Forest industries set fair
STUART GOODALL CONFOR CHIEF EXECUTIVE
When the first lockdown began the UK forestry and timber sector had been looking forward to better times following the depressive effect beetle damaged timber from central Europe had on demand and prices. But as construction sites shut, it seemed inevitable the timber industry would suffer and there were many long faces.
The first glimpse of light came with Confor’s success in persuading the four administrations in the UK that domestic wood production was an essential activity given the need for packaging for food and medical supplies, the transport of these products on pallets, energy generation from wood, and fencing for farmers. As a consequence, demand for timber quickly resumed.
Then came furlough and travel restrictions, and the nation began to channel disposable income into home and garden improvements, alongside strong demand for construction grade timber.
Imports flexed most to meet increased demand, but UK mills were running at full shift capacity with sustained levels of high production. The strong domestic demand continued through the winter of 2020/21, giving mills little respite and by the time the summer of 2021 arrived long faces were replaced by tired faces as the supply chain fought to keep wood flowing from forest to mill.
Then as late summer temperatures cooled so did demand. By the time I began visiting mills again in October, there were reports of stocks building and faces showed relief at the opportunity to draw breath.
The question now is, does this switch reflect a ‘traditional’ seasonal slow-down or fundamental change? While no-one can predict the future, the main drivers for sustained strong demand for timber are still there in the UK and policy developments are providing reasons to be even more optimistic.
What COP26 made clear is that the world is still seeking solutions that reduce carbon while allowing for economic growth, and wood sits well in that space.
The Declaration on Forests and Land Use and pledges to halt ‘imported deforestation’ will raise further questions about where the UK sources its timber. However, the domestic sector has limited capacity to grow further and imports will always be a major part of UK consumption. Therefore, getting our ‘house in order’ on imports is vital for the reputation of both imported and home-grown timber.
We’ve heard a lot about building back better and greener from the pandemic, and clearly this provides opportunities for our industry. Like COP26, the thinking behind this places a focus on economic activity that helps reduce emissions and challenges sectors like construction to go faster in reducing emissions.
Confor continues to press governments to do more to promote wood and the Department for Environment, Food and Rural Affairs has convened a cross-departmental group to work with industry to take this forward. Scotland is already working with industry to promote the use of wood and the Welsh government is keen to do so too.
Ultimately the fortunes of the domestic sector are dictated by what happens elsewhere in the world, and on that there are also reasons to be optimistic. Global demand for wood is forecast to grow strongly, we have impending export restrictions in Russia and, in time, pest damage in Canada and central Europe will reduce supply.
Looking ahead there is optimism we will see strong demand within the UK. There are positive indicators coming from the construction sector and further storms this winter could load up demand for fencing. After a breathless 2020 and 2021, 2022 may be more of a canter than a sprint, but the UK wood market appears to have the stamina to push on. Hopefully that will keep a smile on people’s faces!
Building merchant excellence
JOHN NEWCOMB BUILDERS MERCHANTS FEDERATION CEO
After almost two years of living with coronavirus, one of the most impressive things about the merchant sector is its adaptability and resilience.
Huge demand for building work and materials required to undertake it inevitably led to issues with product availability and supply, but merchants have risen to the challenge to manage stock and help customers get the products required to keep projects on track.
The BMF’s Builders Merchants Building Index (BMBI), which analyses data from over 80% of generalist builders merchants sales throughout Great Britain, reported record sales in Q2 2021, followed by another strong quarter in Q3. Timber and joinery products have driven much of this growth, with sales to the end of October up by 57.2% compared to the same period in 2020, and up by 36% on 2019 pre-pandemic.
Sales showed the first signs of easing as we entered the winter months, but we should be aware that availability is likely to top the agenda again in 2022.
The BMF’s central role within the Construction Leadership Council’s Product Availability Group (PAG), bringing together 70 senior executives from manufacturers, merchants, house-builders, contractors and major trade associations, has helped to develop the widest possible picture of availability issues, find ways to work around them and share this information across the industry through the PAG’s monthly statements. The Group will continue into 2022 with an extended brief to include horizon scanning to flag up potentially disruptive, medium-term issues that can be mitigated by an agreed, planned response.
