Post on 12-Mar-2020
Forestry Products Marketing Workshop
Novi SadSerbia and Montenegro
5 April 2006
Nicol SinclairArea Operations ManagerArgyll and Lochabernicol.sinclair@forestry.gsi.gov.uk
Monday, 24 April 2006
2
Overview
Forestry CommissionStructureForest OwnershipTimber Production
GB Forest IndustryBalance of tradeProcessing sector
Timber MarketingObjectivesSale MethodsEmerging Opportunities
Monday, 24 April 2006
3
The Forestry Commission
•Founded 1919
•Three distinct Departments of
Forestry for Scotland, England
& Wales
•Separate Department for
Forest Research covering UK.
•3,151 staff.
Monday, 24 April 2006
4
The Forestry Commission Organisation
Structure Chart of Countries
Head of Policy Head of Grants and Licences Head of Corporate Services Chief Executive of Forest Enterprise
Country Director
Deputy Minister
Lead Minister for Forest Policy
Monday, 24 April 2006
5
Forest Enterprise Functions
An agency to manage the State Forests in each country.
Demonstrate good practice in the delivery of Forest Policy.
Corporate Plan with targets:Economic
Environment
Social
Monday, 24 April 2006
6
Aims & Objectives
• To maximise the value to the economy of the wood resource becoming available over the next 20 years
• To create a diverse forest resource of high quality• Ensure forestry makes a positive contribution to the
environment• Create more opportunities for people to enjoy
woodlands, forests and trees• Help communities benefit from woods and forests
Monday, 24 April 2006
7
Vital Statistics
Forestry Commission Land Holding– 778,000 ha productive forest – 276,000 ha other land (grazing, conservation & recreation)
– No new planting– 8200 ha of Restocking– Current production around 5.5 million m3 obs and
rising
Monday, 24 April 2006
8
Forestry in Britain
Forest Ownership
ForestryCommission - 28%
Private - 42%
Farmers - 20%
Public/voluntarybodies - 10%
Monday, 24 April 2006
9
Age Profile of Forests in Britain
050
100150200250300350400
Thou
sand
ha
Pre 18
61
1861
-1900
1901
-1910
1911
-1920
1921
-1930
1931
-1940
1941
-1950
1951
-1960
1961
-1970
1971
-1980
1981
-1990
1991
-1997
Monday, 24 April 2006
10
GB Timber Production 2002-2021 (by ownership)
0
2,000
4,000
6,000
8,000
10,000
2002-2006 2007-2011 2012-2016 2017-2021
000
m3
Forest Enterprise Private Sector
Monday, 24 April 2006
11
GB Timber Production 2002-2021 (by country)
0
2,000
4,000
6,000
8,000
10,000
12,000
2002-2006 2007-2011 2012-2016 2017-2021
000
m3
Scotland England Wales
Monday, 24 April 2006
12
GB Timber Production 2002-2021 (by dia. class)
02,0004,0006,0008,000
10,00012,00014,00016,00018,000
2002-2006 2007-2011 2012-2016 2017-2021
000
m3
7-14cm 14-16 cm 16-18 cm to 18 cm
Monday, 24 April 2006
13
GB Softwood Planning Potential
0500
10001500200025003000350040004500
000
m3
2002-2006
2007-2011
2012-2016
2017-2021
SRWSawlogs
Monday, 24 April 2006
14
The GB timber market ...
Finland land area = 30.5m ha Finland Population = 5.1 millionForest area = 66% 6 Ha of Woodland per person
UK land area = 24.2m ha Population = 60.5 millionForest area = 11.6%0.4 Ha of Woodland per person
0% 20% 40% 60% 80% 100%
Ireland
Netherlands
UK
Greece
Belg/Lux
Italy
France
Germany
Spain
Portugal
Austria
Sweden
Finland
Land use - International Comparisons
Forestry Agriculture Other
Monday, 24 April 2006
1
UK Timber Market
UK consumption of wood and wood based products (2005) = 45.0 million m3/ yr. WRME
UK roundwood production (2005)= 11.05 million m3. (19%)
UK is the World’s second largest
net importer of wood and wood
based products.
Monday, 24 April 2006
16
Standing timber and sawlog price indices 1994 - 2002
0
50
100
150
200
250
300
Apr-94
Oct-94
Apr-95
Oct-95
Apr-96
Oct-96
Apr-97
Oct-97
Apr-98
Oct-98
Apr-99
Oct-99
Apr-00
Oct-00
Apr-01
Oct-01
Softwood Sawlogs Standing Timber Linear ( Softwood Sawlogs )
Monday, 24 April 2006
1
UK sawnwood consumption
0
2,000
4,000
6,000
8,000
10,000
12,000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
000
m3
Sweden UK Finland Latvia Russia (USSR)Canada Estonia Lithuania Eire Others
Monday, 24 April 2006
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GB sawnwood market share
0
1000
2000
3000
4000
5000
6000
m3
Construction Joinery Pallet &Packing
Fencing &Garden
Other
GB Production Imports
Monday, 24 April 2006
19
GB potential market share - 2014
0
1000
2000
3000
4000
5000
6000
m3
Construction Joinery Pallet &Packing
Fencing &Garden
Other
GB Production Imports
Monday, 24 April 2006
20
GB Sawmilling Industry Structure
Total Production by output category
0
100
200
300
400
500
600
700
800
<100
0
1000
- 50
00
5000
- 10
000
1000
0 - 2
5000
2500
0 - 5
0000
5000
0+
000
m3
Wales
England
Scotland
Sawmills by output category
0
50
100
150
200
250
<100
0
1000
- 50
00
5000
- 10
000
1000
0 - 2
5000
2500
0 - 5
0000
5000
0+
No.
Mill
s
Wales
England
Scotland
Monday, 24 April 2006
21
Developments in UK Sawmilling
Introduction of strength
grading
Visual grading
Machine grading
Kiln drying
Regularising/planing
Engineered wood products
Monday, 24 April 2006
22
Sawlog Market development
Will depend upon…….
Timber Quality
Cost competitiveness
Industry restructuring
Our Customers customers
Monday, 24 April 2006
23
UK Pulp & Paper
Number of Papermills -
91
Number of Pulpmills - 2
(both integrated)
-1000
0
1000
2000
3000
4000
5000
6000
RecoveredPaper
Chemical Mechanical Semi-Chemical
000
tonn
es
Imports
GBProduction
Monday, 24 April 2006
24
GB Pulp & Paper Industry
Currently 2 Pulp & Paper mills using approx 0.7 million tonnes SRW/yr
UPM KymmeneCaledonian Paper, Irvine -LWCShotton Paper - Newsprint
Iggesund PaperboardWorkington - GC2 FoldingBoxboard
St Regis Paper
Chepstow - Corrugating Medium
Monday, 24 April 2006
2
Pulpwood Market Development
0
200000
400000
600000
800000
1000000
1200000
1400000
tonn
es
1991 1993 1995 1997 1999 2001 2003
PulpwooddemandSpruceSawmill Chips
Export (pulpand chips)
Monday, 24 April 2006
26
Wood based panels
Currently 7 panel mills using approx2.0 million tonnes SRW/yrNexfor
Dalcross - OSBCowie - MDF, Particle boardSouth Molton - Particleboard
Egger UKHexham - ParticleboardBarony - Particleboard
KronospanChirk - MDF, particleboard
SonaeKnowsley - Particleboard
Monday, 24 April 2006
2
Wood-based Panel Industry
Highly FragmentedLow entry barriers
High exit barriers
Private ownership
GB Panel Industry 2002
0
200
400
600
800
1000
1200
1400
1600
Nex
for
Egg
er
Kro
nosp
an
Son
ae
Pro
duct
ion
capa
city
( 00
0 to
nnes
)
OSBMDFChipboard
Monday, 24 April 2006
28
Potential Panel Production 1996 - 2005
0
1000
2000
3000
4000
5000
6000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Chipboard MDF OSB Panel Demand (inc plywood)
Monday, 24 April 2006
29
GB panel industry recycled timber demand 1997 - 2005
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Monday, 24 April 2006
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But...
