Our industry forged a more secure future in 2023 by tackling challenges that shook our very foundations.
The regulatory uncertainty continued this year, creating enormous uncertainty. But for the most part, we’ve managed to overcome these obstacles. It serves as a reminder to us that sanity must prevail, even in the most chaotic and threatening situations.
This experience has made us more patient, in a way. I hope that this will be baked into our business, as it seems we will require this patience in future, not only for our individual businesses but to face the challenges to our industry.
Technological renewal
There is no room for complacency. We have decided to question the way things are being done in the industry and are more convinced than ever that our approach to modernising the industry via automation is the most sustainable one.
We understand this is a difficult challenge, especially for an industry struggling to head back to profitability. In our view, the investment must be seen as a necessity to safeguard the future.
Looking at the financial markets, it’s clear that interest rates will remain high for longer, and that a potential recession is still on the horizon. This would give any person sufficient reason to discount, or even discard, the idea of modernising their infrastructure. This is a trap we saw many years ago, before making our own decision to modernise our production facilities. We had all the reasons not to do it: a weakening market, increased costs, diminishing profitability, and uncertainty (the process started when we were still in lockdown).
It was a leap of faith, but we realised that without adequate facilities, the future of our business would be under threat.
This premonition is coming true, as we are seeing ongoing changes to legislation requiring safer, cleaner, and better working environments. It also helped us in optimising our production, which is having a financial benefit, as material management is much more precise than previously. Our material is weighted in units as precise as 100g, which is remarkable, considering that we are working in hundreds of metric tons.
In this light, we’re very excited to have moved further with our offering to customers of the Protreat automated treatment plant. This builds on the technology we developed at our own automated plants in Mossel Bay and Sabie; probably the most modern production facilities in Africa and among the best globally, positioning us as a company of the future.
Our Protreat plant will add value to the industry, bringing not just ease of use but also ease of compliance with the standards governing timber treatment, providing evidence of quality treated timber.
In short, Protreat will prepare our customers, too, for the future.
Dolphin Bay is working on some add-ons to the Protreat plant, which we look forward to bringing to your attention next year.
We’ve introduced a customer credit exposure model, to help our customers manage shipments in relation to cash flow and are pleased that almost all our customers have signed on, seeing the model’s value.
Overcoming self-sabotage
Inward reflection was unexpected and necessary this year. We were under the false impression that we supply only to reputable companies which have the industry’s best interests at heart. It turns out this was false – but a welcome reality check.
We always prefer to know the truth. To us, it’s like taking a stroll down a river, admiring the scenery, and picking up rocks to see what is beneath them, even if it’s unpleasant.
Boy, what a walk it’s been!
Self-sabotaging undercurrents have always existed in our industry. This year, they grew and became clearly apparent. This made us question a number of our decisions.
The motive of these companies was doubtless to cut their own costs in tight economic conditions; the consequence was to threaten our industry’s future. It is good that the industry has started taking ownership of the problem, but this is only the start. Dolphin Bay has vowed to do our part by not supplying operations that are deliberately non-compliant, and we will continue to promote our Quality Pledge as a way of ensuring high standards.
Our foreign markets have remained remarkably resilient, considering their challenges. Markets abroad have experienced a severe shortage of liquidity in a variety of foreign exchanges: Dollars, Euros and Rands. This is of great concern to us, as it makes the future uncertain and the planning of shipments to our customers difficult. The risk has become so severe that the industry might soon be moving towards secure forms of payment, either a letter of credit or cash before shipment.
To cope with the problem, we’ve introduced a credit exposure model, which helps our customers manage additional shipments in relation to their cash flow. We’re pleased that almost all our customers see the value of and have signed on to the model.
The guiding principle
Those working in our industry are by tradition humble people: foresters, woodcutters and conservationists, whose livelihoods depend upon their respect for the long-term cycles of nature.
After writing this letter and reflecting on all the events of this years, I find myself appreciating the foundation of our industry and its long-term focus. I’m keeping in mind that many of the trees that are planted now will not serve this generation, but the generation to come. It’s a guiding principle in our decision-making.
I wish you all a restful and restorative Christmas season.
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