Summary
• The exchange rate has opened the door for British timber producers.
• Mills are securing market share by improving their product offering.
• BSW and James Jones have invested across all their sites.
• John Gordon & Son is investing £20m, including on biomass for heat-treating products.
• James Callander & Son is developing a multi-million pound greenfield site.
The wider European economic crisis has buoyed the British timber industry. A positive price differential between imported and British timber has helped to increase market share to about 40% in favour of home-grown. But at the same time, the UK’s major sawmillers and processors have been using the opportunity to enlarge the scope of British timber beyond its traditional place in fencing and pallets.
Mills have invested huge sums in processing both to increase capacity and make efficiencies, but also to improve the quality of product, which the mills believe are changing perceptions towards British timber.
“We are very positive with the way the exchange rates have gone,” said Scott Gordon, joint managing director of John Gordon & Son, which is investing £20m in the Nairn-based business
“It has been a great opportunity to get our products in to customers that would not normally buy British and let them have a look at what we are doing. And we hope they will continue to buy from us even though the rates may shift in future.”
Gordon Callander, managing director of James Callander & Son, in Fife, agreed: “Where buying British timber before has been resisted, we have proved as an industry that there is nothing wrong with it and it does the job perfectly well. Now we have our foot in the door, I think we can continue that.”
In spite of the price differential between imports – British timber has been about £30/m³ cheaper than Swedish – Tony Hackney, chief executive of BSW Timber, said the market was more complex than that.
“Pricing is certainly important,” he said. “However, other factors such as improved quality, availability and levels of service are all essential in the eyes of the customer. The UK market has by no means recovered. It is not just differential pricing that dictates what happens, but the inter market dynamics.” In other words, the performance of other markets, notably Scandinavia, and the effect of raw material supply chain pressures all have a bearing.
Heavy investment
BSW has invested heavily in recent years, spending £8m at Dalbeattie on a planer/grader line and stacker system, which doubled production of easi-edge and easi-stud construction timber. Investment at Fort William included £10m, with a further £30m to complete full site integration with 10 new Mahild kilns and a battery of pressure treatment vessels. More recently, a high-speed planing and grading line from Ledinek and Springer was commissioned, and two 5MW KIV biomass kiln heating plants. A new sawline is due to be commissioned early next year.
James Jones & Sons Ltd has invested at all its sites, most recently with a £25m sawline at Lockerbie, which the company believes is now one of the most modern sawmills in the world. Additional capacity in secondary processing includes high-speed planing, X-ray grading, treatment and kilning. Brown Tanatone treatment was added at the end of last year as well as additional re-sawing. Six new Mahild kilns were added to the existing bank of 10 kilns, making Lockerbie the largest kilning facility in the UK. New biomass boilers have helped reduce its carbon footprint.
Graham Blyth, the company’s senior manager for sales, confirmed that the UK was less attractive for Baltic and Scandinavian shippers, but added: “The domestic mills have also capitalised on the increasing requirement for short delivery turnarounds and a pick-a-pack specification.
“The life cycle analysis benefits of domestic timber are also being increasingly relied upon, driven primarily by end users’ and architects’ corporate social responsibility and sustainability policies.”
John Gordon & Son is also investing in biomass. Demand for heat-treated products for construction, roundwood and kiln-dried carcassing persuaded it to embark on a £20m re-investment after spending steadily in the past 15 years on sorting, stocking, treatment and cross-cutting facilities.
“It has been demand really in those three main areas: pre-drying, fencing and carcassing, and we simply needed to update some kit that was quite old,” said Mr Gordon. He and his brother, Rod, are fourth-generation Gordons to run the company, which this year celebrates its 150th anniversary.
Mr Gordon said the company was positive about the future and the recent favourable exchange rate had been an opportunity for British timber rather than a short-term gap in the market to be filled. “People are motivated by price, but they have also been taken by what they have seen. With people focusing on cost we also need to keep up the efforts of the industry to influence specifiers that British timber can do the job.”
Improving technology
James Callander & Son has started developing a multi-million pound greenfield site in Kincardine, West Fife, not far from the company’s mill in Falkirk, which is landlocked. Plans were first approved in 2007 and, after delays caused by the economic downturn, the first phase, costing £4m, is a log sorter that has just became fully operational. It includes a Sawco ProBark scanning system that makes it possible to see the exact shape of a log beneath the bark, which the company believes is the first such system in the UK. “This is a real jump in technology for us,” said Gordon Callander.
He said the company had been busy in volume terms and agreed that much of that was due to the currency situation. However, he added that KD carcassing had been a particular success story. “Our customers are not fundamentally busy but they are keener to buy British, not only on price but on quality of the product, the accuracy of the sawn product, which, going back a generation, we as an industry have to admit just wasn’t the case.”
The company has also benefited from a greater take-up of home-grown C16 grade rather than imported C24. Paying less for the now much improved British C16, which can achieve similar results as more costly C24, is “a no-brainer”.
BSW Timber agrees. “Investments in kilning, and planing and grading technologies mean we can offer a construction product to rival imported,” said Mr Hackney.
“We believe that the vast majority of UK construction products could use British C16 timber without any major design issues. In particular, C16 timber can be used by using wider sections or decreasing the centres of the joists. And British C16 is fit-for-purpose and is graded to standard BS EN 14081:2005. There has been major effort to improve the dimensional stability and finish of the planed goods.
“We are already seeing a move towards UK fibre from timber frame manufacturers and national housebuilders, who are being driven by their clients’ desire to use locally-sourced materials,” he added.
“Perceptions towards British carcassing have changed over the last decade and these have been driven principally by the fact that many of the UK sawmilling groups have invested in new primary and secondary processing capacity,” agreed Graham Blyth.
New retail opportunities
One of two projects at James Jones’s Lockerbie site is a mini bundling system to package carcassing sections of a smaller dimension into 150x150mm squares, each of which will be strapped. This offers stability during transit and storage, maintaining material integrity as well as offering new retail opportunities for the merchant sector.
The company is also investing in incising of whitewood species, such as spruce, to offer dried, incised whitewood fence posts and landscape sleepers treated to use Class 4 suitable for ground contact applications.
“All of our sites have recently gone on to extended hours or introduced extra shifts to meet demand with a just-in-time offering,” said Mr Blyth. “Sales volumes in the first quarter have reflected a more positive outlook and this has been enhanced by a mild winter, merchant restocking and sawmill capacity rationalisation, particularly in Scandinavia.”
BSW has also extended working hours at its Newbridge-on-Wye, Powys, mill, created 25 full-time jobs and increased capacity. The company said it had experienced strong demand this year for its products across all sectors.
It’s all cause for optimism within the sector. “As an industry I think we have weathered the recession better than many others and if all the indicators continue to go well, I think the next year can only be good,” said Mr Callander.
