Financial Meltdown!!!!!!

Is there life out there?

Well the answer is yes, but in small areas of work usually in the top end of the market. The news in the last week of a ‘global financial meltdown’ of banks has unnerved a lot of building society & bank deposit savers. Where is their money going now?

Remember the old idea of 1.5 times your salary to borrow? This has been extended to 3 times and in some instances 4 times which makes any repayments tricky.

Some would say it is immoral to sell a mortgage to people who cannot afford to repay it. Surely this is asking for trouble? The premise that the house valuation and prices would go up, was the money markets’ only safety net for this type of stupid lending. Banks need to keep what’s known as an ‘8% liquidity ration’ behind the tills for every day withdrawals. The run on Northern Rock meant it could not pay its customers ‘their own’ money because they had loaned it to other banks doing similar things. This act brought it down. In America (how many times do we still read ‘when America sneezes UK catches a cold’) the idea was that the two principal American mortgage companies would lend to encourage house ownership, where only approx 65% ownership exists. Their aim of selling bad mortgages to increase this statistic to approx 80% meant that people who were out of work, single parents, or on benefit, who had signed up for a deal to buy an apartment has no chance of repaying it. The result is that these people have returned to renting.
 
The buy to let market in the UK is turning sour too, what a mess, brought on by sheer greed by a few. The effects are wide reaching. Do not get us started on Pensions, which has had a direct hit by all this mess.
I gather the bank of ‘Silentnight’ is going great guns!! Let’s hope that instead of the mattress deposit account some of the money is spent getting the economy going again. Especially spending on timber related products made by our customers. Loyalty and Support at these times are critical.

Exchange Rates

Exchange rates are an issue to watch out for. The dollar has dropped and the confidence has gone out of it from 1.97 to 1.79, back to approx. 1.80 at the moment. This in effect is approx. 9-7.5% which is likely to come in onto shipments arriving in October/November. The euro is still bubbling around the 1.245 mark so no real changes at the moment, we may see the money markets favour the £ sterling which will strengthen the pound. But again the volatility of the money markets is such that we do not know what is around the corner.

Trade News

Colour variation as a topic comes and goes but it’s a good time to remind infrequent users of Iroko there has been a lot of colour variation in our last two contracts. The Bills of Lading from the same mills we have bought from have sent us some wide colour. This I gather is not uncommon as the sawmills in West Africa are buying plantation Iroko from miles apart and the trees have different micro climate and environments making this species quite varied. FSC Iroko in some parts from Ghana and Cameroon is becoming possible. We have revieved a batch of FSC Iroko for the very first time. Only after machining can you really tell the significance of it, often in the sawn plank it is difficult to detect. UV light will darken Iroko quickly, so in time it does mellow. But please be aware we do try to select in worktops where possible but in machined timber this is very difficult to do.

In Euro Oak the light patchiness comes in to play at certain times in some thicknesses. We commissioned a TRADA report on this. We are able to email the results to you if required. In short, it is due to climate change, again do not panic UV light will mellow the colour. Initially it may be thought to be a drying defect in kilning, or a mycelium problem but it is as a result of changing weather patterns. The timber is no less strong or less durable. The migration of Tannin is less uniform in the planks

White patches in Oak

Please remember, if you cut the timber and machine it, it is yours. As the Trade would say, if in doubt always skim and let us know. All of our end customers need to be made aware of the changes all Sawmillers and importers are facing, this is an education process, ask our external sales team to go through this subject with you for more clarification.

Please note returned Through & Through must have our distinct Bar Code tags on them. This is part of our recording  and measurement system, and without them WE WILL NOT GUARANTEE that credits will be given. It is very embarrassing receiving very poor quality timber back from another merchant (which was never ours to start with). They now have the honour to collect isolated poor timber from us at their expense.