Consolidation, collaboration and communication
David Hopkins, Timber Trade Federation Managing Director
At the time of writing, 2021 has started with many of the same themes and issues which dogged 2020.
The Christmas break saw Brexit negotiations concluded. On the positive side, we now have a deal to work with. On the negative side, we must remember it is highly unusual for any country to impose trade restrictions and barriers on itself like this. The TTF will be monitoring what impact, if any, this has, and which areas of business still need clarity, advocacy and lobbying work. Signs are that the debate will continue to rumble for much of this year.
In addition, latest pandemic lockdown measures and the horrifying health statistics show that the fight against Covid is still far from over. It casts a long shadow over the whole sector.
The main supply chains feeding the UK market are still experiencing problems, which look likely to continue for some months, with most members reporting that all customers and products remain on a strict allocation basis.
The impact of these phenomena is likely to drive further consolidation and integration in timber markets. This may be no bad thing. The economic rebound from the current depths is likely to be rapid, and there is sense in combining strengths to maximise its potential.
The TTF is no different. Last year we announced the intention to merge with TRADA. We are on track to complete early this year so that we can create a unified organisation, running from sawmill to specifier. This will help us to increase the timber voice at political and industrial level, while providing members and the market with the technical information, guidance and training to seize every opportunity.
The merger will also drive further collaboration with other trade association partners for the threats and opportunities we cannot face alone. This year will see further developments from the Ministry of Housing, Communities and Local Government on use of combustible materials in construction, while the insurance industry tries to drive any risk – possibly including timber – out of its portfolios.
Working with the Structural Timber Association, Swedish Wood, the Alliance for Sustainable Building Products and others, we are engaged in projects to help address and overcome these issues. It will take time and pooled resources but we have a strong programme to put timber on the front foot.
Finally, 2021 is due to end with the UK hosting the global climate change talks, COP26, in Glasgow. The TTF is actively involved on two fronts. First, working with the Foreign, Commonwealth and Development Office (formerly DfID) and others to promote the role of sustainable timber production in tropical forestry; and second working with trade bodies in the UK and across the EU via CEI-Bois to promote the role of timber construction in reducing emissions.
This is a big message and could unlock multiple markets for timber products and timber design. However, key to all of this action across Brexit, Covid, and climate, is the need to collaborate, communicate and consolidate for maximum impact. The journey starts here!
Looking ahead to working together, regulations and new opportunities
Helen Hewitt, British Woodworking Federation Chief Executive Officer
Protecting the interests of BWF members and the wider woodworking and joinery manufacturing sector is our guiding principle. In 2020 the pandemic threatened livelihoods and created uniquely complex challenges and we focused on providing practical guidance, as well as a voice for the sector.
But, while the pandemic shook the construction industry, it had the positive effect of bringing our sector and the wider construction supply chain together for the first time in a long time.
Construction industry response was co-ordinated through the Construction Leadership Council (CLC) and BUILD UK, with specific groups feeding information to them.
Through these channels, the BWF was able to represent the woodworking and joinery manufacturing sector – ensuring our members’ views influenced development of the CLC Roadmap to Recovery, as well as the wider approach to tackling product availability and site operating challenges.
This collaboration was vital to recovery post lockdown and demonstrated the construction industry can overcome major challenges by working together. My ambition is to ensure this collaborative approach remains for the benefit of the entire timber supply chain.
For manufacturing members, the UK’s exit from the EU brings one of the most significant regulatory challenges our sector has faced in years – the introduction of UKCA (UK Conformity Assessed), which will apply to most goods currently covered by CE Marking. We are helping members navigate this change, producing simple-to-follow guidelines and hosting interactive webinars.
We will continue to advocate use of timber to government and lobby on issues such as fire safety standards, use of timber as a preferred construction material and its role in supporting a sustainable home renovation market. Our hope is that future government incentives will be based on whole life carbon assessment and material choice rather than just operational carbon. The recent Green Homes Grant was a positive economic stimulant, but provided no guidance on material types homeowners should use, so did not offer our sector a significant opportunity.
Supporting career development, skills building and retention and attracting new talent to the woodworking and joinery manufacturing sector also remain BWF priorities. A great example of our development of quality training provision is the assured fire door installation awareness course we launched earlier in 2020 in partnership with the National Open College Network (NOCN).
More specifically, 2021 will bring legislative changes that will impact on the training needs of members that manufacture and install fire doors. Competency and standards both have key roles in the Fire Safety and Building Safety Bills and, with a focus on skills, training and third-party certification, we’ll help members meet legislative requirements.
The resilience, determination, resolve and agility our sector has shown this year are qualities that will see it prosper into the future. With its focus on collaboration, skills and timber as a sustainable building material, the BWF will continue to be the sector’s voice and champion.
Overcoming through resilience and innovation
Tony Hackney, BSW Timber Group Chief Executive Officer
Steering BSW through the storm in 2020 was difficult, yet enjoyable. My team have performed extremely well and adapted to finding ways to serve our customers and supply chain, and to improve business performance; and might I add, in the middle of a change of ownership and acquiring two major UK businesses.
We’ve followed government guidelines, which has been confusing as we operate in Scotland, England and Wales. However, we’ve overcome and standardised our approach, minimising risks by implementing new Covid standards and listening to staff.
Continuing the purchase of logs and ensuring the mills immediately implemented new working practices, we’ve managed to maintain reasonable stock levels and to perform. Although, increased demand has put pressure on log supply and export of logs to Ireland has compounded this.
Customers have been very demanding as they’ve seen markets go from complete lockdown to high activity and, understandably for them, it’s about full racks and yards. The whole customer base has outperformed other sectors and this is something our trade associations should highlight to government.
I forecast continued demand, with DIY and home improvements continuing into the summer of 2021 until people are free to travel again, although it’s also forecast that holidays at home will be preferred. Any downturn in this market will be offset by increased demand from construction, given the housing shortage. Overall, I think there will be an incremental increase in excess of 10%.
The promise of a greener economy is welcome and as a sector we must demonstrate, through testimonials and statistics, that wood is good for multiple applications.
The focus on emissions and climate change must be taken seriously and BSW has recently launched Carbonstore UK, which will provide a host of services and advice in this area.
We also face the uncertainty of Brexit and how trade agreements will impact our markets, but if we take the same approach to handling this as we have with Covid-19 we won’t go far wrong.
We’re the only UK sawmiller with European operations, so have a clear view and contingency plans and now, with ownership of SCA Wood UK, we also have a strong relationship with a very experienced importer to the UK. So we’ve hedged our strategy and protected our supply chain for customers – pretty unique!
We’re behind the curve in using engineered timber products compared with central European countries. Government support and knowledge sharing is important to developing this market. There will be sceptics, but there are many applications where engineered products and cladding can be used safely and with predictable performance structurally and from a fire risk perspective. BSW will continue to pioneer innovation, with new applications and advanced products, such as our Alchemy wood composites and IRO heat enhanced architectural cladding and decking.
As a company and a sector, from forestry to DIY retail and merchants, I’m proud of how we’ve risen to the challenges of 2020 and I’m very optimistic for a great 2021 and beyond for our resilient businesses and people.
Resilient and resourceful industry will continue to thrive
John Newcomb Builders Merchants Federation Chief Executive
2020 was a year like no other, but on current indications we should see a return to more normal trading conditions in 2021 – although Brexit could still throw an unwelcome curved ball into the mix.
When the building materials industry was thrown into confusion as the initial Covid lockdown was announced last spring, the BMF made it our mission to help members through the crisis and be in the best possible position to recover quickly.
This was helped by our membership of the Construction Leadership Council’s Task Force (CLC). We represented members’ concerns directly into government and provided information and guidance on protecting staff and customers during lockdown and their business for the long term.
