Summary
• The hardest hit customers are those with the closest links to construction.
• Cash flow problems are causing companies to curb expenditure.
• Fire retardant treatments have great potential.
• Investments have been made in plant software.
N o-one in the timber treatment sector is saying business is easy at the moment. The market has been hit by the slump in the construction sector and the consensus is that any renaissance in housebuilding is still some way off.
In addition to this, the business has also had to contend with, what some consider, the over-hyped issue of treated fence post failure which has been used in certain quarters as a stick to beat the industry.
“Sales and volumes for the first six months of the year were on a par with 2007 but, since then, we have seen an accelerating decline in activity,” said Neil Ryan, managing director of PTG Treatments, although he added that there are signs that demand is stabilising.
Gordon Ewbank, UK commercial director, Osmose, said he’d seen large stocks of treated timber building up in yards, particularly at the larger mills and producers. “The effect this has had on us was that we were artificially cushioned, particularly during the second quarter, and then when people started cutting back on hours, we were immediately hit,” he said. “In the second half of the year we’ve seen a distinct downturn both in the home-grown sector and in imported wood into the timber frame sector.”
BASF’s Peter Moran, account manager, Wolman Division, said those customers who have been hit hardest are the ones whose business is directly linked to construction. However, he still believes the timber treatment sector has a healthy future. “There is considerable growth among some of the highest end treaters and manufacturer companies who can achieve some added value to their products.”
The economic crisis has also had some practical implications for companies: it’s become more difficult to ensure prompt payments with some customers who are suffering cash flow problems. Despite being part of the world’s largest chemical company BASF, Mr Moran said even Wolman has to be more thoughtful about costs. “A number of our customers have had to forego attendance of some events that we put on in Germany [symposiums] since they have felt it necessary to stay with their businesses at this time and to be very careful about their own expenditure.”
Demand for plants
A more encouraging note from treatment suppliers is that recent contraction in demand appears to be levelling out. And there are other postive developments in the sector. A side effect of the downturn, for instance, has been the growth in companies wanting both new and used timber treatment plants. “Over the last six months many smaller companies have been contacting us, interested in having their own small treatment plant,” said Janet Collins, operations director at Treatment Services Ltd, citing reasons such as the inflated cost of haulage.
One recent example is Atkinson Builders at Pickering in Yorkshire. “We’ve just installed a mini Double Vac plant for them,” said Ms Collins. “They are very conscious of the pressures on small builders/joinery works, in particular, and are now offering local companies the chance to send small batches of timber to them to help them get through these difficult times.”
While the preservation market is struggling in the current climate, the fortunes of the fire retardants sector have proved more robust. In fact, according to Neil Ryan, the market for fire retardant treatments continues to meet expectations and has not suffered – at least not yet. “This side of the business serves commercial and public sector construction, which does not appear to have been affected by the current economic climate,” he said. “It is possible that we are still working on long-term construction projects and there may be a lag in the economic cycle.”
Arch Timber Protection’s David Law believes that fire protection is such an important and emotive issue that fire retardant-treated timber still has great potential. And the use of products such as Arch’s Dricon or Non-Com Exterior fire retardant treatments allows the creative use of timber in buildings that, under current Building Regulations, would not be possible.
While most suppliers continue to keep a close eye on the country’s economic fortunes, they are also responding to reports of failure of ground contact timbers like fencing and fence posts. It’s a situation that’s proved an opportunity for others, like the Postsaver 25 sleeve system, which comprises a tough outer polythene sleeve lined with a meltable sealant forming a tough dual layer barrier to decaying organisms at the vulnerable ground line section of the post or pole.
But, despite such innovations, treatment suppliers are adamant their products are more than up to the task – provided they are used correctly.
“Quality is an issue for the home-grown fencing sector,” said Osmose’s Gordon Ewbank. “People have suggested that there are question marks over the efficacy of the new generation of water-based products: companies like ourselves, Arch and Wolman are not going to put products into the market that we’re not happy with. We’re happy with the products so long as they are used properly.”
Industry scheme
Suppliers have carried out considerable work with the UK Forest Products Association and Wood Protection Association and, according to BASF’s Peter Moran, there is a real intent among these organisations to try to push quality treatment and reward it by offering a commercially worthwhile scheme to treaters – one which will help them attract added value for their ground contact products.
“Rolling such schemes out more generally is a challenge, of course, due to the nature of home-grown wood and the traditional methods of the fencing industry,” he said. “However, progress is being made at all levels of the industry and I am very encouraged by the positive intentions of treaters, preservative suppliers, trade bodies and contractors.”
Meanwhile, treatment suppliers are continuing to invest internally, as well as looking at new market opportunities and product innovation. Wolman, for example, has invested in plant software as well as in staff by providing BSI auditing training and IWSc courses to new employees. “It has been a record year in terms of the provision of training for all members of staff,” said Mr Moran. “This we see as very important for remaining positive and active throughout what is an inevitable slowdown.”
For Osmose, the key is diversification. “We have a strategic objective to diversify,” said Gordon Ewbank. “Our core business is – and probably always will be – wood preservation, but our business vision is to enhance the properties and add value to wood.”
In recent years, Osmose has entered the fire retardants sector; it markets the Royale system for enhancing colour and weathering; and Indurite for wood hardening systems.
“We have an active programme of product innovation and diversification and it’s a core part of what we’re doing,” said Mr Ewbank. “We see it as a way of cushioning ourselves from things like the slowdown in the housing market – it makes good sense to move into other sectors that are not so directly linked to the fortunes of housing.”