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Scary Talk With VP

Started by Deadwood, February 20, 2006, 12:46:40 PM

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Deadwood

Yes I had a scary chat with our companies Vice President, not our real Vice President...I'm not that important, and besides I did not have a Flak Jacket!

All joking aside, he was telling me that some of the Papermills in Maine can import paper-grade chips from Finland, Norway and Sweden cheaper than they can purchase round pulpwood right here in Maine. It's hard to believe, but that is currently what these papermills are doing.

The wood ius cut, chipped and then shipped via cargo ships over to the Cargo Port's right here in Searport and Kittery Maine. Then they are hauled via train car up to the mills far cheaper than they can produce it here. I also found out where our "log train" come from via this guy. I work for the railroad here in Maine, and every day, we have a train (120 cars) of round hard wood pulp come out of New Brunswick and deliver it to a mill in Maine. I always wondered where that wood came from. Now that's a lot of wood!

If this trend continues, it has major ramifications for the loggers here in Maine. Logging employs more people in the State of Maine than any other industry. We have a lot at stake, but I still thought this makes for some serious discussion here on Forestry Forum.

How many people knew that paper companies were routinely importing raw materials from other countries (and I don't mean just Canada).

How can they produce and transport raw materials so cheaply from half-way around the world?

What does this mean for the local loggers/ suppliers?

How do we reverse this alarming trend?


jon12345

 The almighty dollar at work there.

Goes to show you how much some companies really care about their communities.  ::)

They are buying the pulp overseas because it is better quality or cheaper.  The only way to change would be to increase quality or efficiency of what is being produced, or ban/tax importation of foreign wood products.

Loggers will have to find other markets for there product or start targeting other products.
A.A.S. in Forest Technology.....Ironworker

beenthere

I surely don't have all the answers, but I suspect the chips come back on grain ships that hauled grain in their direction from ours.  Returning with a load of chips maybe the only alternative to returning empty. Just a thought. We could tax imported pulp and pulpwood but they would do the same to our grain.

Also, seems I recall a few years back the state of Maine made some 'momentous' decisions about what their timber could be cut for, and at the time, a lot of loggers were talking about being put out of work. Maybe those 'environmental' or 'tree hugger' decisions are having an effect as well.
Alaska and the Feds made some 'enviro' decisions as well that put loggers out of work. Gave timbered land to the Indians, who could (and have) clearcut their land and are now trading 'clearcut' land with the Forest Service (feds) to get the 'saved' land for more clearcutting.

Similar effects to the emminent domain 'takeover' when the Gov't makes the 'brainy' decisions for 'our benefit'. Similar also to the 'windfall' profits thread, where the Gov't thinks it can 'control' the system.  Lots of side effects that are not so pleasant to observe and feel.
south central Wisconsin
It may be that my sole purpose in life is simply to serve as a warning to others

crtreedude

We have huge amounts of gmelina down here - worthless stuff usually for the market, except for wood pulp and pallets.

I have been contacted frequently by people wanting to buy huge amounts of very cheap wood.  It don't do it because it isn't our business and besides, I don't like it.

So, how did I end up here anyway?

getoverit

I worked for 25 years for a chemical company that produced the world's menthol needs. This was used in such things as medicines, toothpaste, menthol for cigarettes, peppermint, spearmint, and the list goes on and on.

Our then president Nixon went to china and naturalized trade relations with the chinese. Almost overnight, we were out of the menthol market because the chinese could produce it cheaper than we could. It meant that over 500 employees were laid off and permanently lost their jobs here in the states.

Now, we are seeing the same kinds of imbalances with other things such as electronics, plastics, and steel. I hear that the chinese are also buying rough sawn wood from us and then making all kinds of things out of it and sending it back to us.

These countries dont have the enviornmentalists to deal with, and the "let's litigate them until they give up" mentality that alot of people here in the states do. I dont know whether to blame the court system for all of this or the environmentalists. The problems with mass litigations stretches far beyond environmental issues, and is killing our medical industry as well, driving up the costs of health care to out of reason prices.

I like clean water and air as much as anybody, but in no way do I consider myself to be an "environmentalist." There has to be some end to all of the endless litigation of industry here in the states. All it is doing is slowly killing us and our economy.

