Lumber Sales Therapists

Studies have shown that spending time in nature can improve mental and physical health. According to the Richmond News (see article here), Ken Ouendag experienced the healing power of nature firsthand and wants to help others through the work as Vancouver’s first certified forest therapy guide. Ouendag says: “I’ve always believed there’s so much good in spending time in nature and so often I’ve kind of questioned why.”

It got us thinking that the adage of “What’s in a name?” might have relevance for lumber traders. Could lumber distributors’ service to mills and retailers be enhanced by reconstituting the function, at least in name, from full-service lumber wholesalers/lumber traders, to freshly-minted lumber sales therapist? Could the reshaping of therapeutic images of walks in the woods and precursored connections of all things wood tied to forest antecedents add value as lumber sales therapists. Could it add a dimension of stability and healing to frantic trading environment for 2×10? Or, at least, ease the pain for buyers – lending comfort in times of unseasonably strong markets amid concerns about duties and constrained fibre supply.

Studies have shown that volatile lumber markets can induce stress. Does this not summon up recognition of  inherent value of lumber’s roots in the forest’s calming and healing qualities? Can we not recognize therein the lumber trader’s transcendental potential as sales therapist? Some say it summons up the poetry inherent in the trade. Think of Robert Frost conjuring overbloated inventory of 2×10 back to the product’s time as a tree; of the missed phone call not heard if it rings in the forest. Remember the soothing call of “Timberrrr!” in the woods, enduring storms of nature, strong – calming, albeit bold as an Emily Carr painting. Summon the poetry in the perfect sales presentation that finds expression for a ‘win-win’ characterization in its perfection. Any lumber sales therapist up to speed in current tools of the trade still finds power in Robert Frost’s Two Roads that diverged in the woods, even as he ponders over the one not taken.

As certified forest therapy guide, Ouendag engages in specific practices declaring that walks in the woods help people practice mindfulness through sensory awareness facilitated by various activitities. “The first one we tend to do is called ‘what’s in motion?” It’s inviting you to walk very slowly and to take note of what’s in motion around you. “When people do start slowing down they start noticing cobwebs that are blowing in the breeze or a salmonberry bush where the leaves are blowing slightly.”

The lumber sales therapist might expand on these exercises aimed at countering inaction or lack of motion, as in when market activity dies, and sense of panic ensues, triggering propensities for onset of early happy hour. Relax, take a deep breath, envision a salmonberry bush – make reaching for a cold one a cold call instead.

Another exercise Ouendag suggests as forestry threrapist is called a “sit spot” which involves finding a space and sitting there for 15 to 20 minutes. It encourages people dealing with grief to “sit with themselves and feel supported by the nature around them.” The equivalent exercise for the lumber sales therapist for assuaging late shipment anxiety might recommend accessing nearest trading room exit, in search of a quiet brooding spot outdoors (in nature) for tearfully cursing CN Rail. Ouendag says the sit spot exercise he employs as forest guide therapist is similar to the corpse pose in a yoga session and is followed by a tea ceremony.

The lumber sales therapist seeks to enhance and heighten sense of well-being by imposing woods-imbued virtual imaging, while avoiding cable news.

The redefined  lumber sales therapist’s role recasts the essence of selling and buying as a spiritual experience with mind-altering techniques aimed at reinforcing 2×10’s recently held association with nature. It’s well known that some have miscast lumber trading as a religious experience, by brushing off late shipments, citing unhelpful comments such as “Not to worry, In the end we’ll all get to heaven”. For starters though, it may all come back to what’s in a name. Some contend that a name means everything. There’s a saying that “What you call a boat determines how it will sail.” William Shakespeare said that which we call a rose by any other name would smell as sweet. Against the backdrop of news story morphing wilderness guiding into ‘certified forest therapy guide’, it’s perhaps not a stretch for creatively adaptive lumber traders to envision enhanced service opportunity in rebranded role as lumber sales therapists.

