Learning how to climb wall of wood

By LIBBY MIDDLEBROOK

Between the lines

The reviving fortunes of the forestry industry couldn't have come at a better time. With an extra 19 million cu m of wood to be harvested by 2020, the hunt is on for new products and markets and the hefty investment needed to bring them to fruition.

But to milk the harvest increase for all it's worth, it is vitally important that the industry continually re-examines the way it operates, especially in marketing and sales.

Timber is an internationally traded commodity, subject to the peaks and troughs of the global economy. The industry cannot rule out another regional disaster like the Asian crisis, which taught New Zealand forestry producers a nasty lesson about the virtues of a wide product and customer base.

Already forestry companies are developing new products through research to create more demand for the trees. Companies like Fletcher Challenge Forests have stretched their branches further afield from Asia, selling strong qualities of high-value clearwood products into North America.

But Wood New Zealand, the industry's marketing arm, says the forestry companies are not prepared enough for the increase in harvest. Spokesman Darrell Carlin says there are simply not enough buyers to make use of the wall of wood coming on stream during the next two decades.

"That's what the future is all about, being clever about how we do things internationally. We don't want more sellers, we want more marketers."

The organisation, funded by Government and forestry companies, would ideally like to set up a collective scheme similar to the Tourism Board's "100 per cent New Zealand" campaign, marketing the country's wood products around the world.

Wood New Zealand is also encouraging exporters to set up long-term supply contracts to better cope with another global economic downturn as well as establishing environmental sustainability procedures to make products more attractive to buyers.

"While we're hanging on to a redundant picture that we're all individuals, we're going to be left behind. As an industry our marketing is constrained by lack of funding."

However, long-term supply contracts are a mixed blessing for forestry exporters because of the swinging nature of commodity prices. The contracts deny them the chance of reaping the highest prices on the spot markets at the top of the cycle but they offer some protection from the lowest prices at the bottom.

But more importantly, long-term relationships pay off. One good example is Fletcher Challenge's close links to Home Depot, the giant US chain of building material warehouses, for the supply of moulded wood products.

Such relationships ensure supplier and customer develop the right products and grow their markets, helping them to ride the industry's cycles and cope with the booming harvest.