This story is another example of it, and resounds a post I made in the general forum about kids making a high mileage sports car that runs on biodiesel.
I'm a lumberjack and I'm ok, I work all night and sleep all day

macpower

Deadwood,
I think Beenthere may be on to something. This state has been squeezing business hard for a long time. The cost of operation here is near the highest in the country. I can see how it would be cheaper to import from Europe.
Purveyor of Stihl chain saws.
Thomas 6013 Band Mill, Kubota L3400DT, Fransgard V3004, 2 lazy horses and a red heeler

Woodhog

I wonder if all those ocean freight chips are coming from all that wood that was blown down in Sweden etc a while back. I remember seeing opictures of huge bundles of it floating in lakes to keep it fresh....at that time they didnt know what they were going to do with it.

With FOC ships ocean freight rates can be very low, some crews dont even have enough to eat. and are almost prisoners on those ships.
You can find sites on the net that show them working with no safety gear, flip flops in the engine room with oil up to their knees etc....
Combine cheap crewing with registry in countries that have very low standards to operate under and you get very good rates to the shippers and rich owners sitting in an office in some place like London, Geneva with the ships office in a place like Panama, Bahamas, Cyprus, Liberia etc. completely immune from the laws that would govern a US/Canadian flagged vessel...

On the trainload of pulpwood from NB,  probably coming from the company who ships
their lumber to the US on their own  railroad and who have the prices around here all depressed and have some good deals with the crown in N.B. (just a hunch)

I wonder who owns the mill that pulpwood is going to????

Big business is sooooo interesting....etc.....etc.. etc....

SwampDonkey

Woodhog, I know exactly where that wood is coming from since they are the only forestry company with the infrastructure in place to move it. That was another sweet deal our province gave them.

On another note who is buying the final product from countries with lax environmental laws? What's the use of certification if it punishes the one's following strict laws and regulations and benefits the other with none.  ::)

I can't beleive that we can import chips or pulp cheaper from western Europe unless their government it subsidizing shipping. But, that wouldn't surprise me since their ship building is subsidized. They have taxes as high or higher than ours and fuel costs are higher.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

Tillaway

A couple of years ago I had a conversation with a guy from a paper mill nearby.  He said it was cheaper for them to import processed pulp from Chile than to harvest the poplar stands planted for pulp just a few miles from the mill.  He said it was about $40 a ton delivered by barge to thier dock.  Thier costs were about a buck or so more to produce thier own of lesser quality.
Making Tillamook Bay safe for bait; one salmon at a time.

Woodhog

well there most be some good news in this...

With all that pulpwood heading out of the Maritmes.

Supply and Demand???

I must start sharpening my spare saws....

Ron Wenrich

This is sort of old news for some of us.  A good number of years ago, Proctor & Gamble shut down all their roundwood and chip purchases throughout North America.  They were buying processed pulp from Brazil, shipping it to the Great Lakes, and then shipping via rail to their plants in the US and Canada.  They said it was to have an even quality of product no matter where it was produced.  I think P & G has some investments in eucalyptus plantations in Brazil.

I also remember some southern foresters howling about the lack of chip markets for their thinnings just a few years ago.  South American pulp was undercutting their markets.

As for European fiber, its pretty hard to believe that they can undercut our markets so effectively.  Afterall, Sweden is one of the more socialistic countries in the EU and their workers are probably better paid than ours.  Only 2 things remain.  Either they are getting government subsidies (which shut down Canadian imports) or they're more productive.  My gut tells me its the latter.   

Never under estimate the power of stupid people in large groups.

SPIKER

I worked for a few months for International Paper (largest land owner in USA something in th eMillions of acres if I remrember correctly)   yes one big company but also well managed.   suppors USA people and canadian too.   I don't remembre IF they have overseas land or any down in South America or overseas but they are using fully sustainable methods, so well in fact they are using less & less of the land they own back when...   SO that means bigger groth trees to harvist on a 7 or 8 year rotation and or an increased time span from location to location each getting a select cut for thinning not a clear cut...

now for the importing rout, lots of different reasons many have been mentioned already.  one big one is the grain going over and the ships having to come back, these are not cargo ships like ones taking containers to/fro. but more of open huled ones I belive.    also since they haul grain they CAN'T put hazzerdous cargo in there.   leaves only a fgew options to come back pulp is just the newest one being highlighted.   