We developed new branch operating guidelines, successfully lobbied for a government-backed trade credit reinsurance scheme that enabled merchants to continue to offer trade terms to customers and helped those also open to retail customers claim business rates relief.
The merchant sector can take positives from a turbulent year. Not least, the adaptability and resilience it demonstrated. For example, we’ve seen fast-track digital transformations within businesses so they could provide an effective online trading offer.
The government has been largely supportive of our sector. We welcomed its Green Homes Grant and we successfully pressed for an extension, so the initiative now runs to March 2022.
However, this cannot be a one-off initiative if we’re to improve energy efficiency and level up housing conditions nationally. We want government to commit to a full national retrofit strategy to upgrade 28 million properties to make a lasting difference to homes quality and help meet the 2050 net zero emissions target.
As far as Brexit is concerned, we’re fortunate that around three-quarters of UK building materials are manufactured in this country, but if the UK and EU hadn’t agreed a trade deal, it would have caused serious issues. We’re already experiencing delays to containerised building products as UK ports struggle to deal with a surge in freight volumes.
As co-chair of the CLC’s Brexit working groups on movement of goods and materials and product availability, I’ve raised this with government and asked about the readiness of ports and customs for Brexit. As one of our main imported building materials, timber is a particular concern.
Summer saw an unprecedented demand for softwood products internationally, while BMF members’ sales of timber, especially fencing and decking, were noticeably higher in Q2 and Q3 as people on furlough improved their gardens.
Coupled with lost production stemming from the impact of Covid-19, stocks at all mills are at record lows and we have already seen significant price increases in carcassing products as a result. Further inbound disruptions will result in increased supply constraints, and we’re pressing the government to act.
2021 will have a fresh set of challenges, but the BMF will continue to take a proactive role in supporting members and we’re positive that the sector has the resilience to survive and thrive whatever the year brings.
Positive prospects as the trade pulls together
Danny Catherall Timber Connection Managing Director
We’ve fared very well this year considering the impact of Covid, especially during April and May where budgeted sales reduced by over 50%. However, since the start of June we outstripped pre-Covid budgets and during the autumn monthly sales surged by over 20% to the year-end, so 2020 is 5% up on a record 2019.
Due to the low staffing levels needed in our warehouse and our sales and administration team’s ability to work from home, we were able to operate fully throughout.
Cash flow came under immediate pressure as some customers held back on payments, sales slowed and timber continued to arrive from overseas – quite a scary position to be in without knowing when things might improve.
As a well-established company our pre-crisis financial strength allowed us to arrange temporary lending through government schemes and our bank if required, but fortunately the worst case scenario didn’t happen as the lockdown was gradually eased.
For two months it was tough going but it gave us time to plan and build a strategy going forward. Lockdown would potentially take us into a recession, but we had managed well in previous recessions. Whilst many timber businesses have to react quickly to a down turn in sales by reducing stock, our position in the market allows us to supply customers on a just-in-time basis thus reducing their exposure and risk. To enable us to do this we remained committed to forward purchasing.
The response from our staff was incredible. Working from home can be a difficult discipline but they showed how dynamic and self-motivated they can be.
The warehouse was put under huge pressure with stock increasing by 25% between March and June. Shipments continued to arrive with very little stock being sold, but our staff worked all hours to free up as much room as possible. Our customers helped us by taking as much timber as they could from existing orders and many of our suppliers assisted us by staggering shipments. There was a real sense of everyone pulling together.
We believe 2021 will continue to be a positive time for the timber industry. Brexit will no doubt cause logistical teething problems, but we are committed to ensuring customers can continue to source timber quickly and efficiently.
The vaccine shows us light at the end of the tunnel and, with government promising a levelling up in rebuilding the economy and a commitment to a greener infrastructure, demand for timber as the go-to sustainable material will no doubt increase.
As sole UK and Ireland distributor of LIGNIA modified timber we appreciate the advantages of these products. Sustainable plantation softwood modified to look like and perform better than most hardwoods. Modified timbers are still relatively new but undoubtedly here to stay.
