WoodWeek 8 August 2018
Virtual reality – If you’re not familiar with it you can do that at this week’s FIEA conference in Rotorua. It’s also just one of the many emerging technologies that is appearing more and more at all of our conferences as the technology in this area just continues to accelerate. This week, conference delegates will see mechanised tree felling and processing closer than ever before thanks to a recent ‘virtual reality’ innovation from Southstar Equipment.
A report on alternative plantation forest species has just been released by the NZ Farm Forestry Association. It is now available on their website. The report details a wide variety of tree species that are suited to steep erosion-prone land and which have root structures that might be less prone to causing landslides after harvest. Author Dean Satchell says it provides considerations of how to lessen the vulnerability of trees now being planted for harvesting decades in the future.
Finally, New Zealand chief executives seem more upbeat in KPMG's latest CEO Outlook Survey Report than respondents in other recent business surveys that have shown sentiment souring by firms fretting over the Labour-led government. According to the report, CEOs see rising global protectionism as the greatest threat to growth and have regressed on digital transformation.
This week we have for you:
Australia: National safety gatherings next weekForest Industry Safety & Technology conference; Bayview Eden Hotel, 6 Queens Rd, Melbourne, Wednesday 15 August 2018
Are you going to attend the Forest Industry Safety & Technology conference on Wednesday 15 August 2018? If you haven't already registered visit the website to check out details of the event, programme and to register - click here.
In addition to the conference, a National Safety and Training Forum will be held on the afternoon before the conference, facilitated by ForestWorks. Details of the Forum are provided below, including the program. The forum is a great opportunity to hear updates on projects taking place at the moment with an emphasis on training and skills.
ForestWorks National Safety and Training Forum, Tuesday 14th August 2018 - 1pm to 5pm.
On the eve of the Forest Industry Engineering Association (FIEA) conference, the National Safety and Training Forum on Tuesday 14th August, will provide an opportunity for industry to discuss a range of national issues and approaches to these issues.
This forum is at no charge however, it is an opportunity for conference delegates to compliment the conference program prior to the welcome reception. A light lunch is included.
For details of the program contact ForestWorks or see the July issue of "The Log" from AFCA. Please register prior to the date for catering and venue requirements.
Southstar’s new virtual reality experienceTree felling like you’ve never seen it before – At this week’s FIEA Forest Safety & Technology Conference delegates will see mechanised tree felling and processing closer than ever before thanks to a recent ‘virtual reality’ innovation from Southstar Equipment.
Southstar Equipment Engineering Manager Jeremy Disher says, “We’ve got an exciting visual experience for delegates to see. With a set of virtual reality goggles on, they can look in every direction while our head is working and they are seeing every aspect of the operation from closer than ever before.”
“People are amazed at how close the action is when they have the VR headset on. This new technology lets them look closer than anything that would be possible in real life. The added bonus is they can look up or down; forwards or backwards while the unit is operating.”
The FIEA Forest Safety & Technology Conference is bringing the latest tools, techniques and technologies for improving both safety and productivity to forest harvesting operations. Over 200 delegates from the length and breadth of New Zealand’s forest industry are attending.
IMF on China’s growth prospectsIn its latest annual assessment of the Chinese economy the IMF says growth is projected at 6.6% 2018. The report from the IMF goes on the say “Four decades of reform have transformed China from one of the poorest countries in the world to the second largest economy.”
“The country now accounts for one-third of global growth. Over 800 million people have been lifted out of poverty and the country has achieved upper middle-income status. China’s per capita GDP continues to converge to that of the United States, albeit at a more moderate pace in the last few years.”
Here are six charts you need to know about this report.
1. China’s strong GDP growth continues. The country now accounts for one-third of global growth. Over 800 million people have been lifted out of poverty and the country has achieved upper middle-income status. China’s per capita GDP continues to converge to that of the United States, albeit at a more moderate pace in the last few years.
Source: IMF & ITTO
Report: Trees for erosion prone landA report on alternative plantation forest species has just been released by the NZ Farm Forestry Association. It is now available on their website. The report details a wide variety of tree species that are suited to steep erosion prone land and which have root structures that might be less prone to causing landsldes after harvest.
Dean Satchell of Sustainable Forest Solutions wrote the new report. It provides industry considerations of how to lessen the vulnerability of trees now being planted for harvesting decades in the future.
Farm Forestry Association President, Neil Cullen says some land and forest managers are in need of this information for steep, erosion prone, terrain.
"This report identifies that a considerable amount of research is still required, but it goes a long way to providing guidance on options for land owners preparing resource consent applications to plant or replant land now zoned 'red' under the new National Environmental Standards for Plantation Forestry (NES-PF),” Neil Cullen says.
