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you hear of pallet makers taking production out, that is a big concern for the economy. Everyone is tightening their belts.” He added that, in his view, packaging demand was “back lower than it was pre- pandemic. “We’ve never had major issues before. Prices would go up and down but now it’s a volume issue as well. It’s more severe than I remember and I’ve been in this business a long time.


“Usually the amount of stock moving around [on pallets] coming up to Christmas is frightening, but it just doesn’t seem to be happening this year.”


The expected impact of the war in Ukraine and subsequent sanctions on Russia and Belarus on demand and sawn timber availability has not been marked. The impact it has had on energy costs is another matter, of course. “At the moment we haven’t seen any bounce from Russia or Ukraine not being involved in imports into the UK,” said a contact.


“The impact is negligible,” said another. “It would have created a shortage if there was demand but the general recessionary environment means it’s not being noticed.” “I was totally wrong,” admitted another. “The expectation was that with Russia and Belarus being out of the market it could put a pinch on the supply chain of pallet and packaging towards the latter part of the year. But, seemingly, a lot of people ordered in case this material didn’t arrive and they ended up duplicating stock because it did eventually turn up.”


/year output mills TTJ contacted said it was processing the same volume – “no more, no less”. He said there have been rumours flying around that some of the larger mills are on short weeks but that was not confirmed and, certainly all the mills TTJ spoke to in early November were working pretty normal hours.


One possible kink in the system mentioned by a contact is that Ukrainian timber, which used to be shipped out across the Black Sea towards Asian destinations is now being diverted by road into mainland Europe. And there is some unease over whether this timber should be badged as certified, since both the PEFC and FSC stipulate that war zone timber cannot be bought or sold as such. “It’s a tricky one and not one I’m going to judge one way or the other,” said a contact. In terms of production levels, one of the 50,000m3


One commentator said that rather than reducing hours the mills were running products that slow their overall production and that they were changing their product ranges to meet the demands of the market right now – “some of them might be producing things they wouldn’t ordinarily do, so they can keep running,” they said.


Coillte noted that it had seen a shift in demand from large sawlog to small sawlog, indicating sawmills can sell products from the latter more easily than they can from the former. In response, Coillte has shifted its own production to focus on trees that produce more small sawlog.


“It’s not something we can do indefinitely but we are trying to match market demand at the moment,” said a spokesperson. “We’re not running any overtime at the moment but we are still working 40 hours a week,” said one sawmiller. “That probably means we have a little bit too much inventory and if I had 20:20 vision I would have pulled overtime back a couple of months earlier than we did.”


Another contact said his mill had cut back significantly on volume but that it didn’t want to go too far and risk losing its hard- earned skilled labour force.


“The single biggest challenge for any manufacturing industry in the UK and Ireland at the moment is getting and maintaining good labour,” he said. “We are probably working inefficiently at the moment [by not reducing production too much] because we’re doing our best to hang onto staff for as long as we can.”


Even with reduced production, stock levels are rising “week-on-week”.


“The whole industry has to reduce volume and most people have at this stage,” said a contact. “I don’t know how much more the home-grown mills can take out and I don’t think they are the problem because, in the scheme of things, the overall volumes are small. It has to come from the imported side – that’s where the problem primarily is.” However, another said that although stocks were building more than he would like, he wasn’t losing sleep over it. And yet another,


from a smaller mill, said his stocks were actually low and “very manageable”. “As a result, our lead times for certain items could be as much as two or three weeks but there are other items you could get tomorrow,” he said. “At the moment it’s all about utilising the log to fit what you think the order is going to be and you can’t look past the next log run that you are cutting.” And he mentioned the new dynamic that mills are having to factor in, which is the rising cost of electricity. The dilemma is that while cutting at a time of falling prices is not usually an attractive option, it might actually be more cost-effective to do it now rather than later when prices have risen still further. “Most mills have seen their electricity costs quadruple,” he said.


One situation that has improved – albeit helped in no small way by the falling demand for sawn timber – is log availability. The backlog of felling licence applications that dogged the industry for so long seems to be almost fully resolved.


Coillte reports that 97% of its felling licences for 2023 are approved – although it added that the road licence situation had not changed and it was getting “less than a handful a week”. The percentage of road licences it has for 2023 is “very low – probably 20-25%”.


“It doesn’t stop us operating because it only impacts about 25% of our programme and most of our customers have enough contracts that they are able to draw down on and move stuff around if the roads aren’t working,” said the spokesperson. “But it’s a big problem and it does make it very difficult for people who buy standing sales from us.”


Coillte’s programme of quarterly auctions proceeded as scheduled this year, as did its annual contract event – albeit that was ►


Above: Coillte hit its annual target offering of 1.65 million m3


this year www.ttjonline.com | November/December 2022 | TTJ


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