As with all the shows we do, we spent a lot of time beforehand inviting key clients to come and visit participating members. So far they have been coming! In particular, with both Merit Kitchens & Pacific Rim Cabinets ad well as Masonite & Canada@Home taking part we made a special effort to target kitchen and reform (renovations) specialists. This seems to have been well timed as reform is the talk of the show. The Japanese government’s promotion of energy efficient homes through its Eco-Point system as the slowdown of new condo starts has most builders and architects looking at expanding their reform businesses.
Overall the show has been going well. Industry watchers have been saying for a while that the Japanese housing market would strengthen in 2010 and it feels that way at the show. I have spoken with clients exhibiting and they too have been having a good show. One told me that this has been the best show for them in 4 years. Let’s hope this keeps up for today and the rest of the year!
As with all the shows we do, we spent a lot of time beforehand inviting key clients to come and visit participating members. So far they have been coming! In particular, with both Merit Kitchens & Pacific Rim Cabinets ad well as Masonite & Canada@Home taking part we made a special effort to target kitchen and reform (renovations) specialists. This seems to have been well timed as reform is the talk of the show. The Japanese government’s promotion of energy efficient homes through its Eco-Point system as the slowdown of new condo starts has most builders and architects looking at expanding their reform businesses.
Overall the show has been going well. Industry watchers have been saying for a while that the Japanese housing market would strengthen in 2010 and it feels that way at the show. I have spoken with clients exhibiting and they too have been having a good show. One told me that this has been the best show for them in 4 years. Let’s hope this keeps up for today and the rest of the year!
Having gone from visionary to reality, the MMGR Program utilizes a revolutionary patent and a new pending patent to bring a common-sense financial approach to the drying of softwood lumber.
Because incorrect data and statistics are often used, incorrect decisions about changes to kiln drying schedules lead to costly reductions in lumber grade. It can also cause an increase in drying-related energy costs, planer break-ups, and a decrease in kiln throughput.
Wagner Electronics now has a methodology to optimize your lumber value and allows you to maintain the optimum lumber value over many varying conditions.Read More
Independent contractors association criticizes Burnaby’s fair wage policy
“Burnaby is clinging to an outdated, ill-conceived policy of forcing building trade union wages and benefits to be paid by private sector employers, who are awarded city construction contracts,” said Philip Hochstein, president of the Independent Contractors and Businesses Association (ICBA).
“They are repaying their political supporters in the trade unions, with Burnaby taxpayers’ money.”
A fair wage policy is a set of contract instructions that compel contractors and suppliers to provide specified minimum wages, benefits, training, safety standards, disability, minority hiring and other working conditions to their employees, while working on city contracts. Read More
Bid-Close ratio
In discussions with a number of wood product manufacturers, both here and across the border, I have noticed a significant change in the Bid-Close ratio over the past few months. For those who don’t know, this ratio is comprised of the number of quotes a manufacturer bids on in relation to the jobs that they actually land. If a company bids on five jobs and they land one, they have a Bid–Close ratio of 20%.This ratio acts as a barometer to the market which is a good measurement to the relative success manufacturers have in signing sales agreements.
The general rule of thumb for the wood industry is the higher up the value-added chain you go, the greater the bid-to-close ratio becomes. For example, finished product manufacturers tend to have a higher bid-to-close ratio than do reman operations often due to the time, complexity, and expertise of bidding on the project. The more time and effort spent on the bid commonly leads to a higher percentage chance of landing the job.
With the downturn in the market locally, and the economic mess south of the border the Bid–Close ratio has changed dramatically. For example, Architectural millwork manufacturers who would normally work on a Bid–Close ratio of between 45% to 50% are now working on a 20% ratio. Engineered wood product manufacturers who are usually even higher (60+%) are hovering around the 23% to 28% range.
What to make of this? Well, almost all the manufacturers that I have spoken to have been extremely busy on the bid side. Comments that I typically heard are “I’ve never been busier quoting on jobs than I am now” . It also seems that buyers are doing their due diligence and shopping their projects to a greater number of suppliers than ever before, some asking for quotes months before the time that manufacturers are normally involved. I’ve also heard that some manufacturers are taking on projects with extremely thin margins in order to just stay busy.
As the markets gradually recover I expect the Bid–Close ratio will likely follow suit and return to normal. For the old adage “that were not in the business for the practice” still holds true today as it did before this downturn. Manufacturers still need to turn a profit in order to stay in business.
While smaller than in previous years due to goverment cutbacks, the pavilion actually looks better than ever as we have implemented the same fresh design concept that we used at the JHS last fall. This layout also allows for every member to have two sides open (basically a corner booth), thus greatly increasing their exposure to the 270,000 people that will come through over the next 4 days.
So far the members seem to be happy. Now let’s hope we see a lot of happy customers too!