Dean Satchell says that owners of red zoned land who wish to clear-fell need to provide regional councils with evidence that significant adverse environmental effects can be minimised. Those land owners should consider an erosion-mitigating forest cover on replant.
“This report provides information on best practice, identifies the gaps in knowledge and sets the scope for the future to improve environmental outcomes from plantation forestry on steeplands,” he says.
"We need more forests on steep hill country to mitigate erosion where pastoral cover isn't enough" says Neil Cullen.
"However, we need the right species, the right rotation lengths and the right harvesting strategies for the best environmental outcomes".
"Forestry is the best land use for erodible hill country, but best practice changes over time to meet the expectations of society and increasing severity of storms. An intense downpour that hit recently harvested and replanted sites in Tolaga Bay resulted in slash mobilisation which made news headlines and has impacted very negatively on the forest industry’s social licence to operate.”
“This report lists a variety of alternative species available that could drive different harvest practices and improve environmental outcomes. It’s up to industry to be proactive and adjust their practices to reflect what society requires," Neil Cullen says.
"This report suggests that alternative regimes and or species will be required now, which will accumulate evidence over time that significant adverse environmental effects can be minimised with best practice."
Forest Owners Association President, Peter Weir, says the report is timely, since industry experts are engaging in finding effective ways through forest management and research priorities to build more resilient forests and more resilient communities.
Downunder: Waratah partners with HultdinsWaratah Forestry Equipment and Hultdins have formed a distribution partnership to offer an extended product line of grapples and grapple saws to Waratah customers in Australia and New Zealand.
The Waratah-branded grapples and grapple saws are a result of customer demand and are now available for purchase.
“We’re excited to begin offering these new lines of grapples and grapple saws to our customers down under,” said Jules Larsen, general manager of distribution and operators for Waratah Asia Pacific and Africa. “Hultdins’ history of manufacturing excellence is a natural match and complimentary product line fit to Waratah Forestry Equipment’s range of distribution lines.”
Hultdins, which is based in Mala, Sweden, is one of the world’s leading manufacturers of attachment product lines and has been developing and engineering products for more than 90 years with tens of thousands of its products being used in the forest every day.
“Over the course of our 40-year history, Waratah has developed a reputation for superior aftermarket technical support and world-class parts systems,” said Larsen. “The addition of these new lines now provides loggers down under with assurance of quality grapple products and confidence that we have their back in after-sales.”
As part of this partnership, Waratah staff has received training on the grapple lines with the recent arrival of the first range of grapple inventory and wide range of spare parts. For more information about this announcement, please contact Jules Larsen at [email protected]
Listed companies serve as industry barometerBMO Capital Markets is just one of the major North American banks that track and report closely on the performance of publicly listed forest companies based in North America. One of those with operations and forests in New Zealand is of course, Rayonier. While their results are not directly comparable to other local forest management companies or divisions of other international companies, they do provide somewhat of a barometer.
Rayonier's Q2 in 100 words
Bottom Line: Good qtr - aided by strength in Northwest and NZ results as well as some 1-timers. The key issue for BMO? Southern timber (biggest EBITDA driver for RYN) remains depressed. We think much of the upside from recovery in southern sawlog prices is already priced into the stock. RYN's stock is trading on top of our estimate of prudent net asset value (NAV). We maintain our Underperform rating on valuation.
New Zealand: Another solid quarter. Adj. EBITDA $25.8mm, Q1 $21.7mm, 2Q17 $18.0mm (net of land sales). Vols +20% y/y. Export & domestic sawlog prices both up 9% y/y. RYN concerned that ongoing trade tensions between U.S. and China could pressure export sawlog prices. Midpoint of FY2018 EBITDA guidance trimmed $5mm to $84-89mm. Prospective buyout of 23% JV partner in NZ has grown more complicated. RYN is interested in the 23% stake, but at the right price.
Southern timber: In-line. Adj. EBITDA $30.6mm, Q1 $28.2mm, 2Q17 $21.6mm. A $5mm y/y jump in non-timber income (3 pipeline easement sales) drove the upside. Vols +10% y/y; sawlog prices up 2% y/y and flat q/q. RYN (and others) are working to foster a southern log export market - RYN’s 2018 vols should double from 2017. Can they grow exports enough to create pricing tension? H2: modestly lower vols and ~flat prices. Midpoint of FY2018 EBITDA guidance up $3mm to $106-110mm.
Pacific Northwest: Solid quarter. Adj. EBITDA $15.0mm, Q1 $14.2mm, 2Q17 $5.5mm. RYN pulled forward vols (+36% y/y) to take advantage of favorable conditions. Sawlog prices +26% y/y & +8% q/q. H2: modest decline in prices and slightly lower vols. Midpoint of FY18 EBITDA guidance up ~$5mm to $43-46mm.
