News - FOBIA
2020
New discoveries about business model innovation the forestry service sector
5.3.2020
One of the objectives in the FOBIA project has been to increase our understanding of business models applied by forestry service contractors and find ways to stimulate innovation within this sector. A business model describes how businesses produce, market and deliver goods or services to their customers, and business model innovation is thus the introduction of new ways to organize and govern the company’s business activities.
A good product or service is important, but for reaching a high profitability previous studies have shown that it may be even more important how things are done. In other words, two companies offering the same service or product may have very different results depending on their business model. Within the FOBIA project, several studies have been done in order to map and analyze the business models currently applied by forestry service contractors, and to describe the development needs and hinders that contractors experience today.
One of these studies was recently presented by Patrik Hollsten, master’s student at the Swedish University of Agricultural Sciences (SLU), who in his thesis project investigated how Swedish forestry service contractors work with business model innovation. The results of his study showed that contractors focus their work on different parts of the business model depending on if their main strategy is to increase the company’s profitability, achieve business growth, or if they are in a start-up phase.
Contractors who were aiming for growth were often had the ambition to strengthen the company’s power to negotiate with customers, and to diversify their risk. The growth was often achieved through recruitment of additional customers, or by exchanging their primary customer to one that could offer better contracts. Another way was also to add new services to their portfolio. This also caused changes in machine and staff resources.
The businesses whose strategy primarily was to increase their profitability put a lot of focus on efficiency in their internal processes. For example, one important measure was to improve governance processes and make sure that the customer was billed for all activities that were covered by the contract agreement. Another common way to achieve higher efficiency was to invest in new forest machines, and also the staff’s work conditions were seen important for achieving a high profitability.
Among the start-up firms the focus was on the establishment of good customer relationships. To start a new business also means that most parts of the business models must be built from scratch and thereafter refined over time. Thus, this group of contractors acted differently than the other two groups which to larger extent could focus their innovation activities on specific business model components.
The main results from Hollsten’s study are also included in a report that synthesizes the work conducted in the FOBIA work package “Business models”. According to Thomas Kronholm, the coordinator of the work package and author of the report, it describes how business model innovation can be implemented, and stimulated, in the forestry service sector by elucidating the contractors’ motivators, how they perceive the roles and responsibilities for innovation, and what kind of tools that can be used for business model design and experimentation.
The report also highlights that it is important to improve contractors’ abilities to innovate their business by offering forums that facilitate exchange of knowledge and ideas between them, and also to provide opportunities for contractors to increase their business skills through education. An example of such an education effort is the FOBIA Boost Site (www.boostsite.org). A major problem for contractors in all countries studied have been the availability of skilled personnel. To solve this important issue, several actors and industry stakeholders will need to collaborate in order to increase the attractiveness of the business. With such an effort, there should be good opportunities to develop prosperous businesses models also in the forestry service sector.
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Small businesses in dire straits – the success factors of logging companies were researched
10.3.2020
Forest machine companies have been struggling for some time. Many are in dire straits due to bad harvesting weather conditions, industrial actions and the decrease in demand for wood. The situation for small companies is the most concerning, as many lack the buffer funds to survive tougher times. In its FOBIA project, the Natural Resources Institute Finland (Luke) researched the reasons why some of these companies succeed and some do not.
The research consisted of interviews with forest machine entrepreneurs and reviewing publicly available financial statements. The companies were divided into three classes according to their turnover. Small companies had a turnover of less than 0.6 million euros, medium-sized ones had a turnover of 0.6–2 million euros and the large companies had a turnover of over two million euros.
A wide range of businesses
The small companies had generally started their operations around the turn of the millennium, when the structural change in the logging industry began. Most of the small companies were subcontractors to larger companies. Some of them had joined forces and negotiated shared contracts with forestry companies. Some of the companies acting as subcontractors had subcontractors of their own.
The owners of small companies felt that competition in the industry is fierce. High customer turnover added caused insecurity. Contractors were found to change every three years for the small companies, when customer relationships of the larger companies often lasted 15 years and more.
