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Chapter 8

8.1 Introduction

The use of sawnwood (not only tropical hardwoods) has, in general, been fairly static over the past ten years in many European countries. Materials such as concrete, metals and plastics have replaced wood in a number of applications traditionally occupied by this material. One notable example has been the rapid substitution of wood in window manufacture. There are many reasons for these substitutions, including:

Within the tropical timber industry, trade in tropical timbers has been affected not only by the features mentioned above, but also by the adverse publicity connected with deforestation in tropical countries. At the same time, a shift in fashion from darker to lighter coloured species has also had a detrimental effect upon the tropical timber trade in some countries and in certain end uses.

The views of many Europeans are, however, starting to change. Many governments, businesses and individuals are questioning how the materials and products that they use are obtained, how much energy is consumed in their manufacture and how they will ultimately be disposed of. For these and for other reasons, timber and timber products are now receiving renewed and favourable interest in some areas and consumption is once again increasing. Changes in fashion are also bringing about renewed interest in wood and wood products, with increased attention in Europe focusing on `natural products' and an `outdoor living' style.

8.2 Specific conclusions drawn from the study

Between 1990 and 1996 there was a general decline in the European imports of tropical logs, sawnwood and plywood, although the latter part of the decade saw a modest recovery in import figures for these products. Veneer imports have remained fairly static since 1990.

The regions of supply changed markedly during the period 1990-1999. This has resulted in a change in the species mix imported. Whilst logs have been imported almost exclusively from Africa, there was a rapid decline in the imports of tropical sawnwood from Asia in the early/mid-1990s. This was countered by increase in imports from Africa and Latin America. These changes in supply have been brought about by a number of factors, including an increasing numbers of producer countries (particularly in Southeast Asia) imposing measures to encourage local secondary processing industries. The 1990s saw a slight increase in imports of plywood and veneers from Africa and Latin America, but a slight dip in imports from the Far East.

The levels of imports as well as the types of product (i.e. logs, sawnwood, plywood or veneer) imported vary greatly from country to country. By way of example, the United Kingdom imports by far the greatest proportion of tropical plywood, whereas France imports the greatest proportion of tropical logs.

The European production of tropical sawnwood based on imported tropical logs fell during the period 1993-1999, by around 26 percent. During the same period, the production of tropical veneer also fell, but to a lesser extent (10 percent), whilst the production of tropical plywood rose slightly (7 percent).

The proportion of tropical hardwood product consumption as a proportion of overall hardwood product consumption varies from country to country within Europe. France and Spain are the largest consumers of tropical sawnwood, whilst the United Kingdom and France are the largest consumers of tropical plywood. Italy is the largest consumer of tropical veneer. On a per capita basis, however, the Netherlands consumes the largest quantities of both tropical sawnwood and plywood.

Figures giving a breakdown of how tropical timbers and tropical timber products are consumed within individual countries are, however, difficult to come by. During the period 1990-1999 in the four largest importing countries, the consumption of tropical sawnwood remained relatively static in France and Italy, whilst in the Netherlands and Spain, slight increases in consumption were recorded.

Data on end uses for tropical timbers and tropical timber products are difficult to come by. Nevertheless there are large differences in end uses observed between different countries. For example in Italy, a significant quantity of tropical sawnwood is used in furniture manufacture, whilst in the Netherlands large quantities of tropical sawnwood are used in civil engineering works. In the United Kingdom, the largest consumption of tropical sawnwood is observed in the construction sector. Around 80 percent of the European Union hardwood plywood consumption is accounted for by the United Kingdom, France, Germany and the Netherlands. In excess of 60 percent of this consumption is of tropical species. The largest consumers of tropical veneers are Italy, Portugal, Spain and Germany. The consumption of veneers is particularly high in certain Mediterranean countries where tropical species are fashionable.

The importation of secondary processed products manufactured from tropical hardwoods has increased over the last ten years. Malaysia and Indonesia have been particularly active at developing their processing and manufacturing industries to add value to their raw materials. Furniture, furniture parts and builders woodwork comprise around 70 percent of these secondary processes wood products. In 1998, secondary processed products accounted for a third of the value of all tropical timber product imports entering Europe, whilst in the United Kingdom and Germany, the value of imported secondary processed wood products exceeded that of primary products. The penetration of secondary processed tropical wood products is greater in Northern Europe than in Southern Europe. The main importers of secondary processed products exported from the Far East and South America are the United States of America and Japan. European countries are, however, the main importers of secondary processed products from Ghana and Côte d'Ivoire, the two main African exporting countries. The growth in imports of secondary processed products is set against a backdrop of declining primary product imports.

The future markets for high added value tropical timbers are perceived to lie in the maintenance of existing and traditional markets, with the possibility of winning back some of the market share lost to competitive materials over the past few years. It was noted, by a number of businesses/organizations interviewed during the course of this study, that as the consumption of timber increased so too did the consumption of tropical timber products. As noted previously, there is some guarded optimism regarding the future prospects for tropical timbers. One of the virtues of this material in today's climate is that of its perceived `environmental friendliness', albeit the importance of this feature trails behind other properties such as quality, durability and style in the perception of the general public. Nevertheless, this is encouraging news for tropical timber products.

