Only in B.C..

When my daughter Evie’s kindergarten class lined up Friday for Sports Day races with teams named after B.C. resource exports, we knew they were into serious learning. The team from NAFTA failed to show, but in the end we learned the lumber team won at least a participation ribbon. After the cheese pizza everyone went home happy.

Tiptop

It’s been said that economics is an imperfect science. So it is that sometimes even lumber market forecasts have been known to be less than perfect. In some aspects related to the woods business, accuracy can be critical – as in when you’re aiming to fall a towering Douglas Fir that’s been growing in your backyard for a century. Unfortunately due to root rot, this giant had to be removed in Langley on Thursday. We can appreciate there was little margin for error. Some days are like that. Thanks to Duke and Tracey for the video!

Northwestern EXPO

“Tune in!” shouted Mike Foley, Certified Speaking Professional and founder of Clarity Central, keynote speaker yesterday at the Northwestern Building Products EXPO in Bloomington, Minnesota. That’s how Mike suggests we differentiate ourselves in a world where everyone is distracted, overwhelmed, overworked – and no one is present. “Tune in to your kid, your boss, your partner, your customer,” said Mike, while noting the attention span of a millennial (8 seconds) is shorter than the attention span of a goldfish (9 seconds).

In his breakfast presentation, Mike expanded on his four keys to “letting go” and “losing the junk in our trunk”: grow your comfort zone, find your balance, manage your mind, lighten your load. It was a fast-paced workshop. One memorable round table exercise quickly revealed how growth can only occur outside the comfort zone, in “the stress zone”. How to manage your mind? “Become a fine connoisseur of the present moment! Where do you live? In the past, present, or future? How does this affect your life? How would it change if you lived moment to moment?” His segment on the importance of credibility and balance – “responding skillfully” – was perhaps most relevant to many attendees engaged in lumber trading.

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Market Minute

While Dakeryn has been an associate member of the Northwestern Lumber Association for a number of years, this was our first time attending and exhibiting at the Northwestern Building Products EXPO. Held at the DoubleTree by Hilton Hotel in Bloomington, MN, the show was tight and upbeat. Virtually every key US distributor in the region was represented. Most retail dealers in attendance acknowledged that business was ticking along – unseasonably steady for January. While the show’s slogan was A World of Opportunities, the majority of Midwest lumber dealers we spoke with openly expressed apprehension over looming cross-border trade constraints. Most-asked question: “What’s going to happen?”

Lumber Super Bowl

This year, Dakeryn has decided against buying TV ad time for the Super Bowl. The decision is based on analysis of how to most effectively nurture the relationships with our valued customers and supplying mills. It could be that the $5 million-plus cost for a 30-second ad played into the decision as well. But that hasn’t deterred 84 Lumber. According to this report at Adweek, 84 Lumber will make its Super Bowl advertising debut just before halftime of this year’s event – the only brand to purchase more than a minute of airtime for a single spot.

We’re told the purpose of the ad is to launch a year-long campaign focused on recruitment, targeting men aged 20 to 29. According to the report, 84 Lumber includes some 250 locations across 30 states and made Forbes’ 2016 list of “Largest Private Companies in America.” It is also one of the biggest such businesses run by a woman; Hardy Magerko was chosen by her father at the age of 27 to lead the company he founded in 1956.

Our industry is going through a period of extreme disruption. And I’ve always preferred to be the one doing the disrupting, rather than the one being disrupted. But to do that, we need to hire and train people differently. We need to cast a wider net, and to let the world know that 84 Lumber is a place for people who don’t always fit nicely into a box.
– Maggie Magerko

17 Questions for 2017

Here are 17 questions that Harderblog will be watching in 2017, in search of answers:

  1. (See Question #1 from last year)
  2. Will Trump really build a wall and have Mexico pay for it?
  3. Will the softwood lumber dispute have found a satisfactory resolution?
  4. Will anticipated countervailing duties on Canadian softwood lumber shipments to the US be applied retroactively?
  5. Will Trump really pull the US out of the Paris Climate Change Agreement?
  6. In the face of “Fake News” and misinformation that poses distraction to sound decision formulation on many fronts, will lumber dealers lean more heavily than ever on trusted wholesale relationships to interpret market changes?
  7. Will Trump really pull the US out of the Iran Nuclear Deal?
  8. Will there be 100 million consumers shopping in augmented reality (AR) by the end of 2017?
  9. Will a measure of sanity return to the Vancouver housing market?
  10. Will the record number of homeless people identified in the City of Vancouver’s 2016 Homeless Count be broken again in 2017?
  11. Will tensions with China escalate over trade and Taiwan?
  12. In light of increased hacking of connected products, will questions surrounding cyber security have become a make-or-break issue by the end of 2017?
  13. Is there any indication that by the end of 2017 a future of driverless transport trucks could promise enhanced just-in-time lumber deliveries?
  14. Will anybody care if the Vancouver Canucks fail to make the Stanley Cup Playoffs?
  15. Will BC Premier Christy Clark’s Liberal Party secure a fifth term in May?
  16. Will the global crises surrounding issues of displaced peoples/refugees have eased anywhere?
  17. Will general predictions forecasting a “bumpy ride” for 2017 come to fruition?

