The last few weeks have been pretty slow for imported softwoods sales to Vietnam and I wonder what are the reasons for this unexpected development? Most of our Vietnamese customers say that the market is being flooded with softwoods from all over the world due to the slowing economy in China and lot’s of timber being diverted to Vietnam. Other says that the recent volatility of exchange rates is causing havoc. In any case many  softwood suppliers are panicking and searching for ways to keep their export volumes to VN. Whatever the reason it is certainly causing prices to drop to the extend that some Vietnamese buyers try renegotiating prices of material already on the water. A pretty unpleasent and unexpected situation and we are not sure how long this will last.APP Timber warehouse MY  04

I just read an article online that Myanmar has arrested more than 100 foreigners who were involved in illegal logging near the Chinese border. The article did not mention that these foreigners were mainland Chinese but one can guess as much. The same happened a few months ago in Gabon were mainland Chinese were involved in illegal mining and logging. It is proven over and over again that many mainland Chinese will do anything to make a quick buck. The same is happening in our industry in China where some Chinese manufacturers will undercut prices by using illegal harvested and/or non-certified raw materials. It is about time that the international environmental agencies take a more pro-active approach to stop this practice.Illegal logs in Myanmar

Illegal rosewood logs

In the last few years we have seen (too) many freight increases basically by all sea-liners quoting “increased fuel cost” as main reason. However crude oil prices have plunged almost 55% to below USD50/barrel so why are all liners not reducing their sea-freight? Seems an unfair situation to me.Crude oil price chart 2015

I have been attending many meetings in the past few years related to Malaysia’s process towards signing the VPA (= Voluntary partnership Agreement) with the EU. All these meetings were, at least for, me very entertaining because lots of matters were discussed yet very little achieved. Everybody has of course a say but at the end there is little commitment to join “forces” and achieve workable results.

Indonesia recently signed the VPA which is excellent news and I would presume that from now onwards all exports from Indonesia with the V-Legal certificate will have the “green-lane treatment” in Europe. Unfortunately this is not the case and they still have to arrange the “due diligence” as required under the EUTR.

The EUTR comprises about rules and regulations but says very little how to comply with these rules and regulations. And worse, when you contact the representatives of the European Forest Institute (EFI) in SE Asia, they are unable to tell you what one has to do to comply with the EUTR except to practice “due diligence”.

I have one simply question which I would like to be answered by the EU or EFI ; what documents does one have to produce less exporting V-Legal products from Indonesia (with VPA) compared to exporting products sourced from a country without a VPA? I presume there must be some advantage to have the V-Legal certification?

Pretty sure that I will not get any answer and I get the feeling that all those EU staff involved with the EUTR simply do not have any answer because that would make their job soon redundant.
eu timber regulation (1)

The current chairman of FSC Netherlands is Mr. R.J. Dekker of the well-known company “Royal Dekker”. This company is one of the oldest timber trading companies in The Netherlands and has for many years been at the forefront promoting legal and sustainable timber. I fully support and applaud Mr. Dekker and his company for their good efforts.
FSC Netherlands is closely associated with “The Borneo Initiative” (in short TBI) and “The Amazon Alternative” (in short TAA) and both organisations promote sustainable forestry management in Kalimantan, Indonesia and the Amazon. The Amazon Alternative ended this month but continues as http://www.idhsustainabletrade.com/hout-peru-tropical-timber-program under the “Sustainable Trade Initiative” (IDH by its Dutch abbreviation).
Royal Dekker started in 2003 operations in Bolivia and operates a timber processing plant under the name “Dekma”. Dekma is one of the main supporters of TAA and received financial aid from TAA and, as such from FSC. (One will not be too surprised that Dekma passed the FSC audit with a “strong performance” but that is not the point).
Of course there is nothing wrong with the above except that you might question the integrity of FSC Netherlands having a chairman who’s company benefits from their own programs that are financially supported by the IDH? And what I find worse is that the Dutch government financially supports both the TBI and TAA which might not be a big issue as long as the Dutch government equally supports other truly “independent” certification schemes like PEFC. But that is clearly not the case so indirectly the Dutch government support unfair competition?

