Sawmills under strain

19:18, Feb 27 2014

Most sawmills in Marlborough are finding it difficult to meet the higher cost of timber, says a Blenheim sawmill director.

Flight Timbers Limited director Rick Osborne said the timber was there to buy if sawmills were willing to pay export prices.

The domestic market was showing steady growth and the price of timber was increasing but still needed to be higher to meet the rising costs that sawmills faced.

International markets were also starting to show some recovery but the high New Zealand dollar negated a lot of the progress made.

Mr Osborne said the sawmill, which employed about 80 staff, was paying higher prices for logs after export prices rose 25 per cent in the past six months.

"Local sawmills will miss out if the equation doesn't work for them," he said.


"We've been deliberately shedding business where customers won't pay our price."

Nelson Forests' Kaituna sawmill, Marlborough's biggest timber sawmill, could not be reached for comment.

New Zealand Timber Industry Federation chief executive Brent Coffey said changes to the structure of the Marlborough and Nelson sawmilling industry were needed for the sector to grow in the face of challenges.

The shortage of logs had been driven by high export demand, especially from China. New Zealand raw log exports had increased 240 per cent since 2008.

Mr Coffey said the ability of sawmills to get a secure and constant supply of logs to cut had been a major problem.

"It has forced some operations to take a long look at their production focus," he said.

"The challenges the industry is facing now calls for some rationalisation, which could result in short term pain but once completed will result in a stronger sawmilling sector."

Nelson Forests managing director Lees Seymour said its first priority was to its domestic customers.

Its harvest over the past 12 years had remained static at 1.1 million cubic metres a year.

Of that, 75 per cent was sold to its domestic customers and 25 per cent was exported, mainly to Korea and China.

"Some of our domestic customers have requested additional volume but we have not been able to supply it because we work on a sustainable basis so we don't have the volume available," Mr Seymour said.

Some of that demand had been driven by Christchurch.

Port Marlborough chief executive Ian McNabb said the number of logs being shipped were up 35 per cent compared to the previous year.

In the six months from July last year to January 31, 350,000 Jas/tonnes were shipped out of Waimahara Wharf in Shakespeare Bay compared to 250,000 Jas/tonnes from June 2012 to January 2013.

There was a similar spike in the number of logs being exported in 2010 and 2011.

The Marlborough Express