– Post by Ernie Harder

Sharpening the Saw

Its been said that there is power in staying connected to other people in your industry. My fifth consecutive B.C. Council of Forest Industries (COFI) Convention, held in Prince George last week, provided again opportunity to return with ideas to sharpen skills and stay abreast of a rapidly-changing lumbering landscape. The listed takeaways include a surprise at how few marketing and sales types were among more than 550 delegates who packed the Prince George Civic Centre for agenda presentations:

-The prevailing politically-charged environment these days seemed to shape tempered viewpoints from panelists on several fronts. Folks looking for Interfor President & CEO Duncan Davies to deliver pertinent softwood lumber dispute insights were disappointed. His confirmation lauding the work the Softwood Lumber Board is doing to grow softwood lumber demand did not excite. Fortunately a pointed question from the audience, asking why Canadian producers would support the SLB when a number of U.S. members are working to constrain market access, elicited topical response: “The tariffs are wrong. Whether or not the economy is helping to soften the blow, the tariffs should not be there. Inspite of trade matters, we need to continue to invest in our biggest market.” From West Fraser President & CEO Ted Seraphim: “Today, we’re not worried about the softwood lumber dispute. But if the market were weaker, we’d all be worrying about it. So we need to grow demand.”

-While there wasn’t a panel discussion dedicated to timely transportation concerns, Federal Minister of Transport Marc Garneau addressed the situation. He said CN and CP need to do better. He pointed to Bill C-49 (Transportation Modernization Act) but his reporting an improvement in railcar capacity for grain fell flat among an audience concerned with lumber shipments. From Beth MacNeil, Assistant Deputy Minister, Canadian Forest Service: “Without infrastructure, there is no trade.”

Jock Finlayson, Business Council of B.C., talked about the uncertain, shifting economic landscape in this province. He referenced the impact of uncertainty on investor confidence and how Canada is lagging in healthy capital formation. He sees little upside in residential construction in Canada, while pointing to “fundamental organic demand for housing growth” in the U.S. 30-39 age group. He suggested recent fiscal stimulus in the U.S. is unnecessary and poorly timed. Presently 300,000-400,000 manufacturing jobs in the U.S. are unfilled.

-According to Paul Jannke, Forest Economic Advisors (FEA), the U.S. labour force is the single biggest constraining factor in U.S. sawmill production.

-It was refreshing to hear from B.C.’s new Minister of Forests, Doug Donaldson, but otherwise nothing noteworthy recorded.

-An excellent presentation by Kevin Pankratz, Senior VP, Sales & Marketing, Canfor addressed export markets and the global outlook. Interesting to learn that the R&R market is bigger than new home construction. Expansive growth in hybrid construction, off-site construction, and building automation in all markets reported. “Governments everywhere will increase focus on green building initiatives to meet emission targets.”

-Most edgy presentation (“Fibre Supply – It Is What We Make It”) goes to Diane Nicholls, now two years into her job as B.C.’s Chief Forester. In the aftermath of the Mountain Pine Beetle, she seemingly referees the constant fight for access to quality fibre, further complicated by the Spruce Beetle presently eating into the midterm timber supply.

-The Forestry Jobs for Today and Tomorrow panel might have been one of the highlights. Best moderator of the convention goes to Sandy Ferguson, VP Corporate Development, Conifex. It was interesting to hear industry (Canfor/Interfor/Tolko/West Fraser) is working to rejuvenate parts of the BCIT Wood Products Manufacturing Program I graduated from, which has been dormant since 2003. From Kara Biles, Manager Learning & Talent, Canfor: “Aggressively advocate for diversity and inclusion in your company; diversity is a competitive differentiator shifting market share toward more diverse companies.” Derek Orr, Business Development Manager, Carrier provided update on planning underway for a Ranger Program aimed at development/training of Aboriginal youth. Lots of sponsor traction for the program including Carrier, Dunkley, Conifex, West Fraser, and Canfor.