Answers

 

 

Ringing the Bells

The ringing of bells at this time of year signals news on different fronts – as in heralding the Advent Season – or, marking the close of another trading day. Both bring news and welcome respite.

In recent months we’ve probably all felt like midwives to an age that’s giving birth to the post-industrial society. In experiencing the tightening grip of hands, there is a sense that someone should be calling for a doctor in the house.

We are mindful that in reporting on this atmosphere we are helping to shape it. Although acknowledging risks peculiar to the time, there is a sense of opportunity and responsibility to share in a vision for the future. It includes looking beyond early vibrations of the historic free trade agreement with the US. That picture anticipates greater stability in the 90’s – where some economic units will learn to survive without growth at the same time as others seek economies of scale cost advantages through consolidation. It suggests our function will expand to interpreting forces beyond supply and demand. Attitudes will reflect sensitivity to shaping quality of life for future generations. Already a new awareness of the fragile nature of international interdependence is evident amid the unpredictability of financial markets and lumber markets globally.

Into this reality the essence of Christmas comes with timeliness this year. It seeks the good in humanity while promising hope and restoration for the soul. It celebrates childhood joys and speaks of innocence that would believe in “Peace on earth and Goodwill to all”.

– Ernie Harder, Dec. 1987

 

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Vancouver (Dec. 9, 2016)

Christmas Tree Talk

It used to be that if you were a young fir seedling on this continent, and assuming you took care to grow hard, you might have a fighting chance one day to find yourself selected as a Christmas Tree. Not so much anymore. Odds are an artificial tree from China has taken away that opportunity. Even so, it’s a season of hope in these times of change.

In fact the Canadian Christmas Tree Association reminded us that we just celebrated National Christmas Tree Day on Saturday, December 3rd.  With 69,968 Canadian acres of Christmas tree production underfoot, the good news is that one acre of Christmas trees produces enough oxygen for 18 people. On the face of things, it might not seem significant. But globally, it’s big business. In the US, the 30 million real Christmas trees sold each year represents about one tree for every three of the eligible US voters who didn’t vote in the recent presidential election.

Annual artificial Christmas tree sales are now in excess of one billion dollars. Balsam Hill is the largest seller of artificial trees, all featuring “stunning realism”. Their website shares testimonials boasting that “things that are tangible, like farm-grown trees” may have lost some of their allure. Fake is more acceptable. In recent polling – even as polling may have lost some credibility in recent times – the US National Christmas Tree Association trade group for tree growers claims that “young adults choose a fresh tree each year at a higher rate than the overall population.”

We’re told that three times more homes will display artificial trees than real trees this year. In Canada, it’s reported we’re even beginning to install artificial trees in provincial parks. But hey, in this age of technology our concept of reality is shifting. It’s all about perception. Ersatz is in. “We live in the social media era,” explains a spokesperson from Ontario’s Ministry of Natural Resources. “We need to make sure photos posted online of our parks look amazing.”

China is a key player in the plastic tree trend. Most artificial Christmas trees are made from PVC plastic, described as fire retardant but not fire-resistant. Fully 80 per cent of artificial trees worldwide are manufactured in China. China, despite its 1.375 billion people, is not a big market for Christmas trees.

Not surprisingly the concerns long ago voiced by “The Littlest Christmas Tree” story of childhood folklore are as real as ever in its challenge to be noticed.

The bottom line is that neither tree (real or fake) has a significant impact on the environment. If you want to lessen your impact on the environment, don’t drive.
– Jami Warner, American Christmas Tree Association (ACTA)

Economy Grade

When referencing “Economy” in relation to lumber, we’re talking falldown or lower grade. That’s not to say there can’t be value in economy grade. A whole industry of utilizing lower grades finds economic viability around remanufacturing lower grades of wood. At the same time, bottom-line, results-driven users of lumber are recognizing benefits of enhanced value in quality in planning construction inventory needs. It’s understandable that suppliers concerned with building brand recognition around quality, both in terms of service and product, tend not to build that awareness around ‘economy’.

