Europe has been buying less American hardwood in recent years. In 2004 there was a healthy, economic-recovery-driven 9% upturn in imports in the EU‘s 15 older members. But their total purchases of US$611.7m, still amounted to an 18% fall since 1997.
The trend is partly attributed to migration of west European hardwood-using industries to lower labour cost countries. Another factor that’s been cited is increasing competition for US companies from hardwood suppliers in Europe itself, particularly in some of the newest EU members, the so-called EU-10.
At the same time as Europe has become more competitive for the Americans, of course, demand for their timber has been growing elsewhere, notably south-east Asia.
Given this scenario, you might think that Europe could start to slip off the US hardwood sector’s radar. But according to speakers at the latest American Hardwood Export Council (AHEC) European convention, nothing could be further from the truth.
Addressing the convention audience of US suppliers and their European customers gathered in Barcelona, AHEC director Mike Snow did not play down the challenges ahead. The rise of south-east Asian hardwood consumption, he said, creates a “paradigm shift” in trading patterns, with the dramatic figures from China, particularly, setting the scene. “New construction in China is estimated at 700 million m2 a year and it’s forecast that by 2008 they’ll be consuming 2.5 billion m2 of flooring and 500m doors and window frames annually,” he said.
Underlining China’s growing significance as a consumer power, he highlighted its furniture industry. Last year its exports were worth U$9.1bn (with 47% going to the US and 14% to the EU). But that was still only 15% of output. The remainder was sold in China.
Exports to China
The latest trend is that China is becoming a major producer of “primary and secondary” wood products, such as lumber, veneer and mouldings. That spells a growing appetite for US hardwood logs. Last year the Chinese imported 140,000m3, compared to under 30,000m3 in 2000. This topic is also clearly a growing concern for the US lumber sector and re-emerged during the lively “face the press” session at the convention when European trade journalists quizzed US industry representatives Jamie French of Northland Forest Products, Bill Doran of Columbia Forest Products, Ed Ramsey of Taylor Ramsey and Jeff Meyer of Baillie Lumber.
Several speakers actually urged controls on log exports. “It would be impossible to stop sales from private lands,” said Mr French, “but in my view we should not export logs from federal forestry – after all, Canada, which buys our logs, does not allow exports from its crown lands.”
According to Mr Snow, another increasingly important market for US hardwood, including logs, is Vietnam. In 2000 it imported just US$760,000 of lumber, US$50,000 of veneer and US $200,000 of logs. Last year the figures were US$21m, US$2.5m and US$8m respectively.
India, Brazil and Mexico were also highlighted as having great potential, but while reeling off impressive statistics for the developing markets, Mr Snow stressed that the Americans should not “turn their backs on Europe”.
“While 2005 has proved more difficult than 2004, Europe is still our best market in terms of added value,” he said. “And we should not look at it simply in terms of numbers. Europe is also a key global market influence, especially in architecture and interior design.”
The quality-oriented importance of Europe was underlined by AHEC Europe programme director Duncan King. “The average price per cubic metre of American hardwood sold to the EU is US$662/m3,” he said. “That is second only to the Middle East’s US$740, whereas for China the figure is US$382.”
EU style-setting
And according to former AHEC European director Michael Buckley, the EU’s significance as a style-setter for US hardwood has the potential to grow. He said European architects are looking increasingly favourably on wood for structural and interiors applications because of its environmental performance, aesthetics and a growing interest in traditional building methods.
He acknowledged that the European new build housing sector was not particularly buoyant, with the notable exceptions of Spain and France. But the refurbishment and restoration markets were “massive”. “And this is a sector that US hardwoods fit nicely,” he said.
Also significant was the increasing number of high profile, prestige buildings across Europe which use timber as a central component. AHEC focused on this market in its architects’ publication Hardwood References which features a selection of flagship buildings incorporating American hardwoods. “Today we’d have trouble choosing which iconic projects to include because of the growing number,” said Mr Buckley.
The Americans do face challenges in Europe, he agreed, including dealing with the misconception that their hardwood is expensive and “unfair competitors”, like rubberwood marketed as ‘Malaysian oak’.
“But American hardwood also has inherent advantages; consistency of grading, predictability of yield, and increasing familiarity of European specifiers with different species,” he said.
To convert the opportunities into sales, he concluded, the industry must continue to raise its profile. “So my view is that if ever AHEC was needed, it is now!”
Other speakers agreed that a key marketing advantage of the US hardwood is its environmental record, although there was less consensus on the form of certification which should be adopted to prove it. Some suppliers said they did not want to be corralled into the international FSC scheme. Others felt the latter had critical market momentum.
Andreas von Moeller from Germany urged hardwood suppliers to resolve the arguments as they benefited rival material producers. And they should certainly drop any resistance to getting certified at all. “That debate is over,” he said. “Just do it.”
Just as important as certification for the industry, added Mr French, was the international battle against illegal logging. “We all agree the general standard of forestry in North America is very high,” he said. “But we’re faced with the fact that up to 30% of logs used in China are illegal. That’s just not fair competition.”
According to Dieter Betz of the European wood flooring federation (FEP), another market opportunity for the US hardwood sector is to increase its involvement with his industry. Europe’s timber flooring producers are still doing well, with FEP’s members (drawn from all the EU’s prime flooring markets except the UK and Portugal) increasing production 7% in 2004 to 91.15 million m2. Their current hardwood use totals around 1.2 million m3, with North American timber accounting for 9%.
As oak, ash and beech are among the most popular flooring species, said Mr Betz, US hardwoods could increase their market share, but what was needed was closer relations between suppliers and manufacturers. “We must work together to promote products that make the most of the characteristics and advantages of real wood in the face of growing competition from cheap laminates.”
Red oak debate
A key feature of AHEC’s stand at European exhibitions recently has been timber flooring in America’s most common hardwood, red oak, and, naturally enough, this species also became a topic of Convention debate.
Mr Snow said red oak exports rose last year from US$570m to US$590m, but this was driven by demand in developing markets. European red oak sales still lagged way behind white.
But AHEC European director David Venables said it was vital to persist in marketing red oak in the EU. “It receives a resoundingly positive response in surveys,” he said. “There has to be desire to promote it, but we believe there’s an opportunity for the species here.”
And overall, he added, while the market would remain highly competitive, Europe still held exciting potential for American hardwood overall.
“Developments in government procurement rules and the fashion for timber generally represent opportunities,” he said. “Perhaps most exciting is the response we get from architects and specifiers. We’ve had a great reception at exhibitions, a tremendous reaction to our publication on structural use of American hardwood and good turnouts for architectural seminars; the latest in Paris attracted 270 people and in Berlin we got 450. American hardwood really is winning new business.”
The Barcelona event, he concluded, would be the last of the annual series of AHEC European conventions, but a “different style of forum” is in the pipeline for 2007.
“In the meantime we’re not going away!” he said. “We have a lot planned in Europe for the year ahead. In fact we’re going to be more active than ever.”
