Australian market requirements for western red cedar and Douglas-fir

MARKET ACCESS & DEVELOPMENT Project number: PN07.1045 DECEMBER 2008 Australian market requirements for western red cedar and Douglas-fir This report can also be viewed on the FWPA website www.fwpa.com.au FWPA, Level 4, 10-16 Queen Street Melbourne VIC 300, Australia T +61 (0)3 9614 7544 F +61 (0)3 9614 6822 E info@fwpa.com.au W www.fwpa.com.au

Australian market requirements for western red cedar and Douglas fir Prepared for Forest and Wood Products Australia by W. MacLoud

Publication: Australian market requirements for western red cedar and Douglas fir Project No: PN07.1045 2008 Forest & Wood Products Australia Limited. All rights reserved. Forest & Wood Products Australia Limited (FWPA) makes no warranties or assurances with respect to this publication including merchantability, fitness for purpose or otherwise. FWPA and all persons associated with it exclude all liability (including liability for negligence) in relation to any opinion, advice or information contained in this publication or for any consequences arising from the use of such opinion, advice or information. This work is copyright and protected under the Copyright Act 1968 (Cth). All material except the FWPA logo may be reproduced in whole or in part, provided that it is not sold or used for commercial benefit and its source (Forest & Wood Products Australia Limited) is acknowledged. Reproduction or copying for other purposes, which is strictly reserved only for the owner or licensee of copyright under the Copyright Act, is prohibited without the prior written consent of Forest & Wood Products Australia Limited. ISBN: 978-1-920883-45-4 Researcher: W. MacLoud Thorlynne Pty Ltd PO Box 116, West Pennant Hills NSW 2125 Final report received by FWPA in October, 2007 Forest & Wood Products Australia Limited Level 4, 10-16 Queen St, Melbourne, Victoria, 3000 T +61 3 9614 7544 F +61 3 9614 6822 E info@fwpa.com.au W www.fwpa.com.au

Executive Summary Demand for Douglas fir (D fir) has decreased considerably over the last twenty years being replaced by kiln dried, mainly machine graded Radiata pine and Engineered Wood Products from Australia, New Zealand and Scandinavia. Western Red Cedar (WRC) has also decreased in volume over the same time frame but to a lesser degree. The possibility exists for the consumption of WRC to rise as Cedar s natural durability, unique properties and sustainable supply characteristics will see it replace some non-sustainable Asian species. As well, there is the possibility of WRC being used as an alternative to chemically treated wood. Australia consumes about 4.5 million cubic metres of wood per year. Imported Douglas fir from all sources (about 98,000m3 in 2004) makes up about three percent of the annual timber consumption while Western Red Cedar holds one per cent of the market. To learn about attitudes in regards to Douglas fir and Western Red Cedar, interviews and a Web based survey were conducted. The on-line survey received four hundred replies from a wide cross section of the building industry. The survey results confirmed that sections of the industry have embraced on-line sources of information for their main source of technical references. Websites came out on top for finding timber information (TDA, FWPRDC (now FWPA) and TABMA websites were most notable). Designbuild, DesignEx and HIA Home Shows scored highest for trade show popularity. Respondents found information available for WRC to be Satisfactory but Less satisfactory for Douglas fir. When asked why they chose WRC in building projects, Good looks/aesthetically pleasing then Natural Durability then Stability were chosen from a list of six reasons. Price then Finishing and maintenance questions were the most cited negatives for WRC. Douglas fir was noted for its Availability in sizes and lengths required followed by its attribute Superior strength to weight ratio. When asked why Douglas fir was not specified most replied Don t know enough about the product. Timber knowledge seminars were rated Good value with Environmental Sustainability, General information on WRC and Douglas fir followed by Finishing and Maintenance receiving the most support for seminar topics. Responses suggest targeted marketing strategies are needed. To help increase the consumption of Douglas fir and Western Red Cedar, more information, easily accessible, and better indexed needs to be placed on websites. A demand was identified for more brochures, increased training of sales staff and product knowledge seminars for designers and builders. More face to face contact was recommended with Specifiers or Designers. Suppliers must work closely with the Design, Specify and Construction sectors to have these products specified. i

Examples of Douglas fir applications showing features and benefits need more publicity to keep this species attributes in front of consumers, specifiers and designers. Western Red Cedar has many unique characteristics, most notably its durability, stability and beauty. These characteristics need to be presented often to the market place to raise the species profile and grow market share. Underlining all of this marketing effort is that the environmentally friendly nature of wood must be continually made known to consumers, designers and builders. Background to this report The Forest and Wood Products Research and Development Corporation, now called Forest and Wood Products Australia (FWPA) is funded primarily from two sources; the Australian Federal Government and the Australian Timber Industry. The Australian Timber Importers Federation contributes a levy on every cubic metre of wood imported into Australia. The timber importer stakeholders and timber associations suggested this study into the Australian market for Western Red Cedar and Douglas fir. The market for both these species has changed considerably over the last twenty years. The overall consumption of North American sourced Douglas fir has been falling since 1989. New Zealand sourced Douglas fir imports have held about steady over the same time frame. Western Red Cedar has seen a fall off of imports over the past 6 years. Australia in that period has undergone a decrease in housing starts, a change in design and fashion, plus a rise in alternative imported products. Aims of the project Briefly outline the historical supply and the relative position these species held in the Australian market. Stakeholders sought a snapshot of the role these species currently play, identifying the benefits and challenges associated with the use of Western Red Cedar and Douglas fir. The project aimed to identify opportunities, applications and strategies for the future by suggesting ideas and ways to promote the species and develop new markets. Methodology To achieve these aims, a range of people throughout the building industry were interviewed and surveyed. The project focussed on learning about their attitudes towards Douglas fir and Western Red Cedar and soliciting ideas and suggestions for future market development. ii