also o the ships I BELIVE that to haul/dock in the USA they have to have an anual inspection performed by coast gaurd here in US BEFOR they can unload the cargo...  NO PASS no unload.  this is NEW though so it may not effect too many ships as of yet but they cneck for many many things such as to insure that the ships conform to US and international safety standards as well as crew for such things as training & age restrictions. ect...  now that does not mean that they couldn't hide or attempt fate through out the year when they already have their cert. ect...  too many ships to check every one for sure.
mark M
I'm looking for help all the shrinks have given up on me :o

isassi

You know, when I was trucking, I picked up a load of 1X4 spruce from Russia in Baltimore, Md. I hauled these to Boise, Id. Now, go figure. I then tripped up in Oregon where I loaded 1X6s bound for Chicago. I asked the guy at the Boise-Cascade mill in Oregon about the Russian lumber, and he said it happens all the time. I cannot see how it can be logged, sawn, shipped all the way here cheaper then they have it in their own back yard. Thoughts???? :P

SwampDonkey

Quote from: Woodhog on February 20, 2006, 04:40:49 PM
well there most be some good news in this...

With all that pulpwood heading out of the Maritmes.

Supply and Demand???

I must start sharpening my spare saws....

You can't compete with cheap crown wood harvested from clearcuts with processors I'm afraid. ;) Ok, not all are clearcut's, but I've seen 'some' post treatment conditions where they might as well have taken it all. Only real benefit is a source of seed trees because the residual wood is ultimately destined for the pulp mill.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

Deadwood

I think part of the story lies within the changes in the shipping industry. Believe it or not, while the price of fuel is going up, the cost of shipping is going down. I think the bigger ships are part of it, and I think we are just getting more effecient at shipping.

As part of the transportation industry for the last 10 years I have seen this first hand. When I worked for UPRR, Z Trains would get loaded in Long Beach Californina and 52 hours later that same train (hauling 150 containers) would be in Chicago. Now friends, that is effeciency in motion!

As for the Canadian Maritime wood, they arrive on cars labeled New Brunswick Railroad if that tells you anything? I was a bit shocked that it was coming so far away, but I have no issues with US/ Candian trading by any means. Swedish/ Finland/ Norway and Russia I have issues with. Especially the last one.

Three years ago a Russian Freighter hit a local fishing vessel, splitting it in half and killed 3/4 of the crew who were sleeping in their bunks. The freighter never knew it hit a 80 foot vessel???? Because the Captain survived they were able to find the vessel in a Canadian Port, but Russia would not allow extridiction of the Russian Sea Captain to the US to face manslaughter charges. I lost 3 good friends because of a wishy-washy Russian shipping company...yep that gets my dander up.

SwampDonkey

Quote from: Deadwood on February 20, 2006, 05:54:46 PM
As for the Canadian Maritime wood, they arrive on cars labeled New Brunswick Railroad if that tells you anything? I was a bit shocked that it was coming so far away, but I have no issues with US/ Candian trading by any means.

That's none other than JDI. As I said earlier they are the only ones with the infrastucture is place. We used to have rail service CN/CP to all the mills/plants, but they closed up shop in these parts where alot of industry is and chose to support only the coastal cities. It all began when some floods took out a couple train bridges, that became their calling card to pull out. Now our railways are nature trails.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

Ianab

QuoteHow can they produce and transport raw materials so cheaply from half-way around the world?

I cant speak for other countries systems, but in NZ it's because trees are 'farmed' like you would grow corn. Just like farming, if you scale things up, mechanise the process it becomes so much cheaper.
Pulp logs here are basically a byproduct of the logging operation, the top logs left after the better saw logs have been selected. The money is in the high quality pruned sawlogs. Harvesting low quality stands is economically marginal if there is only pulp wood there and stands of pine are usually just thinned to waste, it's simply not worth dragging the small logs out.

It seems the major cost involved is how far the logs have to be trucked to get them to a ship, not how far the ship has to sail?

