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Above left: James Jones’s mills are operating at near capacity Above right: James Jones’s three-year trial of the Volvo electric truck has been a huge success
“Prices improved early in 2024, and they needed to because things were really no better than break even in the second six months of 2023,” said Mr Gordon. “Improvements weren’t significant, but they moved in the right direction and we got a steady increase through the first quarter and into the second quarter. It’s good to see some of the margin returning to the bottom line.”
It’s a similar story at James Jones & Sons. “As businesses return to work from their summer holidays, there has been a very encouraging pattern of demand that is consistent across all market sectors,” said Graham Blyth, sales director. “Fencing and landscaping sales have been very strong this year and, whilst volumes have peaked, activity currently remains strong. Carcassing demand has been steady, and there are signs of growing confidence and optimism amongst our merchant customer base. Demand throughout the pallet and packaging sector is strong and is expected to be maintained during the next few months.”
As is the norm, price increases for British- grown timber have been driven by improved demand but also by the uptick in the price of imports. Prices for British-grown timber remain “highly competitive”, though. “British timber will always be priced competitively against imported material, though the gap between them is always fluid,” said Mr Faulkner. “We will see this change as the market recovers, with the impact of log costs in other regions having an inflationary impact on sawn timber pricing.” “The price gap between British and imported timber has narrowed in recent months, but British material remains competitive against a typical, mixed specification and ‘pick a pack’ service,” added Mr Blyth. “Every sawmiller across Europe is challenged by rising log prices and increased
input costs, and margins have been squeezed substantially.”
Log prices have also “firmed a bit”, as demand for sawn timber has increased, but raw material availability is “pretty good”. In order for it to stay that way, security of supply is crucial. “We have good ongoing relationships with both the private sector and Forestry and Land Scotland (FLS),” said Mr Gordon. “Securing long term contracts (LTCs) gives us the confidence to continue to invest significantly in the business. A number of those LTCs came to an end in recent years and our harvesting team has worked extremely hard and been successful in securing two significant contracts for the next five to 10 years. We are delighted to have secured these and success in this area will help underpin our investment programme going forward.”
“Our log availability is good at present, with a strong bought forward position for all our mills,” said Mr Blyth. “There is a flow of tenders coming to market with standing prices and demand being supported by small roundwood demand from processors and biomass operators. Forestry and Land Scotland aim to achieve 3.2 million m3
of
production in the year to April 2025, which is also improving availability through the next six-month period.”
Looking further ahead, though, planting levels remain a concern for the industry and this was brought into even sharper focus when the Scottish government announced proposals for a 41% cut in the money available to support woodland creation and management through the Forestry Grant Scheme (ttjonline January 17, 2024). “Planting levels will always vary,” said Mr Faulkner. “Although the UK has planted around 50% more trees this year, this isn’t necessarily commercial forestry. With Wales
only achieving 12% of its planting targets, and Scotland cutting its planting grants, there is still much room for improvement if we want to secure log availability for future generations.”
He added that the cutting-edge research carried out at Maelor Forest Industries underpins a large proportion of BSW Group and Binderholz, as the genetic work being undertaken now will improve the trees of the future, whether they grow faster, straighter or stronger (see also pp32-33). “There is an incredible amount of innovation on display at Maelor, and we should be able to communicate the findings of this in the coming years,” said Mr Faulkner. “Replanting is an ongoing concern,” agreed Mr Gordon. “The deputy first minister, Kate Forbes, visited the mill in June, prior to the general election, and we were delighted to see her and appraise her of the industry. She has a good knowledge of the sawmilling sector but we certainly had a frank discussion on replanting. We appreciate that all budgets are stretched but we emphasised the importance [of British-grown timber] in terms of the import/export deficit and the importance of a thriving timber processing sector to jobs in the rural economy. We stressed that not investing through replanting would be detrimental to the industry in the medium to long term.”
As demand has improved, so sawmill output has increased, with BSW noting it has been “adjusted accordingly” following “market demand returning to pre-Covid levels”. “We also work with customers on their forecasts to ensure our capacity aligns with their demands,” said Mr Faulkner, adding that stock is at relatively low levels across the Group’s sawmills, with lead times remaining short as it turns over quickly. ►
www.ttjonline.com | September/October 2024 | TTJ
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