|
Report from
Europe
UK conference calls for step change in hardwood
marketing
To end years of decline in UK hardwood consumption, a
radical step change is required to improve two-way
communication between the hardwood trade and key enduser
and specifier groups, including product designers,
architects, manufacturers, building contractors and
retailers.
There is an urgent need, on the one hand, to improve trade
understanding of the constraints and opportunities in
different market segments, and on the other hand, to
encourage market acceptance of a wider range of
hardwood species and grades and to improve recognition
of their technical and environmental attributes.
These were key messages of the UK Timber Trade
Federation (TTF) conference on the UK hardwood market
sponsored by The American Hardwood Export Council
(AHEC) held on 9 March.
The conference aimed to provide a more accurate picture
of the hardwood market in the UK and to inform the
activities of the TTF which aims to revitalise the market
development work of their National Hardwood Division
(NHD) in co-operation with AHEC and other producer
associations.
TTF Director Dave Hopkins said that the TTF would draw
on feedback received at the conference to develop an
action plan for hardwood market development and provide
the NHD with a budget for implementation.
The conference attracted around 80 participants including
representatives of many of the UK＊s largest hardwood
importers and agencies and producer associations such as
AHEC, Canada Wood French Timber, Malaysian Timber
Council, and the European Sawmillers＊ Organisation.
A series of presentations and a panel discussion provided
insights into the current position of both tropical and
temperate hardwoods in the UK and wider European
market. It was noted that UK sawn hardwood consumption
in 2016 was around 370,000 cu.m in both 2015 and 2016,
down from 415,000 cu.m in 2014 and figures in excess of
525,000 cu.m per year prior to the financial crises.
The downward trend in UK consumption forms part of a
wider trend across the EU where sawn hardwood
consumption has fallen from in excess of 8 million cu.m in
2001 to around 5.5 million cu.m last year.
Reasons for declining hardwood consumption in
Europe
The downward hardwood consumption trend is partly due
to falling availability on the supply side 每 with hardwood
harvesting levels constrained within the EU and a large
share of the better quality European logs now being
exported to China and other Asian countries, a problem
compounded by the very heavy focus on European oak
which is also in strong demand in the barrel staves market.
At the same time, Europe＊s access to tropical wood has
diminished, as tropical countries have taken steps to
reduce log exports, and a much larger share of logs and
sawn wood is now diverted to emerging markets so that
European buyers no longer drive price levels and are less
able to dictate terms.
Other reasons for downward hardwood consumption
highlighted at the conference include: shrinkage of the
overall UK and European markets for materials since the
financial crises; relative lack of availability to finance and
failure to innovate in the hardwood processing sector; and
intense competition from a wide variety of wood-panelbased
and non-wood alternatives which have experienced
large capacity increases and falling prices in recent years.
In the UK itself, domestic sawn hardwood production has
remained static at only around 50,000 cu.m per year
during the last decade.
However, due to a significant amount of new planting in
recent decades supported by government grants favouring
native broadleaves over conifers, availability of hardwood
logs for harvest in UK forests is set to continuously
increase from the current level of around 400,000 cu.m per
annum to a high of 3 million cu.m over the next 30 years.
Much of the hardwood volume in UK forests is on private
land in areas of England with high population density (and
greater demand for amenity woodland) and harvesting
may well be constrained by environmental and other
planning controls.
A lot of volume is also likely to be used for power
production (use of biomass for energy receives a hefty
subsidy in the UK). Nevertheless, there is potential for UK
sawn hardwood production to increase significantly in
coming decades with important knock-on effects for the
import trade.
Exchange rates were identified at the TTF conference as a
significant factor influencing UK import prices for
hardwoods in recent years. The GBP is currently trading at
only USD1.21, down 30% compared to July 2014.
Only once before in the entire history of the two
currencies, in the mid-1980s, has the GBP been valued so
low against the USD. This exchange rate shift has meant
that GBP prices for hardwoods from the US and Asia
(where currencies are more closely tied to the USD) have
risen sharply.
The GBP has also fallen against the Euro, but much less
dramatically, by around 15% from €1.41 at the start of
2016 to the current level of around €1.17, and this only
represents a return to the level prevailing in 2014.
UK hardwood import market share
Nevertheless, statistics shown at the TTF conference
indicated there has yet to be any significant switch from
the US to Europe in UK temperate hardwood imports. In
fact, the long-term trend in rising US share of UK
hardwood imports continued last year.
UK imports of U.S. sawn hardwood were 105,000 cu.m in
2016, 2% more than the previous year. The US accounted
for 32% of all UK sawn hardwood imports in 2016, up
from 31% the previous year and around 21% a decade ago.