Too many people still have negative perceptions of timber, notably linking tropical timber production with rainforest destruction and its associated negative impacts. As a tropical timber supplier we are committed to sustainably sourced hardwoods, with the majority of our supply from minimum third-party verified legal sources, including plantations. The trade must promote these sustainable materials. It is happening but there is still a long way to go.
Passion and unity gets business back on track
Neil Fuller Alsford Timber Ltd Managing Director
2020 as a year for our business was one of reactivity and responsiveness.
After closing for four weeks at the end of March, all efforts turned to the safe reopening of our branches, which started in April. At the end of March, we, as with much of the industry, had 91% of staff furloughed, and within eight weeks we had 91% back in work!
Since then, our key focus has been on recovering lost ground from the closure, and by 2020 year-end we were pretty much back on track.
A contributing factor to this was the decision to reopen our website to Click & Collect and delivery orders via our branches, in advance of opening the branches to walk-ins.
As well as helping us maintain order levels, it enabled us to carefully manage our safe operating procedures, and ensure our processes were running smoothly as we reintroduced walk-in branch purchases.
At Alsford we have six core values, and at the heart of these are the ‘united’ and ‘passionate’, values that our team have demonstrated repeatedly this year. We have performed as an extraordinary team throughout and I cannot over emphasise how proud I have been of all our colleagues.
During closure we kept our entire finance team of eight working from home and concentrated on supporting customers with payments, ensuring we continued to pay all of our suppliers on time, which we did.
We are also fortunate enough to have a robust, and fully functioning trading portal to support our trade customer base and service the growth in demand that we have seen from retail.
And, having experienced the significant benefits of online trading through the pandemic, we’ve recruited two new managers to support our existing web and marketing teams.
In addition, we took the opportunity to restructure our external sales team and, under a new strategy, now focus on internal sales hubs, bringing 60% of our team inside, with a small core representing us externally.
We are forecasting a cautious approach to 2021, given not only Brexit, but the current issues over timber supply to the UK. I’m more concerned over log supply issues to our main carcassing suppliers than what could happen with Brexit, and any consequent port hold ups.
Sawn joinery stock for our production mill at Erith has been beefed up and we are also working closely with our engineered wood product partners, taking extra loads in to cover potential port delays in January.
Our current supply chain is robust and our relationship with loyal key suppliers spans decades. It would be foolish not to be concerned, but there is, after all, only so much we can do in preparation.
Looking to the future, the government’s pledge to build back better, and greener, does open the way to greater timber use, provided its efforts are properly focused and its commitments aren’t jettisoned if the pandemic continues longer than predicted.
But to capitalise on this, the timber industry needs to become even more united, especially to overcome the in-built prejudices against the use of timber as a truly effective building material.
Rising to challenges and opportunities in the year ahead
Tony Miles, Archwood Group Vice-Chairman
Despite unprecedented challenges in 2020, Archwood’s product range through the brands Richard Burbidge, Mason Timber and Atkinson and Kirby, has performed strongly. We’ve re-engaged with larger users of stairparts in particular and decking accessories have seen unprecedented demand, as consumers spend more on the home – their sanctuary in troubled times.
We’ve also focused on our workforce, putting their health first and ensuring we go beyond recommendations on workplace safe distance and PPE. Like many, we used the furlough scheme when needed, especially at the start of the pandemic, when customers had no option but to close.
At the same time, we put cost into the business to ensure when customers reopened we could provide the same strong service. International demand for timber product in the summer put pressure on supply across the board. But we’ve worked hard to become closer to key suppliers and that paid off, while customers too have been understanding about occasional supply gaps.
Covid gave us time to interrogate our business in detail and to address key areas which during normal times may have been forgotten. We’ve made changes that will be permanent, with the core focus on agility. I also believe the new communication channels we’ve adopted to engage customers will remain a fixture. There will still be face-toface trading, but less of it. Zoom in my mind was a three-flavoured iced lolly! Now it’s an invaluable business tool.