Premier John Horgan seemed pleasantly surprised with the warm welcome before delivering his keynote speech Friday morning: “Thank you for clapping.” He deftly navigated the politically-charged minefield.

~~~

At first glance, the 2018 COFI Convention struck me as perhaps being lighter on content in comparison with past years. However, on second glance, it was rich in both content and opportunity, with plenty to digest. As one among four delegates from Dakeryn Industries, I again return from this convention with new and enlightening ideas. For us all, it was a worthwhile time to ‘sharpen our saws’.

Premier John Horgan with COFI President & CEO Susan Yurkovich (6 Apr 2018)

Sticker Shock

After hitting a 20-year high in 2017 ($440 October 10), the Random Lengths Framing Lumber Composite Price has snowplowed even higher this winter, reaching $458 Friday. SPF 2×4 #2&Btr is $502, a record high. “Shaking their heads – some in near disbelief..” — that’s how Random Lengths describes ever-wary lumber traders in their Weekly Report on North American Forest Products Markets (19 Jan 2018).

Last week a good U.S. customer, in response to a partial quote, asked: “Where are they hiding all the wood?” I posed the question to Russ Taylor, Managing Director, Forest Economic Advisors Canada. Russ notes Canadian shipments are already limited by tightening timber harvests in the B.C. Interior and Quebec. And with Canadian softwood lumber exports further constrained by cross-border duties, FEA-Canada projects Canadian shipments to the U.S. to shrink even more, up to 7% through 2019. Russ confirmed the additional North American lumber production required to satisfy U.S. demand will need to come from U.S. mills. Russ considers projections for U.S. mill shipments to grow 15%, from 34.0 billion FBM in 2017 to over 39 billion FBM in 2019, “an aggressive target.”

When Russ then reiterated FEA-Canada’s most recent five-year outlook quoted below with permission, I was reminded of the comments John Innes, Dean of the Faculty of Forestry, UBC made back in 2012: “What people seem to forget – and I don’t really understand this – is that there was extra capacity created to process this lumber when the beetle reached its peak. Surely people then realized that this was a temporary thing; that it wasn’t going to last.” See: Firm Offers?

U.S. demand will be leaning more heavily on expansions in U.S. production and European lumber imports in the 2018-19 period. Production increases in the U.S. will be subject to many factors, including lumber prices, log supply and costs, financing, supply chain dynamics (including loggers and sawmill workers) etc. This means we could see varying supply responses in different regions of the U.S., and at different times.

As we have been forecasting for the last few years (and again this year), there does not seem to be nearly enough available softwood lumber capacity in North America to meet U.S. demand by the end of the decade. While the slower pace of housing starts has somewhat delayed any potential ‘supply gap’ in the last few years, the burden of import duties on Canadian lumber shipments to the U.S. has now exacerbated this situation (starting in 2017). We predict that incremental supplies of logs and lumber will be required each year, and that high lumber prices will result and attract more supply; in 2020 and beyond, there is strong potential for even higher lumber prices.

 

Breaking: SLB-funded initiatives generated 1.02 billion board feet of incremental softwood lumber demand in 2017.

O Christmas Tree!

Festive holiday flavours don’t come unwrapped around our home until The Little Christmas Tree story is shared. You’ll recall, it’s about the little fir tree in the forest, wondering if it will be the one chosen to be someone’s special Christmas tree. Sadly, this year, the little tree, like so much of what’s shaping news, is getting caught up in politics. Is nothing sacred, we might ask? Through northwest breezes touching Chilliwack’s Vedder Mountain woods we heard the little tree’s plaintive sighs. “Leave me out of it, NAFTA” the tree uttered. “My dreams are about creating wonder, cupping candy canes for kids. Let me hear laughter, even for a little while. I don’t need to hear talk of threatened export duties on Christmas tree shipments from Oregon to Mexico. Tell me about a star on top, or.. maybe an angel. What’s the world coming to? Not so many of us are being primed and pruned these days. My market value is higher this year you say? So what? Something’s twisted when gauging my true value in dollars and cents. You’re missing the point. I have no crass commercial ambitions. If that were on my mind, I might have sought long term ambitions as some condo floor joist. For just a little while, let my branches share sounds of birds singing O Tannenbaum. Allow me a moment to wonder if this be the year when I’ll be the one selected to brighten a living room corner – I be the one bringing joy, even for a little while. This year will I be selected to be someone’s special Christmas tree?” the little fir tree ponderedThe season invites a pause even for lumber traders to ponder things priceless.
