Báo cáo khoa học nông nghiệp " IMPROVEMENT OF OPERATOR SKILLS AND TECHNOLOGY IN SMALL RURAL SAWMILLS IN VIETNAM " pot

Sawmill efficiency conversion of logs into sawn timber is amazingly high given the quality of logs that are available to most of the rural sawmills.. Visits to a number of integrated for

CARD Project Report

Executive Summary and Commentary 6

1 Introduction 15

2 Method 15

3 Survey Results: 16

3.10 IS ANY FURTHER PROCESSING OF SAWN TIMBER CARRIED OUT BY THE

3.12.2 How many different suppliers of logs do you have? 32

3.12.7 Do you have problems with the diameter of the logs? 35

3.13.3 Other plantation species 37

3.22.2 Knowledge 53

3.23 HOW GOOD IS THE OPERATION OF YOUR SAWMILL IN TERMS OF: 53

3.23.2 Effectiveness (meeting the customers’ requirements) 53

3.24.1 What do you think are the constraints for your business succeeding now? 54 3.24.2 What do you think will be the constraints for your business succeeding in the future? 55 3.24.3 What are the major issues that affect your business now? 56 3.24.4 What are the major issues that will affect your business in the future? 57

List of tables and Figures 

Table 1 Percentage number of sawmills operating full time 6 Table 2 End uses of acacia sawn timber in Vietnam by region 8

Table 5 No of years that sawmills had been in operation by region (North, Central

Table 6 Sources of funding for rural sector sawmills (millions VDN.) 18 Table 7 Estimated Value of each sawmilling business (millions VDN.) 19 Table 8 Maximum minimum and average storage times for logs 32 Table 9 The difference methods by which sawmill obtain logs 32

Table 11 Range of Acacia log diameters sawn by volume and prices paid / m3 38 Table 12 Range of eucalyptus log diameters sawn by volume and prices paid / m3 38 Table 13 Range of “other species” log diameters sawn by volume and prices paid / m3

39 Table 14 Range of native species log diameters sawn by volume and prices paid / m3

40 Table 15 Range of Non specified species log diameters sawn by volume and prices

Table 16 Range of Acacia log diameters sawn by volume and prices paid / m3 42

Table 18 End use of sawn Timber as percentage of production 45

Figure 1: Meeting with officials in Bin Dinh to discuss the survey 14 

Figure 2: Map of Vietnam showing regions where the survey was undertaken 15 

Figure 3:(a) Mr Chien undertaking survey with sawmiller (b) Survey being lead by Mr Ngoc in the work area of the sawmill 16 

Figure 4: Some sawmillers have diversified and also made furniture An occupational hazard for this sawmill was wondering cattle 22 

Figure 5: Typical Vertical sawmill with carnage that moves the logs past the saw 25 

Figure 6 (a) & (b): Typical horizontal sawmill with operators pushing the saw over the log which is fixed to timber base blocks 25 

Figure 7: Horizontal bandsaw mill being manufactured near HCMC 26 

Figure 8: Typical circular saw benches with no guarding, riving knife or fences 26 

Figure 9: Sharpening a bandsaw freehand on grinding wheel 27 

Figure 10: Typical grind used to sharpen bandsaw blades 27 

Figure 11: A metal and cardboard sun shade has been fitted this was not considered to be a modification by the owner 28 

Figure 12: Two methods of air drying typical for sawmills in Vietnam 29 

Figure 13: Kiln being hand unloaded onto a wheelbarrow 30 

Figure 14: Pressure treatment vessel in large sawmill, exporting to china 30 

Figure 15: Furniture produced at sawmills 31 

Figure 16: Inside a kiln the (a) empty kiln viewing fans and heat exchangers (b) looking in the door into a kiln loaded with timber 31 

Figure 17: A log supply typical of sawmiils using garden trees 32 

Figure 18: The log is showing the release of growth stresses 33 

Figure 19: The log is not straight – therefore recovery is low if straight timber is to be produced 34 

Figure 20: Problems with water in the log yard increases the likelihood of staining and / or decay 34 

Figure 21: Log with sap stain 35 

Figure 22: Sawmill using very short acacia logs (900mm) 35 

Figure 23: large diameter and long length acacia logs obtained from 20 year-old plantation The sawmiller paid a premium price for these logs 36 

Figure 24: (a) Acacia trees planted at My Son (b) Accassia logs cut for use in construction 37 

Figure 25: Pine plantation being thinned and logs ready to be delivered to a sawmill 38 

Figure 26: Typical plantation of eucalyptus 40 

Figure 27: Imported logs at very large sawmill near MCMC 41 

Figure 28: Acacia being used for furniture 42 

Figure 29: Coffin manufacture in Northern region using local species 43 

Figure 30: A chair manufactured at a sawmill, domestic furniture produced when sawmill activity was slow 44 

Figure 31: (a): Flooring using local species (b) Flooring drying in sawmill 45 

Figure 32: Timber being used in a new building, built in traditional style in Hoi An 46 