Colleagues like personal interaction, but they now want a socially distanced office. They’ve also become flexible on home working and it provides better work/life balance, so that’s something we’ll continue.
As for the outlook, we’re expecting continued demand levels into the first half of 2021. That is based on forecasts we’re getting from our customer base. After that, I wish I had a crystal ball.
Brexit will pose challenges for the industry. Lots of product comes from the continent via sub-contracted hauliers. Will they want to potentially wait at borders to deliver goods? For this reason, I can only see distribution costs increase.
From a stock holding perspective, driven by those customer forecasts, we engaged more product in the run up to the new year.
Taking a broader perspective, for years our industry has hoped to see more timber in construction. To achieve this, we need to think much more about our customers’ customer, the ultimate consumer, and how they see our product in the future. The next generation is thinking differently. They won’t talk so much about cost of product, more its impact on our planet and people. Carbon footprint, sustainability, wastage, energy, health and safety, modern slavery, natural resource management. All these will shape product choice and the way we operate.
Timber has massive environmental and technical positives, but we’re not as good as we could be in promotion or policing.
Strong brands, which we have in our portfolio at Archwood, need to lead the way. So we’re confident of the future, but aware of our responsibility to adapt to and drive change.
A smart and human future for a lively industry
Gabriele De Col, SCM Group UK Managing Director
2020 has been unique in many aspects. But it’s proved an outstanding year for SCM. Save the most critical months of March and April, we’ve been incredibly busy supporting a lively industry and exceeding expectations in several market areas.
We enacted remote working to provide normal customer support and brought in emergency stocks of spares to avoid risk of localised lockdowns – and I’m really proud of the recognition SCM received for support offered to vital sectors, like suppliers to the NHS and Nightingale centres.
During this period, the woodworking industry’s resilience and focus on the future while living with the difficulties of today have really come to the fore. And all members of SCM UK have worked as a team to support customers, including our dealers network.
We’ve filled the pipelines with a solid order intake, both stand-alone installations and large integrated projects, so 2021 is looking good. Even in recession, there is scope for investment.
There would have been logistics disruption if we didn’t reach a Brexit trade agreement, but we believe that new import processes will fall into place and duties, if any, will only affect prices slightly.
Our strong second half has been bolstered by government support and in 2021 it would be good to see renewal of the Growth Fund, aimed at increasing manufacturing automation and data management, as envisaged under Industry 4.0 developments.
Coupled with eco-aware technologies, this can improve UK manufacturing efficiency and productivity while reducing CO2 footprint. SCM’s Maestro software suite already includes the instrument to focus management on recovering efficiency and reducing waste and our CNC equipment with the multi-touch eye-M operator panel can incorporate these advanced functions.
There’s an incredible push in construction towards eco-efficient buildings, demanding insulation of doors and windows, fireproofing and sound deadening of an ever higher standard. “Batch one” offers space to smaller manufacturers providing performance and quality, so competence is ever more critical and SCM is focused on helping customers make the most of their equipment.
Our role is to respond to timber processors’ changing needs, and that includes providing new solutions for timber construction, such as Area XL, the new 5-axis CNC machining centre for industrial production of large format CLT panels.
We’ll also continue with remote practical demonstrations, training and maintenance optimisation, facilitated by the Maestro connect internet of things (IoT) platform and Smartech augmented reality assistance.
We’ve also applied digital systems to producing industrial manufacturing demonstration films for distribution in TV format – our SCM LIVE SHOW. Although we still make the most of our Nottingham showroom, within Covid safety parameters, to add the smell of cutting wood to demos!
We’re focused too on all aspects of Industry 4.0. Our CNC machines’ integrated software tools and digital services facilitate diagnostics and problem fixing, and forewarn of potential issues and need for component replacement.
Overall, SCM will continue to invest in our Smart&Human factory; a digital factory with state-of-the-art automation systems, but also one that’s accessible to everyone, based on a profoundly human approach and all-round rapport with customers.
