France looks beyond storm

Summary
• French timber exports fell sharply in 2008.
• French house construction could drop 30% this year to under 300,000 units.
• A new report proposes a e100m government development fund for the industry to help make it a central element in a lower carbon economy.
• French forestry continues to grow at 60,000ha a year.
• By 2020 France should be harvesting 21 million m³ more timber.

Buffeted but unbowed probably best sums up the French timber industry.

This giant of the European wood sector – and France’s forests, at 15.8 million ha, are five times the size of the UK’s – has been through tough times recently. But difficult market conditions don’t seem to have dented its upbeat outlook or diverted it from longer-term strategies.

Like counterparts across most of the world, the French timber business has been suffering the chill winds of global economic downturn for a while. In January, it was dealt a further blow by cyclone Klaus which tore a swathe across the south-west of the country.

“Around 680,000ha of forest was affected, resulting in 42.5 million m³ of windblown timber,” said Yves Costrel de Corainville, director-general of the industry association Federation Nationale du Bois (FNB). “That’s nearly five years’ normal harvest for areas hit by the storm.”

Government loan

The French government has now stepped in with a €600m loan package to help fund storage of all the excess wood. But the fallout from Klaus will be felt for a while, with its impact exacerbated by the economic situation. In the best of times it would have been difficult to absorb the windblow but, after two consecutive quarters of GDP decline, France is officially in recession and forecasting total contraction for the year at 3%. What is more, the timber industry’s prime market, construction, is one of the hardest hit sectors of all, predicting 30% fewer housing starts than 2008’s 400,000.

The state of trade is clearly reflected in French timber prices, with sawn hardwoods down overall by 2% in the year to April 2009 and softwoods 21.8% lower.

Latest foreign sales figures also highlight that the French industry is facing a truly international recession. One of its biggest export categories, oak logs, were down over 20% in 2008 at 365,789m³. Falls came across the board, although the UK proved a more resilient market than most with purchases down just 4.38% at 32,418m³. This kept it as France’s third biggest oak log customer after Belgium (133,413m³) and Italy (54,107m³).

Sawn oak was not so badly affected, down 12% at 189,414m³, but within that figure UK business took a bigger knock, down 37% to 30,499m³.

Beech log exports were boosted by a 138% rise in sales to China to 42,000m³, but overall fell 7% to 401,696m³, while sawn beech exports were 13% lower at 139,554m³. By volume, French softwood exports were hit worse.

Spanish market

“The major contributor here has been the contraction of the Spanish market, our biggest for softwood,” said Mr Costrel de Corainville. “Spain’s construction industry is going through very severe recession and demand has naturally fallen significantly.”

Overall, French softwood log exports fell 11.54% in 2008 to 1,416 million m³, with sales to Spain 22.5% lower at 417,198m³, while sawn softwood exports were 13% off at 687,763m³, with Spanish sales 42% down at 208,600m³.

After a surge to 19,258m³ in 2007, sawn softwood exports to the UK also dropped to just 10,992m³.

This year, after a flat first quarter, the FNB says feedback from sawmill members indicates some improvement in trade, although for the time being it remains marginal and tentative.

Of course the downturn has claimed casualties in the French industry, including the 600,000m³ Klenk softwood mill in Vogelsheim, which went into liquidation in April. Temperate veneer specialist Jura Placage has also announced a five-month shutdown at its 14.5 million m² capacity plant, while hardwood plywood producer Plysorol went into receivership last November, although it has since been bought by two Chinese companies.

Diversity and versatility

The FNB, however, has been encouraged by the fact that there haven’t been more closures, a fact that it puts down to the diversity and versatility of the industry and its ability to use emergency economic measures such as “chomage partielle”, where workers are put on a mix of benefits and short-time working.

“Our membership is proving resilient at around 1,350 companies, of which 800 are sawmills,” Mr Costrel de Corainville. “They are having to adapt to the market, for instance softwood sawmill Fruytier and hardwood producer Eurochêne have both deferred investment in new facilities, but businesses are coping.”

The industry, he added, is also taking concerted measures to mitigate the downturn and strengthen its position to capitalise on the eventual recovery. This includes political lobbying, a key result of which has been the just-published Puech report. Commissioned by President Sarkozy, this contains a raft of recommendations for government action to set the timber sector up as one of France’s key ‘green’ industries for the future.

President Sarkozy

The proposals, which Mr Sarkozy promises to enact, include boosting the amount of timber used in construction. In 2005, the government introduced its Plan Bois Construction Environnement stipulating that builders use 2dm³ of wood per 1m³ of total materials in a building. The report wants this increased tenfold.

It also recommends a €100m strategic government investment fund for the sector, with €20m available now.

Another key proposal is to treble the price paid to timber and other businesses for electricity generated from wood fuel. Some have expressed concern this may spark a surge of growth in the wood energy sector that could push up timber prices. But Dominque Juillot, president of the French Forest and Wood Council, said that if the system is properly managed this should not be the case.

“[The report] accepts the principle that there’s a hierarchy of wood uses, from solid timber down to energy generation,” he said. “And the more wood we get out of the forest, they more there will be for all uses.”

Another positive for the prospects of the industry is that the downturn does not seem to have diminished its commitment to generic promotion. For instance, the French equivalent of the UK’s wood for good campaign, Le bois c’est essentiel, is continuing its efforts to persuade construction professionals and consumers to opt for wood for everything from whole houses, to kitchen furniture – and its website, www.bois.com, is now getting 50,000 hits per month.

“The cost is split between the French and Swedish timber industries,” said Mr Costrel de Corainville, “and currently the annual budget is €900,000.”

New organisation

Last year France Bois Forêt (FBF), an umbrella organisation for a range of associations, launched its own consumer promotion on the performance and environmental benefits of using wood. And another body, the Comité National pour le Développement du Bois, is focusing on boosting timber construction through a range of publications and its website www.cndb.org.

The still better news is that all the marketing seems to be having an effect, notably in timber construction.

“Timber building has only 9% of French house construction, but it’s grown 40% since 2003,” said Mr Costrel de Corainville, “and in 2009, while it’s been hit by the slump, it’s only declined 8%, against the market’s 30%.”

By 2015, he added, it is forecast that timber construction could have a 15-20% share of French new build and, if the market recovers to 2007 levels, that could amount to over 80,000 housing units a year.

Mr Costrel de Corainville acknowledges that the economic situation makes the immediate future uncertain for French timber, but he remains optimistic that it will emerge robustly from recession and storm. In fact, if anything, both have strengthened appreciation of the importance of the forestry and wood industries to France and its efforts to develop a lower carbon economy.

Positive outlook

The outlook of Le bois c’est essentiel is equally positive. Another upbeat forecast on its website is that, with government encouragement, public and private planting will continue to drive French forest growth at an annual rate of 60,000ha, which means the country could have an extra 21 million m3 of wood a year at its disposal by 2020 – a total annual harvest of nearly 70 million m³.

Further underlining the industry’s confidence the FBF has also launched a magazine, Careers in Wood, to attract more young recruits.

For more information visit www.frenchtimber.com.