including sodium hypochlorite, hydrochloric acid and caustic soda. Ixom operates a sodium hypochlorite plant in Christchurch.

Oji is wholly owned by the Oji Group, which is a global pulp and paper company. In New Zealand, Oji operates two pulp and paper plants in Kinleith (the Kinleith mill) and Kawerau (the Tasman mill), and a mill for recycled product in Auckland. Oji has two chemical manufacturing plants which it uses to supply chemicals to the Kinleith and Tasman mills. It also sells sodium hypochlorite, hydrochloric acid and chlorine produced at its chemical plants to customers in New Zealand.

The proposed transaction would see Ixom take ownership of Oji’s chemical manufacturing assets in Kawerau.

A public version of the clearance application will be available shortly on the Commission’s case register.

Background - We will give clearance to a proposed merger if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market.

Further information explaining how the Commission assesses a merger application is available on the Commerce Commission website.

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Momentum building for bio-plastics

Opportunity for new bio-plastics industry - Bio-based plastics made from forest resource have been under study for years.

Many can serve as drop-in replacements for the fossil-fuel based plastics that most of us are familiar with, such as polystyrene and polyethylene.

Overseas the momentum for a new bio-plastics industry is building. The UK government has set a target of eliminating all avoidable plastic waste by 2042.

Bioplastics will play a crucial role in achieving this target. The European Commission and the European Investment Bank (EIB) are launching a new €100 million fund to stimulate private investment in this bio economy.

A key opportunity for New Zealand is investigating ways forest slash might be turned into bio products including plastics. This would be an entirely new industry requiring careful integration of forestry practice with new technologies, systems and market opportunity.

Source: ForestX

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Almost finally … Statistic of the Year for 2018

This year, I served on the judging panel for The Royal Statistical Society's (RSS) International Statistic of the Year. We recently announced the winner: 90.5 per cent, the amount of plastic that has never been recycled.

Why is that such a big deal? Much like the Oxford English Dictionary's "Word of the Year" competition, the international statistic is meant to capture the zeitgeist of this year.

The judging panel accepted nominations from the statistical community and the public at large for a statistic that would shine a light on today's most pressing issues.

Last year's winner was 69, the annual number of Americans killed, on average, by lawn mowers — compared to two killed annually, on average, by immigrant jihadist terrorists and 11,737 killed annually by being shot by another American. That figure, first shared in The Huffington Post, was highlighted in a viral tweet by Kim Kardashian in response to the proposed migrant ban.

This year's statistic came into prominence from a United Nations report.

The chair of the judges and RSS president, Sir David Spiegelhalter, said: "It's really concerning that so little plastic has ever been recycled and, as a result, so much plastic waste has leached out into the world's environment. It's a great, growing and genuinely world problem."

Let's take a closer look at this year's winning statistic.

About 90.5 per cent of the 6.3 billion metric tonnes of plastic waste produced since mass production began about 60 years ago is now lying around our planet in landfills and oceans or has been incinerated. If we don't change our ways, by 2050, there will be about 12 billion metric tonnes of plastic waste.

When the panel first looked at this statistic, I didn't grasp what billions of tonnes of plastic meant. Based on a study from 2015 and some back-of-the-envelope calculations, that's the equivalent of 7.2 trillion grocery bags full of plastic as of 2018.

But again, I still didn't quite have a feel for how much that actually is. People tend to use distance measurements to compare numbers, so I tried that.

Assuming a grocery bag of plastic is about a foot high, if you stacked the grocery bags, you could go to the moon and back 5790 times. That started to feel a bit more real.

In fact, if you could monetise all of the plastic trash clogging up our environment — including the 12 per cent that is incinerated — you could buy some of the world's biggest businesses.

Assuming it costs US3.25c to produce a plastic bottle, we can estimate a grocery bag contains about US$1 ($1.46) of plastic material production. (I took one bag and filled it with 31 bottles.) So 7.2 trillion grocery bags is equivalent to US$7.2 trillion.

What can you buy with that? Apple, Amazon, Google, Microsoft, Walmart, Exxon, GM, AT&T, Facebook, Bank of America, Visa, Intel, Home Depot, HSBC, Boeing, Citigroup, Anheuser-Busch, all the NFL teams, MLB teams and Premier League football teams.

In other words, if someone could recycle all the unrecycled plastic, he or she would be the richest person on the planet.

A difficult aspect of statistics is putting numbers into a context we can wrap our heads around into a format that means something to us. All I can say is this speaks to me. It's time to clean up our act.

Source: NZ Herald

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Buy and Sell

... and finally ... Kiwis in the big smoke

Two Kiwis, Trevor and Jean, are walking down a street in Bondi in Sydney. Trevor happens to look in one of the shop windows and sees a sign that catches his eye. It says 'Suits $10.00 each, Shirts $4.00 each, Trousers $5.00 a pair'

Trevor says to his pal, 'Jean, look! We could buy a whole lot of those, and whin we get beck to InZid, we could make a fortune”. “Now whin we go unto the shop, you be quiet, okay? Just lit me do all the talking cause uf they hear our accint, they might not be nice to us. I'll speak in my bist Aussie accint.”

'No worries, smiled Jean, I'll keep my mouth shut.' They go in and Trevor says, 'I'll take fufty suits et $10.00 each, 100 shirts et $4.00 each, and fufty pairs of trousers et $5.00 each. I'll beck up my truck and ...'

The owner of the shop interrupts, 'You're from New Zealand, aren't you?' 'Well... Yis,' says a surprised Trevor. 'How the hill dud you know thet?'

The owner says, 'This is a dry cleaners!'.

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

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

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