So far, touch wood, we’ve managed to keep the flu bug at bay around the Dakeryn office, despite the open office plan. We’re being told that the cold and flu-season tends to be worse where open office plans are in place. Other disadvantages of an open office include lack of privacy. While lumber trading floors have traditionally not been places for much privacy, it’s true that predictable tensions in a productive office can draw attention of the entire staff, leading to suspension of trading. And major incidents on the trading floor, while rare, have in the past reportedly involved costly downtime for clean-up, equipment repairs, and anger management classes. Still, it seems most trading floors have found that the disadvantages are eclipsed by these four benefits of an open office:
- Most appreciate the sense of community that an open work environment can support.
- Open space allows for better communication and exchange of information among co-workers. It is easier to ask each other questions in an open environment.
- Some employees prefer being among other people, not wanting to feel “closed in” or “all alone”.
- The open work environment allows employees to know what’s “going on” in the office – being “in the know”.
We’re Open! Dakeryn Industries – North Vancouver, B.C.
The North American Wholesale Lumber Association’s Vancouver Regional Meeting & Cocktail Party happens Thursday, April 10th at The Vancouver Club. Stay tuned for updates. Andy Dunn, President of the Vancouver Canadians Baseball Club, will be one of three compelling speakers on the agenda. Fans of the Canadians, Single A affiliate of the Toronto Blue Jays, are no doubt aware the club was chosen Minor League Franchise of the The Year in 2013, by Major League Baseball. NAWLA’s Vancouver Regional is expected to sell out just as quickly as last year; tickets available on-line here.
Any opportunity to sit down with a real entrepreneur always raises the interest level. Earlier this week I caught up with Dave Chalmers, former BCIT classmate in the Wood Products Manufacturing Program. Dave is a founding partner of Iron River Forest Products here in North Vancouver. His company custom cuts Western Red Cedar and Douglas Fir logs, producing large timbers and beams for timber frame construction, and specialty clears for door and window manufacturing. In addition, Iron River enjoys strong ties to First Nations, facilitating all levels of the logging process (including financing and quality control) – while initiating sales through the BCTS small business program.
I was intrigued to learn that Dave recently purchased a floating “barge camp”. The Pride of Seymour is 130×60 feet and sleeps 16 people in both semi-private and private bedrooms. Providing a home for loggers in remote inlets along the coast where there are no land camps, the barge features a fully-equipped kitchen and dining room, along with a games room and pool table, satellite TV and WiFi. The barge rents monthly for a tidy sum – though Dave reports “it takes a beating” during stays that last 6 to 9 months, depending upon the size of the area being logged. Presently the barge is in Campbell River for updates including new generators, flooring, and a fresh coat of paint – in preparation for a busy logging season.
Pride of Seymour
Sold! Hemlock in Hayden Bay awaits shipment to China
It was written in 1970. Over 20 years later, I would open a textbook at BCIT to discover that my dad’s B&S Theory formed a large part of the chapter on lumber wholesaling in the Wood Products Sales & Distribution course.
I welcome your feedback on the B&S Theory of Lumber Wholesaling. Do you agree with the basis of the theory? Does the theory hold relevance today?
On a little roadtrip outside the office yesterday, I was reminded just how valuable it is to connect with customers face to face. A blog post just today by best-selling author Ekaterina Walter confirms the best social network ever is a table and two chairs. Coming from a social media innovator and self-described “hyper-networker”, that’s saying something.
Walter also points to a study confirming that 90% of word-of-mouth still happens offline. Says Walter: “Relationships is how the deals get done in this world. Reputation and trust is the currency that not only fuels long-term relationships, but the overall success of any venture. It’s what sparks word-of-mouth. It’s what brings opportunities. It’s the only thing that matters in the end. It’s common sense. So step away from the keyboard!” One more thing, according to Walter: never eat lunch at your desk alone.
On a day when we learned that the February NAHB/ Wells Fargo Housing Market Index experienced the steepest decline in the 30 year history of the index, it might be timely to re-visit the big picture. While we’re told this drop in Builders Sentiment can be attributed in large part to extreme winter weather, economists from Applied Global Macro Research (AGMR) tell us the snow won’t put a chill on what could be the hottest economy since the late 1990s.
At a time when sluggish lumber sales might be prompting concern among some traders, this “unusually rigorous and prescient” trio of economists from AGMR only adds more depth to the bullish outlook for spring. We’re told “just as the bursting bubble in housing helped trigger the Great Recession, the prolonged sickness in this sector, which has persisted well past the recession’s end, is now poised to give way to an acceleration in the recovery that has been under way for the past few years.” The full story is available here, at Barron’s Magazine.
(HT: Mark Kennedy, CIBC)
“The price collapse that began in 2007 lasted through early 2012. So low did prices go that the inflation-adjusted median price as of December 2013 is still about in line with where it was in late 2001. The result is that house prices can easily rise 5% to 10% faster than the rate of inflation through this year and the next, and still not catch up with the trend growth rate of 2% to 2.5%.”
-The Case for 4% Growth – Barron’s (2-15-14)
So it’s Valentines Day! Tell that to lumber dealers concerned with moving wood to construction sites in the Northeast, where some parts are collecting two to three inches of snow per hour today.
