A slowdown in China's housing market has forced a Taranaki logging contractor to slash his crew's working hours.
Graeme Sole, of New Plymouth logging business G J Sole, yesterday told about 60 employees their working week would be cut down to four days.
"We aren't laying anyone off. We are just going to cut them back a little bit. There has definitely been a slowdown in demand for logs. We are only doing half of what we were doing before."
The drop in demand was the result of a slowdown in China's housing market which had reportedly made banks less willing to lend money for development or buying houses, and that meant there had been a dip in usage of the logs.
Log inventories at Chinese ports had doubled in the past six months and it was believed there was as much as two-and-a-half months supply just waiting to be used. This oversupply had seen export log prices drop by a third in the past three months.
Sole said it was no longer economic for farmers to have their smaller stands of trees harvested and while prices for top grade export logs were still good, lower grades currently had nil returns for their owners.
In two to three months, when China worked through its stock piles, Sole predicted log prices would go back up and working hours for his loggers would increase.
"We had a meeting this morning and explained everything. It's just a matter of us all working together. Hopefully it will come back quicker than we anticipate," he said.
Logging contractors across the country were experiencing similar slowdowns, Sole said.
Tom Boon, of timber processors Taranaki Pine, said the drop in export prices meant they were now able to buy more locally harvested logs that might otherwise have been exported.
"We have generally had to match export prices but now we pay more than export. We are taking more local forest logs but we cannot take them all. That's why contractors in the region have to slow down," he said.
Port Taranaki chief executive Roy Weaver said last year a record 300,000 tonnes of logs were exported through the port but the Chinese slowdown meant that record would not be equalled in 2014.
"We are expecting it to impact us through to the end of the calendar year. We are not sure what the impact will be yet but we will not reach the heights of last year in the next 12 months. But it's one of those things that could turn around quickly," Weaver said.
- Taranaki Daily News
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