A Moutere sawmill will close and a Nelson mill will switch to purely douglas fir processing in an industry consolidation that could cost about 30 jobs, it was announced yesterday.
Gibbons Group subsidiary Waimea Sawmillers is selling its Tahunanui business to Ranex Group, which is to close its Moutere Timber Ltd operation.
The staff of the two mills - 70 in Beatty St, Tahunanui and 30 in Wilsons Rd, Moutere - will be consolidated, with all jobs having to be reapplied for. Ranex says it will try to sell the Moutere business "in some form or other" and hopefully retain some jobs there.
The changes will happen at the end of this month, with Ranex-owned Eurocell Wood Products to begin operating from the Tahunanui site in June.
The move ends Gibbons Group's 40-year ownership of the long-established Tahunanui mill, in which it has invested heavily in hi-tech timber processing equipment.
Waimea Sawmillers managing director Scott Gibbons said it was a difficult decision to sell, but there wasn't enough douglas fir to keep two Nelson mills in business.
"We were both competing for the same supply and someone had to step back."
The mill had been alternating douglas fir and radiata pine processing, and the consolidation would make more radiata available to other mills in the region, he said.
A massive increase in Chinese demand for logs has put pressure on domestic mills, and restructuring in Nelson was flagged in February by the Timber Industry Federation.
Gibbons said the Moutere mill had been cutting 50 per cent of the douglas fir resource in Nelson, with Waimea cutting the other half.
"This consolidation will put all the douglas fir through one sawmill, and ours is the higher-tech, so it makes sense to do it this way.
"The majority of the employees will get the opportunity to be offered employment, so that's encouraging. There'll be a merging of the two groups of people, they'll all go through a recruitment process and they'll pick the best out of the 100 available."
The Tahunanui mill would be cutting 80-90,000 tonnes of douglas fir a year, where it currently cut 40,000 predominantly for the local market, with some exports to Australia and the South Pacific, he said.
"The positive part of this story is that two parties have got together - there hasn't been two closures, there's actually been one rationalisation of two resources. It's positive for the forestry industry, the manufacturing team there now, and customer services."
He said it had been a difficult industry and Gibbons Group had decided to concentrate on its construction, property development and forestry interests.
However, it was an extremely hard decision.
"We're a family-based company and a lot of the staff down there are like family members. But the reality is that we were competing for the same piece of wood, and it makes sense for it to all go through one operation."
Gibbons said the sawmilling industry was "a tough game" with stiff competition and an unfavourable exchange rate for exporters. It needed more thinking about greater efficiency and this was an example of how to achieve it.
New Zealand Timber Industry Federation chief executive Brent Coffey said the change was "a good thing".
"It comes at quite a good time. There is light on the horizon for the wood processing industry. Domestic demand is starting to pick up and export markets are starting to look better.
"It's never nice when jobs go, but needs must, really."
Ranex Group closed its Upper Hutt sawmill in 2012 with the loss of more than 40 jobs. It blamed a lack of pick-up from the Christchurch rebuild, trouble with sourcing affordable logs, a weak housing sector and competition from exporters of raw logs.
Principal shareholder Christopher Randall, of Amberley, could not be contacted for comment on yesterday's announcement.
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