W.L. West & Sons Ltd.
Timber Talks - December 2007

Happy New Year

The Economy

December is a short month but has held pretty well together with orders to the last.
Thank you for the work you have given us this year. It maintains growth for our mutual benefit.

There are only a handful of companies like ours in the UK now, and it is important to meet our customers needs as best as we can, offering best value whenever possible,
We are always trying to improve quality and choice. This year it has been hard with such pressure from the Far East. In passing, one of our French log suppliers has told us that the export of logs to China has reached a plateau, but Vietnam is now buying strongly. It would appear their labour costs are even lower than China’s! Perhaps the government subsidies are slowly being removed to get China onto a more level playing field?

The CBI bulletin for December is ‘Flat demand’ and order books have weakened for Jan ‘08. We are still pretty busy. The UK stock levels are down at the moment, understandably, to carry high volumes of stock over the holiday is expensive. There is a note in the Bulletin regarding payment to suppliers, delayed payments are the major reason that companies go to the wall over this period. They have to pay for stock, holiday money, and other costs in this, the highest energy use period. Yes, you can imagine what’s coming - please can we have monies due in please.

There are signs of another possible interest rate cut which will be welcome news, this will help us all. We all want to avoid a depression in the market place.

Most timber imports, softwoods and hardwoods, generally saw price rises of an average of 22% more in some species. We have even seen some supplies diverted from the UK to the Far East this year. Shortages have forced the prices to rise. Cost to extract and process have also lead to this Cost Push Inflation.

The UK depends on 85% of its softwood and hardwoods being imported from overseas. This is why some big softwood mills have invested in the last couple of years in big softwood processing plants, but be aware, not all UK grown softwood will make anything much more than fencing grades!

Renewable Fuel - Biomass

Construction is the main magnet for imported timber, it is even more important as the Green issues associated with timber as a natural renewable resource is shouted from the roof tops, even at Government level. The fact that timber is Carbon Neutral is now making the headlines. Burning timber as a Bio fuel is gaining ground, and power stations are starting to be built on a local level, small at present, but over time collectively significant. It is estimated that there is a new demand waiting for this fuel to offer heat and electricity of up to 3.6million tonnes a year in round wood terms. This will make a significant hit on the current annual cropping of UK forested timbers of currently 8.80million tonnes of round wood timber felled this last year.

There will be supply problems in 2015/2020 as the volume of timber coming onto the market drops sharply. So the industry needs to start a massive planting program now, let alone 20 years ago! New planting is low, it takes approx 35 years for a Sitka Spruce tree to be of a big enough size to harvest.

There ought to be tax breaks for investors to encourage mass planting for fuel, construction, joinery and other related timber end uses.
We in Europe are the lowest in producing timber than any other member EU state, this will not affect our generation, but it will the next and subsequent ones.

Our parents didn’t give two thoughts about timber for energy. They had North Sea oil and gas which has all but run out, squandered and lost for ever.

We as a company, like yours, have to depreciate an asset and write it off over a given life span, the cost for that depreciation are monies set aside to replace that asset, so what has the Government done to protect the next source of energy?  Have they done a deal with a Baltic Eastern European state to buy gas and oil through a pipe which they control?  There is not enough fuel to go round, there are not enough trees to burn to maintain the levels we need for instant heat and light.

Any investor looking for a long term ‘Banker’ surely must look towards bio-mass, timber can give great short-medium term benefits, given that a nuclear program takes forever to pass the necessary interest groups and lobbyists as a real alternative. This could take 50 years, by then it could all be too late.

2008 and beyond!!!

What does the future hold? For 2008/2009 there will become a growing need to accept more defects in timber, colour variations and knots, clear grades of timber are becoming more and more difficult. Changes in temperate climates have clearly changed the characteristics both in growing and drying.

Laminated and ‘F’ jointed timber will become more important in the construction sector first, and in the next 5/10 years into the domestic market

Timber ‘Altered’ by Chemicals such as Acetic acid with the patent name like Accoya will become more evident on the market as a softwood with hardwood pretensions!

Thermowood the patent name, softwood and other hardwoods altered by boiling, in effect to change the sugars in the timber to make it durable and more stable and more resistant to fungi and insect attack.

Oak with more internal blotchiness due to global warming, evident in Chestnut as well, the report we commissioned from TRADA has confirmed what we thought, it is caused by re-migration of tannins. Please ask the salespersons for more details if required.

We hope you had a good festive break, and let’s all look forward to a positive and prosperous 2008, it is going to be a good trading year! Once again thank you for the business in 2007 and please continue sending your enquiries in 2008.

W.L. WEST & SONS LTD
Selham, Petworth, West Sussex GU28 0PJ
United Kingdom

Tel: 01798 861611   
Fax: 01798 861633   
E-mail: sales@wlwest.co.uk

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