The share of harvesting in the companies’ turnover was at least 70 percent. The forest industry was the most important customer group for logging companies that also provided long-distance transportation services in cooperation with transport companies. Some had their own vehicles for transporting wood. The small companies provided land development, for example, as an additional service. The middle-sized companies were more clearly focused on harvesting wood and used subcontractors less than the large companies. Additional services were found to not necessarily improve the profitability of the larger companies, but they did make the companies more competitive.
The smaller, the weaker
The average return on invested capital decreased between 2012 and 2017. It was less than three percent for the small companies and around ten percent for the middle-sized and large companies. In reality, the situation is more dire, as no calculatory pay adjustment was performed on the numbers. Variation in financial indicators was large.
The small companies were often in debt. They did not have the resources to make investments, even though last year they did not report feeling like finding funding would be an issue. Most of the entrepreneurs’ time was spent in harvesting work, and they made sacrifices relating to their own income. Workload was reported to be unsustainable at times, and yet the entrepreneurs did not always even reach the pay level of a forest machine operator.
The machines of small companies had the least number of operating hours, and work sites could not be centralised due to the small size of stands. A large part of a harvest’s profitability comes from the work of operators. However, bonus systems were in place mostly only in large companies. Large companies also invested the most in monitoring profitability and finances. Small companies employed the smallest number of certified forest machine operators and often employed unexperienced operators. After the operators earned their stripes, they left for the larger companies.
Room for development in management skills
The entrepreneurs were typically certified forest machine operators or had a vocational education degree. Financial management was limited to checking monthly reports sent by their accounting firm. Even the large companies rarely took full use of systems designed for management and wood procurement.
The need for more extensive business management competence is clear, especially if an entrepreneur is planning on expanding their business. In addition to competence in financial management, negotiation skills are highly necessary, since wood procurement is mainly based on networking. Small companies too should find time to systematically evaluate and plan their business operations, which can be done in cooperation with experts from an accounting firm, for example. Business models should be developed as well. Subcontractors should seek to cooperate with other companies, but navigating the networks requires using brokers.
More responsibility to the value chain
The number of harvesting contracts has been purposefully increased within the forestry industry. Subcontracting has become an integral part of wood procurement, and risk management for large forest machine companies. The development shows that there is very little surplus to distribute within the procurement chain. Even though the price of wood is an important factor in competitiveness, it should be kept in mind that a value chain works best when each of its links can operate in a profitable and sustainable way.
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Benefitting both the entrepreneur and the operator – feedback from the audits very positive
4.3.2020
In order to find out the level of adoption of the teachings in operator audit during the FOBIA project, Luke and Riveria conducted a telephone survey among the Finnish harvester and forwarder operators who participated in the audits during the project. The audits were also carried out in Ireland and Scotland but these harvester operators were excluded from the survey due to the fact that their working methods and environment were such different from the typical Finnish tree harvesting situation.
The main focus of the survey was to find out long-term effects of the audits to the harvesting work. The survey was carried out in January 2020 whereas the audits were conducted during approximately one to one and half years earlier.
The total number of interviewed persons was seven (five operators, two entrepreneurs), in total the audits were conducted for eight Finnish machine operators. Missing operators were not available for the interviews due to varying reasons such as retirement or not answering to telephone calls.
In the survey, the respondents were asked to summarize the general evaluation that was received from the instructors during and after the audits. Majority of the general evaluations had concentrated on the working techniques such as tree selection in thinnings and the loading/unloading of mixed assortment loads. All interviewees noted that the feedback from the instructors was useful in order to develop the working methods. All answers also indicated that the both the productivity and the quality of work improved due to the audits.
The respondents were asked to make an assessment of some focal points of the audits. The assessment was done by answering with Likert scale from 1 to 5, where 1 represents the lowest and 5 the highest effect and 3 equals to no effect at all. Interviewed operators estimated that the immediate effect of the audit into controlling the work was on average 4.4, whereas the long term effect was estimated to be 4.0. The results indicate that the most powerful effect was experienced directly after the audit, whereas after longer time period the effect of teaching had lowered.
Results also indicated that the audit had a 4.2 average effect on improving the personal working methods, whereas the audit was seen to improve working activities as one part of the chain on average by 4.17. The respondents also noted that the audit events recreated a considerable personal interest in focusing on the more or less systematical self-improvement during the daily work.
