Shortage of logs spurs shake-up
Restructuring is expected in the timber industry in the Nelson region as log exports bypass local sawmills.
The New Zealand Timber Industry Federation believes that there will need to be changes to the structure of the Nelson and Marlborough sawmilling industry for the sector to grow in the face of challenges.
"The ability of sawmills to get a secure and constant supply of logs to cut has been a major problem in the region and has forced some operations to take a long look at their production focus," said the federation's chief executive Brent Coffey.
The shortage of logs has been driven by high export demand, especially from China. New Zealand raw log exports have increased 240 per cent since 2008.
"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 saw milling sector".
Mr Coffey said the export demand for logs meant that log trucks quite often drove past local sawmills to waiting ships. Even when local sawmills were willing to pay the going rate, they could not source the logs.
That meant there were "guys sitting around with nothing to do" and shifts were reduced to meet the log supply, he said.
"Some guys really look after the locals but I don't see that so much in the Nelson region," he said.
Sawmills in the region include Carter Holt at Eves Valley, Prime Pine, South Pine, Waimea, NPI, Moutere Timber, Taylors and Kaituna.
Nelson Forests managing director Lees Seymour said it supplied to all those, and 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," said Mr Seymour.
Some of that demand had been driven by demand from Christchurch, he said.
He said there was always discussion around sawmills upgrading, changing and consolidating as they looked to improve their business.
Prime Pine general manager Kevin Sturgeon said he knew mills were struggling to get logs and that log trucks were going straight past on their way to the port.
The Little Sydney Valley mill, which employs 25 workers, sources most of its logs from Golden Bay and supplies 60 per cent of its product to the domestic market. "We are hanging in there but long term, I don't know."
Mr Coffey said the future for the sawmilling industry was promising.
The domestic market was showing steady growth and the price of timber was increasing but still needed to be higher in order 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.
"The industry has been working hard on efficiency gains but more serious capital investment will be required to ensure continued success," said Mr Coffey.
"With implementation of world class production efficiencies, product specialisation, a rise in timber prices and the support of log suppliers, the future for sawmills in the Nelson and Marlborough region can be a good one."