I was just informed by one of my colleagues in Ho Chi Ming City that some Vietnamese workers are on strike at factories located at Binh Duong Province. They are apparently targeting Chinese owned factories in protest to mainland China’s aggressive behavior towards the South Sea waters which, China argues, belongs to them. I am not much into such politics but what worries me is that any strike in Vietnam is normally to be approved by the government’s labor department. And strangely enough in this case they target any Chinese owned factory regardless if the owners are from China, Malaysia, Singapore or Taiwan. Personally I believe that political matters need to be discussed and solved at government levels and they should not use other means to force their views. It will only results in reduced confidence by foreign investors in Vietnam and push more manufacturing business towards other South East Asian countries such as Indonesia and Malaysia.VN

Earlier this month I attended the annual IPWA meeting held in St. Petersburg FL in the USA. The IWPA (International Wood Product Association) was established in 1956 and is a leading international trade association for imported wood products into North America. According to its website it “represents over 200 companies and trade organizations engaged in the import of hardwoods and softwoods from sustainably managed forests in more than 30 nations across the globe”. Their members consist of three key groups involved in the import process:
1. North American importers and consuming industries
2. Overseas manufacturers and suppliers
3. Service providers that facilitate trade
This was my 2nd annual convention and also this year it surprises me how few Asian members attend this event. I talked to many North American importers and based on their information Asia is THE most important source for their imported products. So why are Asian manufacturers not there? It really baffles me and it seems that Asians prefer to export their products via 3rd party traders rather than going closer to the end-users such as North American distributors and or re-manufacturers. Besides meeting these importers it is also a unique opportunity to get first-hand information what is happening in Canada and the USA.
Of course the lack of Asian suppliers at the IWPA was good for our business; the fewer Asians the more export business we, as APP Timber, do and also during this convention we were able to obtain new orders.
IWPA

APP Timber is looking for a General Manager Sales to be based at our HQ in Malaysia. This person will be responsible for the development and performance of our group’s sales and marketing activities in Asia. It includes identifying and evaluating new customers, market conditions and developing sales objectives & strategies with the objective to increase our market share and sale margins. This includes implementation of sales and marketing reports for all countries with respect of customer visits, weekly and monthly reports, warehouse sales reports etc. The position requires frequent travels to all our sales markets. The successful candidate must have minimum 15 years marketing experience in the Asian woodworking industry with a good management back-ground. Good computer knowledge is required to make use of the latest web marketing tools. Of course a very good command of English and spoken Mandarin is an advantage but not a must. The GM Sales will report direct to the Managing Director at our HQ in Malaysia. Interested candidates can send their resume to me at hermens@apptimber.com.

This is the heading of a recent media release by the New Zealand Timber Industry Federation Inc. in which they claim that the number of logs exported (mainly to Chain and India) are twice as high as the volume of logs processed domestically. Many sawmills experience downtime and production losses because they are unable to buy enough logs (at reasonable prices). They also mentioned that the sawmilling industry has lost over 3000 jobs since 2008 and is at great risk of losing many more.
I am not sure why they release this “news” now as many of us know this has been going on for many years; as matter of fact I have been highlighting this fact in many articles in various publications. My question to the New Zealand sawmilling industry is; what are you going to do about this? Why you are not more united and force your government to take action? Most of your forefathers used to be emigrants pioneers who worked very hard to establish the basis of today’s industry. They were fighters and left no stone unturned to survive but it seems today’s generation of saw millers has lost that skill?

The Malaysian Straits Times newspaper carried an interesting article today; “Foxconn eyes US, Indonesia”. Foxconn is a Taiwanese company with huge production facilities in China and THE leading supplier of Apple iPhones and iPads. The article claims that the rising costs and labour unrest in China are main reasons for Foxconn to relocate production by building high-tech factories in Indonesia and the USA. So does this also apply to the woodworking industry in China? I partly think so; our industry is low tech and is difficult to automate so it will always rely on low cost labour. One does already see a move of production from China to lower labour cost countries such as Indonesia. And yes it would be logical that some of the production moves to the USA especially if it concerns products using US sourced timber. However the USA timber industry is already facing a labour shortage so this would only work for that type of production which can be automated such as panel furniture, flooring etc. but probably less for solid furniture. Lastly I do find it recommendable that Asian manufacturers are willing to invest in the USA whereas many American seems to have lost the spirit of entrepreneurship.