Figure 33: Knots have been filled to use timber with defects 46 

Figure 37: This sawmill had houses on both sides This picture shows the neighbours house The owner is unaware of environmental and noise regulations that may apply to his sawmill 57 

In July-December 2007 an intensive survey was undertaken of the rural saw-milling industry engaged in the processing of acacia and eucalyptus species in North, Central and South Vietnam The total number of sawmills interviewed was 74, 24 in the North, 25 in Central Vietnam and 25 in the South This represented approximately 5% of the total population of rural sawmills in Vietnam engaged in processing (MARD 2007)1 In addition 15 furniture manufacturers were interviewed, 5 in the North Vietnam, 5 in Central Vietnam and 5 in South Vietnam A total of 17 log suppliers were also interviewed, 7 in the North, 5 in Central and 5

in South Vietnam

Approximately 90 % of the rural sawmills operating in Vietnam are family businesses Ten percent are private companies The growth in rural sawmills has been relatively recent Of all the sawmills interviewed none had been in operation longer than 18 years The average time that sawmills had been in operation was 5.3 years thus indicating that the expansion of the rural saw-milling industry has been very recent This probably reflects the maturing of acacia plantations that forms the raw material base for this industry and the freeing up of the economy to promote entrepreneurial activity

Sources of business finance were primarily from existing family businesses with funds supplied ranging from VDN 25-700 million (average VDN 165 million), Private finance loans ranged from VDN 2-2500 (average VDN 144.7) and relatives VDN 10-100 (average VDN 43.6) None of the sawmills interviewed had received government grants for establishing enterprises Sources of funds between regions ranged enormously Banks loans were more prevalent in the Central Vietnam (on average VDN 259 million), whereas the average loan in the North was VDN 50 million and VDN 48 million in South Vietnam The total estimated investment in rural sawmill equipment was VND 335,300 million The average investment in each saw milling enterprise was VND 161million in the North, VDN 150 million in Central Vietnam and VDN 249 million in the South of Vietnam

The survey identified that a large number of the rural mills only operated part time

Table 1 Percentage number of sawmills operating full time

Region Full time operation

• Lack of a continuity in the supply of logs and

• Inconsistent markets

Despite a potential over capacity for sawing the available raw material and inadequate markets, 44% of sawmills indicated either plans to expand or a wish to expand their activities Target expansion areas were primarily furniture manufacturing (78% of respondents) of whom 21% indicated that they would like to focus on high value export markets Other markets included handicrafts, and kiln drying of timber Reasons forwarded for identifying these potential opportunities related to a perception that there were substantial market opportunities in these particular sectors The main obstacles hindering expansion related primarily to a lack of funding followed by the lack of available skills Other issues included the availability of quality raw material, lack of good managerial skills, a lack of knowledge and unstable market conditions In most instances, there was a perception that there was an expanding market for furniture and that expansion into such areas would stabilise demand for sawn timber

Saw-milling equipment (horizontal and vertical bandsaws) have been manufactured almost exclusively in Vietnam A few mills were imported from China Most of the mills surveyed owned only 1 mill Mill expansion usually involved purchasing addition mills Most sawmills also owned circular saws These have been introduced more recently for recutting flitches into sawn timber for furniture and other end uses Virtually all mills had rudimentary saw doctoring capability The equipment was purchased new However, skills in saw doctoring varied enormously between mills None of the mills surveyed indicated any modifications to purchased equipment indicating that in general the saw-milling equipment was suitable for the sawing of acacias Only 12% of mills surveyed have plans to upgrade equipment Emphasis on replacement focused on:

• Purchasing vertical bandsaws because these were more suitable for sawing small logs,

• Establishing furniture manufacturing equipment,

• Replacing old circular saws

Further processing undertaken by sawmills to add value include:

• Air-drying Only a third of all sawmills engage in drying

• Kiln drying is undertaken by relatively few mills, although a number of mills send their timber to enterprises that specialise in kiln drying,

• Preservative treatment was being conducted by 13 enterprises

• Integration of sawmills into manufacturing was reported and focused mainly on furniture (16 companies) pallet making (9 companies) and construction (9 companies)

Those companies involved in kiln drying were experiencing very serious problems particularly in relation to drying to a consistent moisture content and identifying suitable drying schedules for eucalypts and some native species The Australian team observed some larger enterprises who were not covered by the terms of this survey have invested heavily in kiln drying equipment These kiln were not operated correctly and results for the more difficult to dry species were unsatisfactory, the main cause was lack of training of the operators and limited understanding of the principles of timber drying Discussions with the kiln operators revealed a genuine interest in learning and getting an understanding of how they could improve the quality of the finished products

