IN everyday life, the rising costs of food and fuel are making regular headlines. And while these increases affect those of us who work in the construction sector as much as anybody, we are also feeling the strain of hikes in raw material costs.
The latest is wood, and one of the UK’s largest panel plants is warning that the increases being seen now are here to stay and are higher than expected.
Kronospan’s chief executive, Ludwig Scheiblreiter, is arguing that this is not a cost that distributors and retailers should try to absorb, but should instead pass down the supply line to avoid long-term financial impacts.
Along with timber, the firm’s other raw materials, chemicals and energy, are also rising, which is typical of the cost problems being faced by many in our industry.
So, it seems, we are stuck with a rising cost, but there is a secondary argument that needs considering and begs the question of whether support for newer green industries should come at a price for more traditional sectors.
Government subsidies to the biomass industry for burning wood are, the firm argues, making matters worse.
Such subsidies, which are aimed at encouraging the creation of electricity, are reportedly worth up to four times the current price levels of timber residues and post consumer wood waste.
Mr Scheiblreiter argues that the incentives are “well-meaning but ill-conceived”, squeezing the availability and cost of a core raw material, threatening Europe’s wood panel manufacturing industry and related supply chains.
Wood, he says, should only be burnt at the end of its usable life.
This final argument is one with which I think most people will agree. Wood is a material that can be re-used, but does have a finite lifespan.
One day, the time should come for it to be used for biomass, but I would suggest the selection from the resources available needs to be more carefully managed.
On the continent, price levels for panel products are reported to be up to 25% higher than the current UK levels, which could follow suit, thanks to raw material pressures pushing down production capacities.
A way must be found for future supply to be secured to safeguard availability, without setting the biomass sector back by taking away the incentives which are driving the industry forward.
It is a delicate balance, but it is vital that our industry does not become the eco drive’s road kill.
For more information on Constructing Excellence in the North East, please contact chief executive, Catriona Lingwood, on 0191 374 0233 or catriona@cene.org.uk.
Catriona Lingwood, chief executive of Constructing Excellence in the North East.