The effectiveness of timber industry representation efforts has been a talking point over the years due to the myriad of organisations representing the various parts of the trade.

There are so many different voices and fee-paying structures, the argument goes, that it is difficult for the wood industry to unite or compete effectively enough against the large centralised lobbying efforts of competitor industries.

Efforts to increase working together and unity have been a slow burn. Back in 2007 the Norton House Group was formed where heads of the leading 16 timber related organisations started looking at ways for the industry to work together for greater industry benefits.

This was followed by the Accord, signed in 2012 by 13 trade bodies, marking a significant step in the augmentation of timber industry supply chain representation, and then the formation of the Confederation of Timber Industries (CTI) in 2015.

A new era of timber industry representation kicked off on November 24 when Timber Development UK (TDUK) held its first annual meeting and conference. TDUK brings together the timber supply chain and specification community within the new body that merges the Timber Trade Federation (TTF) and TRADA.

More than 150 members attended the AGM in central London, hearing that TDUK’s mission was to provide “One Supply Chain, One Vision, One Voice”, drawing on more than 1,500 members extending from sawmill to specifier.

TDUK chief executive David Hopkins emphasised that the new organisation would feed information both up and down the supply chain as it truly seeks to represent members from the sawmillers to specifiers, linking timber production to the end user.

“The future looks bright for timber as the UK looks to build more sustainable homes and achieve net-zero targets, and the rising number of mergers and acquisitions in the market reflects a growing, and increasingly sophisticated industry,” he said.

“Now our own merger between TTF and TRADA will ensure the timber industry will have a strong, collective voice as we strengthen the role of timber in construction.”

TIMBER MARKETS

The global market conference following the AGM was an opportunity for members to hear about market dynamics in the timber sector from Nick Boulton, TDUK head of technical and trade policy, as well as a UK and construction economic summary from Noble Francis – the Construction Products Association’s economics director.

Mr Boulton said the first eight months of 2021 had seen a 41% increase in UK softwood imports to 5.5 million m3 (1.7 million m3 above the same period in 2020). Domestically produced softwood reached a volume of 3.3 million m3 for the period.

“As a sector we should be rightly proud to have delivered a record amount of timber to the market despite all the obstacles we have had to overcome,” he said.

He said the performance demonstrated the resilience of the timber sector. “We need to get the message out there to counter the opinion that there is not enough wood out there.”

Latvia and Germany registered large spikes in softwood shipments to the UK, the former seeing a 175,000m3 increase and Germany a 120,000m3 rise for the period.

It was not only softwood seeing strong import volume growth, but also hardwood (+20%) during the period.

However, at the time of the November market conference, Mr Boulton referenced the pressure on prices at the time with a glut of CLS on the market with prices under pressure, explaining that as signs of a likely price correction after the big price increases (for latest softwood information see our softwood market report).

Keys risks highlighted by Mr Boulton include the ongoing HGV driver shortage, shipping delays, the impact of rising energy costs and the Russian log export ban.

He also had a word to say about Brexit.

“Brexit has not yet fully played out. There are challenges next year [2022]. They should not have too much of an impact on our sector, but they are still there.”

UK ECONOMY

Construction Products Association (CPA) economics director Noble Francis was on hand to explain the state of the UK construction market and the CPA’s forecasts.

Mr Francis said the CPA forecasted construction sector output growth of 14.3% for 2021, but had revised growth downwards to 4.8% for 2022. The latter is largely due to supply chain issues.

He said the construction industry had enjoyed a V-shape recovery from the initial Covid-19 shock and not been impacted by subsequent national lockdowns. Contractors had expressed confidence in prospects in the first half of 2022, with the trend towards houses rather than flats. But he said there was some medium-term concerns over housing affordability.

“Private housing and RMI demand remain strong but material availability and cost is an issue,” said Mr Francis. “The infrastructure sector remains strong but delays are an issue.”

The CPA is seeing a trend in the commercial sector towards office downsizing, with some companies looking for smaller and better-quality premises.

The CPA is forecasting private housing output to have risen by 17% in 2021 and by 6% in 2022, while private housing RMI is forecast to have risen by 20% in 2021, but to remain flat – albeit at a high level – in 2022.

Mr Francis highlighted heavyside materials such as bricks, cement and roofing products as being impacted by higher energy costs, since energy represents roughly one-third of total costs of producing those products. And he also referenced the extreme rise in 40ft Chinese container costs, with prices rising from approximately US$1,500 in the summer of 2020 to as much as US$14,700 in the summer of 2021.

Meanwhile, also at the conference, delegates heard about the private equity sector’s interest in the UK timber market during recent years. Cairngorm Capital Partners, Endless LLP, Hadleigh and Inflexion have all taken positions in UK timber companies over recent years.

Rob Wallace, director of Deloitte, said there had been a big increase in private equity M&A deals in the UK timber sector in 2021 (year to date to November, 2021) with 14 deals recorded, demonstrating considerable acceleration.

Mr Wallace said private equity was attracted to the timber sector due to the industry’s link with construction, sustainability and consolidation opportunities due to the large element of small and independent companies in the sector.

Rob Barclay, CEO of the National Timber Group (one of Cairngorm Capital’s investments), and Tony Hackney, BSW Timber group CEO, shared their experiences of private equity.

Mr Hackney said Endless LLP’s acquisition of BSW led to a doubling of turnover in just 18 months and led the company in the right direction. BSW was then the subject of an acquisition by Binderholz, which Mr Hackney said had been preceded by a careful selection and decision process by BSW involving a total of four potential trade partners. The Binderholz deal, he added, would see BSW keep its brand with exciting developments to come, hinting that people “would see timber in a new light”.

“There are various private equity funds and they all view the timber industry differently, so choose your partner carefully,” he said.

Mr Barclay added that the timber sector was sometimes slow to change and a bit of expert investor help could enable companies to progress more quickly.

Deloitte’s Mr Wallace said national housebuilders were very interested in increasing their share of timber framed housing. He admitted that private equity’s record of involvement in modern methods of construction – of various types – was not an unblemished record though.