Log storage times at the sawmill were on average 1 month in the South 1.1months in Central Vietnam and 0.6 months in the North The total elapsed time from tree felling and transport to the log storage yards was not identified However, storage in extreme cases at the log yard was reported to be as long as 6 months Strategies need to be implemented to streamline the logistics of supply to reduce log storage time particularly given the incidence of decay

that was reported by 29% of respondents Log supply was identified as a problem for 57% of

respondents, mainly because of “availability” The wet season also compounded the problem

often resulting in a discontinuity in supply Research needs to address the whole question of

log supply Techniques need to be developed to reduce sap-stain including proper

housekeeping techniques at the sawmill to lift logs off the ground and provide timely rotation

of the stockpile This is needed to avoid the development of a decay environment in the yard

The biggest problem (25% of respondents) in relation to log quality was the presence of

sweep (i.e bent logs) Inevitably sweep resulted in the crosscutting of logs into short lengths

The most common log length was 2.4 metres

Just over 60% of the sawmills interviewed in the survey processed acacia species (Acacia

mangium and Acacia auricliformis) The minimum log diameters specified comprised 10cm

(24%), 12cm (59%) and 15cm (17%) These sawmills reported volumes of between 2 and

300m3 of logs milled per month with prices paid between 0.6 and 2.5 million VDN per m3

Eucalyptus camaldulensis and Eucalyptus urophylla were sawn in 38 % of sawmills, about

25% of the volume of acacia species Ten sawmills indicated the use of other plantation

species Six were sawing Pine; one was sawing Khaya tonkinensis; three were sawing

rubberwood with one of these mills also milling Sau, Rieng and Dieu Only two sawmills in

the north indicated the use of imported logs with a combined consumption between 3-6m3

per month

The conversion efficiency of sawlogs into sawn timber was very consistent between regions

53%, 50% and 53% respectively for the North, Central and Southern regions These

recovery rates are high given the small diameter of logs and indicate that the sawmill

technology is relatively efficient in maximising value from the logs The recovery results

calculated would be considered to be very high, this may be due to the method of using the

volume of sawn timber as a percentage of the volume of logs All sawmills used a flat

sawing method which gives the greatest recovery and width were usually the maximum

possible and may contain wane (The presence of bark or lack of wood from any cause on the

edge or corner of a piece of wood ) on one or both edges

An end use analysis of timber highlights the dominance of furniture manufacturing and

construction

Table 2 End uses of Acacia sawn timber in Vietnam by region

These statistics highlight a very high proportion of timber being used in furniture

manufacture, particularly in North and Central Vietnam In the South, pallets and crates

short Pallets and crates representing 51% of the market in South Vietnam comprise low value markets Timber is usually rough sawn with no value adding in terms of drying or machining Quality requirements for this market are also relatively low Once again the life cycle is relatively short Furniture and flooring represent high value markets Expansion in these markets is hampered by an apparent shortage of suitable logs Limitations in the availability of longer logs, which is also frustrated by the logistics of transport and man handling will also limit market development in construction There is an expectation that the domestic furniture market will continue to develop as marketing and distribution become more sophisticated and better quality logs become available Approaches to providing longer lengths of timber have been addressed to some extent by State enterprises in Hanoi by introducing finger jointing The technology (imported from China) is relatively cheap and appears to be successful Short random lengths of sawn timber are purchased from a myriad

of sawmills located in the Hanoi area for drying and reprocessing into longer lengths

Customers specify quality requirement Forty-eight percent of saw millers who answered this question indicated that there are quality requirements that they have to meet Forty-two percent of respondents indicated that they work by agreement Only a relatively small number of mills (11%) indicated that they have sawing tolerances Nine percent work to agreements The presence of stain in timber, whilst a very prevalent defect, was either not considered as being important, or was tolerated as being inevitable Only 8% of respondents indicate that there is limits placed on the amount of stain and only 3% have stain limits specified in agreements or contracts

The survey analysis of past training experience poses a serious problem, firstly because of the low incidence of staff receiving any training, secondly because of the number of sawmills indicating that the quality of training was a problem and thirdly because of the number of enterprises that felt that the training available wasn’t relevant to their needs On the positive side, 73% of enterprises indicated interest in receiving training Data has been amalgamated for all regions (i.e., North, Central and South)

Table 3 Past training experience by sawmills

Staff receiving training in the past 13%

Enterprises interested in receiving training 73%

Enterprises indicating that the quality of existing training courses was a

The same questionnaire attempted to prioritise the topics that enterprises felt were important The topics have been ranked in order out of 10 based on the priority accorded by those enterprises interested in receiving training (table 4.)

