The UK wood machinery market appears to have been little better than mediocre for many manufacturers in the first quarter of 2001. However, while not living up to people’s high expectations, business has been fairly steady and there are no squeals of real pain from manufacturers. ‘If someone had given me this level of business a few years ago I would have been absolutely delighted,’ said one UK-based manufacturer. ‘But these days I say "where’s the other half?". It is still okay but it’s not exactly setting the world alight.’

Another contact said: ‘The [machinery] supply market has not been too bad from our point of view but there is very stiff competition on the manufacturing side. There are not enough orders for everyone, so it’s tough.’ Things had gone quiet over Easter he added.

However, another contact said he had noticed more market activity generated in April than in previous months, despite Easter. This is a seemingly ‘strange’ but understandable development, he explained. ‘Sometimes, when the pressure comes off the gas for a moment on the production side, it gives people a chance to look around and think about doing things differently,’ he said. ‘And, of course, it is all starting to pick up in time for Ligna now.’

Where machinery is being purchased, buyers are continuing to look for ever-greater material and production savings, probably because of the high costs associated with labour in today’s market. Machines tend to be geared towards automation and computer control, so manufacturers can drive down their production costs in real terms.

As always, said one contact, the Germans were preparing to unveil the most ‘whizzy’ innovations at Ligna in Hannover on May 21-26. ‘If they are going to make some innovations they tend to come out at Ligna because, if they bring them out in Milan, the Italians have copied them by the time Ligna comes round,’ he said, adding that his company would be attending the show ‘in full force’.

Ligna welcome

Ligna is seen as a welcome fillip by many people, because investment across the industry is generally perceived to be down. ‘The climate is simply not conducive to new investment,’ one contact believes, ‘and it has nothing to do with the general election.’

Another contributor said his order books were full already but that Ligna ‘should give us another boost’. ‘We should know more towards the middle of the year but at the moment we are very satisfied,’ he said, adding that demand was strong across his entire range of panel and solid wood processing equipment. ‘Business is coming from very small customers, who are looking to invest properly and take the right step forward and we are also supplying multi-million pound installations.’

The main cause of nervousness in the market is the economy and there are real worries in some quarters over prospects for the next 12 months. The election is taking up very little of people’s time because the widespread belief is that Labour will win.

But the worries over the economy are sufficient to make companies very cautious about their investments, said one contact. ‘They are being extra careful, when they invest money that they are not going to put themselves into any kind of diffi-culty.’ Part of the problem, he believes, is that continual talk of downturn and recession can itself precipitate depression in the economy, though he is hopeful that this lesson has been learned. ‘I think most people realise now that we tend to talk ourselves into it,’ he said.

Another contact said that doubts about the state of the US economy and the potential for effects in other economies could also be influencing investment decisions in the UK. ‘I think the American thing has perhaps put things on hold a little bit,’ he said. ‘Foot and mouth here has also made people a bit anxious. In reality, it has not been the most wondrous first quarter of a year.’

&#8220Maybe it’s a cyclical thing, I don’t know, but something is not right in my opinion. You have to question whether bigger and bigger units can really provide the service for minor customers. We might well see smaller sawmills that have been mothballed coming back in future”

A contact

Secondhand demand

While buyers of wood-processing equipment readily acknowledge the need to invest to remain competitive, many of them are not in a position to acquire the very latest technology. ‘People want to invest to increase their capacity but probably can’t afford to go for completely new equipment,’ said a contributor. He anticipated that an increasing amount of secondhand equipment would enter the UK in coming months.

Commenting on the possible threat to the new machinery sector of greater numbers of manufacturers opting for secondhand equipment in future, one contact said: ‘In our market place there is always the odd one that will buy a secondhand machine but the customers we deal with like to make the right long-term decision, rather than a quick-fix, secondhand solution. The customer who, for budget reasons or whatever, may set out to buy secondhand, is usually a different quality of customer and I don’t see that as a big problem at all.’

Market conditions are ‘not at all buoyant’ in the kilning sector, either in the UK or overseas, according to one contact. ‘I think the sawmillers are quite depressed and, of course, that reflects on our market,’ he said. ‘But we have been doing bits and pieces, modifications and minor refurbishment projects, which have been quite good for us. ‘The fact is that the sawmillers – our customers – are not making enough money, probably because of fairly cheap imports from the Baltic states – someone is setting the price and the rest have to follow.’

The root cause of the problem appears to be overproduction of sawn timber throughout Europe; companies are trying to produce more to cut overheads per cubic metre. But many regard this approach as detrimental to the wider industry. ‘There is no real balance between output and consumption,’ said one observer.

Continental equipment manufacturers face similar problems and, in Sweden, a significant number of smaller sawmills are either shutting down or being earmarked for closure in the near future, not because they are going bust, but because their owners have concluded that overcapacity in the market has rendered them unviable. ‘Investment is down because of low timber prices. No-one is happy,’ bemoaned a contact.

Consolidation

The Swedish closures appear to reflect the industry trend towards consolidated, higher-capacity production facilities and are thought unlikely to have any meaningful impact on overcapacity generally, according to the contact. He says there is also a risk that, in the longer term, huge sawmills will not be able to serve smaller customers properly: ‘Maybe it’s a cyclical thing, I don’t know, but something is not right in my opinion. You have to question whether bigger and bigger units can really provide the service for minor customers. We might well see smaller sawmills that have been mothballed coming back in future.’

Rather than merely gripe about the fact that cheap wood from the Baltics is squeezing the UK kilning market, one commen-tator said his company was actively targeting the former Russian-controlled states with promotions for its drying equipment, and was ‘doing well’.