The following was published by the Medite 2016 Global Futures Group, TTJ, United Kingdom (click title to view original article)
Profiting from the luck of geography
January 23 2010
By Bernie Neufeld
Bernie Neufeld of BIS Shrapnel says Australasia’s economic ties with Asia will be the dynamic increasingly shaping its wood panels sector in the future
Recession, what recession? While Australia’s economy certainly slowed, it was the only industrialised country in the world to avert two quarters of negative growth, following the onset of the global financial and economic crisis Why? Was it good economic management, or is it just a lucky country? The short answer is both.
While the Australian government countered the financial crisis with a well timed and massive stimulus programme, Australia’s Mandarin-speaking prime minister made a point of travelling to Beijing when the crisis hit. By no coincidence, China also rolled out a well-timed, massive stimulus programme, managing to maintain economic growth in 2009 at historically high levels. Other countries, including Indonesia, Malaysia and Japan all followed with similar programmes, maintaining strong economic activity. Strong growth in Asia was as crucial to preventing recession in Australia as was the stimulus programme. With good economic management, and the luck of geography, Australia has had more than 15 years of economic growth without a recession.
Australasia is by history and by culture linked to Europe and North America. By geography it is inextricably linked to Asia. China is now Australia’s largest trading partner, having over the past decade replaced Japan, Europe and the US. What an impact it has had on Australasia – and the wood panels industry!
Shaping the future
The increasing linkage of the Australasian economy and culture to the developing powerhouses of Asia is the dynamic shaping the future of this region. The Asian region itself is increasingly being integrated, as is Australasia with Asia. Trade and investment flows with Asia are powering Australasia’s economic growth, and vice versa.
The power of Asia has had a profound effect on the MDF industry. In the mid-1990s, North American and European companies were investing in MDF production facilities as if there were no tomorrow. Japan was the key producer and consumer of MDF in Asia, followed closely by South Korea and Chinese Taipei (Taiwan). I had just visited China, a country that at that time produced virtually no MDF or particleboard. At an industry conference in North America, I made a rather bold statement at the time that China would one day lead the world in the production and consumption of MDF.
This notion came from a visit to Chinese Taipei [Taiwan], where furniture producers advised they were rapidly shifting production facilities to mainland China. This meant China would either need to import MDF and particleboard, or produce it to service the rapidly expanding furniture industry. For a decade, China imported huge volumes of MDF and particleboard. At the same time, production facilities in China expanded rapidly. Eventually imports were replaced with domestic production. Today China is the undisputed world leader, with an amazing array of MDF and particleboard producers and consumers, dwarfing North America, Europe and Australasia. It is also a net exporter. In many ways China is an opportunity missed by North American producers, who could have seized the day to invest in production facilities in China, or to export to China, as many European and Australasian producers did.
MDF industry
In Australasia, the MDF industry has been completely transformed to one dominated by investors from Asia, and focused on exports to Asia. It is a prelude to how the industry and other industries in Australasia will be shaped in the future. It will be Asia centric. The region has six MDF production facilities. Of these, four are now owned by Asian companies, three in New Zealand, and one in Australia. In 2009, the region produced an estimated 1.2 million m³ of MDF, of which 44% was exported.
Of the three facilities in Australia, the 145,000m³ capacity plant at Wangaratta, New South Wales, is owned by Sumitomo (Japan), the 260,000m³ plant at Oberon, New South Wales, is owned by Carter Holt Harvey (New Zealand), and a 230,000m³ plant at Gympie, Queensland, is owned by (Laminex) Fletcher Wood Panels (New Zealand). Production in 2009 in Australia was 600,000m³ of which 30% was exported, mainly to China, South Korea and Japan.
Of the three facilities in New Zealand, the 220,000m³ capacity plant in Rangiora is owned by Daiken and Itochu (Japan), the 170,000m³ capacity plant in Mataura is owned by Dongwha (South Korea), and the 350,000m³ capacity plant in Nelson is owned by Sumitomo (Japan). Production in 2009 was 645,000m³, of which 78% was exported, mainly to Japan, China and the US.
Particleboard industry
While the particleboard industry remains predominantly owned and operated by domestic interests, this is in part a result of lower demand for this product in China, and strong demand from the building industry in Australasia. Australasia has 14 small particleboard production facilities, one in New Zealand and 13 in Australia. Only four plants have a capacity exceeding 100,000m³. In 2009, production was 900,000m³, of which only 2% was exported. A transition to ownership by Asian companies, and exports to Asia is possible, but less likely in this sector, as domestic consumption is strong, and particleboard is less tradeable.