Several factors explain the continuing increase in US
hardwood share in the UK market in 2016 despite the
exchange rate trend. The UK is strongly oriented towards
oak, which is readily available from the US but for which
supplies from Europe have become increasingly restricted
in the last two years.
Effective market development campaigns have also
boosted UK demand for American tulipwood, an abundant
hardwood now very popular for manufacture of kitchen
components, mouldings and other interior applications,
often substituting for lighter tropical species like ayous
which have become less readily available.
The rise in US share in the UK market in 2016 is also
partly explained by stock building by UK importers who
speculated, rightly as it turns out, that prices for US white
oak would continue to rise and the GBP-USD exchange
rate continue to weaken throughout the year.
In early 2017, signs are that UK stocks of US hardwood
are now quite high and this speculative trend may have run
its course. There is some expectation now that the rise in
US share of UK sawn hardwood imports peaked last year
and will fall in 2017 as the higher prices begin to eat into
UK consumption of US hardwoods.
Meanwhile, according to statistics shown at the TTF
conference, tropical share of UK sawn hardwood imports
was around 30% in 2016, a significant recovery from only
around 28% in 2015, but down from levels closer to 40% a
decade ago.
As in the UK＊s temperate hardwood sector, the UK market
for tropical wood is now concentrated in a very limited
range of species. Sapele from Cameroon and Congo
Republic and meranti from Malaysia are overwhelmingly
dominant. These species are stocked as utility woods to
supply the UK joinery sector.
UK sawn hardwood imports from Cameroon were 23000
cu.m in 2016, a slight increase from 21,000 cu.m in 2015,
but well below levels in excess of 30,000 cu.m in each of
the years between 2010 and 2014.
UK imports of sawn hardwood from the Republic of
Congo doubled last year from 7000 cu.m to 14000 cu.m.
This follows investment in sawmilling capacity and
availability of FSC certified product from two large
operators in Congo Republic. A very large proportion of
the around 10,000 cu.m of tropical wood the UK imports
indirectly by way of the Netherlands is also derived from
African countries.
Due to scarcity of hardwood kilning capacity in both
Africa and the UK, a lot of African wood is dried in the
Netherlands before being re-exported to the UK.
The UK imported 22,000 cu.m of tropical sawn hardwood
from Malaysia in 2016, 7% more than the previous year
but still less than half the volume prevailing before the
financial crises.
This forms part of a larger trend as Malaysia has reduced
focus on European markets for rough sawn hardwood in
favour of emerging markets and more value-added
products such as laminated veneer lumber, doors and
furniture.
Importers at the TTF conference commented that other
tropical hardwoods which were formerly popular in the
UK are now rarely imported, in some cases due to
substitution by cheaper more readily available alternatives
(such as bangkirai decking widely replaced by wood
plastic composites and ayous mouldings replaced by
wrapped MDF), in others due more to EUTR conformance
concerns (such as framire from Ivory Coast).
Drivers and constraints in the UK hardwood market
UK importers were asked at the Conference to comment
on the main drivers of UK hardwood demand. It was noted
that house building in the UK involves very little
hardwood, typically only small volumes for stair
components and kitchens. Finishing applications such as
mouldings, doors, windows, and cabinets are rarely in
hardwood for new build.
Hardwood is now used mainly for higher end commercial
fit-outs and private bespoke projects and products. There＊s
also quite a strong regional concentration, with hardwood
demand focused on South East England, particularly
London which dominates the commercial sector.
Looking to the future, UK importers at the conference
emphasised that lack of training and expertise is now a
major obstacle to expanding the market for hardwood in
the UK. This problem is apparent both within the UK trade
itself and in the manufacturing, retailing, engineering and
specifier community.
One UK importer observed that ※when selling hardwoods
in the past we would be able to talk to a professional
hardwood buyer, with expert knowledge and appreciation
of the value of the material and of the reliability and
reputation of individual suppliers.
Now buyers often have limited technical and industry
knowledge and choose suppliers solely on price. This
means we all chase each other to the lowest possible
denominator, offering the lowest price with less concern
for quality§.
This lack of training and knowledge goes some way
towards explaining the UK＊s increasing concentration on
just a few ※big name§ species that are familiar to the less
well informed, and a widespread unwillingness to
experiment or innovate.
The TTF conference also invited comments from
representatives of the UK retailing, architectural and
engineering sectors. A common theme was that the
hardwood industry is generally very poor at providing
clear information on product performance and availability.
One architect observed that ※when we deal in steel, we
know exactly what is available 每 precise sizes and grades
每 and how it performs. But when it comes to wood,
particularly hardwood, there typically isn't clear
information, in fact some suppliers seem to go out of their
way to withhold information and it＊s not always clear
why§.
It was noted that product designers and architects, or their
clients, don＊t have the time or money to investigate new
timber species, or for sourcing wood in the correct sizes.
