Safety warning as foresters face price slump

Last updated 05:00 21/06/2014

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Foresters must not be tempted by safety shortcuts as profitability comes under pressure, forestry stalwarts say.

Log production has reportedly reduced by as much as 30 per cent, due to wet weather and the falling price of export logs.

The price of A-grade logs has fallen US$50 from US$160 a tonne in March and job cuts seem inevitable.

Farm Forestry Association president Ian Jackson said that as things got tighter, it was important safety was not compromised "for the sake of a cheap job".

He was echoed by Peter Clark, of forest consultancy PF Olsen, who said the industry's notoriously volatile earnings and profitability were not usually considered a safety issue. "But I believe these both impact on worker safety."

Log prices have fallen because of an oversupply of logs in China as credit tightens to protect its booming housing market.

Clark said it was unclear whether this situation would last more than a few months. It was not in China's interests to let its construction industry collapse. However, harvests were being deferred and some Kiwi exporters were struggling to even secure sales, "and have either left the market or are offering very low prices".

Forestry was an industry where "a small movement in log price, exchange rate or bulk shipping costs will mean the difference between a positive or negative cash return on harvest", Clark said.

The industry faced a difficult choice between avoiding losses and maintaining a strong contractor workforce.

Those who had been harvesting for several years were likely to press on, as they could average out their risks over several markets. But "the unfortunate reality is that many smaller harvesting jobs won't start in this market and some will stop", Clark said.

"This has awful financial consequences for some contractors who recently geared up to meet the increasing demand for harvesting services."

Jackson agreed that forestry was "a lean, mean industry" and layoffs were inevitable.

"Three months ago you couldn't get a logging crew for love nor money.

"Now I'd imagine you could get one very easily," he said.

He drew comparisons with another collapse in export log prices in 2008 but the major difference was that the annual harvest had since doubled to close to 30 million tonnes.

At current prices, it was "uneconomic to harvest many blocks of trees in New Zealand right now".

However, for one group there was a silver lining in the lower log prices.

Kevin Hing, a director of the Timber Industry Federation, said China's oversupply had made it easier for domestic sawmills to source logs. 

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Fed up with the industry's vagaries, forestry consultant Peter Clark has called on the Government to provide leadership in smoothing forestry's boom-bust nature.

New planting – which has shrunk to almost a standstill with uncertainty over the carbon credit scheme – needed to be encouraged to secure future supply.

Support for forestry skills training and a wood-first policy for government buildings to boost domestic demand would also help, "in the absence of a functioning climate change policy".

"My point is that a sustainably profitable industry that has lower volatility . . . would provide a better foundation for investments in good roading infrastructure, longer-term contracts and for contractors to invest in training and modern, reliable equipment," he said. 

- Stuff

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