Source: Equity Research Publishing Group, BMO Capital Markets
OIO approves Wenita land saleThe land beneath about 22,500ha of Otago forestry blocks has been sold to a specialist Australian forestry investment fund, for an undisclosed price, and the fund has also bought a 38% stake in Otago's largest timber producer, Wenita Forest Products. The land ownership has moved from a United States-owned fund to an Australian fund.
The Overseas Investment Office this week granted consent for the sale of 22,553ha of land from overseas US fund, Fund 7 Foreign LLC, owned by Boston- based The Rohatyn Group, to Australian ANZFF2 NZ Ltd, a subsidiary of New Forests Australia Forest Fund 2, of Sydney.
The cutting and management rights both remain with Wenita Forest Products, which has had them since 1990, and the land area remains under its control.
Wenita chief executive David Cormack said when contacted he expected few changes under the Australian governance, for either Wenita's 14 staff or more than 110 contractors it has involved in silviculture, harvesting, road building and transportation.
'It's business as usual for us. We're not expecting any major changes,' he said.
Wenita has blocks in Mt Allan, northwest of Dunedin, and a further 20 spread across Maungatua to Lawrence, and southwest down to Kaitangata and around Akatore, near the coast.
Industry sources understood the complex deal had been under negotiation for the past two years and the sale price was potentially 'well over $100million', but that had not been confirmed.
The Australian fund invests in New Zealand, Australian, Asian and US forests, and has has more than $A3.5billion ($NZ3.81billion) of assets under management, the OIO's June decisions statement said.
Wenita Forest Products is the largest producer of timber in Otago and its revenue last year was $73.8million.
The Rohatyn Group partner Ian Jolly said in a statement on its website it had bought the Wenita shareholding in 2005, in a joint venture with Chinese logistics company Sinotrans, and 100% of the Otago Land Company's land in 2006.
Part of the OIO consent includes retaining existing permitted land access, to evolve into unrestricted public access and also several conservation initiatives.
Source: Otago Daily Times
Survey: CEOs shrug off business bluesNZ CEOs shrug off wider business blues in latest KPMG survey - New Zealand chief executives seem more upbeat in KPMG's latest CEO Outlook Survey Report than respondents in other recent business surveys that are showing sentiment souring as firms fret over the Labour-led government.
KPMG NZ chief executive Godfrey Boyce said the survey pointed to a "slight softening" in confidence but he didn't view this "as a faltering of confidence – but more of a realistic re-balancing". Given that New Zealand has come through a period of robust growth, "a little tempering of confidence is both realistic and expected," he said.
He did note, however, bedding in a new government with new policies "inevitably brings a level of uncertainty."
According to the report, CEOs see rising global protectionism as the greatest threat to growth and have regressed on digital transformation.
The past year has seen “global vagaries continuing to play out with a return to territorialism in response to Brexit and the US government’s protectionist trade direction," said Boyce.
A total of 68 percent identified a return to territorialism as the greatest threat to their organisation’s growth. New Zealand's reliance on export-led growth may underpin that nervousness, particularly if a trade war between the US and China breaks out, said Boyce.
"Barriers to trade raise the costs of export and damage competitiveness. This can impact grower returns and undermine growth, with knock-on effects on jobs and regional economies," Zespri International chief executive Dan Mathieson told the KPMG survey.
How a sawmill helped engineer a new machineThe oldest of seven boys, Leo Eby grew up on a dairy farm in Pennsylvania. Whenever his dad didn’t need his help on the farm, Leo would help out at his neighbour’s sawmill. Leo was more interested in the lumber business. In 1987, a neighbour’s sawmill was upgraded, so Leo and his older brother Arnold decided to purchase the old equipment. When they weren’t working on the farm, they were tinkering and running their new sawmill. The company continued to grow.
In December 1998 a fire destroyed the entire mill. They decided to rebuild on a new location on the farm and invested in better equipment and improved technology. Eby’s Sawmill now employs 50 people and produces about 15 million board feet annually.
Then Leo bought a TimberPro forwarder. “It became indispensable, but there were some things that I wished were better about it,” says Leo. However, Tigercat did not have a comparable product to suit his mill yard needs at the time. Leo came to the realization he needed to consider a replacement and soon.
“Over the years I had been observing Tigercat and kept in contact with Jerry and I noticed Tigercat’s high quality construction. If Tigercat made a machine in the same category, I definitely wanted to go with Tigercat, but at this point, it hadn’t been built yet,” explains Leo. “I knew that the only people that could achieve my goals was Tigercat. And even though I actually didn’t have any new Tigercat equipment, I knew they were on the cutting edge of good-quality equipment. I also knew Tigercat had a reputation for making equipment that is easier to work on.”
