ISSUE 40
SPRING 2022
T H E N E W S L E T T E R F O R C U S TO M E R S O F T H E S C O T T G R O U P
SERVING LOCAL INDUSTRY NATIONWIDE
Spring 22 Market Update It’s challenging times as we witness the grave crisis enveloping Ukraine. Like many, we have sought to offer practical support, and have done so through the Disasters Emergency Committee - Ukraine Humanitarian Appeal. While risks around labour, HGV drivers and material constraints had not gone away, we briefly saw signs of stability emerging after a difficult post-Covid recovery. The Ukraine conflict now further adds to widespread market uncertainty and global supply issues, and with the highest inflation rate for more than 30 years, the conflict has exaggerated the impact in both the business and domestic community of ‘the cost-of-living crisis’. Sanctions imposed upon Russia do not directly impact our timber procurement. We have negligible exposure in that geography, but the global dynamics of the timber industry do mean that the indirect effect is both significant and immediate. Russian, Belarussian and Ukrainian sourced timber is a key component of European softwood timber supply, providing approximately 10.3 million m³*. This displaced demand will now compete with other existing supply streams, and this is inevitably feeding through into price pressure. Our supply chain remains robust, but our purchasing team is dealing with levels of volatility and complexity way beyond normal market behaviours to ensure continuity of supply. The breadth of our supply chain and our successful partnerships with the largest mills in both the UK and the Baltics have enabled us to maintain continuity of service for our customers.
We’re pleased to be able to bring you our regular, unbiased commentary on the industry through our quarterly market updates. Our UK and Baltic-based procurement teams are really well-positioned to understand industry dynamics and provide their insights on market trends – keeping you informed on the issues that might impact you. You can read all our market updates on the website and sign-up to receive direct to your inbox here: www.scottgroupltd.com/sign-up-for-our-newsletter *Source: FEFPEB
SECURING SUPPLY CHAIN SUCCESS During the past two years, the timber market has experienced unprecedented turmoil and volatility, so, it’s more important than ever to ensure the robustness of our supply chain. As it is a finite resource, our timber demand requires really careful planning and we are continually improving and developing our capacity and timber supply chain processes. We always look at the bigger picture and only seek to source the right volume of timber for our needs.
As the UK is a net importer of timber – using more than it grows – our relationships with timber sources outside our own country are critical. We currently procure almost 500,000m³ of timber per year, sourcing around 50% from homegrown suppliers and the other 50% from the Baltics and the rest of Europe – so we always need to be ahead of the game. We recently embarked on a series of internal workshops within our manufacturing business - bringing together our planners and buyers to
Together, we deliver more.
embark on the next phase of continuous improvement. We always aim to maximise the sustainability and resilience of our processes to ensure we continue to maintain continuity of supply, no matter what the market throws at us next. Together, we deliver more.