Features

Index Page
Contractor Profile 1
Contractor Profile 2
Contractor Profile 3
Guest Column
Manitoba Mill Upgrade
Industry Training
Sawmill Innovations
Small Sawmilling
Spotlight
Supplier Newsline
Mill Drying
Bridges & Culverts
----------------
Departments

Calendar of Events
Reader Service
Classified Ads
tech_update

-----------------
Site Information

Contact List
Past Issues Archive
Join our Listserve
Search Our Site
---------------------

 

 

 

September 2006 - The Logging and Sawmilling Journal

SPOTLIGHT

The Kiwis are coming

In an effort to broaden international trade, the New Zealand government is encouraging a number of New Zealand-based forest equipment companies to expand into other markets, and the plans include testing the Canadian market.

By Tony Kryzanowski

Despite a strong market for its sawn timber in the United States and neighbouring Australia, New Zealand is still a major exporter of raw logs, and this is a situation that neither the domestic manufacturing industry nor the government is pleased about. The country exports about $1.15 billion in sawn timber to the US and Australia. Yet, 67 per cent of wood products exported to Korea are logs, as are 71 per cent to India. Logs also exceed exports of sawn timber to China and Japan.

According to Murray Sherwin, the director-general of New Zealand’s Ministry of Agriculture and Forestry, the issue of adding more value to the country’s forest resource is very high on the government’s agenda. “With regards to the export of logs, it’s almost a national shame,” he says.

What’s of further concern to the New Zealand government is that the volume of export logs is dropping due to stronger competition in its traditional Asian market from Russia. According to a recent government report, there was a decrease in log exports, from 7.3 million cubic metres in the year ending March, 2004 to 5.1 million cubic metres in the year ending March, 2005.

The New Zealand Forest Industries Exhibition and Conference was held in Rotorua, which is renowned both for the presence of the Maoris (above, at the exhibition’s opening ceremony) and the forest industry.

Sherwin says the forest industry and the country really are between a rock and a hard place. Trade barriers to New Zealand’s manufactured wood products are having a lot bigger influence on the direction of the country’s forest industry than the exchange rate, despite what some local producers would believe. At the present time, the New Zealand dollar is about 64 cents to the American dollar, having escalated over the past five years from 40 cents.

“We face escalating tariffs in a number of our key markets,” says Sherwin. “So, if we do attempt to process our logs, we face tariffs, whereas the logs go through largely tariff-free.”

Claymark International is a major New Zealand-based exporter of value-added Radiata pine wood products to North America. Claymark operates an advanced sawmilling and value-added operation in Rotorua, and one of its main customers is Home Depot. Dean Camplin, group general manager, points out that one of the significant dangers of exporting raw logs, particularly to emerging markets like China, is that New Zealand could in effect be exporting its established forest industry.

Camplin says that by shipping Radiata pine logs from New Zealand to China, it could only be a matter of time before the Chinese develop the technical ability to compete with New Zealand’s established forest industry with similar products in international markets.

There is a sense, however, from both New Zealand’s industry and government that the country is really getting tired of being kicked around on the issue of trade and trade barriers, particularly since it is so dependent on exports. It has taken two notable steps in an attempt to battle back.

The first is to raise the country’s forest industry research and development capacity by participating in a joint venture called “Ensis” with neighbouring Australia. The venture is a combination of both Australia and New Zealand’s forestry research and development organizations. What’s interesting is that the organization’s chief executive officer is Larry Little, a Canadian-born and trained- MBA with roots in such organizations as the Canada Mortgage and Housing Corporation. Furthermore, the technology commercialization manager of Ensis is also a transplanted Canadian, Garry Boos. He is responsible for helping to transfer Ensis research and development technology from the laboratory to the marketplace.

The second notable step being taken by the New Zealand government is to escalate the activity of the country’s Trade and Enterprise Department to help domestic companies, including those serving the forest industry, branch out to other markets through promotional events like the recent 2006 New Zealand Forest Industries Exhibition and Conference, and to improve their understanding of international marketing, including the value of forming strategic alliances. A number of New Zealandbased companies have plans to test the Canadian market over the next five years.