Despite these challenges, this is an exciting time for the building materials industry. Many merchants have fast-tracked development of online trading sites, which are becoming an ever-more important part of their customer service offer.
There is undoubtedly a new spirit of collaboration throughout the construction industry. Another example is the merger of The Institute of Builders Merchants with the BMF, which opens up career-long training and development opportunities.
In doing so, we are looking to attract a far wider, more diverse talent base, with an ultimate ambition to achieve Chartered status for the IoBM.
The BMF’s appointment of LEAP as our new full-service apprenticeship provider in 2022 is another exciting initiative to support skills development. LEAP, the apprenticeship delivery team to the Travis Perkins Group, will work with BMF Apprenticeship Plus providing a service tailored to suit all members. There are already over 1,000 apprentices enrolled onto a LEAP programme. With the current intake being 40% female and 60% male and encompassing an increasing number of BAME colleagues, these apprenticeships are again nurturing a more diverse workforce within the industry.
CO2nstructZero, the cross-industry change programme to drive carbon out of all parts of the supply chain, is a further example of collaboration. BMF members have been swift to respond to the government’s call to reduce our carbon footprint. Together they account for 20 of the 50 companies achieving CO2nstructZero Business Champion status since the programme launched last year.
I’m sure we will see more members joining them in 2022, and the recently launched BMF Sustainability Forum will provide a great platform to share knowledge and promote discussion as we seek to build excellence together.
A future as carbon storage giga-factories
KEITH FRYER FORT BUILDERS’ MERCHANT DIRECTOR
Let’s start with a prediction: there will be Christmas presents under the tree in 2022!
For some in the trade, staring at piles of stock that need turning into cash, this is a worrying time, but it will sort itself out. Despite a global pandemic (or because of it?) demand for timber products is strong. At the time of writing, the US futures price for lumber is around double the February 2020 level. I know, we’re not in the US, but the sheer scale of their demand carries forward to the rest of the world. The US is telling us they’re going to be busy.
COP26 reconfirmed what we know. Timber, in all its forms, stores carbon. We need to change our own perception of the industry we work in. This is the carbon storage industry. Sawmills are carbon storage giga-factories! We’ve never seen so much interest from governments and the media, as they clamour to get on board the carbon storage train.
Even SMEs like Fort can do their bit – we’re telling customers how much carbon they’ve stored from the timber products they’ve bought. We promote low energy construction, using amazing local materials, grown, sawn and constructed into beautiful buildings, all within less than a 50 mile radius.
Building with timber is growing exponentially. We’re shoving competing materials off site and this growth in demand will put pressure on the production supply chain. It means we’re going to have to get used to paying more for timber and that’s a good thing. For far too long it’s been under-valued; 2020 and 2021 saw us smash that glass ceiling and, while falls will occur, mainly through imbalances, the underlying trend is for increased demand.
Geopolitics have a big impact on UK timber trading. Global sawlog availability is a problem and some big players are flexing their muscles. Russia, quite rightly, wants to preserve its raw material and add value inside Russia. It has introduced a log export ban, which means other ‘log poor’ countries (China in particular) are on a global hunt. That inevitably puts pressure on log prices. Other countries have implemented bans and alongside increased forest fires and bark beetle infestations, there are plenty of reasons to see sustained or increased prices.
Your place in the supply chain will give you different perspectives, but, taken as a whole, timber demand is going to be strong in 2022. Large volumes of material, such as constructional softwood, currently giving some of you palpitations will be used up and then you’ll be replacing that stock. That’s when the market will decide where prices will really be; all we see currently is a need to turn overstocks into cash.
Adding value is the way forward. If raw material is in short supply, why bother producing cheap products? The best way to protect our businesses is by selling the incredible benefits of timber.
When I first started in the industry ‘carcassing’ was wet, sawn lumps of wood. Now it’s kiln dried, planer regularised, strength graded and usually preservative treated. Flooring grade chipboard used to be 18mm-thick sheets of material. Now it’s mainly 22mm, moisture resistant, TG4, often with protective surfaces. We’re perfectly capable; we just need to be confident and stop going to the lowest common denominator.
