I am sure you have seen the many reports or statistics that cover Australia’s surge in building activity, especially for new housing, which we assume is the market’s response to the government stimulus, and in our opinion has been incredibly effective at supporting our industry, underpinning our nation’s economy and helping Australia avoid an economic depression with COVID-19.
The surge in demand has been great for us all collectively in the supply chain, and being too busy is a good problem to have as compared to the alternative. However, it has caused tension and misinformation in our industry supply chain which AKD would like to address from our perspective, and share our actions in this FTMA News article – our first for 2021.
Firstly, here’s a reminder of AKD’s context for last year – 2020 was a year that started with the bushfires and then COVIDvid-19 hit. Timber demand had been soft in 2019 especially in NSW, and consequently AKD had built considerable inventory at all of our locations and from some customers we had been placed under considerable pricing pressure and reduced demand. Given the significant uncertainty of COVID-19 and our growing inventory we elected to stop cutting at our smallest sawmill Irrewarra (VIC) in May, as we prepared to weather the storm, and, as you may recall, we also called on the Government to intervene. In June our Caboolture mill suffered a temporary but significant production shut due to a site fire. These two events had the effect of stopping AKD’s inventory growth, and then Homebuilder in July lit a very different fire, a positive one, a fire of demand!
Caboolture came back on line in September, Irrewarra was restarted in October and as per the graph below AKD’s supply into the Australian market has increased.
Graph: AKD Quarterly Structural Sales Volumes
As the graph shows, AKD has increased our supply of pine into the Australian market significantly, compared to the previous year. The growth has also been consistent quarter-on-quarter, as we worked closely with our customers on their requirements. It is important to understand that AKD recognizes loyalty and has supplied the customers that continued to buy consistent volumes through the difficult trading periods of previous periods.
We are conscious that AKD’s structural pine supply is one ingredient in a complex supply chain for building new homes, and other suppliers of timber and other building materials have also had their own reactions to this demand surge. We also believe there are other implications of this demand surge for our fabricator customers including labour shortages and potentially false demand with builders shopping quotes for better prices and lead times.
We believe it is important to recognise that demand for timber has increased and is not because of a reduction in domestic output. Our efforts to maximise product volumes available to the Australian market has required teamwork, commitment from our employees and an agile manufacturing approach. These sorts of increases however are best geared to be achieved over a longer time frame and more importantly with consistency into the future.
Sawmilling is not a business type that is able to easily pivot; changes take time and require considerable resources. Employing and training additional staff, sourcing and processing additional logs for a few extra weeks or months is not really feasible, and is inconsistent with our company’s values of taking a long term view.
To help support ongoing growth, AKD has recruited additional talent into our organisation and one new role which will have considerable interaction with fabricators is the new Business Development Manager position. Dave Gover has joined the business in this new role and is based at the company’s Queensland sawmill in Caboolture.
Dave (pictured right) will have a dual focus, with the primary focus as Business/Product Development Manager and the secondary focus as leader for the Queensland Sales Team, reporting to General Manager Sales, Liam Buchanan. The position will focus on construction methodologies of today, how they are likely to evolve, and how AKD uses our wood resource and manufacturing capabilities to provide products that help our customers and their customers continue to build with timber. The role will actively investigate the application of our products, construction issues, and opportunities for the future.
Dave comes with strong credentials, a wealth of experience and deep connections throughout the industry and a passion for timber. He was formerly the CEO of EWPAA (Engineered Wood Products Association of Australasia) where he led a team of technical experts in verifying that wood products conform to Australian standards and provided technical assistance to processors in product development. During his time with EWPAA, Dave was the chair of the Building Products Industry Council, a multi-sector organization advocating for regulations which deliver acceptable building outcomes for society. He has also held operations and production management roles in LVL and Glulam manufacturing and Hardwood sawmilling. With an engineering qualification he has provided technical support for the specification of Engineered Wood Products and supported product development for EWPs across Australasia and developing the necessary manufacturing capabilities to match. He is a strong advocate of timber and plays an active role in leading industry discussion and research on the potential of timber within the construction industry.
Dave will support the AKD Queensland Sales Team as we look to significantly expand that site’s production capacity, product volume and range. He is looking forward to meeting AKD’s customers across all of AKD’s markets, understanding the challenges and opportunities being faced, and exploring how AKD will navigate them and support our customers now and into the future.
We have had great support from our workforce on all sites over the past year of uncertainty. AKD’s planning for future changes is focused on the quality of both people and timber in our East Coast business. We want to ensure that our people grow and contribute to new initiatives and in doing that, we assure our customers of AKD’s reliable quality timber supply and our long term view.
All the best,
Shane Vicary
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