(HT: Ernie Harder)

AAC Reduced in PG

The announcement of a 33 per cent reduction in the annual allowable cut (AAC) in the Prince George Timber Supply Area is no surprise. Back in 2011, the AAC in Prince George was temporarily elevated for salvage-logging operations. Five years later, at the 2016 COFI Convention, Tim Sheldan, Deputy Minister, B.C. Ministry of Forests confirmed that “most of the economically harvestable beetle-killed timber has been harvested.”

According to the news release, the measurable real impact on economic activity is expected to be less significant in consideration of average timber harvests in recent years. The effective cut reduction is 8 per cent. Even so, industry observers and lumber traders could rightly be wondering about longer term implications for markets, domestic and foreign, at the same time as trade issues remain unsettled.

There’s no doubt we’re coming closer and closer to the point where the cuts will be reduced. There will be less timber.
– Dave Peterson, B.C. Chief Forester (21 Nov. 2014)
See: Beetle Boundaries

harry-bliss-carol-check-my-appointment-book-something-s-not-right-new-yorker-cartoon_a-l-9180854-8419449

Summer Haze

While smoke from B.C. wildfires hangs heavily over Interior and Coastal landscapes, so too a certain smoke obscures lumber market horizons searching for uncertain outcomes of softwood lumber negotiations.

When prices climb, lumber as a commodity finds extra supply available: mills re-open, add shifts, build more mills, areas that were too remote to haul timber from become more economical etc. But we interrupt this program with an unprecedented wildfire season. Fire danger has disrupted logging operations, stalled production at a number of mills, and fractured the transportation chain. As the contractor handling our recent home renovation liked to point out, “These costs are real.” Perhaps most alarming, reports this week tell us industry analysts are concerned the fires will compound B.C.’s dwindling timber supply. “Part of the tragedy we are dealing with is that fires are also burning through trees spared by the pine beetle outbreak, including young planted stands that were being counted on as timber supply over the next several decades,” said Phil Burton, professor of forest ecology and management at UBC here.

Traders meanwhile point to the upcoming expiration of the preliminary countervailing duty on Canadian softwood lumber shipments to the United States week of August 28th. Following the recent spike in lumber prices, many dealers appear to be anticipating a steep market correction when the 20% CVD is lifted. Will the bottom fall out? If only things were that simple. We’re told negotiations for a possible new SLA involving a cap on market share are progressing. While there is perceived motivation and hope for striking a deal before NAFTA negotiations are set to begin, some have now questioned that timeline, warning the U.S. Lumber Coalition’s “de-facto veto” on any proposed agreement might prolong the dispute, suggesting a quick resolution may not be congruent with their interests.
BREAKING: U.S. industry rejects Canada’s latest softwood-lumber proposal

Burrard Inlet today, and downtown Vancouver

What’s wrong with this picture?

We’re told that “rising material costs” were a significant factor in the wake of 51% of U.S. home builders raising prices last month. This according to surveys conducted by John Burns Real Estate Consulting, noting this ratio marks only the second time in the last 10 years more than half of new home communities raised prices – the highest rate since the dramatic surge in U.S. housing prices in 2013. Meanwhile The Economic Calendar reports here that “cost pressures” can help to explain why housing starts and permits have been relatively uneventful over the past few months. The National Association of Home Builders (NAHB) suggests that this trend of firming confidence in the face of underwhelming housing data is liable to continue due to “supply-side issues.”

Aside from unprecedented seasonal B.C. wildfire impact on lumber markets, restricted fibre supply looms on the horizon. At the same time as questions of housing affordability challenge builders and consumers across the continent, does it make sense for narrowly defined interests of The U.S. Lumber Coalition to seek further price-increasing tariffs on lumber imports?

Some of the groups that are hurt by foreign competition wield enough political power to obtain protection against imports. Consequently, barriers to trade continue to exist despite their sizable economic costs.