The interviewees were also asked to give their own feedback and points of improvements to the auditing organization. Three persons raised a suggestion about extending the duration of the audits in such ways that the recognition of the changes in working methods would be reviewed e.g. one month after the audit event. This way the deeper adoption of the education would be observed in more reliable ways. Additionally, one person suggested that the participating operators would benefit more if they would receive more information about the contents and expectations of the audits prior to the first meeting in forest.
Finally, the results from the operator interviews indicate that the audits were generally found to be useful from both entrepreneur and operator viewpoints. The audits were estimated to be most fruitful when targeted to machine operators whose working skills are neither the lowest (e.g. fresh out of forestry school) nor the highest (very experienced and trained operator). Furthermore, direct comments indicated that the personal motivation towards improving working capabilities was the most important driving force in accepting and adapting the suggested points of improvement. This concluding finding correlates well with the initial idea of supporting the forest machine operators’ in such ways that they will be more productive and their well-being increases.
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Improving management and leadership skills made easy for forest service businesses thanks to Boost Site
11.2.2020
Boost Site Portal, an e-learning environment for studying leadership and management of a forest service business is targeted to forest service and harvesting companies. Independent of time and place, busy professionals may now access several online courses covering topics from business models to operational productivity, and much more.
Digital education specialists and stakeholders shared information and experiences on digital platforms and learning at the FOBIA project’s Concluding Seminar on Digital Platforms, which was held in Vuokatti, Finland on 4 February 2020.
The event also marked the launch of Boost Site Portal, an e-learning platform targeted to forest service and harvesting companies, available in three different languages—English, Swedish and Finnish. The courses are updated constantly and intend to follow the latest trends of e-learning.
”Although some of the material is universal, certain courses remain country-, and thus, language-specific as for example legislation is unique in all countries,” says Arto Kettunen, Project Coordinator from TTS.
So far, Boost Site has been piloted in Scotland, where forest contractors and students tested certain study modules. “The results were encouraging but adjustments need to be made”, describes Euan Bowditch, Researcher from the University of Highlands and Islands.
Students seek flexibility
According to the event’s keynote speaker Päivi Rasi, Associate Professor of Education from the University of Lapland, the students of today want e-learning to be flexible, constructive, collaborative and individual. Modularized studies may suit professionals particularly well as finding time for studying is not always easy. According to Rasi, more e-learning would not mean less teachers—quite the contrary, as teachers would become designers of learning.
These findings were backed by the FOBIA Project.
“According to our experiences, there are situations when face-to-face teaching does not fit entrepreneurs’ schedule. Physical distance to classroom, travel time and price are all valid reasons, not to mention lack of free time. E-learning may help overcome these obstacles”, says Henna Hurttala, Research Manager from TTS.
“Having a digital learning strategy, in which student is always at the center of the process, is a must when the organization is dealing with e-learning”, conclude Joel Ronimus and Miia Mäentausta, both Development Managers from TTS.
Paula Mikkola from the Regional Council of Lapland stressed that the Northern Periphery and Arctic Programme, which has funded the FOBIA Project, has in general benefitted end-users.
The FOBIA project’s staff wishes that forest service and harvesting companies actively make use of all the material developed in the project.
2019
Mobile self-monitoring for mechanized harvesting to help forestry entrepreneurs
20.9.2019
Press release, published on 19 September 2019
An application was developed for Luke’s FOBIA project which focuses on enhancing forestry entrepreneurs’ business competitiveness. The newly developed tool allows the user to apply self-monitoring while harvesting timber.
The application is suitable for self-monitoring the quality of various thinning and energy wood harvesting activities. It allows the harvester operator to take the measurements needed while sitting in the cab. Smart phone’s GPS signal is used to locate the site and the application comes with satellite and terrain maps. Each operational stand may be marked out manually or the user can apply, for example, the forest inventory data found in Metsään.fi portal. Self-monitoring can be done off-line as well, as the application will save the information and updating will be done automatically once network connection is restored.
