WoodWeek – 14 August 2019

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Greetings from your WoodWeek news team. Changes globally for the Caterpillar brand continued this week as Sime Darby Berhad just announced that its subsidiary, Sime Darby (NZ) Holdings has secured a conditional agreement to acquire Gough Group from Gough Holdings. Gough Group has the Caterpillar dealership with service territory in New Zealand and transport and materials handling businesses in NZ and Australia.

The New Zealand Caterpillar dealership has a rich history spanning 90 years, making it one of the oldest dealerships of Caterpillar equipment outside of the United States. Gough Group currently employs approximately 950 people across a network of over 50 locations in Australia and New Zealand.

Looking to wood markets and the signals remain negative regarding direct indicators. The forestry price index fell 8 percent as demand from China for logs fell away, said ANZ agriculture economist Susan Kilsby. A high level of log supply from New Zealand and other regions has resulted in a build-up of stock on wharves in China, at a time when usage rates have eased. Building activity slows in China during its hot summer months and buyers are also more cautious than normal due to the impact the trade war between China and the United States is having on manufacturing activity, she added.

On the other hand, there is a wider leading indicator of Chinese economic activity that we provide you with each quarter that is looking slightly positive. It is, however, a high level trend and is not specific to log or wood markets. In July 2019, China’s manufacturing purchasing managers index (PMI) was 49.7 percent, up 0.3 percent from the previous month, indicating that the prosperity level of manufacturing industry has rebounded.

Finally, early next month we've got a strong line-up of construction case studies with mass timber being used in commercial buildings. Our WoodWorks – Changing Perceptions Conference is running in Auckland, making it more accessible to architects, quantity surveyors, developers and project managers across New Zealand.

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Gough family sells Caterpillar dealership

Gough family to sell Caterpillar dealership after nearly a century - The wealthy Gough family has sold Gough Group for $211 million to a Malaysian company after a 90-year history in New Zealand owning the Caterpillar heavy machinery dealership.

The Gough family fortune is collectively valued at nearly $400m but members have been split in recent years and been embroiled in a High Court battle for control over the family trusts that controlled the company.

Family members include property developers and investors Antony and Tracy who are brothers, and their nephew and son respectively, Jamie, who is a Christchurch City councillor.

Gough Group employs about 950 people across its network in more than 50 locations in Australia and New Zealand. Over the past year Gough Group grew its revenue by more than 18 per cent $540m from higher sales sales for its Caterpillar and transport and materials handling businesses.

The buyer is Sime Darby Berhad, one of the largest Caterpillar dealers globally. It purchased Continental Car Services in 1999. In New Zealand, Sime Darby Motors operates under the Continental Cars and City Nissan dealerships in Auckland representing brands such as BMW, Porsche, Volkswagen, Audi, Ferrari and Nissan. It also has a commercial transport arm representing brands such as Volvo, Hino, Mack and UD Trucks.

The conditional agreement depends on Overseas Investment Office approval but is expected to be completed by the end of September, Sime Darby said.

With an international workforce of more than 20,000 employees, they are headquartered in Malaysia with operations in 18 countries and territories across the Asia Pacific region. Sime Darby Berhad is listed on the main market of Bursa Malaysia Securities Berhad.

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More about Sime Darby >>

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Australia: New tree growing technology

New technology to grow money on trees - In Australia, researchers at the Department of Agriculture and Fisheries (DAF) have developed new technology and methodologies for Australian growers to better value their product and enable primary processing mills to more efficiently align timber to end-product specifications.

DAF’s specialist team has developed a patented wood-borer, combined with the use of ultrasonic technology and mathematical techniques to accurately predict the quality of individual logs and boards from measurements obtained from standing trees in southern pine plantations. As the main softwood produced in the state, southern pine is valued at $438 million and supports 1,670 jobs in rural and regional communities across Queensland.

According to a DAF senior scientist, Dr Chandan Kumar, significant variation of timber quality exists between growing locations, trees and within individual trees and that has made predictions challenging in the past.

“While existing technologies can predict the quality of trees and logs with varying degrees of accuracy, and to segregate high or low range logs, to date they have been unable to predict the value of individual boards from the same tree,” Dr Kumar said.

Dr Kumar said that the development of the new technology will allow primary processors to know the quality and value of logs they are receiving. “This will provide big gains to mills, allowing them to match timber received from growers to end-product specification requirements, thereby maximising the value recovered.