Table 4 Ranking of training topics

Topic Ranking

Further manufacturing 13.4 Saw Sharpening 12.2 Sawmill Practices 11.8 Marketing 11.5 Business management 9.1

Air Drying 9.1 Preservation 8.7 Equipment 8.7 Kiln drying 7.5 Wood properties 4.7 Sawmill safety 4.0 Saw-maps 3.2

Sawmill owners clearly identify further manufacturing as the highest priority, followed closely

by saw sharpening, sawmill practices and marketing We believe that this highlights concerns

on the part of sawmill owners who are focussing on how they can add value to their current sawmill businesses, through better hands-on skills; how marketing can improve their sales performance and how their day to-day performance can be lifted through improved saw sharpening and better sawmill practices

A second tier of skills focuses on business management, drying (air drying - followed by kiln drying), preservation and equipment handling

Fundamental knowledge of wood as a raw material and OH&S were ranked as a low priority Similar surveys conducted in Australia, the US and Europe would potentially have ranked training these in these topics as most important There is possibly a lack of appreciation of the value or need of such information in understanding practical forest industry operations, the value of solving problems from first principles Such information provided by the survey is valuable in highlighting where demand for courses will arise Clearly a strategy that identifies these topics as study areas in their own right would be unsuccessful and highlights a need for weaving the principles of wood-science, OH&S and saw-maps to the more practical skills identified by the survey

All respondents to the survey completed a swot analysis (strengths weaknesses, opportunities and threats) To a greater extent many of the strengths were also identified as weaknesses

• Increasing demand for products

• Open markets

The opportunities identified were similar between each of the regions There was a sentiment that the industry was becoming better known to the general public; that the work associated with wood processing was in general relatively easy to learn; that a culture of shared learning could be achieved and that the business was relatively cheap to invest in

• Lack of skilled workers,

• Small size of business

• Limited investment funds

to the local community

The first question that arises is whether the “old fashioned” saw-milling equipment has served its purpose and whether more sophisticated saw-milling equipment should be encouraged In the short and medium term the answer to this is probably no Sawmill efficiency (conversion of logs into sawn timber) is amazingly high given the quality of logs that are available to most of the rural sawmills It is unlikely that an improvement in yield could be achieved by introducing more sophisticated equipment Secondly a very high proportion of sawmills are not operating to full capacity Equipment breakdown was not identified as a core reason for equipment working below capacity; rather raw materials supplies and inconsistent markets were identified as primary reasons Higher cost more sophisticated sawmills would exacerbate this problem The capital cost for establishing a horizontal Vietnamese sawmill is very low, US$3-4,000 The fact that the sawmill is not operating to capacity is unimportant in terms of paying off capital, whereas the introduction of more sophisticated in-feed and out-feed systems and automation would see more than a hundred fold increase in the capital investment needed This changes the nature of the business from being low cost, rural, part time, seasonal and flexible to being full time, ideally 3-shift, inflexible labour reducing industrial production Transportation costs for logs to larger fewer mills would increase Many of the locations currently used by small horizontal sawmills would be totally unsuitable for expansion into larger mills since many are on sites that can’t expand or are located adjacent to dwellings

Visits to a number of integrated forest industry complexes in Central and South Vietnam, that were established in the last 2-3 years to produce very high quality furniture, solely for export identified some very interesting features

Firstly, there was a very high level of occupational health and safety applied to workers This

is reported separately

Secondly, very high quality logs of beach and oak from Germany; oak from Russia; cherry and pine from the US, teak from the Philippines and tropical hardwoods from South America etc were being imported as raw materials for furniture manufacture

Thirdly, some of the most sophisticated computer controlled furniture manufacturing equipment (in one enterprise valued at $US80million) had been imported for manufacturing knockdown furniture components for export Saw milling however, employed a bank of Vietnamese horizontal sawmills (in one case, 20 horizontal bandsaws in a row) to provide primary conversion of very high value logs into high value sawn timber for subsequent processing into high-value quality furniture Very clearly it would be relatively easy to write a case for employing a US$2-5 million sawmill complex to undertake this function Such a decision had not been made primarily because the cost of 21 horizontal bandsaws is still a fraction of the cost of a fully integrated sawmill and the conversion rate achieved using the horizontal mill coupled with low labour costs couldn’t justify such an investment On balance

at this point in time there is no justification for trying to encourage a departure from the rudimentary home-grown saw milling equipment currently being used Improvements can be made to the Vietnamese bandsaw type mills and these will be highlighted in a separate report

Fourthly, value added kiln drying and wood treatment facilities had been established, as well

as very well maintained air-drying practices This is reported separately

Potentially there is no value to be achieved from the government providing financial incentives for establishing more low cost sawmills The investment needed to establish new mills is low and is best left to market forces However, at the same time as the survey was conducted audits were undertaken of kiln drying operations Many of the kilns inspected were imported and of high quality In addition Vietnamese manufactured kilns ranged from were well-designed units that met the requirements for drying acacia and eucalypt species, through to poor quality in-house built units, which produced questionable quality material However, operation of these kilns was sub-optimal due to the failure to use fairly basic drying principles and utilisation of standard monitoring equipment (i.e wet bulbs sensors) to ensure correct operation In other words drying was achieved using an oven or ‘hot box’ rather than

a properly controlled dry kiln The inevitable consequences of this resulted in drying degrade, non uniform moisture content and / or over drying This is a training issue since most of the kilns audited had the equipment available for monitoring relative humidity via wet bulb sensors which inexplicably at times had been disconnected Most drying operation failed to use baffles This inevitably led to inefficient energy use and variable wood moisture content both within and between boards, on completion of drying In addition their appeared to be a lack of adherence to species-specific drying schedules Whether the best kilns are being used for Vietnamese conditions is also an issue (a research and technology transfer issue) Whilst many sawmills interviewed in the survey identified kiln drying as a business opportunity, clearly there is not enough sawing capacity for each individual mill to justify establishing its own drying facilities Air-drying requires a great deal of skill and a surprisingly

successful furniture manufacturing Many small rural sawmills have their sight set on furniture manufacturing as a logical extension of their sawmill activities