Within the FOBIA project, a virtual learning environment for forestry service enterprises’ leadership and management training is under development as well. The modular training package, the BOOST Site, coordinated by TTS (Finnish training and development centre), is done in three languages for the four FOBIA partner countries. The training is piloted this fall in Finland, Scotland and Ireland, and in spring 2020 in Sweden. Based on the students’ feedback, the contents will be further developed. Training self-monitoring as part of a forestry service enterprise’s operations is new to the forest service business and it gives the entrepreneur an opportunity to further develop leadership, communications and quality in mechanized harvesting.
The obile self-monitoring tool enables the machine operator to save the sample plot locations on e.g. satellite map. The sample plot data is available to timber buyer, forest owner and other possible stakeholder in real-time operations. Screenshot from application: Wuudis Solutions Oy.
”Self-monitoring is an essential tool for forestry service enterprises. Our application, which was developed by a Mikkeli-based company, Wuudis Solutions Oy, offers an easy-to-use way to train self-monitoring to entrepreneurs,” says Arto Kettunen, FOBIA project’s coordinator for the training package.
In addition to self-monitoring, the application contains simple guidance for thinning. “When suitable, the entrepreneur may expand self-monitoring with Wuudis Business to cover all activities related to forest management from soil preparation and planting seedlings to tending of seedling stand and thinning,” concludes Seppo Huurinainen, the CEO of Wuudis Solutions Oy.
For more information
TTS: https://www.tts.fi/en/tts
Wuudis Solutions Oy: https://www.wuudis.com/en/
Arto Kettunen, TTS, coordinator
+358 50 045 4017
arto.kettunen@tts.fi
Seppo Huurinainen, Wuudis Solutions Oy, CEO
+358 44 581 4950
seppo.huurinainen@wuudis.com
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What a contractor wants – What a contractor needs…
27.5.2019
The FOBIA project has been underway for close to two years now and I have spent a lot of time with a range of forestry contractors (or service providers) wading through the issues that impact their businesses, profitability and ability to operate effectively. One theme that has emerged emphatically is that these issues mostly come from external pressure, underlying culture of the industry and current practices. His does not mean that there is no room for improvement of business practices and skills but movement internally and externally needs to occur to have real impact and support a healthier contracting landscape.
Tonnage versus volume
This is at the heart of the profitability issue, “we have no control over want we earn from a job, we are contracted to cut but cannot rely or plan on what we take out, as it might be left at roadside for 6 weeks, and if it’s hot we might loss a third or half of the weight, and therefore half our money – nothing will change dramatically unless we switch to payment for volume”.
Without resolution in this area contracting will remain for many an unstable business. However this requires a high change of the industry that will have knock-on effects to other parts of the supply and require a period of adjustment a transition. Majority of industry professionals believe dealing in volume rather than tonnage is a more useful metric.
Procurement
The current procurement system or the process for tendering for jobs is a strain and frustration for both small and large contractors. They all spend inordinate amounts of time and money on the process, which they do not always fully understand subsequently effecting their success in such tenders. Also the system is reliant upon metrics primarily based upon economics rather than more qualitative criteria that would emphasise quality and build upon best practice and planning for the future. However this problem in itself has created a gap to be filled by professionals who can prepare a competitive bid and navigate the complexities of national procurement systems. “Procurement takes up half of my resources, it is too complex and unnecessary, which really hurts many businesses, especially the smaller ones who have no chance to take the administrative hit”.
Help or more streamlined systems are needed for many experienced contractors let alone those who are entering the sector. Perhaps this is a job for the new FOBIA Boost site or Forestry Schools.
Stuck between a rock and a hard place (power of pricing)
Priced-out, under-priced and no benefit to timber prices rising…the power of price resides elsewhere in the supply chain and the contractors place has little room for growth, as their prices remain competitive rather than benefiting from market peaks and booms in the sector. That power is with the seller or buyer and undercutting standard prices that fairly represent professional quality and reasonable profit undermines the industry as a whole and will knock-on to the capacity for quality of work and therefore the environment being created for future forests. “Contractors have a tendency to price one another out, it is commonly a race to the bottom, which is hurting the industry and if we are powered by procurement metrics over professional judgement and experience then this trend will continue”.
Lack of funding and external support
“I do not know where to turn for support, not much funding out there for start-ups and expansion of forestry contracting businesses, even for innovative proposals to adapt machines or try something new. Banks basically see us as too high risk and it is a terribly expensive business… Not sure how to begin to get ahead”.
