December 6, 2013 § Leave a Comment
The declared B.C. lumber industry expansion plans into China are interesting in the face of information reported in The Vancouver Sun where concerns over shrinking fibre supply are real:
Canada’s forest products industry is booming but faces a long-term threat from climate change, according to a new federal report tabled in the House of Commons. The industry, while enjoying thriving and growing markets in Asia and a rebound in U.S. housing construction, could see its long-term supplies jeopardized, according to 2013 edition of Natural Resources Canada’s annual report, The State of Canada’s Forests. “Canada’s forests are undergoing significant changes as a result of a changing climate, including more frequent fire, drought, and disease and insect attacks,” the report states. “This increase in disturbances.. could impact Canada’s supply of quality fibre in the long run, posing some risks to both industry transformation and sector competitiveness. Innovative, science-based policy solutions, mitigation strategies and forest management approaches will therefore be needed to help decision-makers at every level navigate the way forward.”
The impact of these variables is likely to become increasingly significant in the future. It brings to mind the COFI Convention back in April, when B.C. Chief Forester Dave Petersen confirmed that the greatest risk where future timber supply is concerned is climate change. He told us that “adapting to that change in climate” is the most pressing priority in resource management.
U.S. Housing Market
An exhaustive breakdown of the U.S. housing market was released yesterday by Mark Kennedy, CIBC Equity Research. The CIBC report was summarized as follows:
- Building permits in October 2013 at 1.034 million jumped 6.2% from September and were up 13.9% from a year ago levels (Housing starts data for September 2013 and October 2013 are scheduled for release on December 18 due to backups resulting from the U.S. government shutdown).
- The U.S. housing market is building new homes at a much lower rate than fundamental long-term demand. The increase in the 30-year mortgage rate seen earlier in 2013 will not detract, in our view, from improving new home construction. New home construction should have a long runway.
- We estimate U.S. housing starts of 930,000 in 2013 and 1,130,000 in 2014. Our 2013 and 2014 WSPF lumber price estimates are $350/M and $400/M, respectively. WSPF prices for the month of November 2013 were $382/M.
- We believe a gradual improvement in the U.S. housing market will continue, leading to a strong North American lumber market through the 2014/2015 time frame.
December 3, 2013 § Leave a Comment
The Festival of Trees has become a popular fundraiser at Christmastime for local charities in a growing list of cities across North America which includes Vancouver. Generally speaking, sponsors and volunteers provide the means, designers decorate the trees, and the 10-day event rises to a crescendo when generous donors make it all happen at the gala auction.
In Prince George last week, 2013 marked the 20th Annual Spirit of the North Healthcare Foundation’s Festival of Trees. Smashing the all-time PG record of $52,500, the winning bid for Finning’s “We Cover Lots of Ground” Tree #3 was a staggering $100,000. Brandt Tractor’s “HEROS” Tree #7 reportedly sold for $75,000, while the winning bid for the Art Knapps & Dunkley Lumber “Winter Dream” Tree #5 was $25,000.
Hey, if a spiced rum fruit cake can go for $1500 at this event, it’s not surprising to also learn here that the Festival of Trees is the major source of fundraising for healthcare in the north. In total, 325 people attended Friday’s gala auction, raising an incredible $425,195. Thanks to Melissa at Spirit of the North Healthcare Foundation for providing the image below.
December 2, 2013 § Leave a Comment
Uncertainty as a byword in seasonal markets is not a surprising description of lumber pricing. And while it’s been said “they don’t ring a bell at the bottom”, The Wall Street Journal has called a market peak. In fact, the reporter goes further: “Lumber prices are getting chopped after notching seven-month highs, as the market hunkers down for a seasonal decline in construction and expected higher production next year.”
An easing in activity over winter is certainly anticipated by most traders. However, any declaration that significantly lower prices have already arrived would likely be considered premature. The article does acknowledge the perception that a pattern of discounted offshore pricing on surplus mill production could lend support to North American winter trading levels.
November 27, 2013 § Leave a Comment
Thanksgiving knows no borders. It will be celebrated by our U.S. friends tomorrow, but, like lumber markets, the spirit of Thanksgiving is not defined by one jurisdiction, time or space. It brings focus to more than football and turkey. It speaks of blessings shared in a people-centered business that is results oriented.
At Thanksgiving some 30 years ago, one small lumber wholesaler sought to answer the question: “What’s Thanksgiving got to do with lumber wholesaling in recession?” (See original: Thanksgiving Oct 1982).
For this blog post, I asked my dad to update his answer to that question in the context of “economic recovery”:
Interestingly, the fundamental considerations surrounding relevance of Thanksgiving in times of economic recession or economic recovery seem timely in both instances – perhaps moreso in midst of industry’s generally cautious talk of “recovery”. The original article expanded on appreciation of the “people aspect of our business”. It declared that even back then, bigness in our businesses could be threatening the individual’s confidence. It suggested that “if anything, economies of scale are being undermined by failure to adapt quickly enough to changes in market realities.” The digital age has introduced the “Power of Now” in our business in ways that could only have been imagined 30 years ago. While acknowledging that sound management principles cannot be disregarded, the original editorial offered that “while systems changes inherently breed frustration and pessimism in some large organizations, they can become creative opportunity for the experienced, small wholesaler.”
We were grateful for our experience where the size and corporate philosophy gave us a built-in bias toward the human element in wholesaling. That’s a strength; it’s vital. It allows smaller wholesalers to follow through with personal attention. It doesn’t eliminate problems but it does facilitate – even ensure – strategies aimed at prompt resolution. It incorporates a built-in respect and sensitivity for customer concerns. The conclusion long ago declaring: “The people aspect of wholesaling provides purpose for our work and gives us reason for optimism” – holds true for today.
- Ernie Harder, Nov 2013
2014 will mark my fourth year here at Dakeryn Industries. I can attest that the most important assets here are the people relationships we enjoy with our suppliers and customers. For these we are thankful. Happy Thanksgiving!
November 26, 2013 § Leave a Comment
Historically the competitive nature of lumber marketing has probably contributed to a reluctance in sharing day-to-day trading information among competitors. At the same time, most would acknowledge there are few secrets left in lumber wholesaling aimed at guarding “proprietary processes”. That is, creating value around variables such as solidifying existing relationships, reaffirming integrity, enhancing performance. This information age is changing all that. So says Jay Baer, marketing consultant, self-described “hype-free social media and content strategist” and author of the New York Times bestseller Youtility. He cites the five reasons why you need to give away the recipe for your secret sauce:
- Your competition already has the formula
- Admit it, your sauce is just Thousand Island Dressing
- Your prospective customers want self-serve information
- Free content filters out the crappy clients
- Your customers are being trained to expect the recipe.
In this age of instantaneous information, Baer has a point when he says “There are only so many ways to skin a cat, and everyone in your competitive set is carrying the same set of knives.”
“I started my career as a sales guy in the nineties, when the funnel was controlled by the sales rep who had all the information the prospect wanted, including pricing and discount options. Now 90 per cent of it has swung to marketing. It’s self-service and you need to be very, very helpful to see to the top of the funnel. The game has changed a lot.”
- Brian Halligan, HubSpot
“The difference between helping and selling is just two letters. But those two letters are critically important to the success of business today. Youtility is marketing so useful, people would pay for it. It’s a new marketing model for the age of information overload.”
- Jay Baer
November 25, 2013 § Leave a Comment
The following images indicate the impact of the typhoon on my aunt’s house in Kalibo, in the province of Aklan, on Panay Island, Philippines.. where they are presently finding shelter under whatever corrugated metal is providing protection against the weather.