One designer observed that ※we specify oak all the time,
because that＊s what we know and what seems to be
available. Perhaps there are other options out there, maybe
cheaper and more readily available, but we simply don＊t
know about them§.
However as one importer observed, there is a ※chicken and
egg§ issue to be resolved here. ※A designer might like a
particular species and request it, but as a natural material,
typically sourced from overseas, it can take two to three
years to bring a new timber type to market. In practice
importers won＊t stock a species unless there is demand§.
The challenge of introducing new hardwood species (or
even reintroducing very familiar but unfashionable ※old§
species) to the market is also apparent in the UK high
street furniture retail sector.
A representative of one large UK retail chain noted that
the company does occasionally pilot test new looks and
timber types 每 for example recently offering some of their
most popular table designs which sell extremely well in
oak in other European species such as beech, ash, and
sycamore 每 but very rarely do these sell.
An underlying message is that to change fashions and
consumer tastes requires a huge amount of time and effort.
Materials tend to do well if perceived by the customer to
be culturally relevant, but also readily adaptable and
flexible in the face of unexpected changes in fashion.
This goes a long way to explaining oak＊s enduring appeal
in Europe 每 the wood is both familiar and yet capable of
being presented in a huge range of colours and finishes.
Nevertheless, there are niche opportunities if hardwood
species can be matched to specific applications, and
buyers can be given sufficient assurance both of their
technical attributes and continuing availability.
This is well illustrated by American tulipwood, not a
popular, or even a familiar timber type in the UK market
until recently.
However, it is now preferred for many interior
applications following a strong market development drive
by AHEC and the US industry combining technical
information with data to demonstrate the large size of the
resource, and with many importers now willing to stock
the wood and able to offer at competitive prices.
Hardwood＊s sustainability message not helping sales
The TTF Conference also suggested that those who
believe that the environmental credentials of hardwood are
a unique selling point offering an easy route to market,
may need to think again.
Attitudes to sustainability expressed at the conference
were typically muddled. The view overall seemed to be
that while everyone wants ※sustainability§, very few are
willing to pay for it, or indeed are particularly interested in
the details of how it is achieved in practice.
The general view of UK importers was that sustainability
is not a positive selling point, although the requirement is
now so ubiquitous that it must be demonstrated to avoid a
loss of market share.
Demand for wood, and particularly hardwood, continues
to be restricted in the UK due to prejudice about the
unsustainability and illegality of product, despite its record
of achievement on this issue.
After all, the sector is the only one which can now assure
customers that all products placed on the market must be
demonstrably from a legal source.
However, the retailers at the conference suggested that
their perceptions of sustainability are strongly linked to
FSC. The implication is that relative lack of FSC in the
hardwood sector undermines market demand and attitudes
to the material.
This raises profound issues surrounding the role of FSC in
hardwood communication 每 whether it is it more of a
hindrance than a help if demand for FSC is not matched:
 firstly, by more significant
progress to achieve
certification on the ground in hardwood
producing areas;
 secondly, any real interest on the
part of
consumers in the genuine technical obstacles to
this form certification in many forest
environments, notably when timber derives from
numerous non-industrial owners that harvest only
very rarely, or in tropical countries where
certification capacity is still limited;
 or thirdly, equivalent forms of
environmental
assurance being demanded of other material
sectors.
By offering consumers a deceptively simple, but still
imperfect, technical fix to their sustainability concerns,
FSC may be distracting buyers from exploring the wider
sustainability narrative of their hardwood products, such
as the social contribution made by the smallholder forestry
sector and the need to maintain the competitiveness of
commercial forestry in relation to agriculture and of
hardwood relative to other, potentially more
environmentally damaging, competing non-wood
materials.
The short-comings of the FSC-only approach were well
illustrated by one furniture retailer at the TTF conference.
The company recently ran a wood furniture promotion
campaign in their main London store which included a
requirement that all products on display must be FSC
certified.
The company was keen to include some British hardwood
in the display because ※the local wood narrative played
well with consumers§. However, in practice due to lack of
FSC supply they were able to display only one small item
每 a chopping board 每 from UK forests. Even in the UK,
FSC certification is still rare in the private sector where
hardwood forest ownership is concentrated.
While the FSC-only approach is still prominent in the UK
large retailer sector, other participants at the Conference
said that in other sectors there is rising interest in broader
sustainability issues.
For example the furniture design community is
increasingly interested in the wider sustainability narrative
surrounding their products, including both with respect to
the source of materials and the life-time of products.
It was also noted that there is a growing appreciation in the
architectural community of the life cycle environmental
benefits of using wood, although for the vast majority of
building projects this will not, on its own, lead to timber
being preferred over other materials.
| 