This impacts many contractors and just heightens the risk and financial insecurity that will deter many entering or remaining in the sector – some coordination around investment areas in forestry structural funds, national forestry agencies and banks needs to be established to address these concerns. Also a one stop shop from a bridging body to facilitate knowledge exchange and disseminate important information would be useful. A potential expansion of the FCA’s or skills council role, subject to funding and resources.
Overheads and capital costs
This will effect most sectors and companies but with profitability decreasing, stability of income uncertain and potentially expensive initial investment for any new job, as well as the need to mitigate against unforeseen problems (especially mechanical), finances and upfront costs are key for any business and most will lack this capacity. Therefore most companies will take financial hits during the job, which will most likely reduce their profit margin and subsequently destabilise ability to work on the next job, this will destabilise the business. Cumulatively over this will result in suffering businesses and suffering workers.
Lack of mentorship and development
Leadership, mentorship and support are key activities whether formal or informal in developing professionals, standards, best practice and ultimately a healthy and resilient sector. Talking to not only success stories in the business but also those that have bleaker stories of how and why their business did not succeed could provide crucial insights into operating businesses. However, industry mentorship does happen but usually organically – there might be use for young entrants or struggling contractors to be assigned a mentor through a support scheme that works from best practice, sector quality and resilience point of view. “Contracting world can be a little Mafia-like, therefore it is hard to strike out on your own, it is a close-knit community, not very open to cooperation and somewhat suspicious of fellow contractors, as we are all competitors but we all need help but there is not always a convenient or clear place to turn to”.
Next steps for IC Scotland
In Scotland we will be running contractor/student workshops in September and October with the Leadership and well-being module designed by our team, as well as the other available modules. This will be our pilot and hopefully help refine the training platform and identify areas for improvement. We also plan to be at the Forestry Expo in Lanarkshire (Seed to Sawmill) and CONFOR Woodland show in Warwickshire to showcase our work and the FOBIA Boost training platform.
A new researcher Sarah Pohlschneider has been recruited to the FOBIA team, she is an expert in forestry education and will help with the remaining deliverables and reports of FOBIA.
Text: Euan Bowditch, IC-UHI
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Quality and reputation are strengths of forest machine entrepreneurs – subcontractors hard-pressed
27.5.2019
The size and profitability of a company often go hand in hand. Many smaller forest machine companies are facing difficulties, although some are also highly successful. Return on investment is usually no higher than satisfactory even among larger companies, while it is adequate or even poor in smaller companies. These are but a few facts indicated in the study of the Natural Resources Institute Finland (Luke), in which forest machine entrepreneurs from eastern and northern parts of Finland were interviewed to analyse the financial standing of their limited liability companies on the basis of publicly available financial statements.
The median turnover of the 19 companies included in the study was EUR 948,000 between 2012 and 2016 (EUR 808,000 in 2016). The median return on investment was 6.2%, which can be regarded as satisfactory (guideline value 6–10%). However, there was a significant variation between the companies.
Larger companies have direct agreements
Smaller wood harvesting enterprises usually act as subcontractors for larger logging companies, whereas medium-sized and large companies mostly have direct agreements with their clients. The largest forest industry companies have mainly entered into agreements with the largest logging companies. Medium-sized companies have the most varied group of customers. They mainly harvest wood for Metsähallitus (a state-owned enterprise) and for forest management associations. The largest companies often set up networks with other companies in order to strengthen their competitive position.
Smaller companies have frequently changing clients, whereas medium-sized and larger companies have more long-term client relationships. Subcontracting agreements are often based on price competition, even though there often is no formal bidding process. Some subcontractors feel that main contractors select the best stands for themselves and designate less productive ones to subcontractors. Often, the stand resources assigned to subcontractors are so small that their concentration is not always possible. Then again, some subcontractors consider cooperation to be fair and believe that it is important to main contractors that their subcontractors also succeed.
Owners of smaller companies work longer days than other entrepreneurs and spend most of their working hours behind the wheel of their forest machines. They work nearly 2,900 hours on average, while owners of the largest companies work Ca. 2,100 hours. Supervisors are only employed by the largest companies that have more than ten employees. All large companies, some medium-sized companies, but none of the smallest companies, monitor operator-specific production and apply incentive schemes to operators.