A web based survey served as a central core of the information gathering process. Two separate questionnaires were tested and approved by a range of timber industry people including members of the Australian Timber Importers Federation, timber exporters, association members, the Canadian collaborators, the New Zealand Douglas-fir Association representative, a building consultant and end users. Questionnaire A was designed for architects, building designers, specifiers, interior designers, builders, engineers, carpenters and tradesmen. Questionnaire B was designed for timber importers, timber wholesalers, timber merchants, joiners, manufacturers, consumers and home owners. The questionnaires shared common questions but also asked specific questions oriented to each group. Questionnaire distribution An email distribution company was contracted to do an Email Blast sending an invitation to a stated 7000 email address list consisting of architects, designers, interior designers, landscape architects, builders, tradesmen, building companies and suppliers. An online invitation was emailed to timber importers involved in WRC and Douglas fir. Large numbers of the timber merchants throughout Australia were emailed. The Master Builders Association distributed some invitations by email, as did the Building Designers Association of New South Wales Inc. The NSW Architecture Bulletin included a small write-up in the May issue, The Royal Australian Institute of Architects in South Australia and Queensland assisted by sending out the survey invitation to their membership. Printed invitations were handed out at the Sydney Home Ideas Centre, the Melbourne Home Ideas Centre, at talks given by architects at the Sydney Home Ideas Centre and the front desk of a timber merchant. Invitations were handed out to interested parties at the 2007 Melbourne HIA Home Show and the Sydney design build exhibition. Further invitations were handed out at a Sydney Timber Industry Institute meeting. Not all of the invitations sent by email reached the intended party. Many were halted at the server gateway and set aside as spam. An estimated 5000 people would have had been sent or handed or have sighted the invitation. The author gratefully acknowledges all those companies, associations and individuals who assisted in distributing the survey invitation. Four hundred and one (401) survey forms were received from respondents. The strike rate of 8% was considered about normal. iii

Table of contents Executive summary... i Background to this report... ii Aims of the project... ii Methodology... ii Part 1 Background to WRC and D fir in Australia... 1 Introduction... 1 Part 2 Past and present market... 3 Part 3 A snapshot of the Australia timber resource... 6 Part 4 Results of Douglas fir surveys... 8 New Zealand Douglas fir... 15 Part 5 Western red cedar... 16 Knotty grade cedar... 18 Canadian exports of western red cedar... 20 Part 6 Survey results western red cedar... 21 Further survey results additional information... 23 Western red cedar and Douglas fir market survey respondent quotes... 27 Part 7 Timber s environmental credentials... 31 Forests, Wood and Australia s Carbon Balance... 31 Energy... 32 Environmental credentials of supplying countries... 33 New Zealand... 33 British Columbia forestry and sustainability... 33 USA forest sustainability... 35 Part 8 Housing market... 37 Australian housing starts... 37 Housing affordability... 37 Affordability trends... 39 Part 9 Future markets... 41 Projected demographics to the year 2031... 41 Australia towards 2020... 42 Part 10 Challenges for the species in the Australian market... 43 Part 11 Conclusions... 50 Web... 50 Training and information... 50 Douglas fir... 50 Western red cedar... 51 Advertising and publicity... 51 Species substitution... 51 Part 12 Recommendations... 53 Part 13 References... 57 Part 14 Appendices... 58 Part 15 On-line survey results... 59

PART 1 Background to western red cedar and Douglas fir in Australia Introduction For more than one hundred years, Douglas fir (Pseudotsuga menziesii) and later, western red cedar (Thuja plicata), have been imported into Australia from the West Coast of North America. Many decades later plantation grown Douglas fir from New Zealand also began arriving in Australia. Both Douglas fir and WRC have made a vital contribution to Australia s building industry in a range of construction applications. Imported volumes of western red cedar today are about half of what they were 20 years ago and volumes of Douglas fir (Oregon)(from all sources) is about 14 per cent of what it was 20 years ago. (Granted, 20 years ago, 1987, was one of the peak years for imports of WRC & Douglas fir and this current year is a relatively low year for building commencements.) Nevertheless, in round figures this is a huge drop in volumes. Why the big change? Housing starts have remained relatively constant averaging about 150,000 per year. Looking just at the Australian framing market, the largest application for sawn wood, two major shifts have occurred over the past twenty years. First, Australia is now basically self sufficient in framing timber, utilizing mainly locally grown plantation Radiata pine. Supplementing framing demand is a plentiful supply of Radiata pine out of New Zealand. Both sources of Radiata are priced competitively. The second major shift in supply has been the rapid uptake (from a slow beginning) of Engineered Wood Products sourced mainly from Australia, New Zealand and Scandinavia. The main EWP products being I beams, Laminated Veneer Lumber (LVL) and Open Web Trusses. In house construction, Engineered Wood Products are mainly used in floor joists. The vast majority of frames and trusses are fabricated off site in frame and truss plants. Frame and truss manufacturers use kiln dried, machine stress graded Radiata pine and Engineered Wood Products almost exclusively. Prefabricated frames, roof trusses and floor joists are supplied in a timely fashion to building sites for rapid erection. Few houses are now stick built on the building site. 1

Douglas fir There still exists a smaller, but discerning market preferring to use Douglas fir for some framing applications, especially in renovations and additions. In upper storey floor joists, Douglas fir holds a market share as it does in structural and exposed beams, rafters, posts and formwork. With a shortage of supply in F7 Radiata pine, a potential niche market in Douglas fir F7 framing timber is a possibility. Douglas fir clears are specified for numerous joinery applications. Promotion of Douglas fir joinery is required to increase these applications. A modest market exists for Douglas fir and will continue to do so. Global supply of timber is constantly changing and Douglas fir may see renewed import growth in applications where its particular strength and associated qualities are required. Western red cedar Although the volumes have dropped over the past couple of decades for Western red cedar, it is a preferred species for the joinery market for its inherent qualities and features. WRC is durable, dimensionally stable, aesthetically pleasing, machines well and is a natural thermal insulator. Importantly, it is sourced from sustainably managed and largely certified forests. With increased promotion of its natural performance characteristics and sustainability, western red cedar should grow in volume and market share. 2

