“A market crisis is always an opportunity” was the pithy title of the presentation from American Hardwood Export Council European director David Venables at the organisation’s convention in Hamburg. It could have applied to the whole event.
None of the 160 delegates, comprising US hardwood suppliers and their European customers, shrunk from acknowledging that American hardwood business in Europe has been hard going. But conference speakers also contended that, if the American industry makes the most of its “uniquely varied and reliable” raw material resource and its global marketing capabilities, it can defend and build on its share of growing international hardwood demand.
The “European market analysis” presentation by AHEC Europe market development manager Roderick Wiles highlighted how tough business has been. In 2002, he said, US hardwood lumber exports to the EU fell 8.4% in value to US$550m and 6.7% in volume to 671,701m3. Sales to the UK dropped 26% and were also squeezed in recession-hit Germany and the Netherlands. Only Spain, among the leading European economies, markedly increased imports.
In the first six months of 2003 US lumber exports to the EU fell in value a further 3.7% to US$284m and in volume 11.7% to 331,241m3.
Mr Wiles said trade was hit by a slowdown in key euro zone economies, the weakness until recently of the euro and rising competition from eastern European hardwood supply and using industries. East European hardwood now has 20% of the EU market, with EU-grown timber taking around 44%, tropical species 20% and US hardwood 5%.
While delivering some unpalatable facts, however, Mr Wiles also pointed out that the EU remains America’s most valuable export market (ahead of Canada, the Pacific Rim and China) “Europe is still buying quality, paying an average US$600/m3 compared to China’s US$370/m3,” he said.
Mr Wiles reported too that US veneer sales in Europe continue to climb, up 4.4% to US$155.5m in 2002 and 4% to US$81m in the first half of 2003. Sales to the UK and Germany declined, but this was offset by rises, among others, to Spain, Italy and Belgium.
Looking to the future, Mr Wiles said a key influence on trading patterns will be next year’s EU enlargement, with the 10 new member states including key hardwood players in eastern Europe and the Baltics.
Pressure from the east
The growing international presence of the east European hardwood sector was also raised during the conference’s panel debate, which was chaired by Jamey French of Northland Forest Products. One question from the floor was how the EU’s timber and woodworking industries could hope to take on the competition from the Union’s newcomers and Asia.
On the panel Antonio Meco of Spanish firm Geswood said pricing was key and that the weaker dollar recently had helped his American hardwood sales. Heidi Carpentier of Willy Carpentier of Belgium agreed, but said competitiveness remained an issue. “American hardwood was too expensive,” she said. “The situation has improved, but given growing competition from eastern European timber, maybe not enough.”
Fellow panel member Peter Winter of the UK’s International Timber warned, however, that the industry should not focus on price to the exclusion of all else. “Recently one of our customers specified more expensive European ash rather than North American, because that was the look they wanted,” he said. “Price wasn’t the issue.”
Other speakers echoed the point that the onus was on American hardwood suppliers to focus more on specific needs of European customers. Of particular concern was the preference of some companies to ship random lengths and timber kiln dried to the 6% moisture content favoured in the US.
“I ask our suppliers to sell not only what they want, but what customers need – dimension timber kilned to the European norm of 12%,” said Paolo Ferrera of Italian agent Brokerstar. “This is what the eastern Europeans are supplying. They might still lack drying capacity, but they have the processing technology and know-how.”
Influence from China
Another conference topic was how the booming Chinese timber industry would influence international hardwood trade, especially its hardwood flooring sector which has become such a major exporter of finished product and voracious raw material importer.
In his global market analysis, AHEC executive director Mike Snow said Chinese GDP is growing at 10% a year and its timber consumption is forecast to hit 250 million m3 by 2010, with an increasing proportion accounted for by imports because of draconian curbs on logging in China. But he stressed that the country is not simply an inexorably expanding re-export machine. It is also becoming the fastest growing consumer market in the world. “In 2001 they constructed 1.8 billion ft2 of new building and they’re planning to build another 175,000 hotel rooms for the 2008 Olympics,” said Mr Snow. “We are seeing the creation of an enormous market for interiors and home improvement products – which is why I’m now going to Shanghai to open an AHEC showhouse in Shanghai completely fitted out with American hardwood products.”
When the conference turned to environmental certification, John Grunwald of Danzer said, with some feeling, that the US did not need it. “We’ve always managed our forests sustainably. Certification is irrelevant – a distraction.”
But the consensus was that certification had to be taken on board in some form and environmental specialist Rupert Oliver said that it still poses challenges. Environmentalist action on forestry is intensifying, he maintained, and national timber procurement policies threaten to act as barriers to timber that is not certified under specific schemes, notably the FSC‘s. The latter could prove a particular headache due to US mill’s use of untraceable “gatewood” creates problems meeting FSC chain of custody criteria.
But Mr Oliver also said the US hardwood sector has advantages in tackling the issue. “Its timber resource is growing in size and diversity and it is well-placed to supply information on forest practice – including via AHEC’s ‘sustainablehardwoods.info’ website,” he said. “The American Sustainable Forestry Initiative (SFI) certification scheme is also gaining momentum, with 40 million ha of forest certified and the first SFI-labelled products exported to Japan.”
Other good news is that proposed EU environmental “legality licences” for timber imports look set only to apply to material from countries with a history of illegal logging.
In the absence of certification scheme mutual recognition, Mr Oliver said that an initiative from the World Business Council for Sustainable Develop-ment (www.wbcsd.ch) could also benefit the trade. To help buyers make judgements amid a plethora of schemes, the WBCSD is devising a ‘threshold’ standard to which they should all comply.
International respect
David Venables also contended that there is international “respect” for the environmental performance of American hardwood. And, he concluded, it had other key strengths which should enable it to build its share of the tough European market. “Besides its range of species, availability of higher grades, longer lengths and wider boards,” he said, “the sector can also capitalise on the fact that hardwoods are increasingly in fashion in Europe, notably in architecture and flooring, with no sign of a swing back to tropical species.”
To make the most of the opportunities, said Mr Venables, AHEC will continue to raise specifiers’ awareness of US hardwoods, particularly lesser-used species, (although there was some disagreement over whether it should continue to focus on red oak, with the Europeans less enthusiastic than the Americans). Following the success of its sponsorship of the UK Wood Awards for architectural and interiors
use of timber and its architects’ seminars across Europe, AHEC is also distributing its Hardwood References publication to architects and interior designers worldwide.
In addition AHEC is promoting to the furniture sector and continues to have US species tested to European durability and other standards.
“We’re not suggesting it will be easy,” said Mr Venables, “but there is a healthy future for American hardwoods if we stay focused and committed and work together to influence the market.”
