Summary
• Production in the UK forest products sector could be down by 25-40%.
• The current downturn has been more rapid than those in the past.
• UK sawmillers say business is hand to mouth.
• Harvesting machinery is idle and some hauliers have taken lorries off the road.
• Despite the downturn, marketing and training are still important.

It is doubtful if anyone in the UK forestry and forest products sector will look back on 2008 with fond memories, unlike their recollections of 2007, when UK softwood sawmillers broke the 3 million m³ production barrier for the first time; sadly, there will be no production records broken this year.

Trading conditions in 2007 and 2008 represent two extremes, which together illustrate the volatility of timber markets. We are used to the cyclical nature of the trade and recognise that, whereas in the past the cycle was represented by an undulating curve, more recently, it has become a sequence of increasingly steep peaks and troughs.

In 2008 we have gone from the euphoric highs of 2007, to the depths of depression, as demand has evaporated in almost every market sector, resulting in many businesses facing the unpleasant scenario of short-time working, and redundancies.

Detailed statistical data for 2008 is not out yet, but industry commentators say that production may typically be down by as much as 25-40% on last year, depending on product mix and location. Needless to say, stock levels have risen dramatically.

No-one expected to see the almost unprecedented high levels of demand experienced in the first three quarters of 2007 continue in to 2008, but neither did they expect demand to all but disappear. There are some exceptions but everyone in the UK wood supply chain, from harvesting contractors to panel products, is suffering.

Speed of downturn

We have seen downturns before, but few can recall anything quite as rapid and severe as this one. In the past, we have seen periods of reduced demand in some market sectors, whilst others have been more buoyant, which has enabled businesses to survive difficult times. However, in 2008 virtually every market has taken a turn for the worse as the year has progressed. UK sawmillers continue to report that business is, at best, hand to mouth.

A downturn of this severity imposes severe pressure on everyone and some parts of the sector are already in a fragile state. For example, the timber harvesting and roundwood transport sectors have faced pressure for some time, including increasing fuel costs, recruitment and retention problems, and now there is a shortage of work. Harvesting machinery is lying idle and some hauliers are taking lorries off the road. Experienced people are leaving the sector and there is no guarantee that they will return when things improve.

Amidst the current gloom it is easy to forget that there is a need to address a variety of topics which affect the trade. Whilst those in the timber industry recognise the environmental credentials of our products, producers of competing materials are upping their game. It is no longer good enough to say “wood is good, so use it”; specifiers and customers are increasingly demanding more technical information and we must be able to provide the data our customers need.

The timber industry cannot afford to rest on its laurels; competing materials supported by big marketing budgets promote their environmental credentials to an audience which may not know any better.

Education and training

Also, at a time when headcounts are being reduced it is difficult to focus on the education, training and skills development needs of the sector, yet this we must do if we are to meet the challenges ahead of us. The timber industry must marshal its forces on several fronts so that when the upturn comes it will be well placed to make the most of every new opportunity. Trade associations have an important role to play to support the industry and are already working together on a range of topical issues, sharing resources for the common good.

So many factors which influence the fortunes of the UK forest products sector are out of its control and until confidence and stability are restored in the financial sector, it is difficult to foresee any improvement in the construction sector and, in turn, the timber trade.

The UK timber industry is characterised by its resilience, but there is no doubt that this has been more than tested this year.

What will 2009 bring? Everyone is hoping for the usual spring upturn, but is this wishful thinking? Let’s hope that there will soon be a light at the end of the tunnel and conditions will be conducive to renewed activity in the construction sector and related markets, which will in turn stimulate demand for wood and wood products.