Differentiating between real and perceived market threats is the challenge in the current unpredictable trading environment, says Wood Panel Industries Federation director-general Alastair Kerr
Uncertainty puts a break on investment and dampens confidence. Unfortunately, both internationally and nationally there are plenty of reasons to suggest uncertainty will prevail for some time to come. Although there is some evidence in our sectors’ core markets of building and furniture that activity is starting to improve, it’s too early to say if this is the start of a trend or seasonal.
A recent presentation by a regional Bank of England agent didn’t fill one with great optimism of any sharp increase in economic activity rather, forecasts suggest it will be slow and steady with one, or at best, two interest rate cuts this year.
Whilst it will be slow to feed through, the announcement as part of the spending review that £39bn will be invested in social and affordable housing over the next 10 years, has to be seen as a positive which might provide the much-needed stimulus to encourage developers. In the private housing sector, although there is no shortage of demand, affordability remains an obstacle and there were no new announcements for extra support for first time buyers.
The tariff issue is not a direct threat to UK panel producers because there are minimal exports to the US. The big unknown, however, are the indirect impacts such as those that might affect furniture producers, or where will Chinese producers ‘off-load’ product previously destined for North America? Chinese producers were reported to be at the Interzum furniture and Interiors show in numbers. Not only quality improvements but also design innovation are now features of Chinese furniture. These developments pose a threat to volume furniture producers in the UK and Europe and by extension their suppliers.
Businesses can respond to competition, but it’s harder if that competition isn’t playing by the rules. The recent European Commission imposition of provisional anti-dumping duties of 62.4% on imports of hardwood plywood from the China and a ‘check’ clause on imports of softwood plywood, should act as a warning to be vigilant in our market.
Threats and challenges are ever present, and it’s a job sometimes to sort out those which are likely to manifest, from those which are only perceived. Sustainable Aviation Fuels (SAF) is one of those future developments where it’s too early to say what impact they could have on the UK wood supply basket but, if you wait until it becomes a problem, it will almost certainly be too late. The Sustainable Aviation Bill has just been through second reading and there is an opportunity here to tighten existing safeguards on sustainable biomass for use as fuel and to guard against a watering down of safeguards that protect wastes that can be recycled. In the case of UK production of SAF production, it may turn out that the bigger problem is not wood for use in producing the fuel, but rather, the wood that may be used to fuel the power plant generating the electricity required for the process.