PART 2 Past and present market In the early days of the colony, buildings were constructed using a variety of locally available materials including sandstone, clay, and various species of trees which were either hand hewn or mechanically sawn into timber. As the colony grew, a timber industry became established, harvesting and processing the surrounding forests. Early merchants in the Australian colony began importing various species of timber that they were familiar with from Europe and then later from North America. The timber from the Americas began arriving around about mid 1800 s and consisted mainly of Douglas fir from the United States, along with small quantities of Hemlock, Spruce and some hardwoods. It was reported that Australia has imported timber from the United States for at least 150 years. (Larsen 1999) Why did people use Douglas fir in the past? Douglas fir was recognized early for its impressive strength to weight ratio, stability, toughness and availability in long lengths and large end sections. It was stable, free of spiral grain, relatively easy to dry, hard, suitable for joinery, framing, boat building and protected exterior uses. The straight, tall trees were plentiful in the coastal Pacific forests of North America. Trees harvested close to the ocean allowed the logs to be easily transported in log booms to the sawmills of the Pacific Northwest (Alaska, British Columbia, Washington and Oregon). Export grades Douglas fir logs were exported or were resawn into flitches - 6 x 12 wider (150mm x 300 wider) (Sydney size) or 8 x 10 wider (200 x 250 wider) (Melbourne size) in lengths from 10 to 40 (3.0 to 12.0 m). North American Douglas fir grades imported in Australia for flitch included Select Merchantable Free of Heart Centre, 3 Grade - defined as #1 Merchantable allowing a maximum of #2 Merch with Select Merch as developing. Clear grades were imported for machining into mouldings and joinery applications. Western Hemlock was also exported to Australia in 12 x 12 (300 x 300) flitches up to 40 (12 m) in length. Western red cedar was normally exported as 4 x 6 wider or 6 x 6 wider or 1 ¾ x 6 (100, 150, 45 x 150 wider) wider or similar, in a range of grades including #2 clears, # 4 clears, Factory Flitch and Shop and better. California Redwood, (a species competing with WRC in many applications), was a sought after species in the higher grades (mostly Clear All Heart) until about the late 1980 s when supply declined and the price increased substantially. Sitka spruce was imported into Australia for boat building, musical instruments, oars and aircraft airframe construction. In the 1800 s a timber importing and remanufacturing industry was established in Australia to import, resaw and process timber sections into a range of building components- including framing, joinery, moulding and cladding with companies establishing themselves often on waterfront properties in the capital cities. The timber industry became substantial. In 1901 Australia imported timber and timber products to the value of $130 million in today s terms. 1 1 Source: ABS, Year Book Australia, 2001 3

During the 1920 s and the Depression era of the 1930 s, plantations of Radiata pine (Pinus radiata called Monterey pine in its native habitat on the west coast of California) were increased in size in Australia, New Zealand, Chile and South Africa. Around about the same time more plantations of Douglas fir were established in New Zealand and to a lesser extent, in Australia. During the Second World War shipments of timber from North America to Australia virtually came to a halt. Immediately after the War large volumes of timber were imported into Australia to fill the growing demand created from returned soldiers and the subsequent formation of families. The coniferous imports from North America were primarily Douglas fir with smaller volumes of WRC, then Western Hemlock. (Sitka spruce, California Redwood, Spruce Pine-Fir were minor imports). The 1950 s was a boom time in Australia for building. Timber imports increased substantially. The bulk of the overseas imports for structural timber were Douglas fir from US exporters based in Washington and Oregon States. Australia s hardwood supplied building and construction markets An Australian Tariff Board s Report on Timber 2 dated 20 th December 1960 stated; that based on supply statistics dating back to 1939 that approximately 80% of timber requirements were being supplied by local Australian sawn timber production. From 1956 to 1976 total supply of sawn timber (from all sources) remained in a range between 3.5 million cubic metres (1962) to 4.7 million cubic metres (1973 building boom). In the same period Australian sourced sawn timber supply ranged between 81% (in 1959) of the total to 72% of the total sawn timber supply (in 1973). The weighted average percentage contribution of imported sawn timber (from all sources) was 21.8% over the period 1956 to 1976. Of the mostly coniferous species imported from 1956 to 1976, less than 10 per cent of the timber was dressed or moulded. Douglas fir comprised more than 50 percent of the imports from 1960-1976. Local production and imports in 1968-69 3 New South Wales produced 29 per cent of the total Australian production of sawn timber in 1968-69 and imported 55 percent of total imports. (NSW was a major market for imported Douglas fir, Western Hemlock, California Redwood, WRC, NZ Radiata pine and South East Asian hardwoods). Victoria produced 22.9 percent of the total Australian production of sawn timber in 1968-69 and imported 17.8 percent of total imports (local supplies were sourced from Tasmania and South Australia) 2 Australian Tariff Board 3 Submission to the Industries Assistance Commission May 1977 Australian Timber Importers Federation. Tariff Aid Pty Ltd. 4

South Australia produced 8 percent of the total Australian production of sawn timber in 1968-69. On a per capita basis, the State of South Australia was the largest importer of timber in Australia with 13.7 percent of total imports. (Almost all of the imports were Douglas fir, with lesser amounts of WRC, Hemlock and SE Asia hardwoods) (Through the 1950 s, 1960 s and 1970 s Port Adelaide was the home to many large remanufacturing sawmills). In a Tariff Boards Public hearing on 27 May 1957, the Melbourne Timber Importers Association advanced the argument that imported timbers are not in direct competition with locally produced timbers but complement market supply by extending the range of species, grades and specifications available. In its report on the industry in 1960 the Tariff Board accepted the complementary argument and stated in its conclusion that imports are generally supplementary to, rather than competitive with local production. Duty has been imposed on timber and timber products since the 1920 s. Over the years to about 1989, Douglas fir imports from North America constituted the bulk of the imports. Hemlock for framing was imported because it was cheaper than D fir and small amounts of Pacific North West Interior sourced Spruce- Pine- Fir (SPF) was imported as was Interior grown Douglas fir/larch. Small amounts of kiln dried Lodgepole pine was brought in and green American Lumber Standards ALS (North American sized lumber) Douglas fir found a niche for a few years in the roof truss market. Pine species, kiln dried and manufactured in the Baltic countries and northern Europe, made a brief appearance. 5