Although in general it was thought that entirely new markets for tropical timber products were unlikely, a number of opportunities were identified in what might be termed `fashion' end uses. These include interior flooring and garden decking in particular.

Of the `traditional' markets for tropical timbers, joinery, is probably the best described. Within this sector, competitive materials have hit hard most end use applications traditionally occupied by tropical timbers. Windows and window frames are of particular note, with plastics being the main competitive material gaining significant market share over the past decade, especially in Northern Europe. Persuasive marketing and the promotion of PVC windows by manufacturers has undoubtedly partly led to this high level of substitution. No doubt positive `counter' marketing from the timber industry to promote tropical timbers by highlighting their benefits (as noted in Section 4.2.1) could help reverse this trend. Similar trends have been observed with other joinery products, notably doors that have also suffered from a loss in market share.

In addition to pressure from other materials changes in fashion, from dark coloured timbers to lighter coloured species have, in certain countries notably the United Kingdom, also had a negative effect upon the consumption and popularity of tropical hardwoods in certain end uses. These include furniture and joinery applications. Nevertheless, some evidence uncovered during this survey suggests that this trend is reversing and that darker species are again becoming more popular.

Within the furniture industry, tropical timbers have lost market share over the past ten years. The reasons for this include a movement towards the used of temperate species (due, in part, to the aforementioned fashion for lighter coloured species) and an increase in the use of panel products such as MDF. Allied to this, there has been an increase in the importation of furniture and furniture components from tropical timber exporting countries.

The United Kingdom and Denmark are currently the main consumers of teak and teak products. Teak is currently supplied in a variety of forms from logs to secondary processed products. Major attributes of teak include its weather resistance and dimensional stability, making it particularly suitable for outdoor applications such as garden furniture. In the United Kingdom most garden furniture is imported from the tropical producer countries. Imports of plantation grown species (mainly teak and mahogany) are currently limited, but, it is thought that the supply of these timbers will increase in the future. Some industry contacts considered that good opportunities exist for short rotation, plantation grown, species and it is interesting to note that most scepticism about the use of plantation teak comes from the industry, rather than the final customers who often appreciate the aesthetic qualities of the material. Overall, the opportunities for plantation grown teak in Europe are considered to be good.

The opportunities for plantation grown teak (as well as other plantation species and lesser known species) would appear to lie in product development and by adding value through the manufacture of secondary processed products in the exporting country. It is worth noting the `success story' of rubberwood products, imported in quantity to European countries such as the United Kingdom.

The design and quality of timber products is associated with the maintenance or increase in the market share of tropical timber products. This is seen to be key issue, if plantation or `lesser known' species are to be introduced to the market place.

With regard to factors influencing the purchasing decisions of buyers of tropical sawnwood, the `natural' properties of tropical timbers, such as appearance, colour consistency and natural durability are of greatest importance. In these respects, tropical timbers fare well against competitive materials. In terms of product specifications, however, tropical timbers do not do so well against alternative materials. In this matter, consistency of grading/quality is the most important factor to the purchaser. Supply related factors are perceived to be the greatest weakness of tropical timbers. These, together with price, have stimulated the use of substitute materials. This is also an issue with tropical plywood and veneer.

As noted above, one of the main competitive materials to tropical timbers is plastic (PVC) especially in the windows sector. Other alternative materials include laminated scantlings. The reasons for the success of these competitive materials can be attributed to several factors, but especially to price and availability as well as regularity and ease of supply.

Little quantifiable information is available on the amount of tropical hardwood flowing along the various channels of delivery in European countries. However, it is evident that traditional importers and traders are the main businesses dealing with the exporters of tropical timbers. In terms of the supply chains, there is now a trend to shorten these, leading to changing patterns of supply. It is likely that a rise in `e-commerce' will change the patterns of supply still further.

Builders merchants and architects, in particular, heavily influence the decision of the public to choose a particular material. Education and positive promotion of tropical timbers and tropical timber products in these areas could well help improve the competitiveness to these materials. An aspect, which is particularly noteworthy, is that of the `environmental friendliness' of timber vis-à-vis competitor materials (notably PVC). This should be more strongly promoted.

Price is a key factor influencing the purchasing of tropical timber products. It is, however, seldom the sole buying criterion, with availability and alternative materials also being factors in these decisions. In recent years, the export prices of tropical timber primary products (sawnwood, plywood and veneer) have, in general, fallen in real terms.