“It will allow mills to adjust sawing patterns and reduce the risk of sawing logs from plots not producing suitable products,” he said.

Former Forest Product Innovation team leader Dr Henri Bailleres added that growers will be able to accurately predict from standing trees when plots will start producing high value wood.

“This enables important interventions at grower level, such as pre-allocation of timber products to better match primary processors needs. It allows growers to identify plots that will never produce high value products so these can be diverted to an appropriate facility and the site replanted to produce higher value products. Conversely, plots producing high value products early can be harvested at a younger age resulting in increased rotations from the same piece of land,” Dr Baileres said.

According to the project report, further investment in the technology will allow for development of a cost-effective and user friendly tool that can be customised to end-user specific requirements, enabling the industry to continue down the path towards ‘Precision Forestry’ by using innovation to improve the value chain and profitability.

This research was part of a collaborative research project between DAF, University of the Sunshine Coast and Queensland University of Technology.

The Department of Agriculture and Fisheries supports Australia’s pre-eminent multidisciplinary forest and timber research team at the Horticulture and Forestry Science Unit’s Brisbane facility at Salisbury.

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China log export market updates

China: Manufacturing Purchasing Managers Index - In July 2019, China’s manufacturing purchasing managers index (PMI) was 49.7 percent, up 0.3 percent point from the previous month, indicating that the prosperity level of manufacturing industry has rebounded.

Q2 China log import prices

For the April – June quarter log import prices into China decreased 12.2 percent y-o-y to US$ 169 per m3. Volumes were steady during the quarter, down just 0.63 percent to 16 million m3 according to China Customs data.

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NZ Commodity Price Update

New Zealand commodity prices fell in July, weighed by the recent fall in forestry and dairy prices.

The ANZ world commodity price index fell 1.4 percent in July after falling 3.9 percent in June. The July index was 0.5 percent lower than it was a year ago. In local currency terms, the July index fell 2.8 percent but was up 0.3 percent on the year.

The forestry price index fell 8 percent as demand from China for logs fell away, said ANZ agriculture economist Susan Kilsby. A high level of supply of logs from New Zealand and other regions has resulted in a build-up of stock on wharves in China, at a time when usage rates have eased.

Building activity slows in China during its hot summer months and buyers are also more cautious than normal due to the impact the trade war between China and the United States is having on manufacturing activity, she added.

Dairy prices fell 1.6 percent in July, but are now starting to firm, according to Kilsby. Butter and cheese prices remain under some pressure, particularly in Europe. New Zealand skim milk powder has been trading at a premium to product from other sources. Whole milk powder prices are stable and are expected to be supported in the year ahead by relatively tight supply.

The meat and fibre index lifted 1.6 percent in July following a similar lift the previous month. Higher international prices were recorded for both beef and lamb, with strong demand from China the driving factor.

The horticulture index inched up 0.2 percent in July and aluminium prices lifted 2.4 percent in July, to record the first positive price movement since March. Prices are still 13.1 percent behind levels one year ago, said Kilsby.

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Tall timber case studies for conference

Early next month a strong line-up of construction case studies with mass timber being used in commercial buildings is being given. The WoodWorks – Changing Perceptions Conference is running in Auckland, New Zealand this year to make it more accessible to architects, quantity surveyors, developers and project managers across New Zealand.

The event brings together leaders in engineered wood design and construction. The development of both cross- laminated timber and laminated veneer lumber has coincided with the need for more carbon-friendly sustainable building solutions. The objective of this annual event is to grow the capability and use of wood in commercial and multi-residential buildings throughout the country.

This week we profile one of the key note speakers, Ralph Austin, President of Seagate Mass Timber, Vancouver, Canada

"When my dad had me work alongside him so he could teach me about carpentry, I was like most kids. I wanted to do something different. But after a few years of university in London, Ontario, I headed west to Alberta in the late 70s to work in the construction industry.

"When prefabrication framing was just being experimented with, I started my own Company – Seagate Consulting and quickly adopted it on every project I oversaw. Wood Prefab is growing in popularity and building height. Today, by operating a portable / mobile prefab station onsite (or nearby), I can better control costs, decrease build-time, keep a tidier and safer site, reduce waste and improve the quality of construction for clients.

"Fascinated with new technology involving prefabrication, CNC machinery, 3D modelling and timber framing, I’m excited to gain insights into timber construction from Europe and apply them here in Canada. Europe’s wood design, structural connections, tools, techniques and equipment are slowly being adopted in North America as architects and engineers become aware of the innovations in timber construction."