BTW New Zealand exports about 2.5 Billioin $ of forestry products a year, it's a major part of our economy and it's all shipped someplace  ::)

Ian
Weekend warrior, Peterson JP test pilot, Dolmar 7900 and Stihl MS310 saws and  the usual collection of power tools :)

SwampDonkey

From 1998 figures we ship $2.9 Billion in NB alone. ;)

We have an abundance of forest land here, it's just not as intensively managed. And this planting and thinning activity is not all that old an activity here. I don't know many plantations and thinnings that would have large diameter wood yet. Certainly couldn't feed an industrial sized sawmill. Still barely sqeeking by to get studwood. I was laying out trails on a 15 year old thinning and the wood wasn't much bigger than my leg. Can't make money cutting it or sawing it.  ::)
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

Black_Bear

Deadwood wrote:

"If this trend continues, it has major ramifications for the loggers here in Maine. Logging employs more people in the State of Maine than any other industry. We have a lot at stake, but I still thought this makes for some serious discussion here on Forestry Forum."

The pulp and paper industry within the State of Maine is indeed changing. Land ownership patterns have changed dramatically within the last 5 years as there are virtually zero mills left that own land. But, for the most part, the sellers of the mills have negotiated long-term supply agreements with the TIMO's, REIT's, etc. that own and/or manage the land. What I'm interested in seeing is what this pattern of ownership looks like in 10, 15, 20 years when the investment corps. start rolling them over. What will happen then?

"How many people knew that paper companies were routinely importing raw materials from other countries (and I don't mean just Canada)."

Eucalyptus pulp is being used here in Maine.  

"How can they produce and transport raw materials so cheaply from half-way around the world?"

Labor is cheap and shipping is even cheaper, as mentioned above.

"What does this mean for the local loggers/ suppliers?
How do we reverse this alarming trend?"

The oligopoly that is the pulp and paper industry here in Maine is affected by slightly different market factors than a market where there are hundreds of buyers and sellers. Bargaining power (one of the most important factors within this industry and within an oligopolistic market) between the mills and the suppliers has changed dramatically in the last few years. I won't go into detail, but right now the number of loggers is dwindling and the median age for a logger is way up there.

In other words, everything may be fine for the loggers if there aren't any loggers to take over for the retired ones. How fast can you cut?? But the mills do not like this fact and are genuinely concerned about it. It shall indeed be an interesting next decade within the pulp and paper industry in Maine.

Fearless prediction: the industry isn't going anywhere. The market will eventually weed out the weak suppliers and the weak buyers.

SwampDonkey, do you think if JDI was incorporated solely in the US they may qualify as a monopoly?  


SwampDonkey

Nope, but in some remote areas of the maritimes they are, where the price of shipping would inhibit delivery to the next closest mill. In Maine we saw the truckers try to organize because the trucking rates were dropped or new rates were set too low. They tried intimidating the truckers by offering to have all their wood shipped by Canadian truckers. Seen the same thing take place years ago with Potato growers and McCains. They squashed any attempt to organize by offering to pay more per barrel to a few in the group. After all the Irvings and McCains went to college together and where mentored by 'ole KC himself. ;)

On to something else. According to what I just read in my Marketing Board newsletter the Berla Group in Nackawick are buying wood mostly from crown. The minister announced on a nationally owned radio station that 28-33 % of their wood supply has to come from private woodlots. What they are offering for the wood assumes the logger has free wood at $92/cord for 8 ft, $82/cord treelength. Whose going to pay the woodlot owner the other $20 - $30/cord stumpage.  ::)

These outfits are worried about loosing loggers because they'll have no one left to squeeze the life out of. Also, the cost of equipment is so out of this world to start a new logging business. We'll be back to horses and the little portable mill owner for our local needs before long. Everything runs in cycles. ;D
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

slowzuki

Swampy I think you are spot on on that prediction until 30 years down the road when fuel costs go high enough to stop this shipping fibre all over creation.  By then all the local mills will have closed with a few major gov propped ones standing and they will continue to dominate the market for fibre.


As a side note, every stick of stud wood stocking the new Home Depot's in Fredericton and Saint John were trucked from Alberta.  How stupid is that?  4500 km of trucking so they don't buy from JD.

Btw JDI and McCain's aren't near as friendly as one might think, they constantly are trying to steal employees back and forth.  They also very quickly settled their public lawsuit a couple of years ago because they found out the court documents become public record which JDI promptly set about examining.

extrapolate85

I am certainly not an expert at corporate governance or global economics. Actually, I am like most of you, a person that lives in a small town in a forested area. I have seen things change so much in my lifetime and also have worked abroad, so I have an opinion about the problem mentioned.

