11 Questions for 2018

Here are 11 questions that Harderblog will be watching in 2018, in search of answers:

1. Will rhetoric of military strike pass the ‘tipping point’ into war with North Korea?
2. Will the Bitcoin excitement be fading, or prove to be a bubble?
3. Will the extreme weather patterns evidenced in 2017 be as pronounced in 2018?
4. Will Trump take steps to call a halt to the special prosecutor’s investigation into Russia’s interference in the 2016 U.S. presidential election?
5. Has integrity lost some of its lustre as a perceived prerequisite for leadership success?
6. As higher lumber prices effectively offset impact of duties, will Canadian major producers’ newly-hedged investments in U.S. production assuage any further concerns companies such as West Fraser and Canfor might have about the ongoing Softwood Lumber dispute?
7. Will Germany repeat as FIFA World Cup champions?
8. Will the powers that be acknowledge that the remanufacturing (value-added) segment of the Canadian forest sector is being unfairly penalized in the application of the AD/CVD?
9. Will softwood lumber be incorporated into NAFTA?
10. In view of the fractured supply chain, will lumber buyers abandon the “just-in-time” model in favour of securing coverage that satisfies longer-term projected needs?
11. Will broccoli, the least-trusted vegetable of 2017 among lumber traders and the general population, retain that notoriety in 2018, at the same time as the world watches broccoli’s favorability surge to number one in Scotland?

Year-end Answers

As we approach year-end, you’ll recall 17 questions for 2017 we posed one year ago at Harderblog:

1. (See Question #1 from 2016)
Yes.

2. Will Trump really build a wall and have Mexico pay for it?
No. It’s reported the promised border wall amounts to eight prototypes sitting in a desert outside San Diego. Mexico hasn’t contributed a peso and no funding has been appropriated by Congress to advance the project beyond the testing phase.

3. Will the softwood lumber dispute have found a satisfactory resolution?
At the 2017 COFI Convention in Vancouver, David Emerson, B.C.’s Trade Envoy to the United States, described the ongoing softwood lumber dispute as “a mutating form of bacteria that has all but become antibiotic-resistant.” In the face of a dwindling resource and increasing demand for softwood worldwide, effective today the combined CVD/AD duty paid by most Canadian importers to the U.S. Customs and Border Protection Agency will be 20.23%, calculated on the selling price.

4. Will anticipated countervailing duties on Canadian softwood lumber shipments to the U.S. be applied retroactively?
No. While the USDOC concluded in April that “critical circumstances” existed (justifying the charging of duties retroactively 90 days), by early December the USITC had announced a negative finding concerning critical circumstances.

5. Will Trump really pull the U.S. out of the Paris Climate Change Agreement?
Yes.

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?
A poll of traders in Dakeryn’s office says “yes” to this question.

7. Will Trump really pull the U.S. out of the Iran Nuclear Deal?
No.

8. Will there be 100 million consumers shopping in augmented reality (AR) by the end of 2017?
Maybe not yet. However we’re told here “shoppers are beginning to give AR more attention, particularly when viewing function-driven, feature rich, high-consideration purchases such as furniture. Voice technology, augmented reality, and artificial intelligence are transforming the retail industry to make buying products quicker, easier and more enjoyable.”

9. Will a measure of sanity return to the Vancouver housing market?
No, although, as a major news story, rental-housing woes in Vancouver eclipsed angst over the climbing cost of homeownership. In 2017, it’s reported the average rent for a one-bedroom apartment listing in this city surpassed $2,000 per month.

10. Will the record number of homeless people identified in the City of Vancouver’s 2016 Homeless Count be broken again in 2017?
Yes. The record-breaking 2,138 homeless people counted in Vancouver this year is 291 more than the previous record of 1,847 homeless people counted in 2016. At 448, Aboriginal peoples are once again over-represented in the number of homeless people living in Vancouver.

11. Will tensions with China escalate over trade and Taiwan?
Trade issues loomed large on many fronts in 2017. The U.S. opting out of the Trans Pacific Partnership headlined trade-related news in Asia.

12. In light of increased hacking of connected products, will questions surrounding cybersecurity have become a make-or-break issue by the end of 2017?
Yes. In fact 2017 has been described as “the year of cybersecurity wake-up calls”. Recent examples show disturbing trends.

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?
See Corrections.

14. Will anybody care if the Vancouver Canucks fail to make the Stanley Cup Playoffs?
Vancouver Canucks attendance figures are said to be the lowest since 2001.

15. Will BC Premier Christy Clark’s Liberal Party secure a fifth term in May?
No.

16. Will the global crises surrounding issues of displaced peoples/refugees have eased anywhere?
See: Why nothing will stop people from migrating.

17. Will general predictions forecasting a “bumpy ride” for 2017 come to fruition?
See: Are you day trading?

Corrections

Markets have a way of redefining terms of the trade. Hot markets lend tolerance to ‘prompt shipment’. Market corrections, not so much. These days, ‘just in time delivery’ comes with caveats such as ‘subject to availability of trucks’. Market conditions present unique challenges to guarding supplier/customer relationships. Some have suggested that markets, like politics, frame questions of definition around who holds the power. In some instances, that is known to shape performance strategies in relation to commitment around short run versus long run considerations. It’s suggested that the transactional approach is not the most desirable for building enduring relationships among customers or voting constituents. A favourite response from one supplier known to be under pressure on late shipments: “In the end we’ll all get to heaven”. We’re in it for the long run, but we appreciate that even our most valued, understanding customers’ patience is stretched when lumber ready for delivery is awaiting wheels.

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Saint John, NB (20 Nov 2017)

 

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!

Breakfast of Champions

Pure gold. That’s how Ryan Holmes describes customer feedback.

In 2008 at their Vancouver headquarters, Holmes created Hootsuite, the world’s most widely-used social media management platform. He writes here in the Financial Post that while the majority of Hootsuite’s 15 million users pay absolutely nothing, “they mean everything.” Why? Because free users stress-test the company’s platform every day, discovering flaws and demanding new features. The constant feedback these users tweet provide enables Hootsuite to continuously refine their product before focus shifts to landing big clients who pay.

According to Holmes, the best market disrupters learn to listen very closely to their initial users. “Because the barrier to entry is so low.. the only thing keeping (users) tied to the product is its innate usefulness,” says Holmes. Today, we’re told that big paying customers now form the heart of Hootsuite’s market. But Homes argues Hootsuite’s strongest competitive advantage remains the millions of free users endlessly stress-testing the company’s platform every day. At the core of Hootsuite’s business, there rests an underlying acknowledgement of the importance and potential for social media to foster customer feedback in developing customer-supplier relationships.

It’s easy, even inevitable, for the pendulum to swing too far, however. The scrappy upstart becomes the industry leader. Instead of catering to end users, attention shifts to landing those huge deals. There is an antidote, of course – staying obsessed with the free users. Google, not surprisingly, is a master at this. Today, Gmail’s billion-plus monthly active users dwarf the three million businesses who pay for G Suite. That won’t change anytime soon. But having a focus group that large ensures Google is always miles ahead of its competitors.
– Ryan Holmes, Hootsuite CEO

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: