Trip Report Timber Expo Birmingham, UK September 23 28, 2012 M12GX-N42EU

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1 Trip Report Timber Expo Birmingham, UK September 23 28, 2012 M12GX-N42EU A. Travelers Vicki Onuliak Bridgeport Pacific Lumber Exporters Association Alan Messett Bridgeport Pacific Lumber Exporters Association Kelly Schroeder Moulding and Millwork Producers Association Moulding and Millwork Producers Association Jim Rodway Patrick Lumber Pacific Lumber Exporters Association Ashlee Tibbets Softwood Export Council Softwood Export Council Hank Marchal Robinson Lumber Company Southern Forest Products Association Brian Hayson Cox Lumber Southern Forest Products Association Jonathan Whitehead Len Barker Cox Lumber Elof Hansson Southern Forest Products Association Southern Forest Products Association Charles Trevor American Softwoods American Softwoods B. Purpose of Travel and Constraint/Opportunity Addressed The goal of this trip was to attend Timber Expo 2012 with the goal of promoting American softwood products. The specific goal was to demonstrate to the trade the aesthetics of American-style decking as well as reach new contacts in the window and door manufacturing industry. Constraint Addressed: #8 - Many deck installers and landscaping professionals choose less expensive, lower quality European softwoods while window, door, and joinery specifiers choose European softwoods due to widespread perception that U.S. species are less durable. 1

2 C. Itinerary September 24 - Participants arrive in Birmingham at 7am Trade Servicing trip to Melton Mowbray to tour the Jeld-Wen plant. 10:00am September 25 First day of Timber Expo trade show. 9:00am 5:00pm. September 26 Second day of Timber Expo trade show. 9:00am 5:00pm. September 27 Trade servicing trip to E.A. Higginson. 10:30am 1:00pm September 28 Participants return to the U.S. D. Summary and Observations From September 25 to September 26, eight delegates from the U.S. travelled to Coventry, United Kingdom to participate in the 2012 Timber Expo trade show. The American Softwoods booth aimed to expose European visitors to US softwood species, applications, and benefits, as well as encourage old and new relationships and facilitate business. Throughout the show, the American Softwoods booth received 150 visitors. The American Softwoods stand was purpose built, with a Southern Yellow Pine deck and samples of American softwoods and mouldings mounted on the walls. Graphics panels promoted the benefits of American softwoods. The stand conveyed a much more professional and integrated image than the usual Nomadic stand and it would enhance the marketing effort of American Softwoods if such stands could be used at all trade shows throughout the world According to the Global Atlas Trade Service, the value of softwood lumber exported to the European region was $32 million in 2011, up from $30 million in At 92 million cubic meters in 2010, Europe remains the second most important softwood lumber consuming region in the world, after the U.S. In line with an overall drop in softwood lumber demand in the European Union, U.S. softwood lumber exports to this region have fallen sharply over the past few years. US shipments fell marginally from $32.1 million (treated: $727,000) in 2010 to $31.8 million (treated: $929,000) in Timber Expo 2012 was the second annual instalment of this trade show. The 2011 show was 50% larger than that of 2011, with over 200 companies exhibiting. The trade show provided a forum for new business and demonstrated how timber can deliver an effective, attractive, and sustainable environment. Visitors included members of the UK timber industry, architects, engineers, contractors and local authorities. 2

3 The AMSO group at the booth In addition to the trade show, three ongoing seminar rooms were available to visitors and exhibitors. The seminar topics varied and included sustainable timber, life cycle analysis, architectural designs, fire risk management, innovative timber products, wood policies, and other issues. AMSO participants discussing lumber quality with visitors The group was able to participate in two trade servicing trips. The first was to Melton Mowbray to visit the Jeld-Wen staircase plant, and the second was to E.A. Higginson, a custom stair company. Jeld-Wen is one of the world s leading manufacturer and distributor of windows, doors, and stairs and offers one of the largest ranges of timber products in the UK. Jeld-Wen UK was established in the UK in 1999, when the Jeld-Wen purchased former John Carr and Boulton & Paul companies from the Rugby Group to form Jeld-Wen UK Ltd. As 3

