Wednesday 13 December 2017

Seeing the wood for the trees is vital for timber exporters

'Now the timber sector has new challenges in the face of competition from Scottish mills and, with Brexit, possible tariffs and longer wait times at entry points into the UK.' (stock pic)
'Now the timber sector has new challenges in the face of competition from Scottish mills and, with Brexit, possible tariffs and longer wait times at entry points into the UK.' (stock pic)

Neil Kerrigan

Forestry is unique - the more economic activity, the greater the environmental benefit. More forests, managed responsibly, provide more habitats for flora and fauna and more potential for recreation. Increased sales of wood translate to more rural jobs and more carbon locked up. Wood from sustainably-managed forests has the lowest carbon footprint of any major building material - including steel, brick and concrete.

The Irish forest industry estimates that it supports around 12,000 jobs and contributes €2.3bn a year to the economy. This is through a supply chain that comprises three critical, interdependent links: the forest and afforestation process, the conversion process (harvesting, sawmilling and boardmilling) and the final end market, where the products are exported and sold.

It all starts with the identification of suitable land for planting. Then, as the trees grow, professional foresters undertake up to three cycles of thinning. Given our climate, Irish trees grow fast - if you consider 30 years fast.

Once the trees are felled, the sawlogs are brought to sawmills - where construction timber, fencing, palletwood and wood chips are produced - and to the three large boardmills owned by Masonite and Smartplymedite in Carrick-on-Shannon, Clonmel and Waterford. These operations are the engine rooms of the supply chain. They directly support 1,000 jobs in towns and villages in the rural economy and have export sales of circa €450m per annum, over half of which is from door skins and MDF and OSB panel boards, produced by Masonite and Smartplymedite.

Progressive investment enabled the industry to respond to construction growth between 2001 and 2007. With the onset of recession in 2008, the companies were able to maintain operations by looking to the UK market. These sales have grown over the past five years and are crucial to providing a return on large capital investments by the industry.

Now the timber sector has new challenges in the face of competition from Scottish mills and, with Brexit, possible tariffs and longer wait times at entry points into the UK. Given the industry's ability to handle past difficulties, there is no doubt it can overcome these ones.

Irish companies have a 5pc share of the UK's €9bn market, which is Europe's largest importer of timber products - and the only show in town for certain Irish timber grades.

To defend this market share and grow, sawmills and boardmills must focus on ambition, leadership, efficiency and sales intelligence. Irish mills are very efficient at processing timber, but they must now look at all the other business processes outside the mill gate. Understanding their customers' current and future needs is key to retaining business. While price is important, customer service and the ability to get timber to a location in the UK within hours are deal clinchers.

Identifying and exploiting a strong customer value position is essential, and a number of mills have honed their value propositions with help through Enterprise Ireland's strategic marketing review programme.

A second line of action over the short term, will involve R&D to create new, added-value wood products for markets in both the UK and mainland Europe.

Thirdly, the sustainability of the sector will depend on the present and growing future supply of wood fibre from private growers across rural Ireland. Ireland has a rich forest heritage, but our woodland cover is among the lowest in Europe, at around 7pc.

As part of Enterprise Ireland's work with the forestry industry and the Department of Agriculture, we are moving to ensure that the interlinked forest, processing and sales elements of the supply chain are each intelligent and efficient enough to protect the growing resource this industry represents for Irish jobs, rural development, exports, recreation and wildlife.

Neil Kerrigan is head of global markets - timber, print and packaging at Enterprise Ireland

Sunday Indo Business

Promoted Links

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Also in Business