Gig Economy

Who knew? A recent study predicted that by 2020, 40 per cent of American workers would be independent contractors. We’re told the switch to gig work is first and foremost about employers moving to what is efficient for them. Here in Canada, 85 per cent of companies recently surveyed figured they will increasingly move to an “agile workforce” over the next few years. It’s part of a “gig economy”.

The “gig economy” is an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements. For lumber types, this may conjure images of portable sawmills and seasonal workers in the woods. For some lumber traders, the concept smacks of impermanence and flies in the face of marketing effectiveness that pays homage to building longterm relationships. Even so, the gig economy finds shared identity in today’s world of transactional strategies and realpolitik.

 

~Tricks and Treats~

The coldest air of the season is flowing into Western Canada today, but a beautiful starry night’s in store for Vancouver this evening. At our house, pretty sure we’ve managed to turn our pumpkin inventory 8 times since Labour Day. A quick check of the 25 Horribly Inappropriate Halloween Costumes for Kids confirms Dorothy, Toto, and this Dad are all good to go. Happy Halloween!

The Art of the Deal

By definition, lumber traders earn their living through negotiation. Most days, the process is more nuanced than “buy low – sell high”!

Trade deals involving negotiation are making news on many fronts these days. Online articles readily offer varying principles, guidelines, and rules for effective negotiation. One such report in the Harvard Business Review offers what the author terms “four ‘golden rules’ to be the most helpful towards productive negotiation outcomes.”

Some have been known to describe successful outcomes around strategy of ‘winning versus losing’, or characterizing established trade deals as “the worst ever”. However, experienced lumber traders know that successful long term customer-supplier relationships, as with international trade deals, are built on effective “win-win” negotiations.

Current NAFTA negotiations are taking shape around what has been described as a list of ‘demands’ from the parties involved. While noises and threats of cancelling NAFTA eminate from some quarters, serious folks tell us to keep focus on the real work of negotiations that recognize there are benefits to be gained for all in working toward effective updating of the deal. Thus the ‘golden rules’ as spelled out in HBR that parallel different stages of a negotiation are interesting to view in the light of negotiations underway on many fronts.

1. The background homework: This serves as a good reminder that any beginning of negotiation calls for need to understand the interests and positions of the other side relative to your own interests and positions.

2. During the process, don’t negotiate against yourself: It’s pointed out that this is especially true if you don’t fully know the position of the other side. This is a recommendation not to give in too early on the points important to you. Wait to better understand which points are more important to the other side.

3. The stalemate: We’re told that there will often come a point in a negotiation where it feels like there is zero room for either side to budge. Both sides are stuck on their position and may have lost sight of the overall goals of the negotiation. If you recognize that you’ve reached this point, see if you can give in to the other side on their issue in exchange for an unrelated point. My Dad relates the story of how my parents negotiated the sale of their first home in Prince George 52 years ago, when a transfer back to Vancouver by his wholesale lumber employer, Ralph S. Plant Ltd, necessitated sale of the home. When negotiations seemingly reached a stalemate over price, Dad recognized that the unfinished basement in the home had been mentioned as one of the sticking points. The prospective buyer, a self-described handyman, was satisfied to point of successful closure on the sale with offer from my Dad to include a trailer of fine Carrier studs, sufficient for completion of the home’s basement.

4.To close or not to close: That is, whether you drive too hard a bargain, cannot reconcile on key terms, or feel that the deal is just too rich for your blood, it’s suggested you “make the offer you want to and let the other side walk if they don’t want it.” This is not to say to be offensive or to low ball, but rather, to be honest, straightforward on what you are willing to do, and explain that you understand if it doesn’t work for them and that it is the best you can do.” No doubt this rule garners respect among all parties involved, including buyers and sellers of wood.

Aspirational Lumber Labors

A social media article at Quartz this week categorizes blogging as aspirational labor. Social media researcher and author Brooke Erin Duffy describes ‘aspirational labor’ as “a forward-looking and entrepreneurial enactment of creativity.. seen as something that will provide a return on investment.” Broadly speaking then, we might comfortably frame our work trading lumber under the umbrella of ‘aspirational labor’.

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Influencer Marketing?

The degree to which intermittent posts at Harderblog are “influencers” on a road to personal riches, so far at least, is undetermined. We mostly share questions and topics gauged to hold common interest with our 135 followers to date – valued subscribers who include Mom and Dad, two uncles, and my cousin Dean. According to “influencer marketing” experts, a blogger needs at least 1,000 followers to be considered a “super blogger” or “super influencer”. At this lofty subscriber level, we’re told advertisers come calling. It’s much cheaper for a brand to reach out to a super blogger’s “organic following” than it is to place an ad in a magazine or on TV. The article at Quartz cautions that there are risks in abandoning your blog for a week, or “you see a huge dip in your followers”.  It’s a risk we accept as a part-time blogger, and full-time lumber trader.