Sap stain, decay and insect attack are important issues in Vietnam primarily because of climate As soon as a tree is felled it becomes susceptible to this rapid process of colonisation The lesson is that trees should be left standing until the supply processing chain has been organised and timetabled Both the survey and quality auditing of the stored logs and finished products indicate an industry–wide problem Sap-stain is common in logs Pines and rubber-wood are particularly vulnerable to sap-stain, much more so than acacias and eucalypts But it is still a problem with these species Apart from the delays in log transport, other issues identified include proper housekeeping of logs at the mill site; the need in some severe cases for prophylactic treatments at the sawmill to alleviate stain and decay A high volume of acacias is used in furniture and the survey indicates that this market will continue

to grow and substitute the use of acacias in low value uses such as packaging, crates, boxes etc Much of the domestic furniture uses a dark lacquer finishes This is an effective strategy

in masking stain in wood However, as the market expands, fashion may change to bring about a demand for furniture that displays the intrinsic species characteristics This is the case for short clear lengths of rubber wood for export The market requires a light colour Export rubber-wood is inevitably preservative treated to prevent sap stain Ten years ago this would have involved treatment with relatively high concentrations of PCP (Pentachlorophenol – (5%) mixed with borax- (1.5%) Fortunately given the dioxin impurities in PCP this practice appears to be history and treatment now focuses on the use of boric acid plus borax that is benign from an environmental and human toxicity perspective, although the preservative is still quite toxic to fish Given the trend towards using acacia for furniture, preservative treatment is potentially not an issue for most sawmills

A visit to a treatment plant manufacturer in South Vietnam identified that highly sophisticated treatment plant was being manufactured The owner of the foundry was concerned about potential future markets for the plant and this concern is probably justified A separate report produced by the research team highlights needs in terms of training and research; the opportunities for niche markets in treated timber and round wood for construction, but also the design of a simple treatment plant that can be used by rural sawmills without exposing workers or the environment to toxic chemicals

Occupational Health and Safety is a key issue for rural sawmills Fortunately the survey identified less of a problem in terms of accidents than was anticipated given some of the work practices and the total absence of any work-place control for the prevention of accidents These issues have been evaluated, reported and recommendations made to improve the working environment Survey results as to sawmill owner preferences in relation

to training, placed a low priority on OH&S Whilst this could possibly be justified based on survey results, issues such as noise and dust were not considered by the survey of owners but were audited at the time of the survey Long-term health issues (nose, lung capacity hearing and eye-sight) are of concern Implementation of current Vietnamese legislation in relation to OH&S needs to be taken on board by mill owners OH&S training is obviously one

of the key strategies in implementing change in the work place Future education training and research needs will be reported separately but will take into account the findings from the survey Clearly apart from the basic elements of training in wood processing, this survey identifies a clear demand for training in business, bookkeeping, marketing and management

The survey provides some quantification of the basic needs of rural saw milling in Vietnam The exercise provides invaluable information from which strategies can be developed for improving the performance of the industry Key issues identified by the survey that require further investigation include the lack of information in relation to log supply This is an issue that needs to be addressed by the Vietnamese Forest Service Secondly the inconsistent market demand reported by many sawmills needs to be addressed This needs an industry

wide or cluster approach to providing collective information and quality standards and finally, mechanisms to promote the development of value adding industries such as kiln drying and furniture manufacturing

Figure 1: Meeting with officials in Bin Dinh to discuss the survey

1 Introduction

Seventy-four sawmills were interviewed, 24 in the North, 25 in Central Vietnam and 25 in the South This represented approximately 5% of the total population of enterprises involved in wood product processing in Vietnam (MARD 2007)2 The areas or providences that were surveyed were selected because they were close to plantations and it was felt that they would give the best representation of sawmilling activities using the plantation estate that have been developed over the last twenty years or so

To investigate the upstream supply and downstream processing further surveys were carried out Fifteen furniture manufacturers were interviewed, 5 in the North, 5 in Central and 5 in South Vietnam A total of 17 log suppliers were also interviewed, 7 in the North, 5 in Central and 5 in South Vietnam The results of these surveys are in separate reports

Figure 2: Map of Vietnam showing regions where the survey was undertaken

2 Method

A “Structured interview” type survey was considered to be the most appropriate for this project The survey questionnaire was prepared by Mr Philip Blackwell after input from the participants present at the inception meeting and by staff from both FSIV and the University

of Melbourne

The questionnaire was then trialled in a number of sawmills in the north by Mr Doan Van Thu, Dr Phan Duc Chien and Mr Bui Duy Ngoc from the FSIV and Philip Blackwell from the University of Melbourne After some minor changes, the survey questionnaire (as attached) was used for all the survey questions

