December/January, 2002

 

 

 

 

guest Columnist

An Insurance Policy has been developed for Wood's Future

Kelly McCloskey

Insurance provides protection against many different kinds of business risks. Companies regularly invest in all forms of insurance to protect products, assets and employees. Think fire, industrial accidents, shipping blockages. Now think marketplace insurance. If companies are willing to invest to ensure that their product arrives safely to the customer, it makes sense to insure that the product has access to the marketplace in the first place. Consider wood's market risk. 

The last five years have witnessed mounting efforts by environmental groups and competing building material industries to reduce the market for wood. Left unchallenged, these efforts will have a considerable impact on costs, sales and profits for anyone working directly or indirectly in the wood business. In fact, a one percent drop in lumber demand would result in a 1.7 per cent decline in price, which translates to a US $390 million impact on revenues for producers alone! Product promotion by well-organized groups like the Steel Alliance and campaigns by environmental advocates working arm-in-arm already threatened significant harm to the forest products sector. 

Environmental organizations publicly embarrass our customers, demanding they sign contracts that limit their procurement choices and reject wood that comes from forests the groups deem to be "endangered". Praise is quick to follow for those that capitulate. Steel and concrete are gaining public favor by highlighting the weaknesses of wood in areas of strength, durability and-surprisingly-environmental impacts. Insurers like manageable risks and wood's market challenge is a manageable risk. In fact, there is very positive news on both the product side and with the forest resource. In addition, research indicates a willing and accepting audience in the form of builders, retailers and consumers that very much want to hear the news. 

Wood still has an emotional and economic hold on consumers, and there is a growing desire to believe that environmental progress is occurring. But the territory is large and there are a lot of people that we have to reach with our message. Group insurance-where a number of companies or individuals pool their resources-is one of the most efficient forms of insurance. It provides the greatest coverage, for the least cost. The Wood Promotion Network (WPN) is group insurance for the wood products sector-as necessary a business investment as fleet insurance. Over 220 wood producers, suppliers and allied organizations to date have viewed the WPN as a preventive measure to limit the impact of environmental campaigns on the cost of access to the resource and to strengthen a preference for wood in homebuilding. 

Our coverage is this-a $45 million war chest for a three-year business-to-business marketing, public relations and advertising initiative that aims to show three things: One, that forests are abundant and growing. Two, that wood is a better building material. Three, that industry will not be silent in the face of aggressive competition -we will fight for market share. Our offense is already in motion. Under the mantra of "Be Constructive-Wood", the WPN is giving the trades, media and do-it-yourselfers great reasons to approach life constructively with wood. TV ads focus on the ease and versatility of using wood. The WPN's Wood Information Bureau is a resource for in-depth information on timely topics. 

Even more information- for both the professional and the amateur-can be found on www.beconstructive.com. Running parallel is a strong offense for the forest. Armed with encouraging statistics from the United Nations and other third parties, the WPN is sharing news that forests in the U.S. and Canada have grown in the past decades and much of the continent's original forest cover remains intact. Television and print ads highlight satellite technology used to map forest growth while encouraging viewers to obtain more information on www.forestinformation.com. Using satellite technology to bring renowned ecologist Patrick Moore from the forest floor to the fingertips of Internet viewers, the site combines information on U.S. and Canadian forests together under one umbrella. 

What we've accomplished to date is unprecedented. A large North American-wide coalition of partners that span the range of stakeholders from landowners and equipment suppliers through to wholesalers and retailers. They know our challenge requires an aggressive, collective response. They are putting both money and time on the table. They are all telling the same story and we're giving them the tools to do it so that we leverage every penny of our war chest. There are no lack of ideas on ways to get the wood message out. The most common refrain I hear when making presentations to potential partners is, "It's about time, what can I do?". And this is what I tell them. Recognize that the WPN is insurance worth having. 

Recognize that insuring market retention and growth for wood is a good investment. Keep in mind that the cost to regain lost market share is always many times more expensive than the insurance premium paid in advance. And, finally, united we stand and (well, you know the rest.) Prior to his role as overseer of WPN, Kelly McCloskey was President and CEO of the Canadian Wood Council. For further information on the WPN, send a message to kelly@woodisgood.org or contact Dale Simpson, VP Coalition Development at dale@woodisgood.org.

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