Rural Lifestyle in Sichuan

by David Daly

"Living in Shanghai it’s easy to forget how big of a disparity there is between the wealthy eastern cities like Shanghai and the rest of China.  Qingchuan County is as different from Shanghai as Shanghai is from Vancouver, so much so that it’s almost like traveling to a different country.  My first day in Guangzhuang village was market day and when I stepped outside I was greeted by an entire pig lying in the back of a cargo tricycle, gutted and ready for sale.  Right next to that vendor was a guy repairing shoes and the street was lined with vendors selling just about everything you would find in a supermarket; food, clothes, sunglasses, you name it.



It’s beautiful country up in the mountains, but I was surprised to find it was actually noisier than Shanghai.  Most of the noise comes from the constant blaring of horns, the very loud tractors used by the locals and there was construction noise everywhere.  There is also a 24hr stream of big trucks carrying construction materials into the mountains.  Bricks, concrete and wood for all the post and beam houses being built was often just dumped in a pile in the road.  We were happy to see there were even trucks (dangerously) overloaded with Canadian lumber. 

Some of the villages we worked in had older traditional post and beam houses that fared pretty well in the earthquake and it was interesting to see modern 2x4 houses side by side.  There is still a lot of visible damage, and people are still living in temporary housing and tents.  Despite this, I had a hard time distinguishing what aspects of rural life had been affected by the earthquake and what was just the way people have always lived.  Living in Shanghai we often forget that China is still a developing country, most of which is very poor.  After reconstruction many people will have a much better quality of life and it’s sad that it had to come at such a price.  Working on the earthquake reconstruction was a very rewarding experience, and after seeing and experiencing the people’s determination to move on I have a stronger appreciation for the indomitable human spirit.

Competitor Profile: Russian or European Lumber

by Brad Spencer

The Russian forest industry is under-developed, fragmented and poorly managed. State foresters have a high degree of independence and low salaries; conditions that invite corruption. The volume of illegally-logged timber is in the range of 1 million cubic meters annually. Further tarnishing the Russian industry is a reputation for being difficult to do business with. Despite all this, Russia is the number one softwood exporter to the Chinese market.

The Russian forest industry has two distinct advantages in the China market; abundant supply and proximity.

Russian logs amount to more than 60% of China’s total log imports. Only 10% of Russion softwood shipped to China was processed in 2006.

Russia’s Far Eastern forestry sector funnels logs into China through a small number of gateways. Roughly 70% of logs arrive by rail into Manzhouli City in Inner Mongolia and Suifenhe City in Heilongjian Province. From these border cities, the logs are distributed further along winding routes throughout the northeast, southeast and to a lesser extent, out to the west of China.

From source to end user, Russian timber passes through the hands of middle men up to four or five times. Even though 80% of the softwood logs are destined for the concrete construction sector, most of the processing is done by a large number of small independent operators who have little-to-no interaction with each other. The fragmented nature of the lumber processing in China makes it difficult to track the chain of custody of Russian wood and makes it unlikely that grading standards will be introduced.

The Russian log export tax was introduced in 2007 to help develop a domestic secondary industry. Although the plan to raise the tax level from 25% to 80% has been delayed until January 2010, the policy is already having dramatic effects on the industry. Russian log exports to China have recently hit a six year low. While Canadian, American and Kiwi lumber exporters are enjoying considerable volume increases as a result of the Russian tax, it is not clear yet whether there will be a net benefit for Russia herself.

UK Market Update

by Patrick Cooper

UK economy: Eleven out of twenty expert economists surveyed by the Financial Times newspaper said the UK economy had stopped shrinking in June 2009 and was likely to start growing in coming months. Those who believed the economy was still contracting said the end of the downturn was near. The National Institute for Economic and Social Research, the think-tank, said that the economy grew by 0.2% in April 2009 and by 0.1% in May, and that annual GDP reached 0% in the second quarter. The Deputy Governor of the Bank of England said it would probably not be until late autumn that policymakers could tell if the economy is on the mend; he is concerned that banks are still not lending enough to foster recovery.

There are now early signs the construction sector is beginning to turn-around and steer itself back onto the road of recovery, though figures remain weak and there remains the possibility of relapse. Data from the Chartered Institute of Purchasing and Supply (CIPS) suggest that recession in the construction industry eased in May 2009. An overall index figure of 45.9 in May compares with 38.1 in April and the record low of 27.8 in February 2009, where any figure lower than 50 represents a contraction in activity while a figure of 50-plus denotes month-on-month growth. The house building sector produced the most encouraging numbers, with an index figure of 48.9.

UK softwood market: Softwood production cuts in Sweden are now manifest, and have resulted in an inelastic supply situation whereby slight increases in demand are causing price increases. While demand placed by the European construction industry has been poor, it has been somewhat compensated for by a more robust renovation sector and increased exports to North Africa. The tight supply situation is expected to continue throughout September and October, and commentators are reluctant to predict beyond that period. Uncertainties surround factors such as harvesting activity (related to demand for pulpwood) and forecast demand. For some time now Sweden has over-supplied the UK market, depressing prices at unrealistically low levels; now Swedish suppliers are holding-back from the UK.