Prior to the commencement of the survey the questionnaire was submitted for and obtained ethics approval from the University of Melbourne Ethics committee This was to ensure privacy and personal data were to be held in the strictest confidence and persons rights are not compromised by this survey

Due to the lack of language and difficulties in obtaining permission to travel in rural areas the bulk of these surveys were carried out by Dr Phan Duc Chien and Mr Bui Duy Ngoc without the presence of any university of Melbourne staff

2

Personal communications Tran Huu Thanh, Ministry of Agriculture and Rural Development, Department of Agro-Forestry Products Processing and Salt Production (2007)

Northern Region for Survey

Central Region for Survey

Southern Region for Survey

Figure 3:(a) Mr Chien undertaking survey with a sawmiller (b) Survey being lead by Mr

Ngoc in the work area of the sawmill.

3 Survey Results:

Analysis of the survey results focuses on the total population of sawmills interviewed (74) unless otherwise stated Where appropriate the results are segmented by region (North, Central and South Vietnam) In addition to the surveyed sawmills a number of other sawmills were visited to gain qualitative information

3.1 BUSINESS INFORMATION

The first question related to confidential business information and the identity of the respondent This information has been excluded from the results to ensure anonymity of those who responded to the survey The information was collected so that the participants could be revisited should extra information be required and for sampling verification

3.2 TYPE OF BUSINESS

This question was use to identify the type of business and to establish how long they had been operating Respondents were asked which of the following categories best fitted their enterprise: State owned sawmill, Private company sawmill, Community cooperative, Family Business or Other

The survey had no response from 4% of the respondents to this question Of the enterprises that responded to this question 90% indicated that they were Family Businesses and 10% were Private Companies

The maximum that any enterprise has operated is 18 years On average the companies had been in operation for 5.3 years Four sawmills had been operating for less than 6 months The Family Businesses had been operating longer than the Private companies and no private companies were reported in the Northern region of the survey

Table 5 No of years that sawmills had been in operation by region (North, Central and South Vietnam) by ownership type

3.3.2 Central Region

All participants responded to this question and only 1 was an existing family business 84% obtained private finance of which 20% received additional finance from the family Relatives supplied the business finance ranging from 10-100mill VDN, with an average of 58mill VDN

Only 8% received finance from a bank The capital raised by the enterprises was between 20mill -2,500mill VDN

Private finance was obtained by 86% of businesses in the south region with the maximum amount borrowed being 500mill VDN and the least amount borrowed being 2mill VDN

No one sourced finance from government grants and 5% received finance from other relatives The largest amount lent by relatives was 100mill VDN and the least amount was

30mill VDN Overall the average amount lent by relatives was 67.5mill VDN A summary of the sources of funding for rural sector sawmills is given in table 2

Table 6 Sources of funding for rural sector sawmills (millions VDN.)

Sources of Business Finance max min average median

Table 7 Estimated Value of each sawmilling business (millions VDN.)

Estimated Value of the Business max min average median

A summary of the reasons given for not being able to work full time includes:

• Lack of reliable markets for sawn timber; (identified by 75% of respondents and of these about 50% supplied the local people or their own builders)

• 31% indicated that a lack of log supply was one of the key reasons

• Lack of contracts, work or unstable markets 31%

• They supply sawn logs for pallet making or coffin making 8%

• The weather 8%

• Other reasons given were interruptions to power supply, lack of space to operate or store their materials and lack of capital

These results indicate conclusively that a combination of problems limit full time production:

• A lack of raw material (log supply) and

• Unstable and unreliable markets for the sawn timber comprise very limiting factors for rural sawmillers

3.5.1 Northern Region

Only 25% of sawmills surveyed operated full time, the remaining mills operated 40-65% of the time Three of the sawmills said they operated full time but then said they stopped due to lack of markets or resources

Some individual comments or reasons given for not being able to work full time include:

• The sawmill is mainly producing timber for coffins

• Sometimes stop because of lack of resources

• Serves both itself and local people

• To fulfil local needs only

• Lack of markets

• Mostly sawing for local people needs

• Lack of saw logs and undertake contract sawing only

• For local market only

• Serve its carpenters, serve local people

• Sawing for local carpenters and people

• Mostly for carpenters, local people and selling sawn timber to meet local needs

• Lack of work (only serve local people and carpenters)

• Sawing for local people and carpenters only

• Serve local people and carpenters, run by the owner

• Serve local people and their carpenters

• Lack of consistent markets to sell products

Thus is general, one can conclude that the industry has evolved primarily from individuals meeting their own needs for timber in the first instance and then needs of other local industries within an environment where there has been a lack of consistent log supply and where markets may be seasonal or fairly haphazard

3.5.2 Central Region

52% of respondents claim to operate their mills full-time; the remaining enterprises surveyed operated 25-60% of the time