PART 3 A snapshot of the Australian timber resource Native forests Australia has 155 million hectares of native forests, 11 million hectares are in designated multiple use forest. Less that 1% of these multiple use forests are logged each year. The volume of logs harvested from Australia s native forests has been relatively stable over recent years. Australian plantations Australia has 1.7 million hectares of plantations. 4 The industry is on track to expand plantations to 3 million hectares by 2020. 5 The harvested volume from softwood plantations increased during the 1990s and is expected to stabilise at around the current level. The volume from hardwood plantations is increasing rapidly as the large areas of plantations established since the mid 1990s reach harvest age for woodchips. In Gross Round Wood Equivalent (GRWE), Australia has been a net exporter of forest products since about the mid 1990 s. 6 This trend is likely to be sustained by the regulation framework outlined in Plantations for Australia: The 2020 Vision. Other private initiatives will also insure that more plantations will be established in both softwood and hardwood. In 2004 98% of all new plantations were hardwood with about 34% of new plantations being established in Tasmania. 4 Annual apparent consumption of sawn wood in Australia Annual apparent consumption of sawn wood in Australia averages about 4.4 million cubic metres. According to ABARE (Australian Bureau of Agriculture and Resource Economics), consumption is set to remain approximately the same for the foreseeable future. See Table 1. 4 Plantations 2020 brochure 5 Plantations 2020 brochure 6 ABARE, ANU Forestry Market report June 2004 6

Table 1: Apparent consumption of Forest Products (sawn wood) in Australia Unit 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 Coniferous 000 m³ 3,455 2,912 3,112 3,270 3,608 3,948 est. Broadleaved 000 m³ 1,425 1,248 1,174 1,138 1,115 1,358 est. Total Sawnwood Per cent of Coniferous 000 m³ 4,880 4,160 4,286 4,408 4,723 5,306 est. 71% 70% 73% 74% 76% 74% Plywood 000 m³ 296 247 297 377 320 351 est. Sawn wood exports from Australia were almost 300,000 m3 in 2005-2006. 7 7 ABARE 2006 Australian Forest and Wood Products Statistics. March-June 2006 7

PART 4 Results of Douglas fir surveys Survey results Douglas fir The following are results from Questionnaire A of the on-line survey. Questionnaire A was designed for the Design and Build sector which included the following professions: Architect, Building Designer, Specifier, Interior Designer, Builder, Engineer, Carpenter, Tradesman. For brevity, this group will be referred to as Architect/Designer/Builder category. There were 203 responses. Architects 18% Building Designers / Specifiers 34% Interior Designers 9% Builders 15% Engineers 5% Carpenters or other Tradesmen 9% Others 11% In the Architect/Designer/Builder category: For technical information about timber: 27% consulted Websites 20 % product brochures 16% In-house libraries 14% manufacturers technical departments Only 12% of the Architect/Designer/Builder category was aware of Websites of domestic suppliers of Douglas fir. (Action required here) Seventy-five percent (75%) of the Architect/Designer/Builder category thought a Q&A (Question and Answer) website link for Douglas fir and WRC was a Good to Invaluable idea. Eighty-two percent (82%) thought it would be valuable to utilize a link to a Website with (drilled down) specific information about Douglas fir or WRC. (Example was a link to, How to apply WRC shingles ) When the Architect/Designer/Builder category was asked to rate the information available for Douglas fir the answer was Less than satisfactory Sixty two per cent of Architect/Designer/Builder category said they had used Douglas fir (Oregon) in a building project in the last two years. The most popular applications were: 1. Large beams - 26% 2. Roof framing - 17% 3. Porch posts - 14% 4. Wall framing - 13% 5. Lintels - 12% 8

6. Doors and joinery - 8% 7. Windows - 5%. When the Architect/Designer/Builder category were asked why they chose Douglas fir (Oregon) the reasons given: 1. Available in sizes and lengths required - 23% 2. Aesthetics and good looks -20% 3. Superior strength to weight ratio -18% 4. Dimensional stability -10% 5. Matching previous framing in a renovation 11% 6. Price - 10% 7. To suit client brief. 8. Liked the smell when sawn - 0.5% Architect/Designer/Builders when asked why they do not use Douglas fir (Oregon): 1. Do not know enough about the product 32% 2. Not sure where it can be used -21% 3. Availability was a problem 15% 4. Lacked span tables and engineering specifications 12% Seventy-four percent (74%) of the Architect/Designer/Builder category did not know that Douglas fir (Oregon) was available in clear grades. (Strong hint here) Seventy percent (70%) of the Architect/Designer/Builder category wanted more information on timber coatings and finishes. 9

Survey Results - Douglas fir (continued) The following are results from Questionnaire B Douglas fir responses Questionnaire B was designed for the Supplier, Manufacturer, Consumer, which includes the following occupations: Timber Importers, Timber wholesalers, Merchants, Joiners, Manufacturers and Consumers. For brevity, this group will be referred to as Importer, Wholesaler, Merchant category. When the Importer, Wholesaler, Merchant category require technical information about timber: 1. 27% consulted Websites, 2. 22 % Product brochures, 3. 21% In-house libraries, 4. 13% Timber related Associations (TDA, FWPRDC, AWA, WADIC), 5. 6% Manufacturers technical departments. IMQ 7. Eighty-one percent (81%) thought it would be valuable to utilize a link to a Website with (drilled down) specific information about Douglas fir or WRC. (Example was a link to, How to apply WRC shingles) IMQ 8. Eighty-three percent (83%) of the Importers, Wholesalers, Merchants category thought a Q&A (Question and Answer) website link for Douglas fir and WRC was a Good to Invaluable idea. IMQ 21. When the Importers, Wholesalers, Merchants category was asked to rate the information available for Douglas fir (Oregon) the answer was Less than satisfactory IMQ 23/4. Forty per cent (40%) of Importers, Wholesalers, Merchants category said they have used or recommended Douglas fir (Oregon) in a building project in the last two years. The most popular applications were: 1. Large beams -27% 2. Roof framing - 14% 3. Porch posts -13% 4. Wall framing -13% 5. Lintels -10% 6. Doors and joinery -8% 7. Windows - 6%. IMQ 24. When the Importers, Wholesalers, Merchants were asked why they chose or recommended Douglas fir (Oregon) they replied: Available in sizes and lengths required - 24% Superior strength to weight ratio - 18% Aesthetics and good looks - 14% Matching previous framing in a renovation - 14% Price - 14% Dimensional stability - 10%. IMQ 25. When asked why they do not use Douglas fir (Oregon), 10

