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Logging Leaders Explore Issues at Meeting

John Deere hosts gathering of American Loggers Council board of directors and trade media

By Alan Froome
Date Posted: 9/1/2004


MOLINE, Illinois — The American Loggers Council (ALC) board of directors held its summer meeting recently. The meeting was generously hosted by the John Deere Company at its headquarters in Moline, Illinois.

        Board members arrived for the weekend meeting from all across the U.S. Practically every state was represented, from Maine to Washington and from Wisconsin to Texas.

        The theme of the meeting was ‘Focusing on the Future,’ but the concept of the sessions was a little different this time. For one, representatives of the forest products industry trade press were invited to attend and participate in many of the discussions. The program also included equipment demonstrations and meetings by John Deere for the benefit of the media.

        John Deere and Timberjack hosted an informal reception the first night to kick off the weekend meeting. Bill Wells, manager of John Deere forestry communications, welcomed the board members and media representatives. He introduced other members of the John Deere forestry team: Mikko Rysa, vice president of sales and marketing world-wide; Don Switzer, North American sales and marketing director. The weekend program was organized by Bill Wells and Dorothy Torbush of Clean Design, the new advertising agency for John Deere and Timberjack.

 

Visit to John Deere

        Board members and media representatives were picked up by bus Saturday and taken to John Deere’s world headquarters, which is in manicured parkland. The building was designed by renowned Finnish architect Eero Saarinen, and it won several architectural awards when it was built some 40 years. The group gathered in the theater used for audio-visual presentations, which has a big screen, rotating stage and four levels of balconies.

        Bob Lane, CEO and chairman of John Deere, welcomed everyone. He is only the 8th CEO in the company’s 167-year history, he noted. The company was started by blacksmith John Deere in 1837; he forged plows for farmers with steel normally used for saws — instead of iron — to work in the heavy clay soil.

        John Deere is now the world’s largest manufacturer of forestry machines. Most of the company’s manufacturing operations are in Woodstock, Ontario, two locations in Finland, and at several plants around Moline. The company has other additional plants in Langley, British Columbia and New Zealand.

        “We have four distinctive brands — John Deere, Timberjack, Hitachi and Waratah — which we would like to tell you something about,” said Bob.

 

Global Forestry Industry

        Mikko gave a detailed presentation, pointing out that John Deere and Timberjack are now the leading forestry machine brands. They account for over half of the world market of 6,000 to 7,000 machine units per year, he said, while the next leading manufacturer is only one-third that size. Sales are increasing — company figures indicate that the forestry machine market bottomed out in 2001.

        Mikko travels a lot overseas and has a truly global perspective on the logging business. He answered several questions from the board members, particularly on the effect of cheap logs and lumber from Russia and the Baltic countries. “It is a vast resource,” he said, “but most of the fiber is actually going to China, not North America. However, lumber is being imported into the U.S. from Chile and New Zealand, so that is having some effect on logging here.”

        Don discussed John Deere’s dealer network (380 at the last count), which offers 70 different forestry machines, including 29 skidder models and 15 feller-bunchers.  Other presentations covered credit and financing services. The Nortrax program can buy a dealership –if the dealer retires, for example — in vital areas to keep parts and service available.

        Dave McFarlane described the six successful John Deere-Hitachi track machines that his division builds in Langley, B.C. Doug Landers talked about the Waratah felling and harvester heads that are produced in New Zealand and Finland and which often are mounted on John Deere-Hitachi machines. “There are over 5,000 Waratah disk felling heads now in operation,” said Doug.

        Mike Ptacek from John Deere in Washington talked about the new Energy Wood Harvester or Bundler. The machine was recently introduced to the U.S. market after wide success in Finland. It retrieves branches and tops from the forest floor and forms them into bundles of wood that can be burned in biomass plants to produce steam and electricity for small rural communities.

        David Althaus demonstrated the John Deere forestry machine simulator and described some advanced harvesting technology projects, like the revolutionary Walking Machine, which was shown recently on the Discovery TV channel. The simulator is used regularly at dealerships around the country to train new feller-buncher and forwarder operators.

        The program was followed by a visit to Coal Valley, John Deere’s demonstration site. Several of the latest types of construction machines were demonstrated, including bulldozers, tracked and rubber-tired excavators, graders and more. After lunch, the visitors were invited to try out the machines for themselves, and many jumped at the chance under the watchful eyes of the John Deere experts.

 

ALC Roundtable 1

        At the first ALC roundtable meeting, several invited speakers delivered remarks followed by general discussion.

        Keith Balter, vice president of RISI, a consulting company based in Bedford, Mass., talked about the economic outlook for the forest products industry. “The economy in general is growing well,” he said. “The price for OSB (oriented strand board) is at an all time high, and lumber prices are also high. However, timber markets are sluggish.”

        Keith attributed the sluggish timber markets to increased recovery at mills (resulting in fewer logs needed), consolidation in the lumber and paper industry (fewer but larger mills), plus increased competition from Russia and Eastern Europe.

        “Lumber consumption is up 26 percent from 1993, but saw logs from U.S. sources have trended down 15 percent in the same period,” said Keith. Lumber from Canada has been constant at about 34%, he added, but the supply from overseas has increased from 0.5% in 1993 to around 5% this year. Likewise, more structural panels — like OSB and plywood — are coming from overseas. Pulpwood demand is the same as it was 10 years ago, according to Keith.