Reasons given for not operating full-time were

• Not enough saw logs or could not sell products

• Mostly working to contracts

• Serving 2 carpenters and local people (nor for selling sawn timber)

• To produce pallets and serve local people through contracts, sometimes there is a lack of work

• Serve local people, and sawing to manufacture pallets under contracts, not much sawing for sale

• To serve local people so depend on their requests, lack of inputs and markets

• Working seasonally, serving local people (sawing for them)

• Lack of capital, lack of sawlogs, unstable market

• Lack of space to operate, lack of space to store sawn timber

• Lack of sawlogs and markets, depends on the requirement of local people

• Mostly serve local people and carpenters

3.5.3 Southern Region

Of the businesses surveyed 47% answered yes to operating on a full time basis However, of

Those who operated on part time basis operated between 25-60% of the time with the average time of operation being 49%

Reasons given for not operating full-time did not vary between the areas surveyed and included the following comments:

• Depends on log supply and customers

• They operate full time except when the power is cut off

• Lack of log supply, unstable market

• Depends on weather and log supply

• Sawn timber demand is unstable

• Market decreasing, lack of log supply

• Lack of work, lack of log supply

• Lack of log supply, unstable market

• Serve local people, depends on local demand

• Lack of work, old machines

• Depends on local people and furniture market

• Only sawing for local people

• Sometime stop due to lack of work or market for sawn timber

3.6 BUSINESS EXPANSION PLANS

This question asked; ‘Do you have plans to expand or improve your business?” If yes; in what areas?

In general 44% of the mills surveyed showed an interest in expansion with the majority desiring to expand into furniture manufacturing Four enterprises indicated their desire for high quality furniture manufacturing and 4 respondents indicated kiln drying as an area for expansion

• If yes; what are the main factors causing the change?

• If yes what at the main obstacles hindering change?

3.6.1 Northern Region

In the Northern region 58% of respondents indicated that they have plans for expanding or improving their business; Eight percent did not respond or have not yet decided, while 33% have no plans for expansion or improvements A high proportion of respondents (78%) of those wanting to expand indicated that furniture manufacture was the desired area with 21%

of these indicating high quality and exports as the desired market

Of the remaining participants who responded (22%), interest ranged from diversifying into handicrafts, into kiln drying, and ‘wood material trading’ i.e either growing plantations for sale

or importing logs for resale

If yes; what are the main factors causing the change?

There was a 58% response to this question Of these, 71% of respondents indicated that the main reason for change was high demand, market availability and expansion opportunities Seven percent want to provide for the next generation Seven percent wanted more work Fourteen percent wanted to diversify their products and another 7% stated that it depended

on the people involved

If yes; what are the main obstacles hindering change?

There was a 58% response to this question A number of obstacles were forwarded by each respondent identified as hindering change Fifty percent of respondents identified lack of money as a hindrance to change The lack of a skilled workforce was identified by 38% of respondents as a problem Mill location was identified as a problem by 14% of respondents Lack of suitable technology was a problem, lack of knowledge and unstable market conditions were identified by 14% of respondents as problematical The availability of quality wood was identified by 7% of respondents

Figure 4: Some sawmillers have diversified and also made furniture An occupational

hazard for this sawmill was wondering cattle.

3.6.2 Central Region

In Central Vietnam fewer enterprises have plans to expand their businesses with only 32% of respondents indicating that they wish to expand Only 8 respondents specified how they would like to expand Two companies saw the demand for dry timber as the reason for change and would like to have a kiln for drying However, one of these sawmills had limited space in which to expand Two sawmills recognized that there was a demand for sawn timber and were considering developing another sawmill Three sawmills would like to move into furniture manufacture because of the demand and because suitable sawn timber was available One sawmill would like to vertically integrate into plantation growing as a means of

one mill recognised the value of cheap labour and felt that there was adequate experience available Two mills identified that the demand for sawn timber was increasing One respondent recognised the need for dry wood and wished to expand into kiln drying

Individual comments included:

• The demand for furniture is increasing

• The demand for sawn timber is increasing

• The demand for wood drying is high, particularly in the rainy season

• The market is good and labour is cheap

• The availability of sawn timber

• There is a high demand for products, labour is cheap relationships are good and the experience is available

• There is a high demand for furniture, sawn timber and the equipment is available

If yes what at the main obstacles hindering change?

The main obstacles to change in the Central region were identified as:

• The lack of skilled workers (4)

• The lack of finance (5)

Other reasons given included:

• The lack of space available

• The market requires high quality product

• Lack of good management

• Lack of technology for drying

• Instability of the market and policy

Individual comments were as follows:

• The market requires high quality products

• Lack of money to invest

• The need to establish new relationships in new areas

• Competition

• The lack of investment

• The availability of skilled workers

• The demand for high quality

• The lack of capital, space, technology for drying and the need for high quality

• The lack of money and skill workers

• The lack of skilled workers and good management

• The lack of money to invest and unstable markets, also policy

• The lack of skilled workers and marketing

3.6.3 Southern Region

Fifty percent of the sawmillers in the south have plans to expand their businesses Of the 12 who answered this question 10 would like to go into furniture manufacturing with 2 of the respondents identifying the desire for high quality furniture manufacture One enterprise would like to focus on pallet making and one would like to develop kiln drying

If yes; what are the main factors causing the change?