Smaller companies own older machines. For example, the average age of harvesters is approximately six years in smaller companies, whereas it is three to four years in other companies. Forest machines clocked 2,600 operating hours in smaller companies, 2,900 hours in medium-sized companies and 3,100 hours in large companies.
Shortage of forest machine operators
Most companies have faced difficulties in finding skilled and motivated employees. The smallest companies, in particular, lose operators they have trained to larger companies.
Nearly all entrepreneurs interviewed consider the high quality of work to be one of their company’s strengths. Most of them are satisfied with their work, and they are not planning any career change. Investment plans in the forest industry are adding faith to the future, while political decision-making related to the use of forests is regarded as a significant risk.
This study will be used to produce training material, on the basis of which forest machine entrepreneurs can identify their strengths and weaknesses. Due to the small amount of data available, the study results cannot be expanded to cover the whole industry.
Translation: AAC Global Oy
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A leap in the productivity of mechanical logging
20.5.2019
The productivity of mechanical logging has increased substantially from the early 1990s. The productivity of thinning has increased more than that of regeneration felling.
This is indicated in a study of the Natural Resources Institute Finland (Luke), based on mechanical harvesting data collected between 2014 and 2017. The study identified, for example, harvesting conditions, the structure of machine operating hours, the productivity of logging and fuel consumption.
Collecting logging residues reduces productivity
Adapting working methods to collect logging residues afterwards reduced productivity in terms of effective time by roughly ten per cent in spruce-dominated clear cutting areas. Average productivity in terms of utilised time was 10.2 cubic metres per hour at thinning sites and 22.1 cubic metres per hour at regeneration felling sites. In addition to the actual logging process, utilised time includes any interruptions at the worksite, and effective time includes machine’s downtimes of at most 30 seconds.
The average stem volume was smaller in Northern Finland than in other regions, particularly in terms of regeneration felling. At regeneration felling sites, the average stem volume has increased since the early 1990s when the previous public follow-up study was conducted (Kuitto et al. 1994). Thinning sites consist of significantly smaller trees than in the 1990s when thinning was mostly carried out manually. When measured by the average stem volumes at the time (thinning 183 dm3, regeneration felling 309 dm3), productivity in terms of utlised time has increased by 70 per cent at thinning sites and by 60 per cent at regeneration felling sites.
The productivity of large harvesters mainly designed for regeneration felling only exceeded the productivity of smaller machines when the stem size was more than 300 dm3.
“The results of logging productivity and fuel consumption indicate that harvesters have partly been over-sized considering the size of trees. However, allocating correct machines to their ideal conditions requires sufficiently large reserve of sites”, says Paula Jylhä, senior scientist at Luke.
The study was funded by the Finnish Forest Research Institute and Luke. It was completed in the FOBIA project, coordinated by Luke and mainly funded by the EU’s Northern Periphery and Arctic Programme. The goal of the project is to improve the business skills of forest machine entrepreneurs through training.
Further information (in Finnish):
Jylhä, P., Jounela, P., Koistinen, M. & Korpunen, H. 2019. Koneellinen hakkuu: Seurantatutkimus. (Mechanical logging: a follow-up study) Natural resources and bioeconomy studies 11/2019. Natural Resources Institute Finland. Helsinki. 53 p. Available at: https://jukuri.luke.fi/bitstream/handle/10024/543864/luke-luobio_11_2019_v2.pdf?sequence=7&isAllowed=y
2018
Busy times ahead – forestry sector is scaling up in Ireland
18.5.2018
Laois Sawmills Ltd., located in the centre of Ireland, is expanding from an annual roundwood intake of 100,000 m3 to 250,000 m3 over the next three years, with the additional timber being sourced from private forest owners. John Kelly, the sawmill Purchase Manager is tasked with securing this supply. We spoke to him about this and how the forest harvesting sector is scaling up in Ireland.
What is the business of Laois Sawmills?