This day even late shipments would be gratefully received ‘full-of-heart-center’. But none are moving. Transportation guys cast wary eyes at the skies over scenes of rail car shortages and icy highways that trap truckers in perilous predicaments. While almost half a million customers in the Northeast are reportedly without power, powered jet engines of U.S. airlines are idling under de-icing machines. So far 75,000 flights are reported to be cancelled in 2014. Yesterday was said to be the worst travel day yet.
Many might be asking: “Where’s the love?” Then suddenly, out of the blue, a mill calls in to ask a wholesale distributor, “Would you be my Valentine”? Not surprisingly, loggers are reporting in with news that even their freshly cut trees in the woods this day are falling…in love!
Happy Valentines Day!
Photos courtesy Chantal at RCP Transit, who reports “This is what our yard looks like in Coaticook, PQ. We got at least 12 to 16 inches through the night and it’s still coming down.”
Changes introduced in the Federal Budget yesterday are expected to contribute to cooling in Canada’s heated real estate markets. According to The Globe and Mail here, Canada’s Immigrant Investor Program (IIP) “allowed foreigners with a net worth of more than $1.6-million to gain residency and potentially citizenship by lending the government $800,000 that would be paid back in about five years without interest.” While the program was closed to new applicants in 2012 due to a massive bottleneck, now reportedly all applicants in the long queue, which includes over 45,000 Chinese millionaires, will see their applications simply scrapped.
With 80% of Chinese applicants to the Immigrant Investor Program indicating a preference to live in British Columbia, what will be the impact on real estate markets in this province? In Jordan Yerman’s piece at Vancouver Observer, he suggests that here in Vancouver, it’s too late – that the influence of foreign money on real estate prices, and our resultant “warped economic landscape”, is fait accompli. Still, he contemplates what effect the cessation of the IIP might have on local real estate development schemes in particular, asking: “Should the flood of rich people slow to a trickle, how attractive will that new high-rise be to investors before the construction stage?”
The market in China for chopsticks must be huge. Students from Quincy, California think so. In fact the Chinese reportedly go through more than 200 billion pairs of chopsticks a year – and according to the students, there isn’t enough wood available in China to meet demand.
A presentation from four students attending Feather River College has been described here as the “highlight” of the Sierra Cascade Logging Conference, which is billed as “the largest forest products and construction equipment expo in the west”. We’re told the young entrepreneurs even caught the attention of officials from Sierra Pacific Industries, which operates the sawmill in Quincy; a meeting is scheduled later this week. Says one of the students: “We think adding in a chopstick factory at our mill would add 100 jobs, and we only have a population of 5,000 people. Right now we’re in the research and development phase. We’re here.. to present an idea and learn.”
One of the week’s early winners, as the Sochi Olympics opened in spectacular fashion today, is Canfor. This morning’s Vancouver Sun headline above the 2014 Winter Games indicated Canfor’s 2013 profit topped $228 million. Reports say profits in North American lumber markets are showing higher bottom line profits than those of recent years. In his report on CIBC’s Institutional Investor Conference at Whistler, Mark Kennedy confirms big producers “are generating positive free cash flow and will continue with high-return discretionary capital spending.”
Meanwhile the growth of international trade for timber resources reveals not everyone claims to be a winner at the moment. China’s voracious appetite for wood fibre is creating mixed reviews in New Zealand (Hat Tip: Roy Falletta). Labour MP’s in New Zealand were reported to be meeting with Northland forestry representatives this week to discuss concerns over what some consider to be excessive shipment of logs to China. According to the NZ timber industry, so many logs are being exported to China that sawmills are finding it hard to meet construction companies’ needs. In the report, a labour forestry spokesman said it was “madness that in a country with large pine forests there is a shortage of logs. Sawmillers have orders to fill but simply can’t do it as twice the number of logs processed here are sent overseas.”
The forecasting models for housing consider a number of variables in shaping outlook for housing demand. Demographics that play into forecasts no doubt suggest that discussions examining the role of affordability in conjunction with unemployment statistics among young people is significant. Bloomberg examines some troubling statistics here, providing us with “perspective on what it means to have entered adulthood amid the tremors of the Great Recession.”
One narrative in play points to the increasing number of young people living at home. In the U.S., it’s reported that 36% of 18 to 31-year-olds were living in their parents’ homes in 2012 – the highest proportion in 40 years. The trend is similarly significant north of the border, where we’re told here the proportion of Canadians in their 20’s living with their parents has doubled the past 30 years. It may also be true in other countries. In the UK for example, Mark Griffith at IPPR, explains here that “Short-term recession-related unemployment is colliding with long-term housing failure, to create intense pressures on young people and their housing choices. We are seeing a regression towards much less mobile households as a result.”
While questions abound as to how much this pattern of “living in mom and dad’s basement” is contributing to pent-up demand in the creation of new household formations, consider the National Association of Home Builders bullish (Hat Tip: Mark Kennedy, CIBC). The NAHB forecasts:
- 1.15 million U.S. housing starts this year, up 24.5% from last year’s total of 928,000 units
- Single-family production to increase 32% to 822,000 units – and an additional 41% to 1.16 million units in 2015
- 333,000 multifamily starts in 2014, up 9% from 306,000 last year.
“There are five key points to the turnaround. Consumers are back, pent-up demand is emerging, there is a growing need for new construction, distressed sales are diminishing and builders see it.”
– David Crowe, NAHB Chief Economist