Along with Leo’s observations of Tigercat equipment, he valued his relationship with Jerry and the two of them kept in contact. “I just knew I had a good relationship with Jerry. He could answer any questions and he knew forestry equipment inside and out.”
Genesis of the 2160 loader forwarder – In early 2015, Tigercat delivered a loader mounted on an AC16 articulating carrier down to a Georgia-Pacific mill in North Carolina. Jerry and then- Tigercat president Tony Iarocci were planning a trip to visit this new machine and Jerry asked Leo if he wanted to join them. The local Tigercat representative invited Leo to go to North Carolina and talk to Tony (then president of Tigercat) to see if he could be persuaded to build a new mill yard loader. Leo walked him through what he was currently using, what he was not satisfied with and why.
Leo explained the application – he needed to unload trucks, load containers, and sort and move logs all over the yard. The machine also needed to feed the mill itself. “That is why it is critical that it has a high load capacity with good travel speed and no outriggers – to keep a continuous flow for the operator,” explains Leo. “I had Tony’s ear all afternoon and he listened very carefully. I’ll be forever grateful for it. Tony really had no reason to give me his time other than he’s just a nice man. It wasn’t like I was a big customer. There was no real reason for him to give me half a day of his time, but he did,” Leo expresses sincerely.
At the end of the conversation, Tony said to Leo, “I’ll tell you what. This is what I can promise you. I’m going to put two engineers on it and we’ll see what we can come up with. Give us six months.”
About six months later Tigercat and Tigercat dealer CJ Logging brought some early engineering plans down for Leo to look over and critique. “I told them this and that and what to change. Then I was invited to a meeting at the factory in Canada to discuss further details with them.”
To read the full story click here >>
PNG: Log exports to stop by 2020In Papua New Guinea, Prime Minister Peter O’Neill says there will be a complete ban on round log exports by year 2020 so that we keep the jobs in our country. In a statement to parliament last week, he said: “We will not be issuing timber permits for round log exports by 2020.
“There will be a complete ban on round log exports by year 2020, so that we keep the jobs in our country. “We want to get the timber companies to go into downstream processing in our country and the fixed product can be exported overseas.
“That is well in line and there is a good understanding in the industry and Government about how we develop our forestry industry.”
O’Neill said in terms of fisheries, government had introduced a rebate system.
“That is because fishing companies, especially in the tuna industry, have taken all the catches overseas,” he said. “They are not coming onshore to get fuel, or supply or offload the fish on our shores.
“As a result, many of our fish end up in Thailand or the Philippines.
“What we have done is we have done a rebate system. We are now telling every fishing company and every fishing boat that you will pay the full price. When you come onshore and unload the fish in PNG waters and factories, we will give you a rebate.”
O’Neill said “Initiatives like that are starting to produce positive results. We are making headways in terms of our negotiations with the resource companies. They are starting to come on board where we have had agreements where we gave them concessions about parking export revenues in overseas accounts. Future projects agreements will come under and follow a stricter adherence to that kind of arrangement.”
Source: The National PNG
Buy and Sell
... and finally ... Wednesday is hump day
I went to the cemetery yesterday to lay some flowers on a grave. As I was standing
noticed 4 grave diggers walking about with a coffin, 3 hours later and they're still
with it. I thought to myself, they've lost the plot!!
... and FINALLY ...
I read this article that said the typical symptoms of stress are eating too much, impulse buying, and driving too fast.
Are they kidding? That's my idea of a perfect day.
In a criminal justice system based on 12 individuals not smart enough to get out of jury duty, here is a jury to be proud of:
A defendant was on trial for murder. There was strong evidence indicating guilt, but there was no corpse.
In the defense's closing statement, the barrister, knowing that his client would probably be convicted, resorted to a trick.
"Ladies and gentlemen of the jury, I have a surprise for you all," the barrister said as he looked at his watch. "Within one minute, the person presumed dead in this case will walk into this courtroom." He looked toward the courtroom door. The jurors, somewhat stunned, all looked on eagerly.
A minute passed. Nothing happened.
Finally the barrister said, "Actually, I made up the previous statement. But you all looked on with anticipation. I, therefore, put it to you that you have a reasonable doubt in this case as to whether anyone was killed, and I believe that you should return a verdict of not guilty."
The jury retired to deliberate. Some time later, the jury returned, and when the jury foreman was asked for his verdict, he pronounced a verdict of guilty.
"But how?" inquired the barrister. "You must have had some doubt; I saw all of you stare at the door."
The jury foreman replied: "Yes, we did look.....
But your client didn't."
That's all for this week's wood news.
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