32% said they Do not know enough about the product 21% said they were not sure where it can be used 17% said Availability was a problem 8% said they Lacked span tables and engineering specifications. IMQ27. When the Importers, Wholesalers, Merchants were asked if they familiar with the following websites pertaining to Douglas fir (Oregon): 1. Western Wood Products Association 20% 2. Council of Forest Industries 12% 3. New Zealand Douglas fir Association 9% 4. Coast Forest Products Association -5% 5. BC Forest Products 5% 6. None of the above 49% IMQ 26. Sixty-five percent (65%) of the Importers, Wholesalers, Merchants knew that Douglas fir was available in clear grades. IMQ 30. When asked if timber reps were generally knowledgeable about Douglas fir or western red cedar the average response was Less than satisfactory (2.9 on a scale of 1 to 8) 11

One timber wholesaler s observation of the Douglas fir market A timber importer/ wholesaler described his observations on the current market for Douglas fir scantling like this: We deal with about 100 builders out of a possible 2300 in New South Wales. Not one of the 100 builders uses North American Douglas fir for framing. Possibly 10 builders would use some NZ Douglas fir for lintels (70 x 90mm) or bottom plates or beams of (72 x 247mm) untreated. We do not sell (100 x 100) 4 x 4 Douglas fir posts for exterior use. Treated and primed Radiata pine posts (88 x 88) are used and placed in the ground and secured with quick drying concrete. Builders are doing this to save stirrup placement. This same wholesaler, who ten years ago handled huge volumes of Douglas fir scantling for another company, outlined the increasing use of Engineered Wood Products in place of solid Douglas fir floor joists. One contributing reason for this he suggested, is the 7 year structural warranty that a builder is obligated to give. A frame designed using Engineered Wood Products, the wholesaler pointed out, gives the builder a level of confidence as the EWP components are specified in a plan signed off by an engineer. Engineered Wood Products Three products make up the bulk of this market: I Beams, LVL and Open Web Trusses. I beam joists consist of top and bottom flanges of solid timber or LVL with the web fabricated from plywood, OSB or other product. LVL are Laminated Veneer Lumber (veneer grain all runs in the same longitudinal direction). Open Web Trusses consist of top and bottom flanges of timber with steel component webbing. In residential timber framed construction the ratio of volumes used in these Engineered Wood Products are in the range of 75% I joists and the balance LVL and Open Web Trusses. I joists are used in floor joist applications replacing previously specified solid Douglas fir scanting in end sections of (50 x 150,200,250,300mm) 2 x 6, 2 x 8, 2 x 10, 2 x 12. An approximate price comparison: Douglas fir in an F7 grade would be around the $400 m3 mark and LVL in the A$1200 m3 range. 4 x 3 Douglas fir is about half the price of LVL designed for formwork (100 x 75 nominal) 12

Steel framing Steel framing holds a share of the market in commercial buildings, sheds and warehouses. In residential buildings, steel framing has declined as the cost of steel has risen due to current raw material demand from Asia. In the past, steel framing may have achieved upwards of 10 to 15% share of the framing market. Douglas fir glu-laminated beams Douglas fir glu-laminated beams are imported into Australia in small quantities. The glulam beams are often used for their aesthetic features or in commercial or residential applications requiring long or curved beams. This is now a small boutique market. New Zealand grown Radiata pine and Douglas fir began to arrive in significant quantities in the 1970 s. Throughout the 1980 s locally produced Radiata pine and New Zealand grown Radiata began to displace North American west coast Douglas fir for framing. Present day market for Douglas fir Most builders agree that Douglas fir scantling is an excellent framing timber. The choice of framing timber basically comes down to price, structural performance, builder preference and availability. Douglas-fir has many advantages. It is stiff, dimensionally stable, high strength to weight ratio, contains no spiral grain, exhibits natural moisture resistance and is sustainably managed. A market for Douglas fir exists for renovations, additions and extensions. Cost comparison of 2 x 4 (100 x 50) structural framing per A$ m3 FIS Jan 2007 Aug 2007 Canadian Douglas fir 2x4 green R/H A$445 m³ FIS A$465 m³ FIS Radiata pine KD 100x50 (90x45 finish) MGP 10 NZ Douglas-fir F5 green 100x50 North Coast Hardwood F11 Sawn A$365 m³ FIS A$395 m³ FIS A$420 m³ FIS A$420 m³ FIS A$730 m³ FIS Explanation: A$ /m3 FIS- price per cubic metre delivered into yard (Free In Store) R/H Rougher Headed rough texture moulded to bring cross section to even size 13

Table 2: Volume of Douglas fir imported into Australia 1980-2006 7 Douglas fir volumes imported into Australia Year North American Douglas fir³ New Zealand Douglas fir1¹ NZ Radiata pine² (for comparison) 1980 92,000 m³ 499,000 m³ 1981 59,000 m³ 1982 51,000 m³ 1983 55,000 m³ 1984 56,000 m³ 1985 64,000 m³ 1986 47,000 m³ 1987 57,000 m³ 1988 783,007 m³ 348mm fbm 67,000 m³ 358,000 m³ 1989 729,000 m³ 324mm fbm 66,000 m³ 1990 522,000 m³ 232mm fbm 77,000 m³ 1991 535,000 m³ 238mm fbm 85,000 m³ 1992 427,600 m³ 190mm fbm 82,000 m³ 1993 351,000 m³ 156mm fbm 30,000 m³ 1994 227,200 m³ 101mm fbm 38,000 m³ 1995 272,300 m³ 121mm fbm 38,000 m³ 989,000 m³ 1996 231,700 m³ 103mm fbm 34,000 m³ 1997 209,300 m³ 93mm fbm 29,000 m³ 1998 135,000 m³ 60mm fbm 43,000 m³ 1999 144,000 m³ 64mm fbm 39,000 m³ 2000 141,700 m³ 63mm fbm 28,000 m³ 1,405,000 m³ 2001 65,300 m³ 29mm fbm 41,000 m³ 2002 78,800 m³ 35mm fbm 21,000 m³ 2003 69,800 m³ 31mm fbm 18,000 m³ 2004 55,000 m³ 25mm fbm 43,000 m³ 168,000 m³ 2005 56,300 m³ 25mm fbm 28,000 m³ 153,000 m³ 2006 37,000 m³ 17mm fbm 24,000 m³ est. 127,000 m³ 2007 1 These figures (in red are total exports of Douglas fir) are from New Zealand (Statistics for years ended 31 December). 2 These figures are (in blue are total exports of Radiata pine) from New Zealand (Statistics for years ended 31 December). 7 Table prepared by Forestry Statistics Section, Policy Innovation & Research Group, Ministry of Agriculture and Forestry. (These are exports to all destinations) Source: Statistics New Zealand, Overseas Trade. INFOS database, Statistics New Zealand. 3 Sources: ABARE, Cascadia Forest Products, ATIF 14

