Wood is undeniably on the up and up. At last, the unique benefits of wood are being recognised by the world outside our industry and we are now better placed to take advantage of the opportunity to significantly grow the market in the UK.
The industry can be justifiably proud of its achievements in recent years; an impressive (and continuing) investment record has brought it right up to date, so that it now competes on the world stage.
The wood. for good campaign has raised the profile of wood and wood products. The campaign has shown the value of concerted effort, but it is increasingly recognised that greater funding is required for promotion if we are to grow the market for wood and wood products in the UK. The development of the Wood Promotion Premium Scheme, now at an advanced stage, has the potential to raise significant funds to support promotion of timber in the UK.
The challenge is for the industry to capitalise on the opportunity and to convert the apparent interest and goodwill into increased business. There have been concerns in some quarters about timber procurement and, currently, public sector procurement is focusing on ensuring that wood products used in public projects are from legal and sustainable sources.
New markets
There is much talk about new markets for UK wood products and some diversification is being seen. There is scope for non-traditional uses of wood fibre, for example, by reducing it to its chemical components for use by other industries. However, in the short term at least, the key to success is thought to be to stimulate demand in existing markets.
Take construction, for example. The government’s desire for 200,000 new homes to be built over the next 5-10 years using modern methods of construction, could and should be fulfilled by timber frame. This use of wood – both solid and sheet materials – would be quick and efficient and provide energy-efficient homes.
Recycled wood fibre has presented a double-edged sword for the industry, providing good news for UK panel manufacturers and some papermakers, as it provides low cost, dry wood fibre, but bad news for sawmillers, as it competes directly with small roundwood, sawmill chips and sawdust.
For UK sawmillers, the much vaunted “level playing field” often seems to have disappeared when one considers the government assistance provided to other sectors of the wood industry, notably PRNs and the not inconsiderable Climate Change Levy relief provided to the paper and panels sectors.
There has been much discussion about the prospects for wood fuels for heating and/or power generation and trials have been conducted at several coal-fired stations. However, it must be remembered that wood is only one type of biofuel being trialled.
This potential new market has created tensions between the panel products sector and the forestry and sawmilling sectors, as panel manufacturers perceive a threat to a part of their raw material supply. Not everyone shares their view. While at present all the sawdust and wood chips produced by sawmills is readily sold, (albeit at reducing prices in the case of chips), further expansion of sawmilling capacity may be constrained by markets for wood chips and sawdust. It is therefore vital that demand for sawmill products, as well as small roundwood, improves.
Sawmilling advances
The UK softwood sawmilling industry, which currently produces 2.4 million m3 of sawn softwood per year, has made great advances in recent years. It now provides a range of products which are recognised as fit for purpose in several market sectors, where they compete with imported wood products, most notably in the construction, pallet and packaging, specialist and domestic fencing and timber garden products sectors. With UK softwood having a 20-25% market share, there is great scope for further growth, but at present this can only be achieved by import substitution, hence the focus on growing the market in the UK.
Softwood production will steadily increase from about 11 million m3 OBS today to about 15 million m3 OBS by 2020, with most of the increase in Scotland. This will be processed by existing mills, many of which have huge latent capacity, and significant increases in production can be achieved by double or triple shift working. Already major investment is being made at existing facilities and this is expected to continue.
The situation in the UK-grown hardwood sector is markedly different. The number of specialist UK hardwood sawmills has dramatically reduced in recent years and most of the remaining businesses now include imported hardwoods. UK annual sawn hardwood production is about 70,000m3 but unfortunately much of the UK hardwood resource is of poor quality, with few obvious markets.
The question of what to do with the large volumes of lower quality hardwood remains all the more difficult in view of high harvesting costs and a dwindling harvesting and contracting resource in southern England.
Within the UK wood industry there is renewed interest in the role of education and training. One outstanding example is the Welsh Forest Industries Group and its Joint Development Initiative, a partnership between wood using businesses and public sector bodies involving funding of some £3m. Already 657 wood-using businesses have benefited from this programme.
It is hoped that JDI will provide a model for elsewhere in the UK. Scottish Enterprise, via its Scottish Forest Industry Cluster, is now focusing on education and training in Scotland. In England, the Regional Development Agencies will have to be courted – a role that the newly established English Forest Industry Partnership will surely consider. The recent development of the UK Wood Chain Group, of which all major wood related organisations have joined, should see education and training allied to business development receiving some long overdue attention.
Supply and quality
In the longer term, the issues of wood supply and wood quality must be addressed. Forecasts for UK softwood availability suggest production levels will dip after about 2021 and return to current levels, before rising again to another peak in about 2060, although production from English and Welsh forests remains relatively static over the next 60 years.
Quality is a key issue for sawmillers. Product quality has improved by leaps and bounds in recent years as a result of investment, but a significant proportion of the predicted increase in log production is likely to be of lower quality logs, many of which will not produce high grade construction timber, although they will be suitable for other markets. Forestry is a long-term undertaking and good practice comes at a price. With timber prices having fallen in recent years, the returns are often insufficient to encourage many growers to continue to pursue good quality silvicultural practice, including pruning and thinning.
The balance of supply will also change from the Forestry Commission (FC) to private sector growers. While some have criticised the FC, sawmillers readily acknowledge that it has maintained wood supplies through good times and bad, unlike some private growers who, for understandable reasons, withdraw from the market when prices are not attractive. In addition, the FC has entered into long-term supply contracts with sawmills and other processors, responding to industry requests for greater security of supply. Without continuity of supply, the sawmilling sector would have been irrevocably damaged.
Forest policy
Forestry policy in the UK is rapidly changing; commercial timber production no longer appears to be a high priority for public sector growers. Today, there is a new emphasis on public benefits: leisure, recreation and biodiversity. At the same time, planting and restocking levels have fallen markedly, grants have changed and the creation of new woodlands is increasingly around urban areas, often involving the planting of broadleaf species which, while they might improve the amenity of an area, the costs of managing them will have to be met by the public purse.
There is a genuine fear that balance has been lost in forestry policy. Unless the government is willing to spend more to support the FC (and the Forest Service in Northern Ireland) and is prepared to see the decimation of another sector of UK industry, it will have to act to create a more positive environment to encourage commercial forestry.
The development of a thriving export market for Sitka spruce roundwood and sawmill chips to the Scandinavian paper industry has provided a welcome market. It is expected that export volumes, estimated at approximately 250,000 tonnes this year, may well increase next year.
The UK sawmilling sector cannot be considered in isolation as its fortunes are intimately linked to those of other sectors, including those of imported timber and of panel products and paper products, which are the major consumers of small roundwood, sawmill chips and sawdust.
As we have seen, on the one hand, the UK sawmilling sector faces a potentially exciting future, if current hopes for increased demand become a reality. But on the other hand and in the longer term, there are concerns about the volume and quality of wood supplies and the external support mechanisms likely to be available to encourage increased planting, restocking and management. To a large extent, the fortunes of the sawmilling sector are beyond its direct control. This is one reason why the industry is committed to raising its game in terms of improved and more effective representation, to be led by the Confederation of Forest Industries (ConFor), jointly established earlier this year by the UK Forest Products Association and the Forestry & Timber Association.
The UK sawmilling industry is characterised by its resilience. In recent years that resilience has been seriously tested, but is felt that the sector has turned the corner and that prospects are undeniably brighter.
