In anticipation of the abundance of timber soon to be ready for harvesting from Scottish forests, many sawmills have invested heavily to ensure everything is in place to cope.
Now they are anxious to see a return on that investment as millions of pounds worth of machinery lies waiting, poised to perform to its maximum efficiency.
David Sulman of the UK Forests Products Association said: ‘Recent investment by sawmilling companies has built in considerable production capacity, which in most cases is not currently being fully utilised.’
But, he said, it will take no time at all to bring that latent capacity on stream, leaving Scottish sawmills well placed.
However, Mr Sulman said the real challenge lies not in dealing with the raw material but in stimulating the market for the UK product. And this, he said, will be very difficult, not least because of lower priced imported softwood, notably from the Baltic states and Sweden.
‘UK softwood has three principal markets – construction, pallets and packaging, and fencing and garden products,’ he explained. ‘Market penetration in packaging and fencing is very high but the construction sector has been identified as a market that has considerable potential for greater penetration by UK grown timber. To a large extent, further growth in this market will have to be achieved by import substitution.’
Sawmillers across Scotland know they are going to have to work hard to maximise the timber bounty.
At John Gordon & Son in Nairn, £3m was invested in a new mill in 1998 and phase two is now ready, with a further £1.5m investment planned.
Director Scott Gordon said: ‘We would like to kick production in. We are poised to move up to the next stage as this volume of wood comes on stream.
‘But at the moment we are not finding an excess of good quality green logs on the market and, although we are not exactly fighting like dogs over a bone, we are still having to fight for what is out there.’
One concern, he said, is that the percentage of better quality logs will drop while the percentage of pulp quality logs increases.
‘We need assurance that the back-up is going to be there in terms of the quality of the timber. We are concerned to maintain the good sawlogs – then pallet and pulp.’
The quality will not be known until the timber starts to come out of the forests: ‘The acid test will be when it is felled,’ he added.
On the other side of the coin, he said, is the private sector – and how much wood they have got and how much they will allow on to the market.
‘We could encourage them with a few more pounds per ton,’ he said, ‘but at the moment that isn’t possible. If they are not in a position where they need a constant cash flow then they are going to hang on until the price is right.’
Meanwhile Hamish Macleod, general manager of Dalbeattie-based Howie Forest Products, is confident the timber will meet expectations.
The mill has seen investment of around £4m in new log sorting, cross-cutting and kilns in the past couple of years and there is currently a latent capacity of around 60% on the site, although production will increase slightly this year.
‘The infrastructure we put in was peripheral to the mills and removed some of the bottlenecks,’ Mr Macleod explained.
‘We have a better idea of the quality of the timber as some crops have come forward. What we can get out of it still matches what the market place is looking for – construction, pallet and fencing.
‘There will be opportunities to expand into the construction sector and we will also need a market for all the chips and sawdust.’
Mr Macleod believes companies will have to become more service-oriented, getting closer to what customers are looking for on a just-in-time basis.
He added: ‘Quality is important, but so is service and delivering to the specification customers are looking for.
‘I believe the timber coming out will be good enough for our requirements. However, the amount may not be as much as was originally thought. Some timber may be more accessible than the rest.’
At James Jones & Son Ltd preparation for the wall of wood goes back to 1985. Joint managing director John Kissock said: ‘We have invested pretty heavily and have four Scandinavian-type sawmills, with the latest at Lockerbie.
‘Our emphasis will be on trying to utilise those assets harder than we have been. That is dependent on the wood coming to market. But I don’t think that is the big issue – the issue is where we are going to sell it all.’
James Jones’ first investment was at its Dumfries mill. It then put money into a similar operation at Aboyne in 1989 and six years later brought on another line at Kirriemuir, followed by Lockerbie in 2001.
Mr Kissock said: ‘This investment, particularly at Lockerbie, was on the back of the predictions we had. We still have a fairly major site to develop there and we are redeveloping Dumfries.’
While not wanting to talk down the quality of the wood, Mr Kissock said the com-pany has put in the technology to deal with low grades so it can utilise the timber into different markets.
‘It won’t all go into construction – some will have to go into fencing and pallet wood and the clever operations will be able to differentiate where material should go. That will be the key issue. We need to do quite a bit of work – and market development is a significant part of the Scottish Forestry Industries Cluster exercise.’ (TTJ January 26)
James Jones sees construction as the biggest market. Mr Kissock said: ‘We have already done pretty well in the fencing and pallet wood markets and have invested in downstream activities. We bought a pallet manufacturing company partly to help us develop synergy, while at the other end of the scale we have our I-joist business.
‘These are areas we see as part of market development, but a big part will need to be in the construction sector and we will need to try and develop the products we have already got going there – such as standard carcassing ranges, timber treatment, regularising. We have secondary processing facilities, the usual pick-a-pack specifications and all the things the customer is looking for. We are developing those to give us a bit of an edge over the competition, but it is quite challenging.
‘There is great potential but it isn’t going to be straightforward. It has been relatively easy to go from the market penetration we had 20 years ago to where we are today because all we have had to do is compete with imports. That has taken us up to something like a 24% market penetration. But if you look at the potential of the wood on the ground we have got to go up to somewhere in the mid-40s if we are going to get it all into the market.’
Another big issue – and potentially a limiting factor – is where sawmillers will sell their co-products. Mr Kissock said: ‘It is the first time in our development we have had to worry about this.
‘There are people right now who are restricted in their production because they cannot dispose of their co-products. I can see there being some problems unless we get an expansion of the processing capacity in the pulp and chipboard mills.
‘The thing doesn’t work if one part of the chain doesn’t work – everybody is in this to try and make some living.
‘It is going to be very difficult – even for those of us with efficient operations.’