Swedish production cuts coincide with log supply shortages in Germany, Latvia and Finland, where forest management units are not prepared to harvest and supply at current prices. The combined effect is leading rapidly to supply-led price increases. The current price in the UK for carcassing timber is approximately £140-145 m³ FOM, with forward orders priced at around £150-155 m³ FOM. The current price in the UK for CLS timber is approximately £105-110 m³ FOM, with forward orders priced at around £120-125 m³ FOM. There would appear to be an opportunity now for Canadian suppliers to gently probe the market with a view to establishing long-term supply relationships, being careful to meet UK market requirements closely and avoid oversupply. There is not a large demand for softwood currently, but import levels are not expected to fall further, and are indeed likely to pick-up gradually.

Marketing Does Work: WRCEA in the UK

by John Park

Paraphrasing a headline seen recently in the UK construction press: ‘The self-build sector could well be the way out of recession for the UK house-building industry’. If the Self-Build Show (organized by ‘Home Building & Renovating’ magazine) in March is anything to go by, that statement may well be not too far off the mark!  Our own (Canada Wood UK) presence there was on behalf of the Western Red Cedar Export Association; this was highly successful and proved to be an irresistible draw for a significant number of visitors, numerous enough to strip the stand bare of most of the literature in just the first two days!

There can be no doubt that interest in Western Red Cedar amongst this user group has been intensified by its not infrequent use and in various forms on projects featured in the highly popular ‘Grand Designs’ television series and in the consumer magazine, also ‘Grand Designs’, accompanying the TV series, this the ultimate media culmination of the WRCEA marketing strategy in the UK. 

For their own follow-up note from the show, TTJ contacted Patrick Cooper, Market Development Coordinator at Canada Wood UK, who said ‘many people were inspired to use Western Red Cedar by its use on Channel 4’s Grand Designs. “It was certainly busy for us and reflects people’s willingness to spend money on their own homes”’.  Unlike commercial developers, the self-build sector builds up to a quality not down to a price!

In February this year we were the sole industry supporter (thanks to some quick thinking in the UK office and astute bargaining with the organizers), as Canada Wood and WRCEA (‘Real Cedar’, with a web link to www.wrcea.org, is prominent on the Conference web site opening page), at the well attended AJ ‘Primary School Design 2009’ Conference.  With the UK government’s announced £7 billion spend on primary schools in the UK it is hardly surprising that the event was virtually a sell-out, 260 delegates from both the construction industry and education keen to learn more about the opportunities and benefits of these developments!

The WRCEA are capitalizing on this truism by continuing with their strategic approach in this market – in addition to the self-build show, participating throughout the year in RIBA (Royal Institute of British Architects) National Road Shows at ten venues around the country, Patrick Cooper delivering the presentation ‘Western Red Cedar – Distinctive Designs’, an element of the Canada Wood UK ‘Lecture Series’; continuing presence of the permanent Western Red Cedar display at the ‘National Self Build and Renovation Centre’ in Swindon (see image – this display generates on average one enquiry per day);  TRADA’s ‘In Touch with Timber’ Conference targeted directly at architects, in addition to ongoing placement in trade, professional and consumer publications all backed up by product support provided through the Canada Wood UK office.

And it is proving highly successful. Notwithstanding the current economic climate, growth of Western Red Cedar imports has been maintained in spite of competing product development and increasing availability of cheaper alternatives such as modified wood, larch and painted softwood and during a period when the Canadian currency has grown in strength against the British Pound.  Timber Trade Federation figures indicate that in 2008 UK imports of sawn softwood were 31.6% lower and sawn hardwood 18.6% lower than in 2007.  During the same period, UK imports of Western Red Cedar from Canada increased by 7%.  So successful do we believe it has been that we are putting forward the WRCEA as a worthy candidate for the 2009 TTJ Awards ‘Excellence in Marketing’ Award!

For many reasons there has always been a degree of scepticism in the primary wood products sector as to the efficacy, need for and cost of marketing!  Well, here is the evidence that the WRCEA marketing model WORKS!  And it has been used before; through the 1980s COFI, amongst its many other activities, created a market for Pacific coast hemlock as a material of choice in the UK joinery industry. 

The Canada Wood Export Program was put in place to provide the incentive and the support for the Canadian wood products industry to re-focus its attention and efforts in regaining market share in off-shore markets.  The WRCEA has done just that!  (And in BC there is also FII.)  Occasionally the WRCEA has not been alone; synergies abound and collaboration with FPAC and Q-WEB has enabled cost-sharing economies in activities.  With appropriate collaboration, the resulting cost to industry is eminently affordable!  One could even be so bold as to say ‘peanuts’!

The future is bright - if the now is collaboration!  And marketing!  Another truism: Don’t tell – don’t sell!  Individual companies spend more in a month on marketing new automobiles and chocolate bars than the entire global primary wood products sector marketing spend in a year!  There’s a thought!  Here’s another - taking a leaf out of the tree’s book: it takes the pull created by transpiration through the leaves to keep it growing!  Come the return to prosperity, when it all kicks off again, having capitalized on the message within Professor Heppell’s truism by creating that pull, it could be not just Western Red Cedar capturing the imagination of designers of new homes and Primary Schools and becoming a material of choice!