It’s an incredible time for our sector. We have the opportunity to take market share from competing materials. Governments are on our side. Be positive. Enjoy the benefits!
Empowering the market with hardwood choice
DAVID VENABLES AMERICAN HARDWOOD EXPORT COUNCIL EUROPEAN DIRECTOR
It’s been another year of extraordinary challenges for the timber sector – soaring prices, extreme freight rates and constrained supply. But to paraphrase Churchill, while the pessimist sees a challenge in every opportunity, an optimist sees an opportunity in every challenge. And at AHEC we see opportunities for US hardwoods in these exceptional times. Notably we believe there’s never been a better chance to grow the business and increase its resilience, while simultaneously increasing the sustainability of the resource and strengthening its environmental credentials, by diversifying the range of species on the market.
Demand for American hardwood in the first 10 months of 2021 was exceptional and especially in the UK. In fact, it accounted for a record 37% of European imports. Its total was up 81% on the same period in 2020 to 135,000m3. That’s already higher than any full year in the last three decades. UK white oak volumes doubled, while tulipwood imports rose 78%. At the same time, although the US hardwood resource is vast and mills have the ability to ramp up output in response to circumstance, availability was an issue and prices surged.
Rising global demand, of course, contributed to supply issues. But another factor, which has been accentuated and spotlighted during the pandemic, is the trend in our sector over recent years to focus on an ever narrower range of timbers. We’ve got this wide portfolio of hardwood species, yet it’s been whittled down to only a few. Small surprise in the boom of last year that availability of white oak and walnut were an issue and costs increased significantly. So there’s a danger of over-exploiting certain species to the exclusion of a fantastic selection of other timbers. By limiting our offer and, because we’re not able to put all our stock in the shop window, it’s also limiting our growth prospects.
While the oak ‘brand’ is strong, not all consumers go shopping for furniture in a specific wood. We believe they are open to persuasion on species.
Architects and designers, the people who ultimately lead fashion and shape demand, are also keen to broaden their species horizons. We’ve been working with specifiers on this for a number of years, recently focusing on red oak, cherry and maple. The creatives we are working with are really excited to try something that’s new to them and explore and develop the aesthetic and technical potential of different timbers.
Critically, of course, there’s also never been a better time to put the environmental case, indeed the environmental imperative, for using a wider selection of US hardwoods, and indeed of all timbers, before specifiers, buyers and consumers. There’s an increasing understanding that using a wider spread of species, proportionate to what’s growing in the forest, makes most sustainable use of the resource and that focusing on a limited number must ultimately result in supply stress.
There is plenty of evidence that today’s consumers are increasingly concerned about the climate crisis and want to do the right thing by the environment. By offering them this option and the variety of wood the forest naturally produces, we empower them to do that.
Overall, we see a very positive outlook for hardwood, particularly in solid form, as environmental concerns lead us increasingly away from the throw-away culture and consumers increasingly choose quality products that last, for which hardwood is the ideal material. And the fastest way we’ll see growth as a sector in this evolving market is to expand the variety of species we offer.
Wood warehouses store potential
GARETH MASON STORA ENSO WESTERN EUROPE BUILDING SOLUTIONS SALES DIRECTOR
In regards to mass timber only, we saw a delayed, but minor impact from Covid-19. When the first lockdown started, construction sites that were already, or close to starting continued as planned. We saw little effect on import volume and did not stop any supply into the UK.
However, once in lockdown we saw a slowdown in activity from developers and investors in particular and there was a short period where construction and mass timber requirement slowed.
But once restrictions began to ease, working from home became the new normal and the financial markets were more confident, construction began to quickly rise again. In fact, it saw a surge in demand as delayed projects looked to get back onto their original timelines.
While this led to some short-term issues of capacity, this is now under control and supply and demand are more balanced. We continued to supply mass timber to the UK throughout the lockdown, and this is testament to the hard work of the UK construction teams and our UK partners.
Looking forward we see timber-based UK industrial buildings as a growth sector. While some countries have used timber for these for a long time, it’s a relatively new approach in this country. But we see increasing interest in sustainable industrial construction for projects such as logistics halls, data centres and delivery warehouses.