 

Subscribers? Brother Matt, Nephews Cal and Seb, Paul – Quilchena on the Lake (4 Aug 2017)

 

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Musical Refreshment

Project Funkify continues:

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%”.

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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.

Robots and Lumber Traders

Robots are increasingly being blamed for job losses these days. At the same time its been said that robots can’t perform as well as humans when it comes to “complex social interactions”. According to Science Daily, researchers recently found that personality factors are the best defence against losing your job to a robot.

Humans outperform machines when it comes to tasks that require creativity and a high degree of complexity that is not routine. As soon as you require flexibility, the human does better. The edge is in unique human skills.
– Rodica Damian, assistant professor of social and personality psychology, University of Houston

In assessing the threat therefore that robots pose for replacing lumber traders in the marketing function, could it be that the critical determinant may involve evaluating the degree to which lumber trading is deemed to involve “complex social interactions”?

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We’re told the study’s findings also suggest that traditional education may not be fully equipped to address the rapidly changing labour market. With that in mind, I read with interest Thomas Friedman’s column in today’s New York Times, Owning Your Own Future. Friedman argues that in the face of automation (“accelerations set loose by Silicon Valley in technology and digital globalization”), the self-motivation to learn – and keep learning – has become the most important life skill. He quotes education-to-work expert Heather E. McGowan: “Stop asking a young person WHAT you want to be when you grow up. It freezes their identity into a job that may not be there. Ask them HOW you want to be when you grow up. Having an agile learning mind-set will be the new skill set of the 21st century.”

Political analysts will long debate over where Brexit, Trump, and Le Pen came from. Many say income gaps. I’d say.. not quite. I’d say ‘income anxiety’ and the stress over what it now takes to secure – and hold – a good job. The notion that we can go to college for four years and then spend that knowledge for the next 30 is over. If you want to be a lifelong employee anywhere today, you have to be a lifelong learner.
– Thomas L. Friedman, New York Times (11 May 2017)

Who’s going to pay?

A jam-packed North American Wholesale Lumber Association Regional Meeting in Vancouver last evening heard a panel of experts discuss implications of countervailing duties on softwood lumber announced Monday by the U.S. Department of Commerce. The latest round of the long-running dispute comes amid ramped-up political rhetoric on both sides of the border.

In candid presentations and Q&A session at the NAWLA Regional Meeting, Susan Yurkovich, President and Chief Executive Officer, Council of Forest Industries; Duncan Davies, President and Chief Executive Officer, Interfor Corporation; Jason Fisher, Associate Deputy Minister, Forest Sector at BC Ministry of Forests, Lands and Natural Resource Operations, captured attention of more than 250 industry participants. While Executive Director of NAWLA, Marc Saracco, acknowledged the significant role of lumber distributors on both sides of the border in facilitating efficient continental marketing of forest products, the real question of who pays looms heavily over the ongoing dispute.

Interfor’s CEO, Davies, reminded us that they, like Canada’s other major producers now heavily invested in U.S.-owned production facilities, are not part of the U.S. Lumber Coalition that is once again creating havoc, unprecedented price patterns of volatility and strength in lumber markets. Reports in today’s Vancouver Sun (“Canfor eyes acquisitions amid fallout from new U.S. duties”) confirm Canfor’s optimistic outlook with “well-positioned balance sheet in recent quarters,” with Canfor CEO Don Kayne adding that they see organic growth opportunities worth up to $300 million by 2018.” Sounds great. Meanwhile, it’s the small and medium-sized businesses who don’t own sawmills in the U.S. – the vast majority of Canada’s softwood operators including re-manners – who will be forced to pay the duties retroactively on any shipments made to the U.S. since Feb. 1.

In the face of the United States’ inability to satisfy American demand for softwood lumber with domestic production, the objective of restricting Canadian market share, with underlying aims of enhancing privately-held timber in the hands of select U.S. entities, points to inevitable, further increase in costs for the U.S. homebuilding industry. Ultimately, of course, the consumer pays. Someone tweeting about the issue might simply add:  Sad. Bad.

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Thanks to Tree Frog News for the following images from last evening at The Vancouver Club, posted with permission. Tree Frog’s full report available at this link: NAWLA 2017 Overview.

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