With regard to the business environment as a whole, a number of factors are seen to influence the marketing of tropical timbers and tropical timber products. Firstly, the level of economic activity in European countries (as well as other tropical timber importing countries) is seen to affect the state of the tropical timber market. Although general economic indicators such as GDP have a bearing upon consumption, relationships between activity in the main end use industries (construction, furniture manufacture) and consumption are stronger. This is borne out by the findings of the survey wherein respondents were asked their opinion about what were the main drivers for demand in tropical timber products. Many stated that activity levels in the construction, joinery and furniture industries were determinants. Macroeconomic factors such as house sales and consumer spending were also noted as drivers for consumption in joinery and building products. Exchange rate fluctuations are another factor affecting levels of consumption.

The competitiveness of the European woodworking industry is another factor that influences the marketing of tropical timber products, both at the level of primary processed products (sawnwood, plywood and veneer) and secondary processed products. The area of specialist, high added value products such as joinery and furniture manufacture provide potential markets for exporters of tropical sawnwood, plywood and veneer, nevertheless the high cost of labour in Europe is seen as a potential weakness.

The trend towards the consolidation of timber businesses (so as to reduce overhead costs, etc.), which occurred in the 1990s places increasing importance on regular and reliable deliveries, consistent product quality and price stability. Trading over the Internet offers a potentially flexible and cost-effective way of trading in tropical timber, nevertheless, for success in this area it is important that suppliers are able to meet their commitments in terms of reliability of supply and product quality.

Enlargement of the European Union is likely to lead to stronger competition for tropical timber from temperate hardwood species such as oak, beech and birch. The harmonization of European construction codes and product standardization is also likely to have implications for exporters of tropical timbers targeting their products, in particular, at the construction industry.

Restrictions placed by CITES may, in the future, affect trading in tropical timbers in Europe. Pressure from NGOs has lead to the introduction of certification as a means of achieving better forest management. The potential impact of certification on the tropical timber market in Europe is difficult to assess and views on its importance in the development of the tropical timber industry varied. Nevertheless, it may be advantageous to be able to offer certified products in certain countries or regions. In general, certified products are likely to have a greater impact in Northern Europe than in Mediterranean countries and in France. For example, in the Netherlands, where tropical timbers have traditionally been used extensively for widows, increasing environmental pressure is resulting in a switch to treated softwood as a substitute. Here, the market would undoubtedly benefit from the expansion of certified tropical timber. Furthermore, it was felt that issues of certification were more important in certain markets (notably the DIY outlets in the United Kingdom) than in other areas.

The environmental perceptions surrounding the use of tropical timbers are likely to be key issues in the future. The adverse image of tropical timber, associated with deforestation in tropical countries may, in part at least, be countered by the utilization of certified timber products. In order to achieve this, it may be necessary to secure mutual recognition of local certification systems operating in countries like Malaysia and Indonesia. In general, the market is unlikely to accept any price premium for certified timber, except in niche applications. There is some evidence, however, which suggests that the ultimate end user may be willing to pay more for certified material.

The growing trend for `green' products is stimulating demand for timber products. In this respect tropical timbers have a number of advantages over temperate species, such as natural durability, strength and aesthetic properties

When compared with other markets for tropical timbers, it may be observed that Japan, like Europe, possesses a large and well-developed market for primary products, whereas in North America, the market for these products is small. On the other hand, the market for secondary products in North America is significant. Although Japan possesses a significant forest resource, in its own right, it is the world's leading importer of tropical logs. Nevertheless, in recent years import levels have fallen, as they have in Europe. Imports of tropical logs to the United States of America are negligible. As has happened in Europe, changes have occurred in the countries exporting logs to Japan. Africa is the main source of tropical logs for the European market, whereas Malaysia, other Asian countries, Africa and Latin America all supply Japan's demand. Around 80 percent of Japan's log imports are absorbed in plywood production.

Whilst in Europe, import levels of tropical sawnwood have remained relatively stable, Japan has seen a 50 percent decline over the period 1995-1999. This decline reflects the slowdown in the Japanese economy and construction sector. This is not surprising given that construction and the furniture industries account for two-thirds of the consumption of tropical sawnwood.

In Europe and Japan, tropical plywood (both imported and produced domestically from imported logs) account for around 45 percent and 80 percent of total plywood consumption, respectively. These figures compare with around 9 percent market share for tropical plywood in the United States of America. As in Europe, most plywood in Japan is used in construction. Over the period 1995-1999, there was a marked increase in tropical plywood imports in all three regions. In part, this is probably a reflection of the desire by exporting countries to add value to their tropical timber production.

Both Europe and North America saw dramatic rises in the value of imports of secondary products between 1995 and 1999, whereas, in the smaller Japanese market, no change was recorded over the same period. It is clear that the major exporting countries are placing great emphasis on encouraging the development of secondary processing industries.

It was mentioned in Chapter 1 that some resistance to the supply of data and/or information for the survey had been met with and that, consequently, fewer companies and businesses than hoped for had been interviewed. As a result, it proved difficult to obtain as much information/data as originally anticipated. The reasons for this reluctance are unclear, however, the traditional conservatism of the industry coupled with difficult trading conditions and sensitivity about criticism over the use of tropical timbers, may all have contributed.

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