4 part of a U.S. owned company, Jeld-Wen UK has additional resources available compared to a locally-owned organization. The company used to use Southern Yellow Pine but finds this now too expensive and uses low cost Brazilian pine instead. EA Higginson was established in 1931, and the current owner bought the company in At the time, the company specialized in general joinery, windows, doors, and stairs. However, 15 years ago, in 1997, EA Higginson revamped their company profile and decided to only manufacture stairs, due to the increased regulations All their items are custom manufactured to the client s needs. A worker at EA Higginson displays an unfinished and finished hand-carved stair rail For the most part, EA Higginson uses engineered softwoods, mostly laminates. They also used to use Southern Yellow Pine, but after the price hiked, they focus on American oak engineered wood products. E. Names of Principal Contacts See Excel Spreadsheet entitled Trade Leads Timber Expo 2012 F. Conclusions and Recommendations The IMF recently forecast that the UK economy will contract by 0.4% in 2012 and to grow by a modest 1% in In common with many European economies, the UK is being hit hard by public spending cuts, weak consumer demand and cautious lending policies to businesses by banks. The sharp slowdown in construction continues, with output in the building sector falling 3% in the second quarter of the year. Housing starts in the second quarter of 2012 were 21% 4

5 lower than in the same period in Such a steep reduction must have an adverse effect on the consumption of lumber and in particular, softwood lumber despite the fact that only 25% of UK houses are timber frame. The picture of almost unrelieved gloom is reflected in reports from the UK regions given to a recent meeting of the National Softwood Division of the Timber Trade Federation. To quote a few: The situation in the region is pretty dire. London and South East There is a lack of demand and margins are poor. Decking sales are weak. There have been a few bankruptcies. There is not much optimism regarding the short term outlook. North West Generally, prices are at suicidal levels although one bright spot is that agricultural fencing is very strong. Scotland. It was against this somewhat depressing backdrop that Timber Expo was held. The show was a qualified success for American Softwoods exhibitors, as they were able to meet with their existing customers both at the show and at meetings before and after the show. This is not a show for new entrants to the UK or European lumber scene. It is specifically suitable for those already doing business here. Consideration might be given to attending the show every other year rather than every year. However, the fact is that this is the most relevant show for American companies doing business in the UK. It also has a useful sprinkling of companies from Belgium, one of whom (Vandecasteele Houtimport) is a customer for American lumber. The fact is that business is still being done by American companies in the UK and Europe, despite the problems caused by the credit crunch and in the Eurozone in general, with the possible exception of Germany, where the economy relative to other European countries is comparatively buoyant. Strategically, it is important to support existing customers and markets in Europe with the expectation that conditions will eventually improve and demand will pick up. However, any improvement is likely to be slow and will be largely dependent on a solution to the woes of the Eurozone. The persistent failure of European politicians to put in place a lasting and credible solution for the Euro makes for a business environment where confidence is fragile, unemployment remains high and businesses are unwilling to invest. A continued emphasis on niche markets (low volume, high margins) and in particular, high grade joinery material and decking must be the sensible strategy for European markets. The image of American softwoods needs to be driven upmarket. Competition should not be with lower quality softwoods from Sweden, Finland and the UK but with higher quality softwoods and lower value hardwoods. This strategy will be developed further in

6 European Union Timber Regulations Europe continues to be in the forefront of climate change and certified wood policies. The European Union Timber Regulations (EUTR), which come into force on 3 march 2013, are intended to curtail the trade in illegally harvested wood and wood products. The EUTR shifts the burden of responsibility for proving legality to importers and buyers. It imposes certain obligations on operators who place timber and timber products on to the European Union markets. All major European countries such as the UK, France, Germany, Spain, and Italy are members of the EU and are therefore subject to this regulation. The EUTR should not impose a significant burden on American exporters. As always with such measures, early preparation is essential. Exporters have already been briefed on how they can help their European customers to comply. 6