The fu­ture’s look­ing bright

Australasian Timber - - NEWS - By Ric Sin­clair Man­ag­ing Di­rec­tor For­est and Wood Prod­ucts Aus­tralia Lim­ited

PRE­DICT­ING THE fu­ture is def­i­nitely a fool’s er­rand. More so, given the re­cent track record of learned pun­dits who have failed to pre­dict ev­ery­thing from oil prices to ex­change rates to US elec­tion re­sults.

So, it is with some trep­i­da­tion that I con­sign my­self to this dis­cred­ited ship of fools.

That said, it is my pre­dic­tion that 2016 will be viewed in hind­sight as one of the piv­otal years in the de­vel­op­ment of Aus­tralia’s fu­ture for­est and wood prod­ucts sec­tor.

Now many of you may see this as a lu­di­crous claim. As a gen­eral rule, it is nearly im­pos­si­ble to gen­er­alise about the sec­tor given its ge­o­graph­i­cal and prod­uct di­ver­sity. For some, the year may have been bet­ter than prior years; and for oth­ers, it may have been worse or just the same.

In terms of eco­nomic or com­mer­cial mea­sures, the ag­gre­gate sta­tis­tics show that there has been a sig­nif­i­cant lift in out­put and turnover for the sec­tor helped by favourable ex­change rates and strong do­mes­tic and ex­port de­mand – this doesn’t mean that the gains have been shared equally and some seg­ments and in­di­vid­ual com­pa­nies con­tinue to do it hard.

How­ever, the piv­otal legacy is not be­cause of the im­proved trad­ing con­di­tions but due to the ‘seeds’ that have been sown that will hope­fully bear fruit in the fu­ture.

Seeds were sown

It would be po­etic, but tech­ni­cally in­cor­rect, to sug­gest that all the ‘seeds’ were sown in the last 12 months. In re­al­ity, many have been years in the mak­ing.

The fol­low­ing is a per­sonal list of things that hap­pened in 2016 that I think (or hope) will make 2016 of his­toric im­por­tance and they are pre­sented in no par­tic­u­lar or­der:

The re­port by the For­est In­dus­try Ad­vi­sory Coun­cil (FIAC) ti­tled “Trans­form­ing Aus­tralia’s For­est Prod­ucts In­dus­try”

The first fed­eral elec­tion in over 20 years where forestry was not a ma­jor po­lit­i­cal is­sue

The change to Na­tional Con­struc­tion Code to make it eas­ier to use light­weight and mas­sive tim­ber con­struc­tion in multi-res­i­den­tial, ho­tels/mo­tels and of­fices up to 25 me­tres in height

The com­mit­ment by gov­ern­ments and in­dus­try to pro­vide ad­di­tional funds to re­search and ex­ten­sion through a num­ber of sep­a­rate ini­tia­tives

The re­port by E&Y ti­tled: “Me­ga­trends and the Aus­tralian For­est and Wood Prod­ucts Sec­tor”

The an­nounce­ment by the West­ern Aus­tralian gov­ern­ment to pro­vide funds to al­low for soft­wood plan­ta­tion es­tab­lish­ment

The con­struc­tion by Lend Lease and Strong Build of pi­o­neer­ing midrise tim­ber build­ings in Syd­ney and by Mor­gan and Hansen in Ade­laide

The will­ing­ness of lo­cal and State gov­ern­ments to con­sider wood en­cour­age­ment poli­cies, of­ten at the urg­ing of Planet Ark

The an­nounce­ment and/ or com­mis­sion­ing of do­mes­tic man­u­fac­tur­ing ca­pac­ity in cross­lam­i­nated tim­ber.

Each of the above ac­tiv­i­ties share a com­mon theme: they are all about in­vest­ing in the fu­ture and point to­wards a much brighter fu­ture for the sec­tor.

In my own sphere of ac­tiv­ity, I have heard a lot of la­ment­ing over the last six to eight years about the good old days when the sec­tor was ruled by gov­ern­ment agen­cies (and their co­hort of pro­fes­sional foresters) and the do­mes­tic in­dus­try was pro­tected by tar­iff bar­ri­ers. While pro­tec­tion­ism may be in resur­gence, I doubt that we can fully re­turn to the past.

