Divide and Rule

President Obama, Hillary Clinton and JK Rowling may have shown their hands in respect of the impending Scottish referendum on independence but timber industry leaders are largely keeping their lips sealed on the subject.

This may be down to a determination not to impose a particular view on the workforce or to adopting a 'business as usual' approach for the benefit of both suppliers and customers - but it could just as easily be attributed to a lack of clarity in both the Better Together and the Yes campaigns.

"I don't believe the arguments for and against are clear cut enough," said Neil Donaldson, group executive chairman of James Donaldson & Sons.

"I think by definition the no campaign is very negative and the yes campaign is largely unknown," he continued. "This creates uncertainty and confusion and until we get more clarity it is very difficult for people to make a rational and objective decision based on logic rather than emotion."

"The 650-page White Paper the Scottish government issued is a huge document but there isn't a lot of detail in it, especially for our sector," said David Sulman, executive director of the UK Forest Products Association.

Polarised Arguments
"Arguments appear to be increasingly polarised but frequently based on little more than assertion or pre-determined opinion," said Peter Wilson, architect and director of the Wood Studio research centre within Edinburgh Napier University's Institute for Sustainable Construction. And, he added, the assessments and propositions made by both sides have been at such variance that "it has been difficult for the public to compare - or trust - their contents and, as a consequence, more objective information has had to be found elsewhere."

Amid the uncertainty, one element that TTJ contacts were agreed on was that access to the Scottish forest resource would remain largely unchanged as forestry policy and Scotland's national forest estate are already governed by Scottish ministers.

"A possible advantage of a yes vote would be at European level," said Mr Sulman. "In the case of a yes vote Scotland would be likely to have its own seat at the table on forestry discussions in Europe, whereas at the moment Defra takes the lead."

And, said Mr Wilson, "for all sorts of logistical and practical reasons Scotland will remain the dominant producer of construction timber on this island for a very long time".

"Much of the existing market for Scotland's forestry is internal," he added.

"However, considerable volumes of sawn timber go to large retail customers in other parts of the UK and it is these markets that will be either threatened or increased by the outcome of negotiations between the Westminster and Holyrood governments following a yes vote.

"Arguably it is in neither administration's interest to create a situation that encourages an increase in imports of timber from overseas, but since the bulk of the rest of the UK's timber already comes from abroad, Scotland would, if independent, effectively become just another external supplier."

Complications would be expected, however, in the absence of monetary union.

"This may make the market a more volatile trading arena," said a fencing manufacturer.

And, he added, while the Forestry Commission would need to continue to bring timber to the market, private Scottish estates might shy away from selling into an English market with a different currency and pricing mechanism.

Additional Costs
"Without monetary union there will be transaction costs and volatility caused by currency fluctuations," said John White, former Timber Trade Federation chief executive. "Many in the timber industry have to deal with these already, so it is not entirely unfamiliar territory, but it would obviously be preferable not to have these additional costs in the supply chain."

"UK businesses are very used to currency fluctuations," agreed timber merchant Keith Fryer. "If Scotland were to have a new currency its stability, or lack of it, might well create some problems but at this stage we simply don't know what will happen."

And there's the rub - no-one knows what will happen. And, in the event of a 'yes' vote on September 18, it is thought the situation is unlikely to become immediately clearer as becoming fully independent isn't anticipated until March 2016.

"Both sides of the debate vehemently argue that there will either be, or not be, a formal currency union and it's difficult to separate politicking from practical argument," said Stuart Goodall, Confor chief executive.

"Using sterling outside a formal currency union is unattractive to both sides, so there would be an imperative on the Scottish government to argue hard for formal union.

"The alternatives are problematic. A new Scottish currency would bring set-up costs and ongoing transactional charges, while joining the euro has few supporters," he continued.

"Of course, 'no currency union' doesn't equate to 'no trade' but the potential absence of one may influence some voters, particularly business people."

Neil Donaldson believes monetary union is essential. "It just makes life so much easier," he said. "For example, we have several sites in England. Are we going to have to pay our English employees in one currency and our Scottish employees in another?"

Peter Wilson maintained that there is "no legal basis" to prevent Scotland from using sterling without a formal monetary union but added that "realpolitik may actually triumph with some form of currency union agreed (albeit under some other name) that is acceptable to both sides."

EU Membership
Another major unknown is whether an independent Scotland would have to reapply for EU membership.

"It's unclear whether a separate Scotland would have any problem or delay in accessing the EU and on what basis," said Mr Goodall. Some of the larger businesses with sites in Scotland operate across the EU and, for those at least, EU membership is preferable, he added.

Another consideration of EU membership relates to the EU Timber Regulation, said Keith Fryer.

"We all know that Scotland has some of the best credentials in the world, but the checks required to prove that it wasn't a 'gateway' for logs and production from elsewhere would add a considerable burden."

Standard Life and HBOS hit the headlines a few months ago by declaring their intention to relocate their head offices south of the border in the event of a yes vote and there is speculation that some timber companies may move base - although relocation of plant and equipment away from the forest resource would be highly unlikely.

"I know there are companies in the timber sector that are positioning themselves to at least consider where their head office should be because of the uncertainty in terms of tax and currency," said Neil Donaldson.

Conversely, suggested Keith Fryer, it may be advantageous for businesses to move from England to Scotland to enjoy lower corporation tax levels, although, he added, his instinct tells him a move in the other direction would be more likely.

The view among TTJ's contacts is that, with details still thin on the ground, on September 18 some voters will follow their hearts rather than their heads - perhaps not that different from any election - and that the yes campaign may gain momentum through national events such as the Commonwealth Games. But while voting based on emotion and "a sense of Scotland being different" may once have been seen as a potential issue with the enfranchised youth, the mood has changed.

"Giving voting rights to young people has been seen as an attempt to add more to the yes vote. I'm not so sure. My feeling is that youngsters today want freedom; to travel and be part of something bigger," said Mr Fryer.

"The polls indicate that most 16 and 17-year-olds would vote no," said Mr Donaldson. "I think they are more likely to turn out to vote on September than elderly voters because it is their future but they don't seem to have been sold on the idea that Scotland is going to be a better place [on independence] and they're quite happy with the way things are."

In the event of a no vote there is broad agreement that Westminster should give more control to Scotland - and an expectation that would happen.

"There is almost a tripartite agreement between the Labour, Conservative and Liberal Democrat parties that they will work together to negotiate greater powers for Scotland and that would be very positive for the country," said Mr Donaldson.

And, he added, the prospect of "Devo Max" may sway some as yet undecided voters.

"If you don't fancy the whole independence thing but quite like the idea of being able to do a bit more for ourselves - spend the taxes we raise in Scotland, for example - then that might persuade you to vote no."

Remoteness from Westminster
"Most people would think that more powers for Scottish government would be a good thing because, at the moment, there is no doubt that there is a feeling of remoteness [from Westminster]," said Mr Sulman.

It's unlikely that these additional powers would have much direct impact on the forestry and timber sector as the Scottish government already has significant control of these areas. However, said Mr Goodall, it may be the issue that has the most impact on polling day.

"If the Conservatives, Labour and Liberal Democrats can come up with a coherent and substantive plan for further powers then it is the 'option' that most people in Scotland have indicated they would support - over the status quo and independence."

A coherent plan is not yet on the table, however, and the promise to deliver what Peter Wilson refers to as "an unspecified collection of further powers" remains just that.

But change will come, he said. "Whatever the result in September, change is going to come to Scotland and with it, inevitably, also to the way in which the UK is governed."