OPINION in this benchmarking exercise that performs a relative comparison of production costs and other productivity measures . The study also reviewed similar research conducted in different countries and concluded that value strategies are significantly associated with competitiveness .
VALUE STRATEGY MORE SUCCESSFUL
Mills with a higher net value recovery ( ratio of product sold against raw material cost ) were more likely to survive during periods of market decline and prosper when the economic conditions improved .
Neither labour productivity nor unit costs were associated with competitiveness . This indicates that a lowest cost producer strategy is generally less successful than a value strategy . A value strategy doesn ' t purely focus on increasing the price of the final product , but it rather entails optimising the cost of raw material against the total value of sales generated .
It is a combination of getting good raw material at a competitive price , getting the most products out of the raw material , and producing valuable products .
The study considered that less than 10 % of the local production is exported , and less than 10 % of the local demand is imported .
This ratio remained consistent during economic cycles and illustrates that the local supply and demand is in equilibrium . The consequence is that when there is a decrease in local demand , competition between local sawmills increase .
The increased competition leads to a reduction in price and eventually profitability of sawmills . The Great Financial Crisis of 2007-2008 caused such an event . This resulted in the closure of about 30 sawmills or 30 % of the number of sawmills at the time .
SA PRODUCES LESS THAN 0.6 % OF SOFTWOOD
South Africa produces approximately 2,0 million cubic metres of softwood lumber per annum . This constitutes less than 0.6 % of the world ' s production . To put it into perspective , the two largest sawmills in the world , Klausner Holz Thüringen ( Germany ) and Wismar Sawmill ( Germany ), produce 2,4 million cubic metres of sawn wood between them per annum . The local sawn wood production in 1990 was 1,7 million cubic metres . The local sawmilling industry only grew 0,05 % per annum from 1990 to 2019 . During the same period , Chile ' s production grew from 2,9 million to 8 million cubic metres per annum , and Brazil ' s production increased from 2,8 million to 7,8 million cubic metres per annum .
Landholdings for softwood sawlogs is almost at the same level as the 1980s and have reduced substantially since the mid-1990s . Policies promoting the development of new plantations should be considered , but this should not be regarded as the primary constraint of the industry .
The lack of growth in the industry can be attributed to many aspects , but a specific concern is that South Africans only use 0,0319m 3 of wood per person per year . Many developed countries use more than twenty times as much . To-date , the local building culture has not been favourable to wood .
The primary constraints have been product development and marketing . The local industry has suffered from marketing myopia , as described in Theodore Levitt ' s 1960 Harvard Business Review article . It ' s been short-sighted in terms of the local market ' s needs and has not developed new products that could have increased local demand , manufacturing capacity , and competitiveness .
INTERNATIONAL BUILDING MATERIAL OF CHOICE
Internationally , wood has become the building material of choice . As part of the natural wood forming process , trees absorb carbon dioxide . For every cubic metre of wood grown , approximately 1 ton of carbon dioxide is absorbed . Brick and mortar , on the other hand , produce carbon dioxide during the manufacturing process .
From a renewable building material point of view , wood is clearly the preferred option . Mass timber has made it possible to develop multi-storey buildings . Examples include the Mjøsa Tower ( Norway ), completed in March 2019 , and is primarily a glulam structure .
The tower is 85.4m high and contains 18 floors . Various forms of mass timber exist including , glue-laminated timber ( glulam ), laminated veneer lumber ( LVL ), cross-laminated timber ( CLT ), parallam and mass plywood .
These products are value-added and use small pieces of wood that are combined in a way to provide optimal strength and fire protection . Mass timber also promotes modular construction that has a lower impact on the building site , requires fewer builders and are significantly faster than traditional construction methods .
The South African sawmilling industry faces many challenges , but it also has many opportunities . In the long term , South Africa should increase the amount of land available for plantations and improve breeding practices through research and development .
An attractive option would be to consider rehabilitating old mines by planting trees . Wattle plantations that are primarily used to produce chips for foreign pulp mills can be repurposed for local softwood sawmilling .
In the short term , sawmills can increase their volume recovery and install technologies suited for small log processing . In the medium term , wood manufacturers should develop mass timber and new wood products . Wood products that increase the efficiency of wood utilisation , the value-added and that meets local needs should be prioritised .
South Africa ' s sawmills are not immune to international competition . For local sawmills to survive , they must remain competitive . A lowest-cost producer strategy is unlikely to ensure that this will happen . A value strategy that aims to satisfy the needs of local users is more likely to pay off in the long term .
ABOUT THE AUTHOR
Schalk Grobbelaar is a senior lecturer at the University of Pretoria ’ s department of Engineering & Technology Management , Graduate School of Technology Management .
REFERENCES :
1 . Allpass , M ., 2018 . Intermill Comparison - Fourth Quarter 2017 , Pietermaritzburg : Crickmay Supply Chain Evolution .
2 . Grobbelaar , S . & Visser , J . K ., 2021 . An analysis of South African sawmilling competitiveness . Southern Forests : a Journal of Forest Science , 83 ( 1 ), pp . 28-37 .
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