New Zealand Douglas-fir 8 The New Zealand Douglas-fir Association surveyed builders about the merits of Douglasfir. Under the following headings are statements made by builders: Regarding stability: saves you time replacing studs and gives you reliability With Pine we may have to replace anywhere up to 20 to 25 studs which costs time and money Moisture resistance: We use Douglas-fir where we can. It doesn t soak up water like a sponge and it will dry on site in two weeks Strength and Stiffness: Douglas-fir is well suited for structural beams, trusses and roof framing In New Zealand, Douglas-fir is the second most planted forestry species after Radiata pine. With around 112,000 ha of Douglas-fir plantations, New Zealand is the third largest grower after France and Germany, outside of the Pacific Northwest. In the New Zealand document entitled, NFED National regional wood supply forests 2000, New Zealand Douglas fir and Radiata pine volumes are forecast from 2000 to 2040. In 2020 Radiata pine volumes 32 million m³ Douglas-fir volumes 980,000 m³ In 2030 Radiata pine volumes 32 million m³ Douglas-fir volumes 1.2 million m³ In 2040 Radiata pine volumes 32 million m³ Douglas-fir volumes 1.7 million m³ 8 NZ Douglas-fir brochure (www.douglasfir.co.nz) 15

PART 5 Western red cedar Over the decades, designers, manufacturers and builders have chosen western red cedar WRC for its unique properties. However, from around 1988, WRC has experienced a fall in demand. Table 3. WRC imported into Australia from Canada 9 1988 97,875 m³ 43.5mm fbm 1989 83,700 m³ 37.2mm fbm 1990 83,250 m³ 37.0mm fbm 1991 58,500 m³ 26.0mm fbm 1992 81,000 m³ 36.0mm fbm 1993 67,500 m³ 30.0mm fbm 1994 72,000 m³ 33.0nn fbm 1995 69,076 m³ 32.0mm fbm 1996 65,925 m³ 29.3mm fbm 1997 69,076 m³ 30.7mm fbm 1998 52,425 m³ 23.3mm fbm 1999 66,825 m³ 29.7mm fbm 2000 69,526 m³ 30.9mm fbm 2001 45,675 m³ 20.3mm fbm 2002 63,451 m³ 28.2mm fbm 2003 51,751 m³ 23.0mm fbm 2004 49,275 m³ 21.9mm fbm 2005 46,125 m³ 20.5mm fbm 2006 53,100 m³ 23.6mm fbm 2007 est. 54,225 m³ 24.1mm fbm Table 4. Value of western red cedar imported from North America 11 2002-03 $Aus 000 2003-04 $Aus 000 2004-05 $Aus 000 Source Canada 64,025 46,188 44,425 USA & other 903 189 255 Total 64,928 46,377 44,680 9 Sources: Stats Canada, Hunter Consulting International Inc. 2007, MB 11 Source: ABS, International Trade, Australia, cat no 5465.0, Canberra 16

Western red cedar (continued) Table 5. Western red cedar import destinations 10 2002-03 2003-04 2004-05 New South Wales 19,600 m³ 16,000 m³ 10,900 m³ Victoria 27,700 m³ 23,800 m³ 25,200 m³ Queensland 14,000 m³ 10,700 m³ 13,800 m³ South Australia 3,400 m³ 2,700 m³ 2,600 m³ Western Australia 2,700 m³ 1,000 m³ 1,400 m³ Tasmania 0 0 0 Northern Territory 0 0 0 Total 67,600 m³ 54,100 m³ 53,800 m³ Table 6. Estimated current uses of western red cedar Current uses of Western Red Cedar Garage Doors 2% Knotty Grade- Bevel Siding, Pergola 10% Blinds & Shutters 13% Joinery (Windows & Doors) 35% Panelling, Cladding,Spa, Screening 40% Panelling, Cladding,Spa, Screening Joinery (Windows & Doors) Blinds & Shutters Knotty Grade- Bevel Siding, Pergola Garage Doors 40% Panelling, cladding, spa surrounds, screening 35% Joinery (windows, doors) 13% Blinds & shutters 10% Knotty grade (bevel siding, pergola, outdoor structures) 2% Garage doors 10 ABS Imports of rough sawn coniferous sawnwood International Trade. Cat number 5465.0 17

Knotty grade cedar One of the areas that the scope of this report was to cover was to investigate producing a set of span tables to be used in the design and construction of various outdoor structures in Select grades of tight knotty cedar. This information is commercially available in book form entitled, The Australian Decks and Pergolas Construction Manual. It was written and published in Australia by Allan Staines and may be purchased from the NSW TDA and the South Australia TDA. The book has been written with input and guidance from Timber Queensland and New South Wales Timber Development Association. The manual is full of designs and span tables to use in building structures such as decks and pergolas. The manual, as pointed out by the author, is a guide only and is not part of a statutory building code. Local relevant building by-laws must be consulted. For details on purchasing the book please refer to the reference section of this report. Large section beams in tight knot grade western red cedar. 18

