July 2012 Wood Industry E-letter

There is great news this week from Statistics Canada, reporting new building permits at the highest level since May of 2007. As you likely recall, 2007 was a very good year, although many of us did not realize it at the time. It was the year the Canadian Union of Public Employees (CUPE) came out in favour of Hezbollah and Hamas and called for a boycott of Israel. More recently, Canada’s unions have supported rioters, anarchists, “occupy-ers” and looters. It seems it takes a lot of “diversity of tactics” to protect a living wage today. I hope the uptick in building permits helps.

Kerry Knudsen

Kerry Knudsen

May of 2007 was the highest-ever valuation of building permits in Canada, with a total value of issued permits at $6.8 billion. This week’s report from Statistics Canada puts our May permit values at $7 billion. Granted these numbers get adjusted for dollar values, etc., in pure, unadjusted dollars, we just hit a record. Either way, we are very close. Going back to 2007, Statcan attributed the bulk of the then-record of $6.8 billion to commercial permits. This year, the main driver is multi-family residential permits.

Going back to 2007, Statcan attributed the bulk of the then-record of $6.8 billion to commercial permits. This year, the main driver is multi-family residential permits.

Breaking that down (as if it’s necessary), we are in a record-setting economy driven by the sector that provides the most value in work for Canada’s secondary wood-products sector. For example, a single multi-family permit can generate 60 kitchens, 180 bedrooms, etc.

Canada has already lost some of its exclusive-use position domestically. Rules on foreign ownership in Canadian companies have been relaxed, and some of the big, European suppliers of secondary wood products have been very active in the Canadian retail market. You can open any issue of Azure or Canadian Interiors and see ads for Scavolini or Bulthaupt.

In the July/August issue of Wood Industry, we will be talking in the editorial about the depth of change that has occurred in the last five years. People are gone; companies are gone; associations are gone; trade shows are gone. Those that are left are faced with a new playing field and old rules.

For one thing, the single-family residential home is fading as Canada’s premier housing market. Young urbanites don’t want a lawn to mow, and retiring seniors can’t mow one. People from other countries are accustomed to more crowding, and actually appear uncomfortable in a remote setting. In fact, people in China think if you own land in the countryside and live there, you are an uneducated peasant. I know that because I own land in the countryside and live there, and I am not accepting any other explanation.

Some folks think I’m an incurable optimist, and I may be. However, I also am a realist, and I see no reason to sing the blues when we are at record levels in one of the vital indicators of the health of our industry.

 

Is everything roses? No. For one thing, many of our most advanced factories went out of business during the downturn. This means our production capabilities are below what they were in an environment of high demand. Like China, we will be under increasing pressure from external competitors. As I have been arguing that we need to exploit China’s current excess demand, so it will not be long before American companies realize the change in currency that killed Canadian exports to the U.S. can also fuel U.S. exports to Canada. In that case, we will see some marketing from real professionals, and Canadian consumers will be singing the praises of “traditional” (face-frame) design and production.

Another area where we are weak is in the builder market. Here in the countryside, surveys are springing up like mosquitoes in a tamarack swamp. The builders have been focused solely on cost, cost and cost. However, there is a light on the horizon, there, as people want more value for their money and learn the value of a functional (not just pretty) kitchen. As the new TV series Duck Dynasty pointed out recently, the most important thing to know about a potential wife is whether she can make a good squirrel stew. Pretty is as pretty does.

Some of us need to sharpen our abilities at bidding, especially in the area of tenders. We have enjoyed the ability to tell customers they have to wait six months for their kitchen, and now we will listen to builders telling us we have six days to deliver and install one. Things change.

 

I mentioned unions up there. In 2007, I wrote an editorial complaining about how the primary side was capturing most of the graduates from the University of British Columbia’s Centre for Advanced Wood Processing. Those were supposed to be our workers. The next month I wrote what I noted above, that Canada’s public-sector unions were going political and taking sides in shooting wars around the world.

Now, I note that the Communications, Energy and Paperworkers Union of Canada (CEP) has been awarded a seat on the board of directors of our own Wood Manufacturing Council, and my direct request to WMC for information is being ignored. You will see more on this in the July issue.

Naturally, the question is not what good the CEP can do for the sector at first. The question is why are they there? Demographically, Canada’s secondary wood-products manufacturers are small companies and privately owned. They have few employees, on average, and would seem to be small fish for a tuna the size of CEP. As I have a reputation for asking, “What DO it mean?

Actually, I have some hot news about the CEP from deep in the bowels of the unions’ internal communications channels. The CEP is currently in talks with the Canadian Auto Workers to merge and become “the largest private-sector labour organization in Canada.” The purpose, they say, will be to, “meet the challenges presented by the anti-labour offensive being waged by capital,” by having “members in many strategic sectors including telecom, manufacturing, forestry, paper, transportation, energy, mining, fisheries, printing and others.” One thing for certain, there isnothing more strategic than communications. Nothing.

Their mode, they say, will be to, “involve activists from the broader labour movement and community allies,” to achieve, “fundamental and radical change.” Interesting. Last week, an advertising supplement in the National Post said CEP is floating the idea of offering union membership to people that don’t work. Why am I not surprised? Next I suppose they will be bringing their “activists” from Lebanon.

Anyway, I imagine it’s all for the good. There are always sharks where the baitfish are plentiful, and I am sure the CEP would not waste its vice president’s time on the WMC if it saw our industry as failing. They probably just see us as weak.
Speaking of information, Wood Industry is hosting its second-annual Canada Night party, this time at IWF in Atlanta, Thursday, August 23 at the show venue. Admittance is free for Canadians, and we are offering free beer, free food, all-Canadian music and, for the first 200 through the door, a super-cool, collector-edition commemorative belt buckle to keep interest up, along with pants. Don’t like belt buckles? OK, YOU come up with something new. We could have ordered hats. This sucker is heavy enough to keep you in the TSA line for an hour. Don’t say you know me.

The main objectives are two. First, we want to have a shot at putting Canadians together in the U.S. during an industry-specific show to swap ideas and share information. Second, we want the suppliers of the world concentrated in Atlanta to see how many Canadians actually leave the home port to do their research. For the foreseeable future, information will rule. We are not weak.
Unfortunately, our industry associations cannot seem to get a national following. We have been harping on this for 15 years.

By now, you know the editorial voice and the direction of Wood Industry. We are proposing that we do for ourselves that which others have not done for us, and we would like to form Canada’s Wood Industry Association.

The purpose will not be to take away from the work of other associations or to do what other associations are doing. Rather, we need a national voice on issues of national importance. These include labour (as above), imports and exports, national regulations on safety, environment, taxation and standards, as well as other matters the staff of Wood Industry magazine has been studying for years and on which we have extensive files.

The proposed association will have no dues or fees, beyond those decided upon by the membership, and Wood Industry and W.I. Media have no desire to create an income stream. We are focused on survival for the industry in an environment of extreme outside pressure against a relatively small group of manufacturers.

At the moment, we are creating a data base of people that are interested. There is no charge and no obligation. However, if we hit a critical level of participation – say, 1,000 potential members – we will take the necessary steps to call an organizational meeting, get incorporated and set an agenda.

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