Gloom was hovering over the Irish construction industry towards the end of 2001, with new house completions projected to be 16% down by the year’s end.

The removal of tax incentives for developers following the Bacon Report, September 11 and uncertainty in the world economy were all arguably factors contributing to this feeling of slowdown.

Despite this, the Irish timber industry has been surprised to learn that government figures actually show an increase in new house completions of 4% from January to the end of September 2001. Full year figures are not yet available but it is thought they are likely to be encouraging.

One consultant expects building growth to ‘probably’ stay at around 2-4% over the next few years, instead of the 8-10% in recent years. He agreed that while building had slowed it remained ‘active’.

A member of the Irish Timber Trade Association said the reinstatement of incentives for developers at the end of last year following construction industry lobbying has made a ‘huge difference’, with Dublin in particular seeing increased activity.

He said black clouds were hovering after September 11 and rents were increasing after the Bacon Report.

‘There was a lot of wrong information on what was happening in the housing sector. But there was no decline and much of the industry is surprised as to what happened,’ he added.

Another factor expected to affect the timber industry this year is new capacity in the sawmilling industry. About £70m has been invested in the past two years, with much of the new capacity coming on stream towards the end of 2001.

One sawmiller said: ‘Within a couple of years, there is probably going to be at least another 50,000m³ of carcassing timber available.’

Fewer imports

This could mean less imported timber, but one contact feared any slowdown in construction activity would lead to market problems.

Several contacts do expect a lot of new houses to be built this year: ‘It’s gone away from the real craziness but it would have been unsustainable with the way the prices of houses were going. Prices of big houses have dropped back and prices of small family homes have stabilised,’ one said.

Wet weather in early February has affected business and the industry will probably pick up in March, he added.

Another contact said: ‘The housing sector is reasonably buoyant and holding its ground. Hotel construction has probably reached saturation point.’

Fencing and decking is reported to be quiet but will pick up soon, said another.

He added: ‘We’ve had a reasonably buoyant January, which is unusual. But prices are fairly keen.’

Competitive prices

Another contact described prices as very ‘competitive’. He explained it as the usual seasonal downturn, with some people ‘panicking’ and trying to off-load softwood onto the market at bargain prices.

‘The start of the year has not been too bad. Prices are under pressure in the softwood end, but that reflects that January is a slow month and some people need to shift stock.’

&#8220The Irish timber industry has been surprised to learn that government figures actually show an increase in new house completions of 4% from January to the end of September 2001. Full year figures are not yet available but it is thought they are likely to be encouraging.
One consultant expects building growth to ‘probably’ stay at around 2-4% over the next few years instead of the 8-10% in recent years”

Merchants have had a ‘great’ start to the year and prospects are ‘looking very good’, according to one source. Bad weather has affected business but the reinstatement of developers’ incentives is again cited as a boost.

Concern has surfaced from several sawmilling sources about Coillte‘s forest inventory – that it may not have as many logs as recorded in 1997’s published figures.

Coillte says it is talking to the industry about the reasons behind some of the figures in the forest inventory changing. A spokesperson says it may be down to windblown trees – north-west Donegal was affected by two major windblows in 1998 and there was another one further south.

However, Coillte says in ‘overall volume there is no real change’.

The spokesperson acknowledged the industry is seeing certain categories, particularly larger spruce, not achieving the volumes expected.

‘But, our target this year is to try and sell more of the non-spruce species and more of the smaller average sizes. Industry has been focusing on large spruce which is the main construction species.

‘We have a limit on the number of large spruce we can produce annually. We are encouraging our customers to try other products and develop markets for those.’

Coillte auctions

Coillte reports three auctions this year to mid-February – two standing and one harvested.

Some 324,000m³ standing has been offered, with 317,000m³ contracted. On the harvested side, 72,000m³ had been offered with 66,000m³ contracted. This makes 396,000m³ overall, with 384,000m³, or 97%, contracted.

‘In terms of log sales, in the first couple of months we have had a very good time. Prices have maintained and are slowly rising, probably reflecting the demand that’s out there at the start of the year,’ the Coillte spokesperson said.

A lot of good quality wood is coming out and customers are rebuilding their stocks, particularly in the larger sizes.

‘Cautiously optimistic’, is how Coillte sees this year. September 11 and the economic slowdown were ‘depressing at one stage’ but it describes the market as better now.

It says the euro is not a big factor as both Sweden and the UK are not in it, a point on which many industry sources agree.

Coillte, as it seeks to be more cost-effective, is looking to increase non-core activities, including building small rural housing developments on its land, possibly showcasing timber design, and possibly windpower installations. But it stresses forest operations won’t be affected (TTJ February 16).

A possible election in the Republic this year may lead to a boost in infrastructure investment though this could take time to filter through.

Most contacts agree that the government has done a good job with the economy and few expect it to lose at the polls.

Meanwhile, another event that is expected to impact on the timber trade, but at least one or two sources, is the World Cup, especially if the Republic of Ireland progresses in the event. ‘A lot of time will be lost during the summer,’ said one company. ‘It’s going to affect everybody. Our whole town just stops.’