The Concise Encyclopedia of Economics

More: Canadian Wildfires Choke Lumber Supply to U.S. Home Builders – WSJ

Close?

While industry spokespersons are being tight lipped about progress in softwood lumber negotiations, rumours abound.

Last Friday, word circulated that Canadian Minister of Foreign Affairs Christina Freeland and United States Secretary of Commerce Wilbur Ross “shook hands” on a ten year Softwood Lumber Agreement restricting market share. This rumour seemed to be congruent with perceived political motivation to achieve a managed trade agreement ahead of potential NAFTA negotiations. By Monday however, a declared state of emergency due to mega-fires in B.C. superseded quota chatter. Then CIBC Capital Markets cautioned that any proposed settlement could be vetoed by the U.S. Lumber Coalition. The rumour fizzled Monday afternoon when in a Madison’s Lumber Reporter follow-up, we were told a source close to the U.S. Lumber Coalition had cleverly confirmed that Minister Freeland and Secretary Ross “surely shook hands” on Friday but “did not shake hands on a deal”. In an update just this afternoon, CIBC Capital Markets noted the framework of the rumoured “handshake deal” was almost identical to a proposal the two sides were reportedly close to agreement on two weeks ago before it was rejected by the Coalition.  CIBC estimates the probability of an agreement between the two countries by the end of August at “greater than 50%”.

~

As recently as last Thursday, the only talk about forest fires in this province was about how few were burning (“three or four”). Suddenly 140 fires started Friday, followed by nearly 100 more Saturday, and a few dozen more Sunday. It’s interesting to learn here how a below-average fire season in 2016 and an unseasonably wet spring in 2017 may have made the forest more susceptible to fire, fueling the unprecedented spread over the weekend. Mills watch with anxiety as the wildfire season, just begun, is impacting Interior communities and forest operations. The Vancouver Sun reports West Fraser, Tolko, and OSB manufacturer Norbord are among the companies that have suspended operations around 100 Mile House and Williams Lake, with 1,000 employees from West Fraser alone off work due to the closures.

BREAKING NEWS

Some of us might wonder if the North American Wholesale Lumber Association risks upstaging CNN and Wolf Blitzer with BREAKING NEWS when the 2017 NAWLA Regional Meeting convenes in Vancouver next week. We can’t be sure of that. Although the anticipated public announcement of the U.S. Department of Commerce preliminary CVD ruling April 25th against Canadian softwood lumber imports is expected to draw a full house to the NAWLA gathering two days later, April 27th. An expert panel’s assessment of implications of the preliminary ruling is sure to attract heightened interest:

  • Jason Fisher, Associate Deputy Minister, Forest Sector at B.C. Ministry of Forests
  • Susan Yurkovich, President & CEO, B.C. Council of Forest Industries
  • Duncan Davies, President & CEO, Interfor Corporation

For more information, visit the NAWLA Vancouver Regional Meeting webpage here.

Update from NAWLA (April 25):  The 2017 Vancouver Regional Meeting has reached capacity and is unable to accept additional registrants at this time. The wait list for this event is also now full. Only those who are on the attendee list will be granted access to this event.

2017 COFI Convention – 26 Takeaways

1. Convention buzzwords: shift (in fibre supply), declining (timber quality), instability (of supply), balance, diversification, value, engage, relationships, confidence, communication, connecting, collaboration

2. Most important trend shaping the global environment: dramatic expansion of the global middle class.
Jock Finlayson, Business Council of B.C., bemoaned Canada’s “slow-moving jurisdiction in a fast-moving world.”
The American economy continues to advance. Over the medium term, “B.C. needs to address a number of important structural weaknesses that threaten our prosperity”.

The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people are so full of doubt.
– Burtrand Russell

3. Historical devaluation of the Ruble triggered significant investment in state of the art sawmilling equipment in Russia. Currency-based advantage led to surge in softwood exports to China. Notion that Russia has an aging, limited infrastructure, is wrong. There are no logistical cost issues in Russia.
– Russ Taylor, President, Wood Markets

4. Russia has Forest Stewardship Certification (FSC). “Don’t ask me how.” – Russ Taylor

