‘Consumer demand’ is the origin of all (sane) economic activity, including the value-adding of wood products.

The questions Mr. Koehler and others who put such great stock in a ‘value-added’ future should be asking are, (1.) is there any actual consumer demand for the type of products he sees replacing the current commodity lumber/panel economy; and most importantly, (2.) if there is an actual consumer demand for these type of products what is it that prevents that demand from being made ‘effective’?

This latter posits that in the making of such products, or any products for that matter, ALL ‘costs’ can be recovered in ‘price’, plus a sufficient profit to make the whole exercise worth repeating on a continuous basis. Can they?

Too many people still only see the ‘value’ in value-added as increased employment. They forget that if the product can not return the full costs of its making to its maker, plus an additional profit over and above that which would accrue from just selling a mere commodity product, there really has been NO ‘value’-added whatsoever.

All such an effort means is that we are finding a more fanciful way of paying someone to endlessly dig a hole and then fill it in again. Nothing of any ‘economic’ value has been increased by all this digging and refilling ~ the wealth of the world hasn’t been increased one iota.

All we’ve done is provide an excuse to pay someone, (and out of the pocket of those who DO actually provide some good or service that DOES increase the wealth of the world, too ~ at the present time).

Do we really want to repeat that in pretending that ‘value-added’ wood products are going to be our great salvation, before we first look at whether there is a genuine consumer demand for them, and if there is, why aren’t they being made now? Why can’t that demand, if it exists, be made fully ‘financially’ effective? lets get our priorities straight, and our blinders removed so that we can see other things besides the creation of some ‘job’ for someone, whether it’s genuinely useful or not.

“whether there is a genuine consumer demand for them, and if there is, why aren’t they being made now”

Geeez …….

the chicken or the egg……

if there is a demand for what? this is invention at work ….. how did benz know there was going to be a demand for getting rid of the horse and putting a mechanical gizmo in its place?

how about coca cola …. if there was no demand for it why did someone came up with the formula?

Someone must have said “If I only had a bottle of Coca Cola” … and 1,000 people echoed that sentiment and Mr. Coca decided he could fill that demand ……

I don’t think creating jobs is a wasted effort in efficiency even if it is a low margin for profit in today’s market. Building diversity into an industry is how one achieves sustainability, because not all pistons are always going up at the same time in a smooth running engine.

If innovation covers the overhead for more innovation and opportunity to expand the piece of the pie that forestry has in the building industry, then that is a good thing regardless of short term profits today.

If one was to take the word of Socred at its maxim then we would be talking about Detroit style economic planning where all that matters is the bottom dollar efficiency… and look where that got them.

Make work projects aren’t necessarily evil in the first place. Right now someone is sitting on welfare consuming $600.00 a month, bored, and if we’re lucky, out picking up bottles to supplement their income, or more likely, just causing crap because they’re bored.

Value added factory comes in and provides a job, and government indirectly subsidizes, and people go off welfare and work, reducing cost of financial assistance, and negative societal causes as people who work generally have higher self-esteem and sense of well being, and tend to be more law abiding than those who don’t work – because they have little to lose from run ins with the law.

That said, who are the people that need these jobs? Tim Hortons is hiring Filipinos because they can’t get workers, foreign workers are working in Chetwynd as we speak, and there’s all this talk about big demand for skilled labour. So any value added facility would a: need unskilled workers and b: pay more than Tim Hortons to have any kind of chance of operating – or, send the wood to China and they’ll make that recliner for you.

Did Otto Benz get the German government to fund his original auto making plant because it would ‘create jobs’?

Did the originators of Coca-Cola hit up Uncle Sam to provide the dough to set up their first bottling plant so they could try their secret formula on the public, and pull all that off on the promise of increased employment?

Sure, there’s the invention of new things, for which there may, or may not, ever be some consumer demand. And if there is, THAT creates employment. Which is always properly a secondary outcome, not the primary one.

Of course no one really knows what will be successful until the product is made and offered for sale. Whereupon it is the ‘profit’ derived from its making that determines whether or not it’s something needed or desired.

That’s what a ‘profit’ in double entry accrual accounting actually is ~ a feedback mechanism that determines the correctness of some line of entrepreneurial action. And I have no quarrel whatsoever with that.

But I do take issue when the ‘profit’ is corrupted from what it should derive from ~ an actual consumer demand ~ and perverted into the way it’s taken in far too many so-called ‘value-added’ ventures.

Where some sharpy with a penchant for producing nothing more than hype convinces some politician anxious to be seen as a ‘job creator’ to put the public’s funds, in one way or another, into some scheme to take wood products up to the next level. Primarily because it might ‘create employment’, not because there is, or even might reasonably expected to be, enough of a demand for the actual product to pay the bills incurred in making it.

This inventive ‘value-adder’ is NOT some Otto Benz type, or a Henry Ford experimenting in his workshop, or even like countless people who’ve been engaged in some facet of wood products manufacture, and paid themselves little or nothing until their venture was up and running and actually earning a decent enough return that they could get something out of it.

Rather the modern ‘value-adder’, judging by too many I’ve been personally acquainted with, pays himself a near ‘Fortune 500’ style salary, right from the get-go, before he’s sold a dollar’s worth of product. Quickly transferring the ‘seed money’ that he’s borrowed, or managed to con some investors out of, to some grant or low interest, or even forgiveable loan from some agency of government.

Which, is all that will ever keep his venture going, and his bloated salary coming. If he’s smart, and many are, he’ll quickly get into these sources, and there are many of them, for every dollar he can. All the while feeding the politician’s ego, until he’s got him so associated with his venture and all it supposedly stands for, the poor boob can’t turn the money tap off. Or he, and his government, might look like complete idiots for ever getting so suckered in the first place.

The point is, if it makes sense to actually ‘value-add’ some wood ~ if it can be done at a ‘profit’, even a small one, but enough to indicate potential ~ someone will step up to the plate and do it. They always have, and given freedom from the kind of excessive government bureaucracy we’re increasingly seeing imposed on us, they always will.