But the wood panels industry, other timber industries, and other sectors in Australasia will in future be driven by the luck of geography as well as good economic management.
About the author
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Bernie Neufeld, an economist, with graduate degrees in economics and political science from the Universities of Winnipeg and Manitoba in Canada, and the University of Hawaii in the US, is senior manager at BIS Shrapnel, an Australian-based consulting company. He manages the company's globally-oriented forestry programme, and has been analysing and forecasting the forest products industry for the past 20 years.
He has travelled throughout Asia, North America, South America and Europe undertaking private strategic and multi-client studies with a future focus on products such as MDF, particleboard, LVL, glulam, I-joists, sawn timber, plywood, OSB, and strand lumber.
Sunday, January 24, 2010
Wednesday, January 20, 2010
Prorogueing in the Canadian Federal Government
Extreme right wing governments seem to have a penchant for mean spiritedness, stretching the limits of the law, and abusing democratic procedures. The Bush administration in the United States with many such questionable actions caused immeasurable damage to the international reputation of the United States. Now Canada is taking a turn at ruining its reputation as a well governed, stable, democratic country, with a federal government that appears to be contemptuous of the people it represents. The following article from the very conservative magazine, the Economist, is self explanatory (click on title above, to view the original article). It suggests this government is on it's way out.
HARPER GOES PROROGUE
Jan 7th 2010
Parliamentary scrutiny may be tedious, but democracies cannot afford to dispense with it
CANADIAN ministers, it seems, are a bunch of Gerald Fords. Like the American president, who could not walk and chew gum at the same time, they cannot, apparently, cope with Parliament's deliberations while dealing with the country's economic troubles and the challenge of hosting the Winter Olympic games. This was the argument put forward by the spokesman for Stephen Harper, the Conservative prime minister, after his boss on December 30th abruptly suspended, or "prorogued", Canada's Parliament until March 3rd.
Mr Harper's supporters might argue that there is nothing wrong with this. Precedent allows it, and Canada is a decent, well-run place, where much is decided at the provincial level. Since most countries already have too many laws, a pause for parliamentary reflection might count as progress. Some places, such as Texas, manage well with only a part-time legislature. Politicians' ritual slanging matches should not be allowed to distract Canadians from weightier battles, such as the bobsleigh, the giant slalom or round-robin curling. Come to think about it, why not shut down Parliament altogether, perhaps until the economy is growing again at full throttle? At least that would help cut the federal deficit.
The argument that previous prime ministers frequently prorogued Parliament is no more convincing. In almost every case they did so only once the government had got through the bulk of its legislative business. The Parliament that Mr Harper prorogued still had 36 government bills before it, including measures that form part of the prime minister's much-vaunted crackdown on crime. When it reconvenes, those bills will have to start again from scratch. Past prorogations were typically brief (see article[1]). This time sessions will be separated by a gap of 63 days.
Never mind what his spin doctors say: Mr Harper's move looks like naked self-interest. His officials faced grilling by parliamentary committees over whether they misled the House of Commons in denying knowledge that detainees handed over to the local authorities by Canadian troops in Afghanistan were being tortured. The government would also have come under fire for its lack of policies to curb Canada's abundant carbon emissions. Prorogation means that such committees--which carry out the essential democratic task of scrutinising government--will have to be formed anew in March. That will also allow Mr Harper to gain immediate control of committees in the appointed Senate, where his Conservatives are poised to become the biggest party.
Mr Harper has form. He prorogued Parliament last winter, too--to dodge a short-lived threat by the three opposition parties to bring his minority government down. Having gone to the polls three times since 2004 Canadians do not want another election. He might say that governing in a minority obliges him to play fast and loose with parliamentary nicety. He has nursed the economy and he has confounded those who feared that he would impose his supporters' loathing of abortion and liking for the death penalty on a generally tolerant country.
A LEGISLATURE MATTERS MORE THAN THE LUGE. Mr Harper is a competent tactician with a ruthless streak. He bars most ministers from talking to the media; he has axed some independent watchdogs; he has binned campaign promises to make government more open and accountable. Now he is subjecting Parliament to prime-ministerial whim. He may be right that most Canadians care more about the luge than the legislature, but that is surely true only while their decent system of government is in good hands. They may soon conclude that it isn't.
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