Table 7. British Columbia Lumber Production 2005 by species 13 Hem - fir 3,070,000 m³ 1,299 mmfbm 7.5 % Western red cedar 1,880,000 m³ 794 mmfbm 4.6% Spruce-Pine-Fir (SPF) 33,250,000 m³ 14,068 mmfbm 81.0% Douglas fir / Larch 2,591,000 m³ 1,096 mmfbm 6.3% Yellow Cedar 177,000 m³ 75 mmfbm 0.4% Total 40,968,000 m³ 17,381 mmfbm 100_% A brief explanation of the above table: Hem- fir is a species mix consisting of (Western Hemlock, Amabilis fir, Grand fir and Alpine fir). These fir are Abies, a different genus to Douglas fir (Pseudotsuga). In the interior of the province of British Columbia, Douglas fir grows in the same stands as Larch. Larch does not grow in the coastal forest. Spruce-Pine-Fir (SPF) is a species mix found in the interior and not on the coast. 13 Source: Statistics Canada Catalogue 35-003-XIB 19

Canadian exports of western red cedar Table 8. Global Destinations of western red cedar exported from Canada Source: Stats Canada Cedar Lumber + Cedar Siding (as of June 2007) Volume mmfbm Country 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2007e Inc/Dec Belgium 16.8 15.1 12.2 14.6 7.5 6.6 7.9 7.7 8.5 9.8 1.1 12.5 28.0% Denmark 2.3 2.6 1.8 1.5 1.1 1.1 0.9 0.6 0.9 0.6 1.9 3.9 507.5% France 8.5 8.4 6.1 8.2 5.9 6.8 6.1 8.3 9.3 10.5 3.8 7.6-27.9% Germany 5.0 3.7 3.6 3.0 2.2 1.8 1.2 2.0 2.1 2.5 1.6 3.1 27.1% Ireland 0.1 0.2 0.3 0.8 1.1 1.2 1.2 1.6 2.7 5.4 1.7 3.4-36.5% Italy 1.0 1.5 1.3 0.8 0.7 1.0 0.6 0.7 0.7 1.0 0.4 0.8-19.5% Netherlands 6.7 6.3 6.4 11.4 7.3 9.7 11.9 13.8 10.7 12.2 6.9 13.7 12.7% UK 6.6 6.6 7.6 12.4 10.2 11.0 11.4 15.5 14.7 17.2 2.2 13.4-21.8% Total Europe 47.4 44.8 39.7 52.9 36.3 39.4 42.4 51.8 52.6 61.1 7.8 15.5-9.6% Middle East 0.1 0.0 0.4 0.3 0.1 0.1 0.2-149.8% Japan 53.3 41.4 32.6 39.8 28.3 24.0 28.2 27.5 23.9 37.5 10.7 21.4-43.3% China 0.0 0.0 0.1 1.0 1.7 1.6 2.9 8.4 10.9 19.7 13.6 27.1 38.2% Korea 1.3 0.3 0.4 1.1 1.1 2.1 1.8 2.2 3.8 6.6 2.6 5.3-19.5% Taiwan 1.9 1.3 1.7 2.9 1.4 1.3 1.2 2.3 1.1 1.9 0.9 1.9-1.4% Other Asia 1.2 2.6 1.6 1.3 0.2 0.2 0.3 60.5% Total Asia 56.5 43.0 34.9 44.9 32.5 30.1 36.8 42.1 41.0 65.9 28.0 56.1-14.9% Australia 30.7 23.3 29.7 30.9 20.3 28.2 23.0 21.9 20.5 23.6 12.1 24.1 2.0% New Zealand 8.8 6.2 5.7 7.1 6.1 6.3 7.0 10.3 8.6 8.8 3.5 7.1-19.4% Total Oceania 39.5 29.5 35.4 38.1 26.4 34.4 30.0 32.2 29.1 32.4 15.6 31.2-3.8% Total Offshore Shipments 143.3 117.3 110.0 135.8 95.2 104.3 109.6 127.2 123.3 159.6 74.9 149.9-6.1% United States 672.0 570.2 653.3 766.0 726.6 691.8 572.3 666.3 672.1 722.2 294.0 587.1-18.6% Total Export Shipments 815.3 687.5 763.313 901.804 821.816 796.074 681.946 793.523 795.335 881.788 368.9 737.8-16.3% Table prepared by Hunter Consulting, Vancouver, B.C 20

PART 6 Survey results western red cedar The following are results for western red cedar from Questionnaire A of the on-line survey. Questionnaire A was designed for the Design and Build sector which included the following professions: Architect, Building Designer, Specifier, Interior Designer, Builder, Engineer, Carpenter, Tradesman. For brevity this group will be referred to as the Architect/Designer/Builder category. When the Architect/Designer/Builder category was asked to rate the information available for western red cedar the answer was Satisfactory. IMQ 17/18. Sixty seven per cent (67%) of Architect/Designer/Builder category said they have used or specified western red cedar in a building project in the last two years. The most popular applications were: 1. Windows - 26% 2. Doors - 18% 3. Exterior cladding - 16% 4. Interior panelling - 9 % 5. Blinds & shutters - 8% 6. Shade or privacy screens 7% 7. Gates - 5% 8. Decking 4% 9. Fascia 3% 10. Pergolas 3% 11. Exterior seating and sauna 3% 12. Shake & shingle roof 0.5% IMQ 20. When the Architect/Designer/Builder category were asked why they chose western red cedar the replies were: Good looks and aesthetically pleasing -33% Natural Durability 27% Stable 14% Easy to paint or stain -10% Sustainably managed (a green building product) 8% Easy to source 5% When the Architect/Designer/Builder category was asked why they do not use western red cedar they replied: 1. Finishing and maintenance questions 14% 2. Price 13% 3. Unsure of sizes and grades available 12% 4. Environmental sustainability questions 11% 5. More technical information needed 9% 6. Lack of design examples or ideas 8% 7. Not in fashion 7% 8. Availability of information regarding species use 8% 9. Lack of span tables 6% 10. Unsure where to source 5% 11. Unsure of fixing and detailing 5% 21

