Summary
• Vandecasteele reports strong demand for ipe decking.
• Martal has increased its range of specifications in key species.
• Carpentier has added more kilning and focused more on European hardwood.
• van Hoorebeke sold 60,000m³ of FSC-certified timber last year.
The 2008 International Timber market scenario, as described by Genevieve Standaert, marketing manager of global trader Vandecasteele, was the perfect storm. But while expecting the going to be tough for a while yet, her company and other leading Belgian suppliers to the UK do see calmer waters ahead. They also maintain there are potential positives for companies to exploit now if they combine caution with willingness to innovate and a heads up for new market opportunities.
“The problem in 2008 was that the economic downturn followed a period in 2007 when everybody was buying like hell and wondering whether there was enough timber in the world!” said Ms Standaert. “Naturally there were delays in deliveries from many areas and then all the contracts came through at once, just as demand was coming off its peak. The industry was left with a lot of timber that it paid high prices for and fewer people were buying.”
For exporters to the UK, Belgian traders agreed, the strength of the euro against sterling compounded problems. “And there’s no reason for the euro to be so strong, as all Europe is hit by the recession,” said Ms Standaert. “Most traders here would like to see it come down.”
Credit insurance
The lack of credit insurance Europe-wide has made life even more difficult, and Vandecasteele is clearly thankful that it has internally funded its own expansion in recent years – and, with the completion of its last giant warehouse in 2004 taking its total of undercover storage at Aalbeke to 12ha, the company now has capacity to stock 120,000m³ of hardwood and softwood.
The better market news, Ms Standaert maintained, is that the improving weather is now putting more spring into the step of timber traders in the UK and elsewhere. Vandecasteele is also encouraged by the fact that the sector has not universally traded down in the recession.
“Take decking,” she said. “Of course there’s demand for the cheap and cheerful, but we’re still doing well with ipe, the Rolls Royce of decking timbers. It highlights that there’s always demand for a quality, consistent product.”
Vandecasteele’s strategic move into more further processed timber (and it contracts out to a number of planing mills) has also stood it in good stead. “Five years ago we were hardly doing anything, but now we have a regular lorry going to the UK,” said Ms Standaert.
Resilient demand for certified
Another positive is resilient demand for certified timber and market willingness to pay a premium for it, even if it’s less than before.
“Out of every 20 enquiries we get today, half are for FSC-certified,” said Ms Standaert. “As a result, nearly all our tropical range is now FSC and we’re getting good volumes in certified species, such as sipo and sapele, in both dimension and random sizes. We also see demand increasing in the future as more high-profile projects use certified timber. We’re currently supplying a number of beautiful projects in the UK and we’re confident the London Olympics, which is committed to using only certified, will generate even more interest.”
Mechelen-based European and American hardwood specialist Martal echoed the view that the better end of the market has held up best. “We have customers who are always willing to pay a higher price for selected hardwoods and they’re still buying,” said UK sales representative Luk van Cauwenberghe.
Reflecting the strength of this business, he added, Martal has introduced new specifications, notably more fixed widths and dimensioned stock, including European 52mm “first grade oak in every width”.
Maintaining quality
The type of customers it sells to in the UK, the company believes, knows that trading down, even in the current economic climate, is a false economy.
“The weakness of the pound has of course affected business, but our UK customers are [geared] to using our inspected and regraded quality material and cannot afford to buy lower grades,” said Mr van Cauwenberghe. “Once you start being less demanding about quality, you lose money because of lower yield.”
The company’s ability, with 40,000m² of warehousing and big kilning capacity, to act as the customer’s stockist has also been an added advantage in a difficult market.
“We’ve maintained stocks so we can supply just in time and in the variety the market wants; every length and every thickness,” said Mr van Cauwenberghe. “And this service is still bringing us new customers.”
European and American white oak make up the bulk of Martal’s UK business, but cherry, maple, walnut and ash have also proved resilient, between them accounting for around 22% of sales – and all, the company said, are backed by proof of sourcing from well-managed forests.
Slight improvement
Well-known supplier to the UK Willy Carpentier has also detected a slight lift in the market.
“Since September, while our Belgian business has been quite stable, export markets generally dropped considerably,” said joint general manager Heidi Carpentier. “And in the UK we’ve faced the additional problems of a weak pound and the lack of credit insurance – for new customers it’s often just refused. However, in the last few weeks we have seen some improvement. The hope is now that this can be sustained through the summer.”
Despite the recession, Carpentier has also continued to push through new developments and undertaken some strategic repositioning. “We’ve invested in a kilning facility in France near our supplier sawmill,” she said. “This improves our efficiency, as we can dry on the spot, and it also has environmental benefits. We’re not having to transport the timber so far and the kilns are also heated by a renewable energy boiler using mill waste.”
The key change in the company’s market approach has been to focus more on its long-term specialism, European hardwood and notably European oak.
“Tropical Timbers and exotics were never the major part of our business and it made sense to concentrate more on building on our strengths,” said Ms Carpentier. “And with our sawmill and additional kilning capacity we have the opportunity to improve service and introduce new products in these areas.”
Oak beams
Among the items Carpentier has been developing are oak beams. “We’re also now offering oak cladding and are putting a new oak decking range through moulding trials,” said Ms Carpentier.
The past year has also seen the implementation of stricter environmental controls at the company.
“We already have PEFC and FSC certification, but are also now implementing Belgian Timber Importers Federation rules demanding more proof of legality from suppliers,” said Ms Carpentier.
A Belgian name that has, perhaps, been less familiar to UK buyers is van Hoorebeke Timber. But in recent years the Gent-based trader has focused on changing that.
“We were not well enough known in the UK and people weren’t aware of the size of our stock and variety of products,” said managing director Pierre-Emmanuel van Hoorebeke. “But since 2006 our UK business has grown rapidly. Visits to the market have improved our knowledge of our business partners and their requirements, and consequently we’ve developed our service, appointed the right sales people and increased sales.”
Among van Hoorebeke’s specialisms is Russian softwood and it has seen “significant development” in UK sales of Siberian larch, mainly for cladding.
Its commitment to environmental certification has also paid off in the market. “van Hoorebeke Timber and Panels as a business has now been FSC-certified for some time and in December 2008 our planing mill was also certified in its own right,” said Mr van Hoorebeke. “Overall, last year we sold 60,000m³ of FSC-certified timber and saw demand in the UK continuing to grow, mainly due to its increasing use in public construction projects.”
The company has pushed on with other developments too, introducing new species from Africa and Brazil and widening output from its plane-on-demand facility.
“We’ve also upgraded computer systems to improve sales service and logistics and invested in a CE marking machine for softwood grading,” said Mr van Hoorebeke.
Currently, he added, the company is also widening its net of suppliers in Russia, Brazil, Africa, Indonesia and Malaysia and exploring new export markets, recently delivering its first containers of hardwood to Russia.
Positive long-term consensus
Generally Belgian suppliers are not predicting a marked improvement in trading overnight. Recovery, said one, may start this year, but it will be late 2010/early 2011 before significant turnaround is apparent.
van Hoorebeke also raised the possibility that prices may increase “quite fast” when demand starts to recover because of the market’s loss of production capacity.
But one company’s comment that there is “now more reason to believe the upturn will happen rather than pray for it” seems to reflect the Belgian consensus.
“We’re optimistic,” said Ms Standaert. “And it’s important that we express that because so much of the current crisis has been down to market psychology and lack of confidence.”
Underlining Vandecasteele’s positive outlook, she added, it has just completed a new access road which will significantly speed up vehicle movements in and out of its site.