5. The panel assembled for the International Markets Review was a rare convention disappointment. U.S. homebuilding constraints are well-known. U.S. housing starts forecasts have become tedious. As for China, when Eric Wong, Canada Wood Beijing Office, warned that B.C. is losing softwood market share, no alarm bells sounded at the Vancouver Convention Centre. Growth in demand offshore is “continual” according to Wong, attributed in part to logging bans in China’s “natural forests” (25 million cube/year harvest reduction). Record softwood imports in 2016 in China >32 million cubes. In a post-beetle world, at least one trader was left wondering if B.C. (“the global resource for softwood,” according to architect Michael Green) should just go off the market.

6. India will be the 5th largest consumer market by 2025. 60% of the population in India is <35.
– Peter Bradfield, Forestry Innovation Investment

7. “The concept of innovation is.. what are you going to do with all of this growing information? Big Data connects people, like us, to the brilliance in the room”. Challenges facing the Big Data Revolution: Volume, Velocity, Variety, Veracity.
– Rory Armes, Founder & CEO, Cumul8

8. “Innovative technologies will help attract tech-savy video gamer kids who aren’t considering a resource-based industry.”
Mark Gerberman, AR/VR Strategic Partnerships & Business Development, Finger Food Studios

9. How can we keep better track of our natural resources using emerging technologies? We need better data and better analysis tools.
In the future, drone technology and remote sensing will identify the log and the mill, and determine the optimal products and customers – before that tree is felled. “We’re working to offer the industry a turn-key drone.”
– Mike Wilcox, Co-founder/COO, Spire Aerobotics

10. “It’s Urban Wood Building instead of Tall Wood Building.”
– Michael Green, Principal, MGA 

11. “Instability of (wood) supply makes people step back.” – Michael Green

12. “Changing the public perception about what’s possible.. reshaping public perception.. is the challenge. But it’s really happening. These ideas are not abstract. Thirty storeys? When we do that or will we do that remains to be seen, but it’s possible.” – Michael Green

13. “The construction industry is broken.”
– Michael Green

14. “Here in B.C., we may be making the right products but we need to be part of the right system. The idea is universal. We want to be leaders in becoming part of this ‘system’ thinking.” – Michael Green

15. TOE = Timber Online Education. Open access to leading experts.. “from forest to frame”. Free global education in wood design, construction, policy, markets, ownership, and environmental impact.

16. “We didn’t blockade because we wanted to stop the forestry, we wanted to be a part of it.”
– Chief Derek Orr, McLeod Lake Indian Band

17. “The Tsilhqot’in decision was a game changer. When I first meet with a chief, it better not be to ask to build a road. We’re there to undertake their unique vision for their community. What is your vision? Under-promise and over-deliver. If you don’t honour one of those commitments then your relationship goes backwards.”
– Karen Brandt, VP, Corporate Affairs & Sustainability, Interfor

18. “Engage and engage early. Meaningfully engaging with First Nations is how you build relationships. If you’re too busy to sit down with us, then we’re too busy to give you support.”
– Willie Sellars, Councillor, Williams Lake Indian Band

19. “I like to think Prince George is the Bio Energy capital.”
– Lyn Hall, Mayor, City of Prince George, who confirmed the COFI Convention returns to PG next year.

20. “The urban and rural connection, not the urban and rural divide.”
– Greg Moore, Mayor, City of Port Coquitlam
21. “Reinvesting in our business to innovate and modernize the technology in our mills isn’t about making more lumber. We’re not going to make more lumber. We’re going to make more value. Industry and government need to get together to get more value out of a scarce fibre resource.”
– Ted Seraphim, President & CEO, West Fraser

22. “How to run at two shifts efficiently instead of three shifts is the challenge. Three shifts are not possible.” – Nick Arkle, Co-CEO, Gorman

23. “(The softwood lumber dispute) could lovingly be called a hardy perennial. But it is a mutating form of bacteria that has all but become antibiotic-resistant.”
– David Emerson, B.C.’s Trade Envoy to the United States

24. “The consumer will pay the price.” – Duncan Davies, President & CEO, Interfor

25. “The softwood file is top of mind for the entire government. We have a strong case but that’s cold comfort for the people feeling the pain of the imposition of duties. A good, strong, fair, mutually-beneficial deal is preferable to long litigation. On both sides of the border, trade is central to maintaining standard of living. Trade creates jobs.”
– Kirsten Hillman, Assistant Deputy Minister, Trade Policy & Negotiation, Global Affairs Canada

26. Q: Is a market share-based quota inevitable?
A: “Nothing is inevitable.” – Kirsten Hillman