In the south 12 people responded to this section of the question They identified factors causing change as:

• The demand for furniture (9)

• The sawn timber is available (4)

• Cheap labour is available (2)

• There is not enough work for the sawmill so they need to move into furniture making since the demand is there (1)

• The demand for dry sawn timber (1) (this is the person who wants a kiln)

• The increased demand for pallets (1)

If yes what at the main obstacles hindering change?

The responses for each of the 12 responding sawmillers are show below:

• Lack of money to invest, expensive to employ skilled workers

• Skilled workers n strong competition

• It takes time to be familiar with the new market

• Not familiar in this field, lack of skilled worker

• Unstable market

• Narrow working place

• Management

• Lack of capital for investment, skilled workers, working place

• Lack of money to invest, expensive to rent skilled workers, high demand for high quality products

• Techniques and money to invest

• Hard and expensive to have skilled workers, high demand for high quality products

• High risk, need to divert product

Thirty-seven of the participants owned a single vertical bandsaw, four enterprises owned two, one owned four and one owned five

The age of the bandsaws varies between 1 and 12 years with the average age being 4.7

Figure 5: Typical Vertical sawmill with carnage that moves the logs past the saw.

3.7.2 Horizontal Bandsaws

Across the three areas surveyed 43 enterprises have horizontal bandsaws Thirty-two of these bandsaws were reported to be manufactured in Vietnam and six in China All six manufactured in China were from the northern area Five enterprises did not answer this part of the question

Figure 6 (a) & (b): Typical horizontal sawmill with operators pushing the saw over the

log which is fixed to timber base blocks.

The majority of sawmillers own only one horizontal bandsaw (35) Six operators own two and two owned five horizontal bandsaws

The age of the bandsaws varied from between one and nine years with the average age being 3.9 years

Again the respondents were asked to rank the condition of their bandsaws between one and five (one is the best condition and five the worst) The condition of the bandsaws varied from between one and four with the average condition being 2.1

Thirty-eight of the horizontal bandsaws were purchased new and three were brought second hand Two did not answer this part of the question

Figure 7: Horizontal bandsaw mill being manufactured near HCMC

3.7.3 Circular Saws

Of the 74 sawmills surveyed, 71 own at least one circular saw 57 of these are reported to

be manufactured in Vietnam and 9 in China with 5 not answering this part of the question The results of the survey showed that fifty-two mills owned one circular saw, thirteen own two, two own three, two own four and two own eight

Figure 8: Typical circular saw benches with no guarding, riving knife or fences.

The newest circular saw is one year old The oldest is ten years old with the average age being four years old

3.7.4 Saw sharpening equipment

Figure 9: Sharpening a bandsaw freehand on grinding wheel.

All but one of the surveyed enterprises owned saw sharpening equipment with 57 manufactured in Vietnam, 10 in China Five enterprises did not respond to this section of the question

Figure 10: Typical grind used to sharpen bandsaw blades.

Fifty-nine mills own one piece of equipment; nine own two pieces and three own three pieces

of saw sharpening equipment and one did not answer this part of the question

The age of the equipment ranged from one year to twelve years The average age was 3.8 years The condition of the equipment ranged from 1 to 4 with the average being 2 All the equipment was purchased new

Twenty five businesses owned both a horizontal band saw and a circular saw Thirteen of these were located in the north Twenty-six enterprises owned both a vertical band saw and

circular saw Eighteen of these were located in Central Vietnam Four businesses owned only a circular saw All of these were in South Vietnam One sawmill in the south does not have either a horizontal or vertical bandsaw because there is not enough power to operate this type of machinery There are three other mills in the south that have neither a vertical or horizontal bandsaw Other comments were; the equipment is old and so the quality of sawn wood is poor, the equipment is old and needs replacing and the lack of equipment causes a lot of waste product

3.8 EQUIPMENT AND MACHINERY MODIFICATION

This question was asked to identify if the machinery that had been purchased by the saw mills was satisfactory and met their requirements If the equipment failed to meet their requirements this question was designed to assist in identifying what changes were required

No equipment had been reported to be modified by the owners

Figure 11: A metal and cardboard sun shade has been fitted this was not considered to

be a modification by the owner.

• Tools for furniture making because they would like to develop their furniture making businesses and

• To replace their circular saw because the old ones do not work very well

Answers were only received from the north of Vietnam

When asked why they would like to replace their equipment, the reasons given were:

• They wanted to expand their businesses,

• They wanted equipment suitable for small logs and

• Their current equipment was not working well

3.10 IS ANY FURTHER PROCESSING OF SAWN TIMBER CARRIED OUT

Figure 13: Kiln being hand unloaded onto a wheelbarrow.