The sawmill processes 100,000 m3 of pallet wood and uses 5,000 – 6,000 m3 of pulp wood as boiler fuel. (Note: Pallet wood is the term used for sawlog with a minimum top diameter of 14 cm and various lengths between 2.5 m and 3.7 m. Pulp wood is small roundwood, 3 m in length and with a minimum top diameter of 7 cm. Log quality parameters are more strict for small sawlog, and less strict for small Roundwood.) Approximately 60 % of annual roundwood intake is supplied by Coillte, the Irish state forestry company, and the remaining 40 % is supplied from private forest owners. The sawmill produces pallet board, fencing board and fencing panels. Pallet board is mainly sold in Ireland and about 70 % of the fencing boards and panels are exported to the UK with the remaining 30 % is sold in Ireland. We are currently building a new sawmill which will be up and running in September 2018. The annual roundwood intake will be increasing to 250,000 m3 by 2021 and we are expecting practically our entire additional intake to be sourced from private forest owners.
What are the main tasks and responsibilities in your current job?
My current position as Purchase Manager at Laois Sawmills is to develop a sustainable source of roundwood from the private forestry sector, and once sourced, to purchase, harvest and transport timber from private land owners. When harvesting machines start a new site I must be there to ensure the harvest plan is understood and before they finish I need to be on site to ensure the land owner is satisfied.
In fact, my main task is to maintain information flow with the harvesting contractor, forest owner, forest manager and other timber buyers. I monitor timber quality and volume throughout the harvesting operation and compile a lot of paperwork to describe the chain of custody and ensure prompt payment to the forest owner and harvesting contractor. We currently employ five ensure harvesting contracting companies directly. We also purchase timber from five other harvesting contractors.
What is your perception of harvesting contractors in Ireland?
I find the companies that are invoicing promptly and accurately are doing better than the others. In other words, these contractors understand the business side of contracting in addition to the production role. Business management is the most important area for the forest contracting sector to improve on, in my view. I would see this as evolving better information flow in invoicing, timber dockets and timber measurement and standardising and fully digitising the paper work.
Contractors harvesting in the private forest sector have been running older equipment due to the lack of consistent work. Now that private forest timber is coming on stream they are investing in new equipment but slowly. Business planning is vital for financing new machines successfully.
Good contractors are well organised in maintaining their machines, ensuring output matches the scheduled production but some contractors struggle with this, having machine breakdowns, costly repairs on site and failing to meet production targets.
Contractors who are well networked, and in regular contact with other contractors and hauliers, are now getting a better understanding of the forest sector and are aware of the demands and requirements on them. Harvesting contractors need to gain better understanding of the broader requirements of the forest sector. The industry is changing rapidly in Ireland, so everyone working in the sector needs to stay informed. Meetings are often organised for foresters and forest owners informing them of the changes happening in the sector, but the contractors are often missing out.
In your opinion, what is the outlook over the next ten years for the forestry sector in Ireland?
Despite Brexit, there is huge potential in the UK timber market and the Irish wood processing sector should be able to increase timber supply into the UK. Also, the demand in the Irish market will increase with the building of new houses. Over the next 10 years there will be a large increase in volumes coming from the private sector. This new resource brings many challenges though.
Due to windblow and premature clearfells, volume will not continue to grow as predicted, and it will be a challenge to manage and regulate volume increment and annual production from the private forest sector. This will lead to some smaller log buyers struggling to reach their quota of supply. Afforestation, which has created this private forest resource over the last thirty years, is stalling at present and is not reaching planned levels. Unless the public view of forestry changes and new ways to stimulate land owners are not found, planting will not increase.
All parts of the industry need to better understand their role and the role of the other people linked in the supply chain. This will require more foresters and forest owners to gain a better understanding of harvesting and how contractors operate. A very simple example is how forest owners and foresters are often not aware of the size of harvesting equipment, and therefore the need to create appropriately scaled site access and forest roading.
There will be need for new machine operators and truck drivers as the older operators are not always being replaced. Other sectors can offer better pay and conditions so there is need for forestry career promotion to encourage the supply of well-trained, competent operators. Management intensity and responsibility of harvesting sites by contractors will increase, as safety, payments, volume recovery and quality of work carried out will need to be monitored and demonstrated. This will put more pressure on contractors to change from being machine operators focused on production only to business managers, where productivity will be one of many tasks to be controlled.
Text: Tom Kent, Waterford Institute of Technology