The in­dus­try that will lead us into the fu­ture is largely pri­vate owned (with a high pro­por­tion of for­eign own­er­ship) and sees both op­por­tu­ni­ties and threats with an in­ter­na­tional per­spec­tive.

One of the big­gest chal­lenges fac­ing the sec­tor is that our re­source base and man­u­fac­tur­ing ca­pac­ity is dis­persed and in most cases lacks in­ter­na­tional economies of scale. Com­pa­nies can com­pete in­ter­na­tion­ally through bet­ter ser­vice and mar­ket knowl­edge, but a crit­i­cal mass of re­source in key re­gions can only im­prove the sec­tor’s in­ter­na­tional com­pet­i­tive­ness.

As the FIAC pa­per suc­cinctly puts it: we need to have the right trees in the right place at the right scale.

In­vest­ment across a broad front

This will re­quire in­vest­ment across a broad front of ac­tiv­i­ties from more in­ten­sive sil­vi­cul­tural man­age­ment of pri­vate and pub­licly-owned native forests to plan­ta­tion ex­pan­sion. The pri­vate land­holder will play a key role in this in­vest­ment and the in­dus­try needs to con­sider a range of mech­a­nisms to pro­vide con­fi­dence to land­hold­ers that com­mer­cial forestry is a worth­while ven­ture.

The wood pro­cess­ing in­dus­try will also need to con­sider some fun­da­men­tal changes par­tic­u­larly when it comes to log size and vari­abil­ity, which may see a shift to more re­con­sti­tuted and engineered prod­ucts.

Since join­ing FWPA in 2008, I have been part of the sec­tor’s roller coaster ride with the last of the hal­cyon days of man­aged in­vest­ment schemes, their sub­se­quent col­lapse and dis­mem­ber­ment, the pri­vati­sa­tion of State-owned as­sets and the mas­sive re­duc­tion in re­search ca­pac­ity that was fo­cussed on com­mer­cial forestry and wood prod­ucts. Cer­tainly a grim pic­ture, but re­struc­tur­ing is never pretty.

Dur­ing this pe­riod, FWPA has re­mained stead­fastly fo­cused on its role in grow­ing the mar­ket for sus­tain­ably sourced wood prod­ucts (both do­mes­tic and im­ported) and de­liv­er­ing val­ued ser­vices to the in­dus­try and gov­ern­ment. Our scope has broad­ened to in­clude mar­ket­ing, stan­dards and codes and in­dus­try sta­tis­tics.

FWPA’s in­vest­ments have un­der­pinned some of the ac­tiv­i­ties that de­fine 2016 as a piv­otal year. Our part­ner­ship with Planet Ark and con­sumer ad­ver­tis­ing fea­tur­ing Peter Mad­di­son from Grand De­signs Aus­tralia have ir­refutably changed the mar­ket per­cep­tion and ac­cep­tance of wood. Our WoodSo­lu­tions pro­gram is now the world’s most vis­ited wood pro­mo­tion web­site and our change to the Na­tional Con­struc­tion Code will drive a fun­da­men­tal change in midrise con­struc­tion. Less prom­i­nent, but equally im­por­tant, our in­vest­ment in re­search and sta­tis­tics will give in­dus­try tools to im­prove their com­pet­i­tive­ness.

As stated ear­lier, the fu­ture is very dif­fi­cult to pre­dict and hu­man de­vel­op­ment never moves in clear straight lines. There will al­ways be volatil­ity and we will con­tin­u­ally be sur­prised by un­fore­seen events, but I am ex­tremely con­fi­dent that there is a strong and ex­pand­ing fu­ture for the Aus­tralian for­est sec­tor.

To rein­ter­pret Sir Win­ston Churchill’s famous quote:

Now this is not yet the fu­ture. It is not even the end of the past. But it is, per­haps, the be­gin­ning of the fu­ture.

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