Covid-19 has turned the world on its head and the timber industry could not escape the carnage, writes Leon Louw.
The saviour of primary, extractive sectors like forestry, farming, and mining, is that they were regarded as essential services during hard lockdowns, which, at least, kept them ticking over during the worst of the crisis. The problem though, is that further up and down the value chain, many other activities were not seen as essential, and as these businesses ground to a halt, demand dropped which affected the primary producers anyway.
According to Forestry South Africa (FSA), there has been as much as a 30% decrease in demand for forestry products across the sector. FSA reported that domestic demand for all products except pulp has declined because of companies further down the value chain struggling to find their feet because of the financial impact of Covid-19. This drop in demand came even though more than 60% of companies operating in the South Africa forestry sector were able to continue their activities through the shutdowns, albeit with reduced staff members and logistical challenges. The one positive, however, is that the virus doesn’t affect tree growth, with the result that large volumes of raw timber are available should there be a sudden spike in demand once the economy opens up in the aftermath of Covid-19.
Despite the adverse impacts of the coronavirus, FSA says that suppliers of harvesting, processing and land preparation equipment used in forestry continued doing business in some sort of way during lockdown.
Timber iQ visited a sawmill operation in Johannesburg early last month and spoke to another sawmill owner in the Nelspruit area to determine just how significant the Covid-19 outfall has been in the timber industry. Both these companies said that although they had to shut their doors for a while during the first hard lockdown, business started picking up again soon after. When I interviewed them, they were back in business firing on all cylinders and confident that the market is heading north, and that demand will reach pre-Covid-19 levels sooner rather than later.
Those sawmills whose primary products are deemed to be contributing to essential services, like boxes, bins, packaging material and pallets used for transport and distribution of food, pharmaceutical products, continued to operate even during hard the hard lockdown. However, sawmills that produces timber for the construction and shopfitting industries, had to shut down.
According to South African Sawmilling (SASA) most sawmills dramatically cut back production and that the employment situation in the sawmilling sector is ‘grave’. The treated pole industry does not seem to be better off. According to Bruce Breedt, executive director of the SA Wood Preservers Association, treated pole manufacturers supplying the agriculture market were considered essential services and continued delivering to order but in substantial lower volumes. Pole manufacturers supplying into the construction, fencing and furniture markets closed for the lockdown, and suffered significant losses. Producers of transmission and telephone poles continued operating but demand was down.
Even though it seems that the timber industry has made it through the eye of storm reasonably intact, the real impact of the Covid-19 pandemic and its subsequent economic outfall has not been determined yet. At the same time the future remains uncertain as the world markets readjust to the 2020 shock. How long it will take to recover, is anybody’s guess. Let’s hope the timber industry is able to pull itself up by the shoestrings and return to some form of normal in the next year or two.