Excess of production capacity in N EuropeComparative strength of sterlingSignificant falls in price of WBPs since 1998 Price of chipwood and co-products fallen by 25%Reduction in demand in chipwood market Rising energy costs
0
20
40
60
80
100
120
MDF OSB Chipboard
1995 2000 2001 2002
Monday, 24 April 2006
31
Woodfuel
Significant emerging market in UK• Driven by government targets on renewable
energy• Most recently by high energy costs globally• Has more stable generating abilities
compared to wind energy• Currently projects being developed with
estimated demand for 5.1 million m3 obs in Scotland alone.
• Potential clash with WBP manufacturers
Monday, 24 April 2006
32
Potential Availability of Low Grade Timber in Scotland
in So
020000400006000080000
100000120000140000
2003-2006
2007-2011
2012-2016
2017-2022
Average annual production in Period
OD
T's
BroadleavesConifers
Monday, 24 April 2006
33
Stemwood 7-14 Production in Scotland
630000640000650000660000670000680000690000700000710000
2003-2006
2007-2011
2012-2016
2017-2022
Average annual production in Period
OD
T's
BroadleavesConifers
Monday, 24 April 2006
34
Methods of sale
FE currently sell around 5.52 million m3 /yr.Currently 50+% of total softwood production
c. 50% Standingc. 50% harvested
Current sale methodsNegotiation on Long Term Contracts (LTC)Open market via Electronic Tender
Monday, 24 April 2006
3
Strategic marketing objectives
To secure market share
ensure necessary market share for the timber we plan to harvest
To maximise value
Maintain the best possible price over the long-term
To assist market development
Support development of existing markets
Help create and maintain new markets
To support country forest strategies
Monday, 24 April 2006
36
Long-term contracts
Have been key in
supporting new
investment in pulp and
panel sectors
Introduced for log and
standing sales in 1998
Currently account for 65%
of all sales
Monday, 24 April 2006
3
Long-term contracts
AdvantagesProvide security of supply - for both
partiesReduced risk for customerProvides basis for improving trading
relationships - potential for reduced transaction costs
Reduction in timber haulage - optimisation of timber flow
Improves our ability to match supply to customer’s requirements - marketing vs selling
Monday, 24 April 2006
38
Long-term contracts
DisadvantagesReduced flexibilitySome customers miss outReduced competition….Distortion of market price
But….Timber market characterised by a lack of
competition (Top 10 UK customers = 85% of volume supply)
Characteristic of dominant monopoly supplier
Monday, 24 April 2006
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Open market sales
• Currently account for 35% of total volume• Traditionally sealed paper tenders and public
auctions.• Usually two tenders and two auctions in each
country every year• Now electronic sales only - 5 times a year
Monday, 24 April 2006
40
Background to eSales Development
• Major component of FC e-Business Strategy
• FC required to implement e-Government strategy
– Key Govt service to be electronically enabled by 2005
– FC reporting back to Government on progress
• Developing systems for Business reasons
• Progressing through Forestry e-Business Forum
• Regular discussion at local Customer meetings
• Involved in specific projects with key customers
Monday, 24 April 2006
41
Electronic Sales - Aims & Objectives
Improved service to customers
Ability for faster and more frequent sales
More targeted information on Sales
Simplified sales procedures
Reduced costs to FC & Customers
less administration
less paper
less staff time
Monday, 24 April 2006
42
eSales home
http://www.forestry.gov.uk/auctions
Monday, 24 April 2006
43
Events - Lot Information
Monday, 24 April 2006
44
Contract maps -Map Browser
Monday, 24 April 2006
4
Summary of key challenges
Increasing productionMarket developmentMarket share
Decreasing priceMaintaining valueTargeting higher value marketsEfficiency, wood chain costs
Partnership…….
Monday, 24 April 2006
46
Thank you