“Since my last update in July there have been unprecedented and disturbing events for the whole of the global market.
The war in the Ukraine has pushed energy cost to unsustainable levels leaving both families and companies with impossible decisions to make. The only respite is that the governmental intervention will help over the next 6 months. I really can’t see this support continuing, the impact for ourselves will be dramatic when it ends. Inflation continues to break record double digit increases. Mortgage rates, food, and fuel all adding to the challenges for all of us, which will ultimately effect sales in 2023 as disposable income and savings fall.
We are currently paying all our employees a monthly bonus. This commenced in June for a 5-month period and this has recently been extended until March next year I believe our social and moral obligation to our staff is such that along with this bonus we will have to try to, as much as practicable, to bridge the gap between pay and the cost-of-living increases.
Softwood
Unlike the UK, Europe continued to buy Russian timber until the 10th July. When this wood is consumed, the Scandinavian mills prediction is that demand from Europe will increase.
On the back of falling construction and DIY demand the feedback from the industry is that the forestry and wood industries are struggling with higher costs, reduced demand and lower margins.
We do not predict will be an issue with supply for the foreseeable future, the problem will be how much capacity the sawmills will take out of the market if they see their margins reducing to unviable levels.
Currently stocks are healthy, but due to increased production costs we are not seeing prices reducing dramatically.
Sheet Material
We have had now a period of stability in the availability and supply of sheet material. Again, we see little to convince us that this will change for the foreseeable future.
The ongoing risk will be production costs. This industry consumes a massive amount of energy to dry and press the sheets. Prices are currently stable however this could well change in April next year when the energy price cap is withdrawn.
Actions and Pistons
A further weakening of the Pound against the Dollar has made importing actions and pistons more expensive. At this moment in time container costs are not reducing by the value that a weak pound has affected prices.
Take care and keep safe.
Kind Regards
Mike”