“A society grows great when old men plant trees in whose shade they know they shall never sit”
– origin unknown and disputed
Literally not Seeing the Wood From the Trees
As you drive along the long straight tarred road that runs from Namibia’s northern border with Angola to the capital Windhoek and the west African coast you see many roadside craft stalls. Here, the locals display their wares both for local consumption and the odd tourist wandering by. As you pass the settlements, the speed limit reduces, allowing you time to see their goods. Among them are animals of every local species, in many sizes, carved from scraps of local hardwood.
With eyes again focussed on the road you may see the occasional truck heavily laden with the same timber. The trucks, heavy with full tree trunks, are all headed one way; to the port of Walvis Bay for export.
The demand for trees comes mainly from China. They import hardwood and turn it into furniture that sells for a high price. While a logger in Namibia may receive €2 per tree, the value of the wood increases at an eye-watering pace as it moves up the supply chain. Local producers receive around €150 per tree, at the ports they are sold for at least $2000 per tree. This is before any real value has been added by conversion to planks or furniture*.
Everyone gains something from the current process. The Government issues permit to loggers (these are not free). The landowner or local co-operative receives payment for the tree, the loggers are paid to cut the trees down, the transport companies are paid to move them and so on.
This is a purely short term gain. Trees are being cut down faster than they can be replenished. If trees took a year to grow, replenishment would surely take place, These trees take 200 years to grow, but at the current rate, there may be no trees at all in Namibia by 2040**.
The short term side effects are also considerable. Overloaded vehicles are destroying local gravel roads. These are crucial links for isolated communities. Animals are being forced out of forests to scavenge on farmland, creating conflict. Where there is no replanting, there is desertification. Clearly, this cannot continue.
But go back to the craft stalls and look behind the displays. Many have workshops where they make furniture for local trade. This can be simple or spectacularly ornate. The trading point of Okahandja is a good place to see this.
Working with Trees – Planning Beyond Life
When do you ever plan 200 years ahead?
Is it really so different to S&OP or IBP? The issues are the same. We match demand to supply to generate profits and other benefits for all of the stakeholders. But we cannot wait 200 years to feel the benefit. We need to eat now.
Firstly, demand needs to be managed to a level that matches the supply of mature trees. This should allow for stock to be held so we do not just harvest each tree when it becomes mature. A forest can only be productive with mature trees.
This will severely limit the demand that can be met. So now we need to decide which demand. Let us categorize… High end, Middle market, Low end. This should strike a chord. So the high end is the local furniture market, the middle is the carved animals and logging is low end. But, in a country of 2 million people, the high end is a very small market. Especially for furniture that is built to be beautiful and durable. Our finance team would like us to sell more high end. They challenge our marketing team to see if we can increase our high-end sales. Do we differentiate or look for other markets?
Now, the export market to China begins to look attractive. We just need to sell the high-end product, rather than the low end. The obvious way to do this is to take the available trees, make furniture and export. This requires investment. By managing demand, we have already increased the value of each tree.
On the supply side, we can replant and replenish. This will help with the very long term but the long term must be aligned with shorter-term benefits. So we need to these and plan to make them happen. In this case, the benefits are likely to include higher prices per tree, more skilled employment (in a country where unemployment rates are around 30%) and a high return on any investment in converting trees to furniture. Add to this, control over the supply and value chain and the motivation should be there. When there is the potential for more than logging fees, then replanting is likely to become a priority too. As values rise, so do standards.
Also, who wants to be broke with no source of income in as little as 20 years?
Elephants in rooms
This all ignores the herd of elephants in the room. These are local, National and International politics and the exploitation of any existing loopholes. No one single body looks after the national interest for Namibian hardwood in the same way that a business would use IBP or S&OP. When businesses use these processes, their own elephants appear in the room. The issues then have to be addressed and managed. Involving the stakeholders is key too – Our marketing, Finance, Demand and supply teams come together to pursue common goals. In Namibia, there are also many stakeholders – landowners, loggers, local communities, the governments, the ports.
I could go on making the point, but enough is enough. Before I leave, I’d like to introduce you to the little guy who’s the inspiration for all of this. He is less than 5cm tall, made of wood and from Namibia. Sometimes he comes with me to meetings. He is there to be picked up and discussed.