Hear more from Ralph at Changing Perceptions 2019 on 4 September in Auckland, NZ

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ForestTECH to feature massive drone case study

The Natural Resources Institute Finland (Luke) used BVLOS drones to carry out tree-wise forest inventory on an area of 18,000 hectares in North-West Russia.

A huge need exists for up-to-date, precise forest inventory data in Russia. The transition from extensive forest management to intensive forest management has already started in several regions of northwest Russia, resulting in an increase in pulpwood available on the market. Detailed information on current forest resources is a basic requirement for this transition.

Luke carried out the research project “Competitive solution based on Finnish knowledge for management of up- to-date forest resource data in Russia (ISKRA)” to develop a cost-efficient solution for collecting information. “Beyond Visual Line of Sight” (BVLOS) drones were used to cover an area of 18,000 hectares in four days. BVLOS is one of the most promising concepts in the commercial drone world today, as it enables service providers to cover huge areas in a relatively short period of time, with spatial resolution of one cm per pixel. The project partners in Russia received permission to fly BVLOS in the Republic of Karelia, and they followed all local regulations related to obtaining and handling aerial data.

“BVLOS will change the market for commercial drone users, offering a cheaper alternative to current applications such as airplanes and helicopters. The relatively low human involvement will drive costs down, leaving only questions of regulation and data processing. With BVLOS, the latter requires different approaches than those of traditional consumer drones due to the large size of data”, said Eugene Lopatin, senior scientist at Luke.

During the ISKRA project, the tree-wise forest inventory was carried out on an 18,000-hectare area leased by the participating pilot company in the Republic of Karelia. A total of 13,652,458 trees were mapped using drone data and data processing algorithms developed for the project. Each tree’s height, breast height diameter, species and age were measured. The project demonstrates a huge potential of drones for smart forest management not only in Russia but also in Finland.

As part of this year’s ForestTECH 2019 series being run in November in both Australia and New Zealand, trials being undertaken with BVLOS and opportunities for local forestry companies will be discussed. Registrations are now open for the conference and associated workshops (some of which limited numbers will apply). Full details on the programmes for both countries can be viewed on the event website; www.foresttech.events.

Source: Natural Resources Institute Finland (Luke)

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Analysts review Rayonier quarterly results

International forest company Rayonier Inc reported Q2 2019 net income of US$18.8 million or $0.14 per share on revenues of US$184.8 million. This compares to US$36.3 million on revenues of US$245.9 million for the same quarter in 2018.

For their New Zealand business analysts reported earning about in line with expectations.

NZ - Adjusted EBITDA $20mm; BMO $20.7mm, 1Q $22mm, 2Q18 $25.8mm. Q2 harvest volumes -7% y/y (BMO -1%). Export sawlog prices down 7% y/y and domestic price fell 4% y/y – both in line with BMO. RYN is maintaining FY harvest volume target of 2.7-2.8 mm, but expecting sawlog prices to remain under pressure.

Source: BMO

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More 1993 forest investors feeling deflated

Arbor Forestry investors were told to expect big returns from growing trees, but the real value of their 30-year investments has barely moved.

Investor Cheryl Hampton has been told to expect $13,139 for each of her two units in the limited liability partnership (LLP) that owns Brockville Forest should Arbor get the go-ahead to sell the forest.

It's a far cry from the $60,000-$80,000 projected returns on each unit Hampton recalls being shown in 1993 when the forestry investment boom was in full swing.

It's bitterly disappointing to her that the investment has only very narrowly bested inflation. In terms of spending power, her $7600 in 1993 equates to around $12,680 in today's dollar terms.

After investors failed to back Arbor's first attempt to sell the eight forests it managed (Greenoch, Bradwood, McQuade, Brockville, Braemore, Northwood, Rosedale and Pinehills) to the Spectrum forestry group in July, Arbor called for a second vote in a bid to sell five of the forests including Bradwood and Brockville, to Spectrum.

That vote closed last Friday.

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Source: Stuff news

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Proof found of wood-wide-web

Do trees always exist as single organisms, or can each tree also serve as part of a linked "superorganism?" A recent finding in New Zealand suggests the latter, as a tree stump there has apparently remained alive by joining roots with its neighbours.

