TTJ: What have been latest changes at NHG?
Stuart McBride: The business was established by Nick Goodwin in 1981. He retired in 2017 and it’s now run by Guy and Ben Goodwin and myself. In the last few years, we’ve increased the number of markets we sell to and last year employed Frenchman Vincent Audant, who specialises in veneers and sells all NHG products to southern Europe. We’ve increased our presence in South-east Asia too, sourcing more semi-finished products from there and selling worldwide, all thanks to our Far Eastern and European trader, Ben Jenn.
TTJ: How many countries does NHG trade with?
SM: Since our inception the total is 65 countries. Currently the figure is 30-35. Our major source areas are West Africa, then North America, Europe, the Far East and South America. Only 50% of our sales are to the UK and Ireland, the balance goes to North America, Europe, the Middle East, Southeast Asia and South Asia and we also cover some speciality sales in New Zealand and the Caribbean.
TTJ: What’s the strategy behind development of the markets you sell to and how do you reach new customers – through marketing, trade events, word of mouth?
SM: We use all three. And we go for “harder” countries where some suppliers would often fear to trade directly, such as Pakistan and India. Personally visiting markets is also a must. Recently, we’ve added Spain and Italy too.
TTJ: What have been latest moves in your timber and wood products range?
SM: We’ve added veneers from Gabon and Cameroon, semi-finished products such as decking, truck flooring and laminated timber from the Far East, and thermally modified African species processed in Europe.
TTJ: Tropical supplier countries are focusing on development of their further processed timber products industries. Do you see these products becoming a more important part of your portfolio?
SM: Yes this is inevitable, but it’s a much slower trend than anyone has ever forecast. It needs a stable investment environment, and tropical forestry is not really that yet. Having said that, it is the future and we are pleased to encourage it, not least because more of the added-value remains in the country of origin.
TTJ: How has the tropical side of the business performed recently?
SM: Supply has been challenging, shipping even more so. Contract lead times are long, and managing this when supply has been disrupted and freight rates skyrocketed has been a challenge. But we did not see the spike in prices from West Africa that we saw from other regions – the markets take time to change.
Even now, with price weakness elsewhere in the world, this is not necessarily true of West African supply. Fundamentally, there is a lack of well-financed suppliers willing to deal with the high operational costs and risks of operating in Africa, plus deal with the legality issues, so this will continuously limit viable supply. Demand has generally been good worldwide. Europe has been poorer of late, the Middle East up and down and the US still good
TTJ: Proof of timber sustainability and legality has become an increasingly key issue in markets globally. How has this impacted your business?
SM: Provision of due diligence information is a significant part of what we do and ensuring our supply partners are up to speed with this is important too. It’s a balance between complying with regulations and not making the process overly bureaucratic and ultimately excessively costly for the supplier.
TTJ: Do you feel tropical suppliers are coping with and managing the growth in the number of countries imposing market legality and sustainability requirements on timber imports?
SM: On the whole yes, they are coping and their understanding is improving. But we’ve found that smaller/less regulated suppliers have fallen by the wayside.
TTJ: A key issue for the EU timber trade and its timber suppliers, is the proposed EU regulation on deforestation-free commodity imports – or Deforestation Regulation. In particular there’s concern about the impact of its requirement for geolocation of timber sources on small forest and timber operations. What’s your view?
SM: We are concerned. How do you really define deforestation? Defining legality is hard enough and EUTR/UKTR implementation is full of value judgements. Implementing any new standard will be potentially more fraught and I fear will lead to interminable arguments between people who are realistic and those who think no tree should ever be cut. Setting up geolocation data is also expensive, who pays? When you have clear traceability that is audited, would this not be sufficient for those operators who can demonstrate that?
TTJ: There’s growing advocacy for use of secondary tropical species, including among NGOs and certification schemes, to make sustainable forest management more economically viable. What’s NHG’s approach on this?
SM: We have always promoted lesser known species and have had success, mainly in the Middle East, with species including dabema, andoung, gombé and others. But there’s much more resistance to change in developed markets and we have repeatedly tried to market okoume with limited success.
TTJ: With these increasing pressures and demands on the timber trade, and particularly the tropical trade, how do you see the role of the agent and its relevance in the market now?
SM: We regard our role as being supplier-facing at least as much as client-facing. In our role, we offer services to both.
Dealing in a range of markets we can offer a producer marketing support for a wide range of productions and species, including new products, and recovery items (that link sales to our clients in very different markets). This means that we are so much more important to suppliers than any one customer would be.
To our clients, our deep knowledge of supply areas is valued. We see the global picture and, most importantly, we do not compete with them by offering stock off the ground to their clients.
Our traders have a combined hardwood experience of over 100 years (most of that is me!), so our knowledge of the product and its possibilities, and our fair and authoritative approach to resolving problems and claims is appreciated by both suppliers and clients. The additional services we provide around legality are valued too, particularly the frequent field visits and traceability exercises that we do.
TTJ: What is the significance of NHG being a del credere agent today?
SM: It’s really important. For suppliers it means security of payment – we pay 100% of our suppliers 100% to terms, no exceptions. We assume the credit risk with customers on their behalf. This is a huge benefit and likely to be more so as we navigate a more uncertain financial environment with higher interest rates. We are financially strong which means we can deal with the fallout should any of our clients get into financial difficulty.
TTJ: Finally, are you upbeat about prospects for the tropical timber trade generally and NHG’s business in particular?
SM: Yes of course. It will inevitably become a more specialised trade since, as we know, actual tropical volumes are falling year-on-year with product substitution. However, barriers to entry are fairly high, and in general there is a lack of knowledge in critical areas. In these circumstances, whatever happens in the future we will be well placed to increase our market share.
