The 2012 NAWLA Regional Meeting in Vancouver was held at The Vancouver Club yesterday. Organizing Committee Chairman Bart Bender (Ainsworth) confirmed 170 registered attendees, up from an average of 150 the past two years. Three speakers followed NAWLA President Gary Vitale’s opening remarks.
1) Paul Jannke – Economist, Forest Economic Advisors LLC
Shortly after he was introduced, Paul
put on a Bruins jersey and reminisced about Boston’s Stanley Cup Final win over the Vancouver Canucks last year. Focus eventually shifted to the topical content in his presentation. While he cautioned house prices in the US will likely fall further, reasons to be optimistic include the fact that new home inventory is now in line with the historical average, and the home-price-to-rent ratio is now below the pre-bubble trend. Reason for concern in the second half of this year is the so-called ‘shadow inventory’ of foreclosed homes and rising gas prices sapping consumer spending. Paul’s discussion of the “Wealth Effect’ – relative to real home prices falling below the long-term trend, was interesting. While FEA forecasts lower lumber prices in the short term, 850,000 US housing starts are anticipated in 2013.
2) David Newstead, Euler Hermes Group
David’s presentation explored considerations surrounding credit insurance in the BRIC Countries. His slide featuring a “Corruption Perception Map” hinted at some of the credit complexities involved in many emerging markets around the world.
How to become a player in emerging markets?
a) Become a known quality
b) Know local rules and regulations
c) Build relationships (culture values “perseverance and flexibility”).
David noted the traditional credit insurance function (“bad debt, access to additional capital”) has changed to sales growth expansion, loss avoidance, and letter of credit replacement. Global business is moving from letter of credit to “open terms.”
3) Mike Phillips, President, Hampton Affiliates
Mike opened his talk by addressing the Burns Lake tragedy. The accident investigation is ongoing – WorkSafeBC is expected to be on site for another 4-5 months. We learned that there is a “bias to rebuild” in discussions involving future operations at Burns Lake. Mike then talked about Hampton’s strategic shifts in response to five market changers: collapse of the US housing market, shift in timber ownership/rise of TIMO’s and REIT organizations, the rapid industrialization of China (“rise of middle class”), weak US currency (increased purchasing power of foreign buyers), and exploding oil costs. Hampton’s marketing priorities shifted (in order) to: repair and remodel markets, export markets, industrial markets, and residential markets (“default” market). It was interesting to hear that Hampton has “guaranteed trucking agreements” in face of freight constraints; the company requires 2,500-3,000 trucks per month.
According to Mike, what has been learned in this challenging economic climate?
a) Lower lumber prices don’t mean lower log prices
b) Sometimes it’s not what you sell it for but what it costs to make it that is the deciding factor
c) “Hope it gets better” is not a successful marketing strategy
d) 9% unemployment does not fit well with “robust” housing market/recovery
e) The forest products industry needs to learn how to be successful without an improvement in new home construction (“we’ll see an improvement in value before we see an improvement in consumption”).