Farm Ireland

Wednesday 21 March 2018

'Brexit is the biggest challenge since construction crash'

John Ryan of Murray Timber group speaking at the Teagasc 'Talking Timber' conference in Ballyhaise Agricultural College Photo: Lorraine teevan
John Ryan of Murray Timber group speaking at the Teagasc 'Talking Timber' conference in Ballyhaise Agricultural College Photo: Lorraine teevan

Claire Fox

Brexit is the greatest challenge to face the Irish timber industry since the collapse of the construction sector almost ten years ago. This was the main message from Bill Stanley of Coillte at the recent Teagasc Talking Timber event held in Ballyhaise College, Co Cavan.

Director of strategy and business development at Coillte and a member of the timber industry Brexit forum, Mr Stanley told an audience of forest owners that everyone on the supply chain, even small farmers with forests, will be affected by Brexit, as at present 80pc of Irish timber exports go to the UK.

"You may be thinking: 'How does it affect me, the private forest owner? I don't sell to the UK. My trees will continue growing until they're ready for clear-fell'. But there's interconnectedness in the industry. What happens in the end market affects every other node right down to the forest owner," he warned.

"Over 80pc of our sales go to five companies, and these companies have a huge role in the overall health of our industry. We need to have a healthy processing sector as that's how our product gets to the market."

The drop in sterling which occurred "overnight" following the referendum on Brexit in 2016 has had a huge impact on Irish processing companies.

"If you have a product you sold in 2015 for €100, you will now get paid €75 for it. That's a 25pc drop; meanwhile your costs stay the same. The impact on currency has been very painful for our processors," said Mr Stanley.

Leading timber processing companies echoed Mr Stanley's concerns on currency. John Kelly, timber purchaser at Laois Sawmills said that the drop in sterling has had a "huge effect".

"On the sales side of things we are doing fine. The exchange rate is having an effect, though - it's 25pc lower; 70pc of our pallets go to the UK. It's a huge problem but as long as we keep our timber moving we'll be fine. It's if it stops moving then we'll be in trouble," he said.

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John Ryan of Murray Timber Group explained that the company's reliance on the UK for exports would prove a challenge for them in the future.

"There's strong demand at the moment but most of our timber is exported, so the rate of sterling is very worrying for us. We're a sawn product that can only be exported to the UK as it wouldn't fare well in other climates," he said.

Mr Stanley added that the danger that the UK would fall into a "deep recession" when Brexit comes into effect would impact on inflation rates even more and hit Irish timber companies hard.

Moreover, countries like Scotland, where it is cheaper to process timber, could challenge Ireland's competitiveness.

"The concern about Scotland is that Scottish timber is subsidised and can come out at a cheaper price. Scottish material is quite competitive when it comes to fencing and pallets. If they can get it at a cheaper price, it puts us at a disadvantage," he said.

However, Mr Stanley was quick to remind forest owners that it's not all doom and gloom for the Irish timber industry.

"We only account for 6pc of UK's imported timber, so there is scope for growth. We have seen a change in direction from hard Brexit to soft Brexit and I think we will continue to see that.

"We don't see the Irish construction sector slowing down either.

"We should now look toward other markets, like France which have a demand for timber, but our timber product is not as suited to some climates as the UK."

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