The coronavirus pandemic has had a dramatic impact on all walks of life and business and the British timber sector has been no exception. However, when lockdown restrictions eased, the UK’s mills cranked back into life and are now as busy as ever.
BSW was “well prepared” going into lockdown, said Tony Hackney, chief executive officer. “We decided we had to knuckle down and do everything we possibly could to manage the effect on the business,” he said.
“Because we had key worker status in Scotland for packaging and agricultural material, we kept the Dalbeattie mill running and the Carlisle mill on part-time. All the other mills shut down.”
Gordon Timber stopped processing within hours of the lockdown announcement and stood down most of its employees for the rest of that week, keeping on a skeleton staff to deal with some Scots pine that would have deteriorated and to put a care and maintenance plan together. After pulling forward its Easter week’s holiday it furloughed most of its staff.
“The following weeks we were just ticking over,” said Scott Gordon, joint managing director. “We weren’t doing any primary or secondary processing but we did despatch some essential supplies such as livestock fencing and pallets for food and pharmaceuticals.
“We probably ended up putting out 50% of what we were expecting to do in April and that felt like a major achievement. From the middle of April, the demand was really spiking and much stronger than we would have expected seasonally. People on furlough with time on their hands were improving their fencing, decking, raised beds and so on and it pushed the demand through the roof.
“We started secondary processing on April 28 and then started processing logs on May 10 and we’ve been at full speed since then. We’re as busy as we’ve ever been.”
James Jones & Sons also experienced very strong demand for pallet and fencing wood. “The supermarket, pharmaceutical, chemical and fast moving consumer goods (FMCG) sectors required huge volumes of pallets to move goods,” said Tom Bruce-Jones, chairman. “Demand for these pallets has been very strong throughout.
“Subsequently, demand for fencing and landscaping products increased by the week as lockdown continued during the very warm weather,” he continued. “All mills were working flat out to meet demand from customers who were adapting fast to direct delivery and ‘click and collect’ servicing.”
As the independent merchant sector began to open up at the end of April and the national merchant sector in May, BSW brought capacity up incrementally. All its mills are up and running.
“We were really busy with fencing and landscaping materials,” said Mr Hackney. “Fortunately, we had tried to build stock, within the restrictions, and had carried on buying logs. That put us in a good position and we could keep our lead times fairly reasonable.”
After the initial surge in demand for pallet wood Gordon Timber saw a dip as the full impact of the economy shutting down hit but reports that it is now recovering, although it is the “least dynamic” of the product sectors. And, of course, some of the sideboards that tend to go into pallets and packaging have been “hoovered up” by fencing production.
“We are a strong mill for Scots pine and have a good reputation for Scots pine fencing,” said Mr Gordon. “But now customers are asking for any wood at all – just give us something to sell.”
He reported that 19mm fencing slats in 1.8m had been particularly strong and were being rationed out. Managing the order book is challenging, he said, but considering where the business thought it might be, it’s a good challenge to have.
Demand for construction timber has been slower off the mark, allowing mills to cut for fencing and landscaping products, but has recovered somewhat.
“We gradually brought on our planing and kilning capacity and are balanced with construction demand,” said Mr Hackney.
“We’re seeing more activity in construction now and our order book is looking pretty strong through to October.
“We’re getting lots of requests for C16 as a substitute for C24, which customers are having trouble sourcing and where they can’t get C16 they are asking us to bring in C24 from our Latvia mill,” he added. “That is an advantage we have, although the global markets are strong and the Latvian mill is busy into the US and Asia.”
Prices for British-grown timber remain attractive when compared to imported material, said Mr Hackney, a view shared by Tom Bruce-Jones.
“Pricing remains competitive against imported timber,” he agreed.
Gordon Timber’s sawn stocks have been “much depleted” as they were eaten up during the period of non-production.
“The object of the exercise is to try to keep up with demand, so there is no real opportunity to build stock,” said Mr Gordon.
“Our stock has come down between a third and a half of what it was prior to lockdown.
We would expect a bit of destocking at this time of year any way in normal circumstances, but this has certainly been much more pronounced and we are very short of most stock items.
“In terms of capacity we are almost where we would expect but we are trying to exercise a strong degree of control, introducing more efficiencies and not letting the overtime rip,” added Mr Gordon.
“We’re sitting on something like 65,000m3 of stock, or around two to three weeks’ worth, which is not a lot for us,” said Mr Hackney. And, he added, it’s not just the total volume that matters but what it comprises.
“We are managing our customer base and monitoring their yards as well to ensure it is not feast or famine, it is all sensibly ordered and we can keep the wheels moving for everybody.”
All of James Jones’s mills are operating at maximum capacity having benefitted from significant capacity improvements and high levels of capital expenditure. That said, availability remains tight as timber merchants returned from lockdown required stock replenishments.
“Inventories are low across all products and lead times vary dependent upon product range,” said Mr Bruce-Jones. “Additional cutting hours are being implemented and value added processes are now operating 24/7 to support our customer base.
“We are now beating estimated delivery dates and stock levels are being scrutinised daily and forward planning by our customer base is improving visibility.”
Log availability is said to have remained in balance throughout lockdown, which Mr Bruce-Jones says is “a credit to public and private estates bringing timber to market, and harvesting operations being active throughout.”
Log supply has tightened since mills have ramped up to full capacity, of course, but forward planning has kept them out of trouble on that score.
“We have enough material bought and are getting good supplies,” said Mr Gordon. “We have enough to satisfy what the mill is demanding.”
New planting levels have increased in recent years but, as Tom Bruce-Jones points out “it is vital that the increased government targets are met in the next five years in order to stimulate further investment in processing capacity and value added production facilities.”
