For 82 years, the Hayward team has derived its wealth from the forests. Many of the forest practices that have fed our families and the company over that period were not very environmentally responsible. We have both a unique opportunity and a moral obligation to give something back to the forests from which our economic prosperity is derived, to promote wood as a responsible renewable resource, and to improve our profitability. Our pioneering work in greening the construction process will be our legacy — as a company and as individuals. It is the right thing to do for our forests and our environment. It strongly promotes our people strategy, and it is economically feasible.
—Bill Hayward, President, CEO, Hayward Lumber Company[1]
Introduction
Started in 1993, the Forest Stewardship Council began by bringing together 130 stakeholders and representatives of the timber industry. Created to “promote sustainable forest management – to protect fragile ecosystems, ensure long-term viability of forest resources, empower indigenous people to reap the benefits of their forestlands, and maximize the economic value of the forests within the contexts of these environmental and social goals.”[2] The question for Bill Hayward, President and CEO of Hayward Lumber Company and FSC chain-of-custody certificate holder since 1998, is did it make business sense for Hayward Lumber Company to sell FSC lumber?
Case Study: Hayward Lumber Company
The issue that Hayward Lumber Company faced when first exploring the possibility of including FSC certified woods to its inventory was that “the local FSC-certified mill was not equipped to consistently meet premium standards for accuracy and surface finish. Too often, quality problems with the FSC-certified wood led to delay, waste and dissatisfied customers (builders and home buyers).”[3] With such obstacles for a product that was not sure to sell, why would a company invest its time and money? Despite these obstacles “Hayward chose to stock FSC certified lumber, and dedicated one acre of land in the Salinas lumberyard to this purpose. (Commercial real estate for industrial use sold for more than $200,000 per acre in 2002.[4]) Given the lead-time of approximately 3 months to obtain FSC- certified lumber from the mill, HLC needed to hold inventory in order to deliver the wood to builders in the traditional manner: pre-cut, load stacked, and with a short lead-time.”[5] While a gamble, Hayward was hoping that, by making it convenient to obtain FSC-certified wood, HLC would be able to attract new customers interested in green building practices and corner the market for such products in California. Based on its best estimate of demand over the next three months, “HLC initially purchased $500,000 of FSC-certified lumber at $4.00 per board foot.[6] This was 20% greater than the cost of $3.20 per board foot for non-certified lumber.”[7] If there was interest in FSC certified wood, one significant advantage that HLC would have was that “None of HLC’s competitors in central California carried FSC-certified lumber… After two months, HLC had sold 80% of the inventory of FSC-certified wood. Rather than allow the remainder to dry out and warp, HLC removed the eco-label and sold the FSC-certified lumber as regular lumber at the regular price of $3.35 per board foot. Fortunately, the FSC-certified wood was physically indistinguishable from other wood,”[8] making it easier to switch over and reducing waste.
FSC – A good investment?
As of August 2009 “The FSC had certified 116 million hectares (2.9 per cent) of forest.”[9] The FSC has seen extraordinary growth and acceptance in the years since its inception. For the Hayward Lumber Company, sales of FSC certified lumber almost doubled from 1998 to 2001. Selling over 64 million dollars in FSC certified lumber in 1998 to budgeting sales upwards of 117 million, FSC has clearly been a smart business investment for Hayward Lumber and its owner Bill Hayward.[10]
Conclusion
Recently the European Commission has called into question the larger social goals of the FSC certification scheme. Most notably that “Forest Stewardship Council (FSC) certification scheme has not reduced deforestation, as originally intended, but acts instead as a market governance tool, which may become a barrier to international trade.”[11] While the next problem that the FSC faces may well be trying to convince developing countries - which often have fewer controls, regulations and money to conserve its forests - that certifying its forests is in its national interests, the business case, at least in the developed world is clear. FSC certified woods and paper products help conserve forests and old growth trees, protect biodiversity and promote a more sustainable approach to the worlds best renewable resource. Hayward, made a risk when it decided to invest in FSC certified lumber, today Hayward Lumber Company is reaping the rewards of being a visionary leader in the world of ever increasing deforestation and mismanagement of our forests around the world.
[1] “Our Restorative Business,” Bill Hayward. Memo to Hayward Lumber Company Management. April 27, 2000. [2] Hamschmidt, Jost, ed. Case Studies in Sustainability Management and Strategy: The oikos collection. Sheffield: Greenleaf Publishing, 2007. Page 95. [3] Hamschmidt, Jost, ed. Case Studies in Sustainability Management and Strategy: The oikos collection. Sheffield: Greenleaf Publishing, 2007. Page 101. [4] http://www.naidirect.com/research/market/pguide2003/montereyca.pdf [5] Hamschmidt, Jost, ed. Case Studies in Sustainability Management and Strategy: The oikos collection. Sheffield: Greenleaf Publishing, 2007. Page 101. [6] One board foot is a piece of lumber that is 1 foot wide, 1 foot long and 1 inch thick, or its volumetric equivalent [7] Hamschmidt, Jost, ed. Case Studies in Sustainability Management and Strategy: The oikos collection. Sheffield: Greenleaf Publishing, 2007. Page 101. [8] Hamschmidt, Jost, ed. Case Studies in Sustainability Management and Strategy: The oikos collection. Sheffield: Greenleaf Publishing, 2007. Page 101-103. [9] http://docs.google.com/viewer?a=v&q=cache:Rad8YsxaWKsJ:ec.europa.eu/environment/integration/research/newsalert/pdf/226na6.pdf+growth+of+forest+stewardship+council&hl=en&gl=us&pid=bl&srcid=ADGEESi1auiEKlECTlc4PqjcgnC7JpazGekmTvOR45FclUN-Pq9l7uUvY4WmDlKPHUgh8wOKcT9exoWtUW5Fal51ub7qsqcAUk4j5g34zYXhj2tye2qLmxTNxlc59ZjDGyiRI_vSSzCm&sig=AHIEtbRzdM7_-YnQWbdyzJy_sOpz-EA8Eg [10] Hamschmidt, Jost, ed. Case Studies in Sustainability Management and Strategy: The oikos collection. Sheffield: Greenleaf Publishing, 2007. Page 101. [11] http://docs.google.com/viewer?a=v&q=cache:Rad8YsxaWKsJ:ec.europa.eu/environment/integration/research/newsalert/pdf/226na6.pdf+growth+of+forest+stewardship+council&hl=en&gl=us&pid=bl&srcid=ADGEESi1auiEKlECTlc4PqjcgnC7JpazGekmTvOR45FclUN-Pq9l7uUvY4WmDlKPHUgh8wOKcT9exoWtUW5Fal51ub7qsqcAUk4j5g34zYXhj2tye2qLmxTNxlc59ZjDGyiRI_vSSzCm&sig=AHIEtbRzdM7_-YnQWbdyzJy_sOpz-EA8Eg
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