There is the issue of government subsidies, either direct (like non-market driven stumpage), or indirect, like competing against countries which shoulder healthcare costs of employees rather than forcing companies to shoulder the costs. The US view is that these are subsidies, their view is that they are supporting an industry and way of life that they have a strong connection with. The Russians are not the problem either; they have huge resources, but not much else, and are trying to get some prosperity (which has mostly passed them by) like the rest of us.

All of the above add complications to trying to compete with this global marketplace, but from my vantage point in the US, I see so many problems and I am not sure how they will ever get fixed. The average American sees cutting a tree as being bad for the environment and most of the visitors and new residents in my area come from Calgary, Seattle, Los Angeles and believe the hype from the WWPA, Greenpeace and the Sierra club. The US Forest Service has removed themselves from being a supplier of raw materials for our resource industries, and is now preoccupied with lawsuits, public hearings and removing the "man" from managing. The big corporations are, by and large, just trying to survive, and I don't blame them for seeking lower cost raw materials. There is not exactly many new mills being built in the US, however, I can think of a lot of mills in my region of the west that have disappeared in the last 10 years - if you had $50 million dollars to invest, would spend it on a sawmill?

Sure subsidies and low cost labour from abroad are out there, but the real problem is that the average voter sees the rural regions as being filled with: resources that should not be touched (only looked at or skied on), and full of ill educated yokels that don't care about their own back yard.

All right, I am getting a little down - time to go to Patrick Moore's website and get my optimism back.

crtreedude

Swampy,

You are correct about cycles. A few years ago everyone and his brother were trying to plant pineapples. You would be rich they all said. 40,000 USD per hectare in 3 years. Of course, the piñapushers as I called them were after me to do it.

My response was always that I don't like doing what ever everyone else is doing - especially when it comes to markets.

The pineapple market dropped 60% this year. The reason? Overproduction. Who would have thunk it?  ::) ::)

Lots and lots of people want to plant pulp wood - grows fast and you get a return in a short period of time. Of course too often the problem is that everyone else is doing the same thing. Pretty soon the pulp wood isn't worth much at all because the supply is so high. Then of course everyone starts saying "Don't grow pulp!" and then the supply plummets and the prices soar...

I personally like to invest in things when the prices plummet when it is something that takes years to mature. The key is finding where the dips and peaks are.

I honestly really like the portable sawmill approach. It allows us to cut wood and still make a very nice profit - both for ourselves and for tree owners.

So, how did I end up here anyway?

Ron Wenrich

Well, our pulp market is just a by product of our sawlog market.  No one is making a living out of just cutting pulpwood.  The softwood market is practically non-existent and you rarely see plantation trees.  So, those market forces of cutting pulp don't enter into the intensive management of many woodlots.

As for subsidized health care, I think you'll find that in Europe that subsidy is born from the high taxes on fuel.  $5-6/gallon is where that money comes from.  The funds come from the consumer, not a gift from the government.

With the high cost of fuel, they have become very efficient in their transporting of goods.  We have not. 

What is happening to many forested areas, there is big money coming there for seasonal homes.  Those guys have a lot more money to make sure their green backdrop stays in tact.  Environmentalists may have picked up the ball on the lawsuits, but where do you think the money comes from?
Never under estimate the power of stupid people in large groups.

SwampDonkey

slowzuki, I wasn't suggesting they were best friends, just the fact that they use the same tactics with suppliers, contractors and truckers. And they did go to school together.

McCain fought tooth and nail against the idea of having Cavendish set up a new potato processing facility in New Brunswick. They argued there wouldn't be enough supply. That was bunk, because I know alot of farmers that weren't even selling or contracting with McCains. Also, if you ask the right people they've been saying we have an over supply and have been asking farmers to scale back over the next few years. Thre were a bunch of farmers processing and packing their own table stock to the USA because they were tired of having 20 % of thier crop stolen.

I remember once we were shipping in there and we had potatoes as big as your feet. They said they had hollow heart. There wasn't a one with hollow heart. The provincial potato inspector said we should pic out the big ones and bag them for the US market. We did, and got $24/barrel US while McCains was trying to steel them. I could go on and on about that outfit.  >:(
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

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