On the positive side, the common consensus from my meetings suggested that the worst is behind them and that the market should experience a slight recovery this year. In fact, one distributor I spoke with commented that sales for February, 2010 were up 62% from the same period last year. Builders in the region are targeting the “Eco House” by focusing on the design and building of high quality energy efficient and sustainable housing. The features of these homes include a smaller foot print (2500 sq ft or less), good energy efficiency and abundant use of sustainable building materials. This is a trend that I have noticed throughout the West Coast of the United States and one that I believe is here to stay. BC manufacturers will need to promote the sustainable nature of their products or risk losing market share to offshore suppliers. An example of this is Bamboo flooring and cabinetry from China when compared to Pacific Northwest harvested and manufactured Red Alder millwork products. When I asked builders which product they considered more sustainable the answer was always Bamboo even though it’s treated with formaldehyde, held together by resin and travels over 10,000 km to reach the Western United States. Work needs to be done to promote the sustainable nature of BC building products and their many attributes.
A potential opportunity to influence the builder and consumer market in Portland is available through the Greater Portland Home Builders Association and their “Street of Dreams” project this summer. They will be building 5 energy efficient green homes and will showcase these homes to over 55,000 attendees August 1st thru Sept 1st 2010. Manufacturers interested in supplying product to these homes should contact me at dfarley@bcwood.com for further information on how to get involved.
I just attended the largest building show in all of Korea with over 700 exhibitors and 150,000 attendees in Seoul this week. The KH Fair had every building product conceivable and some very impressive exhibits from Korea and other parts of the world. Green building construction and healthy living seemed to be the biggest trend and was seen throughout the different exhibits at the show. As a result, the wood construction and building products section was well exhibited with new products and designs.
BC Wood partnered with CMHC International to showcase a variety of wood products at the event and promote companies through advertising efforts. Korea has typically been considered a raw materials market, our exhibit had several finished wood products including a Western Red Cedar Gazebo and some high end finished furniture from British Columbia. The end result was positive and many Korean buyers were impressed by the unique quality products from Canada.
Despite the downturn in the Korean economy, the show was very well attended and our booth attracted a lot of interest. Many of our exhibitors were new to the Korean market, but were very impressed by the people, wood culture and enthusiastic levels of interest in our wood products.
During a week-long tour of the Kootenays, Bell was in Castlegar and met with the mayor and councillors.
Bell said Castlegar is doing well as a Wood First community, following a provincial program that encourages innovated domestic use of wood products.
“You are living it here,” he said. “You are a great example for the rest of communities to follow.”
“As Minister of Forests and Range, I get to tour lots of small communities,” said Bell. He explained the Castlegar’s facilities are some of the nicest he’s seen in the province and make good use of wood construction. Read More
Lumber prices are spiking sharply upward in the U.S. as sawmill curtailments, largely from producers in this province, are finally tightening the supply of lumber heading into the still-fragile U.S. housing market.
“There’s been a dramatic turnaround but it’s taken more than two years,” said John Allan, president of the B.C. Council of Forest Industries.
The mill curtailments have finally “bitten,” Allan said, tightening the lumber pipeline to the United States.
Companies remain cautious. There is an overhang of foreclosed homes in the U.S. to come on the market and new-home construction remains weak.
“It’s definitely bottomed, but it has a long way to go,” said Andy Carr, a sales representative at Westbank’s Gorman Brothers plant, which produces specialty boards one-inch thick for home finishings. “It’s still a fragile economy down there and as long as government programs are in place, things will look like they are getting better. But their economy is not rolling along on its own steam yet.”
At today’s prices, the mills that are still standing in B.C. are cash-positive, Allan said.
On Friday, the price of lumber closed at $317 US a thousand board feet.
A year ago, lumber was selling for $165 US a thousand board feet. The average break-even cost in the B.C. Interior is $260 US. “The price jump is strictly a supply-side response by the market,” said Rick Jeffery, president of the Coast Forest Products Association.
He said it’s prompted by producers here keeping their production down, dropping their inventories of both logs and lumber, and selling more lumber into the growing Chinese market.
B.C. lumber production is down 39 per cent since 2007, according to Statistics Canada. More than 20,000 workers have lost their jobs.
And in their recent conference calls with analysts, the heads of three of the province’s largest forest companies — Canfor, Interfor and West Fraser Timber — all said they intend to keep both curtailed shifts and mothballed sawmills down until they see stronger demand from the U.S.
Smaller producers fear that the big players may restart too soon, swamping the market with two-by-fours.
“There’s been good discipline on supply-side management from the industry, which is unusual because it’s a fragmented industry,” Jeffery said. “Everybody has taken down time, so supply is more in balance with demand.”
China’s role has also been significant in tightening the supply for the U.S. Canadian exports to China are up 135 per cent year over year for the first nine months of 2009.
In his conference call, Interfor CEO Duncan Davies told analysts Interfor is shipping 10 per cent of its lumber to China. Canfor’s Jim Shepard said Canfor is shipping eight per cent. All West Fraser’s offshore markets account for 10 per cent of production, CEO Hank Ketcham said.
The result: B.C. mills are no longer so dependent on the U.S. market.
Nowhere is that more clear than at Gorman Brothers. Before the lumber downturn, Gorman was shipping 80 per cent of its lumber into the U.S. Now, Carr said, the company is shipping 35 per cent to the U.S., 35 per cent to the domestic market and 30 per cent offshore, mostly to Japan and the Middle East.
**This is article is from the Vancouver Sun by Gordon Hamilton: http://www.vancouversun.com/Industry+bounces+back+lumber+prices+spike+sharply/2591038/story.html