12. Client choice, structural durability, not specified for project 3% When the Architect/Designer/Builder category was asked which of the Websites pertaining to western red cedar are they familiar with: (36 responses to this question) 1. Western Red Cedar Export Association 61% 2. Western Red Cedar Lumber Association - 28% 3. Cedar Shake and shingle Bureau 11% When the Architect/Designer/Builder category was asked if they were aware of WRC Designers Handbook available as a download only two people out of 117 responses to this question answered yes. When the Architect/Designer/Builder category was asked if they were aware of the on-line Cedar school only one person out of 117 responses to this question answered yes. The following are results from Questionnaire B of the on-line survey. Questionnaire B was designed for the Supplier, Manufacturer, and Consumer which includes the following occupations: Timber Importers, Timber wholesalers, Merchants, Joiners, Manufacturers and Consumers. For brevity this group will be referred to as Importer, Wholesaler, Merchant category. When the Importer, Wholesaler, Merchant category was asked to rate the information available for western red cedar the answer was Satisfactory. Fifty-nine per cent (59%) of the Importer, Wholesaler, Merchant category said they have used or recommended western red cedar in a building project in the last two years. The most popular applications were: Windows - 21% Doors 15% Interior Panelling - 13% Shade or privacy screens -8% Fascia - 4% Exterior cladding - 13% When asked if timber reps were generally knowledgeable about Douglas fir or western red cedar the average response was Less than satisfactory (2.9 on a scale of 1 to 8) Sixty-eight percent (68%) Importers, Wholesalers, Merchants would recommend WRC Select Tight Knot grade for outdoor or backyard construction 22

Further survey results additional information The following are results for western red cedar from Questionnaire A of the on-line survey. Questionnaire A was designed for the Design and Build sector which included the following professions: Architect, Building Designer, Specifier, Interior Designer, Builder, Engineer, Carpenter, Tradesman. For brevity this group will be referred to as Architect/Designer/Builder category. Information sources ADQ7 The Architect/Designer/Builder category was asked what magazines they read: 1. Building Product News 26% 2. Architectural Product News - 22% 3. Building Connection - 15% 4. Architecture Australia 13% 5. Artichoke 8 % 6. Monument 7% The 2003 Sweeney Research project (commissioned by Architectural Media Pty Ltd) 11, found: The top ten publications Always Read by the 300 architects surveyed: Architectural Product News 45% Architecture Australia 43% Building Product News 34% InfoLink Architectural 27% BCME 26% Houses 22% Architectural Review Australia 17% Monument 9% Indesign 5% Inside 5% ADQ 8. The Architect/Designer/Builder category was asked which of the following Web sites were they familiar with: 1. TDA (Timber Development Association) 43% 2. Forest & Wood Products Research & Development Corp. - 30% 3. TABMA (Timber and Building Materials Assn) 17% 4. TRADAC (Timber Queensland) 10% 11 Source: Survey of Architect s Magazine and Journal Readership 2004. Study 13850, by Sweeney Research Pty Ltd., Albert Park, Victoria. 23

ADQ 12. How many building or trade shows have you Architect/Designer/Builder category attended in the past 2 years? 1. 37% attended 2 shows 2. 16% did not attend any 3. 12% attended 4 shows 4. 12% attended 1 show ADQ 13. The favourite Trade Shows (Architects/Designers/Builders): 1. Designbuild - 33% 2. DesignEx- Form & Function 30% 3. HIA Home show 9% 4. Working with Wood show - 8% 5. Building & Home Improvement show - 4% ADQ 14. Architects/Designers/Builders rated the trade shows as good value overall ADQ 15. Architects/Designers/Builders Why did they not attend trade shows? 1. Too much time involved - 35%, 2. Learn enough from other sources - 30%, 3. Too far away -11% ADQ 31 & IM. When asked if they recalled advertisements-print, TV, radio, on-line over the past year. Of the 98 people that responded to this question 85 people could recall an ad for western red cedar but only 13 people could remember an ad for Douglas fir. ADQ 32 Where do Architects/Designers/Builders mostly learn about new building products? 1. Magazines 40% 2. Internet 27% 3. Trade/Professional Associations 15% 4. Timber/Building Supply Reps - 9% 5. Colleagues 7% ADQ 34. Sixty percent (60%) Architects/Designers/Builders said that they have been asked by their clients about sustainability issues or wood certification more often than 2 years ago. ADQ 35. Architect/Designer/Builder category felt timber knowledge seminars were a very good idea. ADQ 36. Which seminar topics would interest you Architect/Designer/Builder category? 1. Project examples design and explanation 20% 2. Environmental Sustainability - 19% 3. Finishing and maintenance - 17% 4. Fixing, detailing - 15% 5. General info on WRC and Douglas fir - 15% 6. Engineering details & technical info- 13% 7. Appropriate use - 1% Survey Results western red cedar 24

Information sources (continued) The following are results from Questionnaire B. Questionnaire B was designed for the Supplier, Manufacturer, and Consumer which includes the following occupations: Timber Importers, Timber wholesalers, Merchants, Joiners, Manufacturers and Consumers. For brevity this group will be referred to as Importer, Wholesaler, Merchant category. IMQ5. The Importer, Wholesaler, Merchant category were asked which magazines they read: 1. Timber Trader 32% 2. House and Garden - 22% 3. Building Product News - 18% 4. Home beautiful -13% 5. Architectural Product News 9% IMQ6. Which of the following websites are the Importer, Wholesaler, Merchant category familiar with? 1. TDA (Timber Development Association) - 26% 2. TABMA (Timber and Building Materials Association) - 22% 3. Forest & Wood Products Research & Development Corporation - 21% 4. TRADAC (Timber Queensland) - 8% 5. Domestic suppliers of Douglas fir (Oregon) and WRC? - 4% 6. None of the above 20% IMQ9. How many building or trade shows have the Importer, Wholesaler, Merchant category attended in the past 2 years? 1. 33% did not attend any show 2. 30% attended 2 shows 3. 13% attended 4 shows 4. 8% attended 1 show 5. 7% attended 3 shows IMQ10. Favourite trade shows of the Importer, Wholesaler, Merchant category: 1. HIA Home show - 17% 2. Designbuild - 17% 3. Building & Home Improvement show - 10% 4. Working with Wood show - 9% IMQ18. Importers, Wholesalers, Merchants category were familiar with the Cedar websites: Out of 146 responses to this question 1. 25% knew of WRCEA 2. 12% knew of WRCLA 3. 1.4% knew of Cedar Shake and Shingle Bureau 4. 61% were not familiar with any of the websites 25