        Jim Petersen of the Evergreen Foundation, which publishes Evergreen magazine, talked at length about the history of U.S. national forest policy. The Healthy Forests Restoration Act is good for the forest products industry, he said, but Jim expressed pessimism in the event that Democrats win back the White House in the next election. Forest lands that are slated for timber harvesting or thinning may be designated ‘hands off’ recreational land, he suggested.

        David Knight, co-publisher of Timber Processing magazine, was optimistic. The pulp and paper industry is still in the doldrums, he noted, but demand for U.S. wood products is strong and expected to increase at least 1% each year for the next three years. Pallets are also in good demand, he noted. Between 650 to 700 million tons of wood products were used last year in the U.S., Dave said.

        There are fewer mills today, Dave acknowledged, but they are bigger; 21 of the 30 biggest mills are located in the Pacific Northwest. Twice as much softwood is cut compared to hardwood. About 98% of timber harvesting is done by independent loggers; half of them, in Dave’s opinion, “just get by” when it comes to operating profitably. He also discussed the concept of 24-hour logging, which is being tried by a Canadian company.

        Randy Hervey of Bituminous Insurance Co. took up the theme of 24-hour logging. His company essentially would not insure a logging company that operates around the clock because of concern about increased accidents and injuries. The industry is safer today with fewer claims, he said, but accidents are very severe. His company might consider providing insurance if a logger was running two shifts where skidding and loading were the only activities of the second shift — and only if mills demanded it.

        American Loggers Council president Steve Hanington thanked the speakers and John Deere for sponsoring the event. “The ALC has 27 state and regional organizations represented here,” said Steve, a logging contractor from Maine. The council was formed in 1994 in response to pressure from outside the logging industry “that was changing the way we work,” he said. “We aim to enhance the logging profession, establish a more level playing field and keep the public informed.”

        The meeting was opened to questions from the floor. One participant asked what kind of regulations loggers face in Russia and South America. Keith Dalton answered by saying they have very few regulations, but their main competitive advantages are low labor costs and cheap logs.

        Asked about Appalachian hardwoods, Keith said the inventory is getting tighter, and there is much competition from abroad, such as furniture from China and flooring laminates from Scandinavia. Engineered wood products are another factor.

        Another person asked if China’s new middle class need for housing will have an impact on lumber exports. Although China claims its economy is growing at 8% a year, Keith thinks the figure is suspect. China must import wood because plantations have not succeeded, he noted. Russia probably will be China’s main supplier of wood, he added.

        John Deere representatives were asked what the company was doing to help change public perception that logging is bad for the environment. The questioner noted the logging industry is nervous about a Democrat administration replacing the Bush White House. Don said that John Deere could not get involved in political questions.

        Don was also asked if John Deere was willing to get more involved in operator training because of the difficulty of hiring and training new employees in the Southeast. Government funds are available to fund training, he said, and suggested working with local elected officials to obtain funding.

 

John Deere Meets Press

        John Deere hosted the media to a breakfast meeting the next day. Bill discussed John Deere’s team approach to marketing. Eric Honsantia talked about the pending introduction of lower emission Tier 3 engines on John Deere machines; even tighter regulations will take effect in future years to Tier 4 engines. Mikko said that good operator training can have a huge effect on productivity and uptime; this will be a strong focus for John Deere for the next several years, he indicated. Don talked about the successful merger between John Deere and Timberjack; both brands will continue to be sold in the U.S. and Canada although only the Timberjack nameplate is used overseas. Mike described the new Bundler option, which can be mounted on a forwarder; tests have been carried out in Idaho and more will be conducted in Maine.

        Asked about where the increase in machinery sales was coming from, Eric said, “Many U.S. loggers are now having to replace their machines after putting it off for so long. Some larger companies are also modernizing after taking over some of the smaller outfits.”

        Mikko was asked about the generally pessimistic outlook for logging that was discussed the day before. He expects the global market for wood products to grow strongly in the next 12 months, and he compared the short term outlook to “one wave in a much bigger ocean.”

 

ALC Roundtable 2

        The ALC board of directors held another open meeting following a closed door session. The second roundtable was chaired by Steve and featured a discussion with the media open to any issues.

        The first question, from TimberLine, raised the issue of the poor public perception of logging. It was suggested that “forest management” would be a better term to use than “logging” with more emphasis placed on replanting trees. Participants agreed the industry needs to make an effort to improve its public image. One person noted that loggers only cut trees where a land developer or sawmill has contracted them to cut, yet loggers always get the bad publicity directed at them.

        Dave Knight suggested sponsoring an annual forestry appreciation day as a way to improve public relations, and many thought it was a good idea. A board member from Washington said loggers have put up signs saying, ‘This area logged and replanted in 1986,’ and the signs have been well received. Using other positive images, such as Smokey the Bear, could help also, participants agreed. A board member from Texas described an event that was held at a high school that was a great success in educating students about logging. Improving public perception is going to be a long process, but it is a good idea to start with youths, people agreed. Someone suggested — half in jest, half seriously — stopping production of toilet paper for a few months to get the message across that “we all need loggers.”

         The American Loggers Council and John Deere-Timberjack deserve a big ‘thank you’ from the trade media for a very productive and pleasant summer meeting.




 






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