In the airlines industry, ‘economy’ defines a supposed base line of minimum, acceptable service. Or so we thought. But not so much anymore. In an effort to redefine coach by re-grading passengers, it’s reported here a number of airlines are introducing a section with even fewer perks than economy class. The “deprivations” United passengers will be experiencing with implementation of “basic economy” suggest levels of service that will not allow for any overhead bin space – and declaration for boarding last. Presumably everybody still lands at the same time.

This trend is interesting considering the inferior quality of products and service being promoted seems to be ‘flying’ in the face of other aspects of commercial/industrial/consumer trends. In this age of heightened branding awareness, the airline approach seems to be contradictory to what their branding goals purport to represent. In the lumber business, “adding value” has built-in connotation for upgrade of quality in product and service, not a dumbing down of those variables. In fact, in the event of a new hybrid tax and quota softwood lumber agreement, some suggest that ‘economy’ could be the first to go.. on a slow boat to China.

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From NLGA, Standard Grading Rules for Canadian Lumber

Forest Bathing

The focus in 2017 is going to be how to achieve a deeper sense of “wellness” in everyday life, reports The Vancouver Sun here. Defined as “making contact with and taking in the atmosphere of the forest,” forest bathing involves immersing “in the calming, leafy greenery of a woodland/forest environment – to relieve tension and stress and to experience a more heightened sense of well-being.”

The term forest bathing comes from the Japanese shinrin-yoku, which means taking in the forest atmosphere. “Knowing the pleasure of being outdoors is nothing new to people here on the West Coast, but the terminology ‘forest bathing’ is something new to our ears. As a result, more people are predicted to go for a walk in the woods if they think of it as ‘bathing’ in nature rather than just taking a rustic ramble.”

Psychology Today explains “what sets forest bathing apart from simply taking a walk in the forest is that we consciously take in the sights, sounds, smells, and the whole experience, rather than allowing our minds to do the things they habitually do, like putting together a mental grocery list.”

This theme of forest bathing certainly fits into progressive thinking for stewardship of the forest. It recognizes value in the holistic approach that plugs into Mike Apsey’s thinking on forest management that appreciated value in the woods beyond “the price of a 2×4”.

runnning-nov-2016-photo-by-ejh

Frictional Factors

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with Clark Ellis, LMC Forest Products Expo (4 Nov 2016)

Frictional Factors are said to impede process or progress. One of the highlights each year of the LMC Forest Products and Building Materials EXPO in Philadelphia is the keynote speaker at Friday’s breakfast. This year featured Clark Ellis, Founder and CEO of Continuum Advisory Group, a management consulting firm that works exclusively with the homebuilding and construction industry. His hi-speed presentation explored ways to improve your business in a world of rising demand and constrained resources. While re-confirming that the biggest constraints in the U.S. housing market recovery are land and labour, he stressed the need to minimize frictional factors. “Complexity is the enemy of velocity!” declared Ellis. “Reduce complexity throughout your organization to increase velocity and enhance your flow rates.”

Ellis talked about the Margin vs Velocity Mental Model, explaining that because “margin is what we know and it comes naturally to us,” companies tend to focus too much on margin. According to Ellis, “in a resource-constrained environment, collaboration trumps adversarial cost-based selection every day of the week.” Rather than focus on ‘more work’ and margin, build strategic relationships with suppliers and customers. “Instead of asking for more, ask ‘how are we doing?'” advised Ellis.

Ellis stressed that feedback – from both employees and customers – is critical. “If you are not measuring employee engagement on at least an annual basis, you are missing one of the most powerful and critical indicators of future business results.” Ellis argued that customer experience must also be measured, tracked, and used to make better managerial decisions. “Mapping and optimizing ‘customer touch points’ is crucial.”

Continuum’s four biggest opportunities to improve your business in today’s constrained environment:

  1. Understand and visually represent your business processes
  2. Drive a velocity mindset through your company and its external network
  3. Change your concept of trade and supplier engagement
  4. Understand that employee engagement drives customer experience which drives business results.

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Market Minute 

The 2016 LMC Forest Products and Building Materials EXPO was brimming with lumber dealers feeling upbeat about 2016 to date and bullish on 2017. However a number acknowledged significant business was pulled forward/covered in advance of the October 12 standstill expiry. Moderating activity since that time also helps to explain the present supply-demand imbalance. The skittish tone and extreme hand-to-mouth buying patterns in evidence suggest dealers, wary of winter and working down inventories for year-end, are perhaps content to “run out the clock” on a good year.