We know the pandemic has driven a shift to more ecommerce, which ultimately increases demand on warehouse space – and with net zero targets as a backdrop, we expect more sustainable building materials to be a focus in new build warehousing in the near future.
There have been some fantastic recent examples of timber-based industrial developments constructed already and now Stora Enso has launched a suite of tools to support developers to create more attractive, productive and sustainable buildings, with spans ranging from 12-36m, so applicable for projects from small workshops to large retail sheds and warehouses.
This service includes provision of a range of wooden industrial building concepts, which allow developers to cut embodied emissions by up to 30%, while also benefiting from highly modular and flexible designs. These can be used as the basis for designing optimised bespoke concepts.
Our intention isn’t to become building designers but to provide support and guidance through our learnings on working with manufactured timber-based projects.
We see our role in this development as collaborating with industry to reach the best possible design. Every project will need to make some decisions early on – these are the high impact decisions. Our concepts help ensure how and where wood construction can solve certain customer challenges. Deciding on a wooden construction at an early stage helps create alignment towards a common target.
Through this collaboration, the value to the customer is higher as they receive a frictionless, cost competitive design process, and lean construction.
We have a team of business developers and experts who are there to engage in these project phases, using our concepts to help the project team.
We base most of our building projects on a just-in-time delivery basis direct to the site, with plenty of planning taking place to ensure components arrive when needed, eliminating need for storage.
Although we produce our components outside the UK, the logistics are very carefully managed, not only to meet required deadlines, but also aiming for minimum possible transport carbon emissions. Studies have shown that using timber can cut carbon emissions compared to similar buildings in Europe by up to 70%.
While transporting from another country may seem carbon intensive, the emissions from transport are in fact a small percentage compared to the amount of carbon stored in the timber products, the net effect being the structure is still carbon negative even with the transport emissions included in the calculation. Timber elements also need up to five times less transportation than traditional materials, which is also why this set-up makes a lot of sense in terms of sustainability.
Investing in innovation
ANDREW WRIGHT JAMES LATHAM MANAGING DIRECTOR
2021 – a year where the industry experienced a relentless assortment of challenges, an extraordinary and unprecedented period that will go down in history books for many reasons. Global logistics combined with increased demand and widespread capacity issues along with inflationary pressures from the supply chain have all affected prices. All of this highlights the importance of relationships with suppliers and customers alike, a critical element in business. Despite these challenges, focusing on good communication, while remaining agile and adapting swiftly to the market conditions has enabled us to successfully maintain supply to our customers.
In spite of all the economic uncertainty and challenges persisting from the pandemic in the UK and further afield, I believe the UK timber industry has a bright future and we will see demand for quality and innovative timber products continue into 2022 and beyond.
We particularly see sustainability and low carbon construction as great opportunities for timber products, and significant contributors to a healthier planet. Carbon consciousness and awareness is growing rapidly. To support this, we recently launched our own Carbon Calculator, for customers and specifiers. This calculator has been produced in conjunction with the BioComposites Centre at the University of Bangor, and displays the carbon footprint and biogenic ‘Locked-in’ carbon content of our timber products.
Another positive for the UK timber sector is the merger of the Timber Trade Federation (TTF) and TRADA to form Timber Development UK (TDUK). Both are acknowledged for driving our industry forward both commercially and technically, so to bring those benefits together under one roof with a single vision and voice can only bode well for our sector and the construction industry as a whole.
Looking forward, building on our hard-earned reputation for innovation, we have been working on several projects that will launch in 2022 which will enhance service levels, product availability and the customer experience, both from sales and specification standpoints.
We’ll continue to invest in our depots, fleet, and operations, and most importantly our people. Product wise, we have several new product lines coming to the fore in the coming months, as well as expansions to existing ranges. It seems that our suppliers haven’t been sitting on their laurels during the Covid pandemic and have developed some truly exciting innovations.
It would be encouraging to believe we will experience slightly less upheaval in 2022, enabling us to continue to focus on our business development as intended. We are confident we have a successful and agile team with the ability and experience to react accordingly to whatever might arise next!