For example, a company called Fibre-gen is a commercial research and development company that was recently spun off by New Zealand’s largest vertically integrated forest products producer, Carson Holt Harvey. It has proven sonic technology for evaluating trees in the cut block for better optimization, as well as using sound to measure the strength properties of lumber in the sawmill.

New Zealand equipment suppliers now serving domestic sawmillers, such as Claymark International (above), are being encouraged to branch out to other markets, such as Canada, and set up strategic marketing alliances.

Another company, ATLAS Technology, has a suite of computer-based forest resource assessment and management tools that it wants to market in Canada. It is planning to potentially provide its software programs at no charge to a BCbased university, so that forestry students can learn how to use them.

Falcon Engineering has a sound-based product that tests the strength properties of green lumber before it is sorted so that sawmills can create more homogenous charges of green lumber prior to kilndrying. The technology also works well in measuring the stiffness of dried lumber.

An attachment fabricator called Level Systems Limited wants to introduce its auto-leveling attachment for excavators into the Canadian market. The attachment has proven itself in a working environment for the past five years in New Zealand. It also has a continuous rotation device that makes forestry attachments more maneuverable.

Wellington-based dry kiln manufacturer, Windsor Engineering, has over 400 kilns in use in Australasia, and plans to expand into North America, especially in areas where trees have similar fibre characteristics to Radiata pine.

In addition to helping home-grown technology companies expand into other markets, the government has just opened a new Wood Innovation Centre in Shanghai, China to enhance New Zealand’s potential market penetration into that growing market.

One of the reasons why logs are such a hot export commodity in New Zealand is because of how forest resource ownership is structured in that country. “The negotiation of log prices and sourcing of a continual supply is always on the agenda for forest companies operating in New Zealand,” says Brian Smith, Automation Electronics director. Automation Electronics is a New Zealand-based systems integrator with considerable international experience.

It has strong alliances with Canadian industry suppliers like Autolog, MPM Engineering, Sharp Hydraulics, Hermery Opto, ScanMeg, TS Manufacturing, and SureGrip, and is based in the community of Mt Maunganui on New Zealand’s picturesque Bay of Plenty. It was part of a large contingent of industry suppliers who took part in the recent New Zealand Forest Industries Exhibition.

The issue of security of log supply is one of the critical differences between Canada and New Zealand’s forest industry where, like the United States, the forest resource is primarily held in private hands. In fact, 92 per cent of plantation forest ownership is held by either privately or publicly registered companies. Many New Zealand-based forest product manufacturers face re-negotiation of log prices every three months.

Right now, New Zealand is heavily invested in planting and harvesting the fast growing softwood species Radiata pine. Unlike Canada, where conifer stands are largely harvested and replanted in natural stands, the Radiata pine is planted and harvested much like an agricultural crop on plantations. With its 20- to 30-year growing cycle that frequently produces logs up to 30 inches in diameter, landowners can often expect two crops in their lifetime. There are also some very successful Douglas fir, eucalyptus, and California redwood plantations in New Zealand, and the government is funding research into the possibility of further diversifying the country’s fibre mix involving both native and imported wood species. New Zealand’s environment is highly conducive to growing both forest and agricultural crops.

The next five years could mark significant changes to New Zealand’s forest industry, considering that Carter Holt Harvey, formerly 50 per cent owned by International Paper and the country’s largest forest products manufacturer, has been sold to one of the nation’s most affluent businessmen, Graeme Hart.

Transition in New Zealand’s forest industry is coming, and as the situation currently stands, it could realistically go in several directions depending on what type of playing field develops for the forest products manufacturing sector. The issues of market access and fibre costs will undoubtedly determine whether or not companies will find it worthwhile to modernize some of their aging facilities or simply shut down altogether.

 


This page and all contents 1996-2007 Logging and Sawmilling Journal (L&S J) and TimberWest Journal.
For personal or non-commercial use only.
This site produced and maintained by: Lognet.net Inc
Any questions or comments on this site can be directed to Rob Stanhope, Principal (L&S J).
Site Address: http://www.forestnet.com.

This page last modified on Monday, January 01, 2007