BSW is doing its bit to ensure continuity of supply by virtue of vertical integration. Its Tilhill Forestry company now accounts for about 60% of BSW’s harvesting and its more recent acquisition, Maelor Forest Nurseries is “a further backward integration to make sure we can supply cradle-to-grave services to the grower,” said Mr Hackney.
“We have planted 30 million trees this year and have just opened a new nursery in Forres, where we have planted another 20 million. We are going to invest in other activities in the nursery group to ensure we are supplying everything we can to meet the government’s planting targets.”
Investments are ongoing across the British timber sector, of course. For example, Gordon Timber is in year three of a five-year investment programme, with the latest major spend being on a new autoclave, supplied by Tweddle Engineering last September.
“The aim is to increase capacity and reduce costs – effectively by treating more but within more reasonable hours,” said Mr Gordon. “We were working Saturdays and a lot of overtime but this plant has the capacity to do around 50% more but in fewer hours – so Monday- Friday 7am-5pm.
“We are reviewing our investment strategy closely in terms of how things go, of course, but business has been much better than we expected over the last few weeks so we are looking to push on with it,” he said.
He added that the company is currently putting a project together that will automate the stacking of one of its key products. “We fully expect that to go ahead in the next six to nine months,” he said.
James Jones’s investment projects were suspended during lockdown but have ramped up again and the list is extensive.
The second phase of the upgrade at Aboyne, totalling £12m, is now being commissioned and production levels have increased substantially. A new biomass boiler is currently being installed and should be operational by October.
Meanwhile, civil works at Mosstodloch have commenced for the new biomass boiler, and plans are at an advanced stage of decision making for production increases after additional land has been secured.
The new visitor and training centre at Lockerbie is nearing completion, and civil works on the extension to the log yard started in July.
The new I-joist line at Forres is fully commissioned and demand is increasing as housebuilders return to work. Capacity increases on the finger-jointing line will come in to effect when the additional cross-cutting saw is installed in October.
In the Pallet & Packaging Division, the new pallet inspection and repair site at Coventry has commenced operations. And that’s not all.
“Two new parcels of land elsewhere have been purchased and these will be developed in the coming months,” said Mr Bruce-Jones.
“A large scale capital expenditure programme is planned over the coming 18 months, which will include kilns and new pallet production lines.”
Product development at the British mills has also continued.
“We are continually exploring new opportunities and products while enhancing our existing product capabilities and service,” said Mr Bruce-Jones.
“An insulated JJI-Joist has been launched and levels of interest are strong, and we have launched our most recent JJI-Design software, which creates the most modern floor, wall and roof design package meeting latest standards.
“Trials of UPALL pallet protectors are ongoing and tests within customer premises have proved to be very encouraging, over and above the analysis conducted at Napier University and Virginia Tech in the US.
Further trials will soon commence.” BSW is busy expanding its IRO Timber range, which is seeing a significant uptake. “We’ve been concentrating on getting a full suite of IRO products and as well as cladding and decking we now have an IRO sleeper,” said Mr Hackney, adding that the product will be launched next year.
The company’s British-made woodplastic composite (WPC) products, which are marketed under the Alchemy WPC brand, have also had some tweaks. The Habitat uncoated hollow monoblock has gained an HDPE coating and is being rolled out for merchants as Habitat+.
“We have also perfected the Urban range, which is a solid wrapped product and really the next generation,” said Mr Hackney, adding that the WPC decking has been going into commercial projects and “bigger installations” over the last few months.
These may be uncertain times but as far as predictions are possible, the sector is optimistic.
“People are saying that the bubble is going to burst but none of us knows when that might happen so we plan as if we will have continuity,” said Mr Hackney. “And then if things change, we change again. We have got such fire power with the mills that we are very flexible in what we can do.
“I think we are certainly going to be busy up to Christmas and what happens then depends on how the whole trade reacts – whether it will be a traditional Christmas will depend on how much confidence they have regarding Covid-19.
“I do think the fencing season next year could be good because people will have seen the benefits of improved lifestyle at home. “My bet on Brexit would be that there will be a trade deal but it might make life more difficult for importers, so my message to customers would be to buy British. We are an insurance policy for continuity of business.”
“The macro economic challenges will test all businesses in the timber industry,” said Tom Bruce-Jones. “However, all customers are recognising that pre Covid-19 market dynamics have changed the industry substantially and the focus from most businesses is on securing locally produced, high quality, sustainable products.
“The investments that James Jones & Sons has made over the past 10 years in value adding facilities and production increases will ensure we can continue to meet demand,” he continued. “Brexit, from 2021 onwards, will present similar issues and locally manufactured products will be in great demand. Opportunities to diversify and expand the Group are being constantly evaluated and Covid-19 and Brexit will further change the landscape.”
“It has happened before when there have been supply issues for imported timber when we have had the opportunity to show what we can do, get our products to a wider audience and let them see what the benefits of British grown timber are,” said Mr Gordon.
“The impact of Brexit is still unknown but I still believe there is going to be good demand for British timber and if we continue to produce it as efficiently and to as high a standard as possible, then we will be alright.” Another sentiment that unites British sawmillers is their gratitude toward their employees.
“Their resilience and fortitude has enabled us to work through this crisis,” said Mr Bruce- Jones.
“We are well aware of the huge impact [Covid-19] has had on staff and it’s been very tough for those who have been on furlough, as well as the extra mile those that are back and those that were never away have gone to,” said Mr Gordon. “We are very appreciative of what they have done, and how everyone has adapted to the changes.”
“I am super grateful to my team and the way they have operated,” agreed Mr Hackney.
“This is at all levels, not just the senior team, who have been sterling, but the mill managers and mill teams who have been incredibly dedicated. We have kept the wheels turning and I am proud of us.”