The kauri tree stump in question was first discovered by Auckland University of Technology researchers Sebastian Leuzinger and Martin Bader, when they were hiking in a New Zealand forest. They noticed that even though the stump had no leaves – which are necessary for performing life-giving photosynthesis and gas-exchange – it was still alive, long after the main tree had fallen down.

By subsequently measuring sap flow in the stump and in surrounding kauri trees, they discovered that when the flow increased in the stump, it correspondingly dropped in the other trees. This, they determined, indicated that the stump's roots had grafted together with the roots of those trees, allowing the stump to receive water and nutrients from them.

While such root-grafting has previously been observed amongst trees of the same or similar species, it has usually been between a few trees that are all still complete and fully-functioning, which could each survive on their own. This arrangement makes sense, as not only does it allow them to draw resources from a wider area via their linked roots, it also increases their stability within the soil, lessening the chances of any one tree falling down.

In the case of the stump, which wouldn't have much to offer the other trees in its present state, it is believed that its roots were likely grafted when it was still a full tree. By the time that tree fell, what remained of it had already been "grandfathered in" to the root network, keeping the stump from dying off.

"This has far-reaching consequences for our perception of trees," says Leuzinger. "Possibly we are not really dealing with trees as individuals, but with the forest as a superorganism … This changes the way we look at the survival of trees and the ecology of forests."

The research is described in a paper that was recently published in the journal iScience.

Source: Cell Press via EurekAlert, newatlas.com

For further coverage on the story click here.

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Crown Forests return to Rangitane Iwi

Rangitane Tu Mai Ra Trust - the Post Settlement Governance entity for the Rangitane Treaty Claims, have regained possession of three former Crown Forestry Blocks - Castlehill, Tinui and the Waihora portion of Whareama. The return of the Ngaumu forests represents the most significant property transaction in the Tu Mai Ra settlement at nearly 6,000 hectares.

"Our people lost up to 97% of their former lands. To say the return of these lands as part of the Settlement with the Crown is significant to our people is an understatement" says Chair of Tu Mai Ra - Jason Kerehi.

"It is hugely important for our whanau and hap? to be reconnected with these lands and to take up the duty and obligations as owners once again of what is now our own private land."

"We are working closely with our lessee Juken Nissho Ltd to ensure a smooth transition and will also connect with our farming neighbours. Many of our whanau work at JNL or in the forestry industry so it’s important that we foster these relationships" said Mr Kerehi.

Rangitane Tu Mai Ra are pleased to provide the opportunity for Rangitane beneficiaries to hunt on their own land. Experienced local hunter Troy Mason will be the inaugural kaitiaki for the Rangitane properties. He comes from a long line of Maori hunters, learning from his dad Paddy and now hunts with his children and mokopuna.

"People’s safety is our primary concern so my role is to make sure people know where they can safely go and get kai for their whanau and marae" says Troy.

At present Tu Mai Ra are seeking interest from their iwi membership to access these blocks for hunting. Any whanau hunters who are registered with the iwi can apply. You can register by contacting info@tumaira.iwi.nz or 0800 Tu Mai Ra (88-624-72).

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Buy and Sell

... and finally ... some random ones for a laugh

Acting on my New Year's resolutions, earlier this year I joined a support group for procrastinators. Not sure how it will go ...we haven't met yet ...

I don't know about you, but as a baby boomer, I'm finding that old age is coming at a really bad time!

The biggest lie I tell myself is... "I don't need to write that down, I'll remember it."

I don't need anger management. I need people to stop irritating me!


While taking a routine vandalism report at an elementary school, I was interrupted by a little girl about 6 years old.
Looking up and down at my uniform, she asked, 'Are you a cop?'
'Yes,' I answered and continued writing the report.
'My mother said if I ever needed help I should ask the police. Is that right?'
'Yes, that's right,' I told her.
'Well, then,' she said as she extended her foot toward me, 'would you please tie my shoe?'


It was the end of the day when I parked my police van in front of the station.
As I gathered my equipment, my K-9 partner, Jake , was barking, and I saw a little boy staring in at me.
'Is that a dog you got back there?' he asked.
'It sure is,' I replied.
Puzzled, the boy looked at me and then towards the back of the van.
Finally he said, 'What'd he do?'

That's all for this week's wood news.

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John Stulen
Innovatek Limited
PO Box 1230
Rotorua, New Zealand
Mob: +64 27 275 8011
Web: www.woodweek.com

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