Jones hits out at 'arrogant' forest owners

Shane Jones pointed the finger at the foreign-owned timber management organisations.

Labour spokesman says foreign firms' drive for big profits putting local industries in jeopardy

Labour's outspoken economic development spokesman Shane Jones has lashed out at "arrogant" foreign owners of New Zealand's forests, saying their pursuit of the highest possible profits comes at the expense of local workers, communities and the wood processing industry.

Jones' comments come as he and industry figures ring alarm bells that local processors are being priced out of the log market as skyrocketing Chinese demand drives prices higher.

"There's a hell of a lot of fear now in the wood processing sector that they cannot secure adequate contracts that give them affordable and durable supplies," Jones said. "It's got to the point that the viability of their businesses is being threatened."

The problem was particularly acute for regions including Jones' home territory of Northland where sawmills were among the few employers of young Maori.

He pointed the finger at the foreign-owned timber management organisations (timos) which own much of New Zealand's forests including US company Hancock.

"The timos, in particular Hancock, have become arrogant," he said. "They're flicking away all the domestic New Zealand producers and they're chasing the speculative Asian market."

That was a slap in the face for the communities which effectively subsidised their businesses.

"These foreign-owned companies rely on ratepayers to upgrade roads so they can move their logs to the ports, they rely on New Zealand's social insurance when workers in the forests are killed.

"The foreign owners' agenda has eclipsed the rights and interests of the New Zealand taxpayer and workforce, this is not a sustainable forest policy."

New Zealand exported a record 3 million cubic metres of logs to China in the September quarter, a 40 per cent increase on the same period a year earlier and log prices approached record highs during the period.

Jon Tanner, chief executive of the Wood Processors' Association, said the increasing proportion of the wood harvest being exported as raw logs was "getting to be quite a serious situation".

"We're really just becoming a plantation for other countries' interests."

The processing sector employed 20,000 people.

Part of the problem was that the local processing industry's productivity was low by global standards and required big investment to bring it up to scratch.

He wanted to see stronger Government backing for the sector.

Associate Minister of Primary Industries Jo Goodhew acknowledged high export log prices meant conditions were challenging for domestic processors.

"The most important thing the Government can do is create a good business environment," she said.

Hancock did not return the Herald's calls but Forest Owners Association president Paul Nicholls said owners were looking for the best return on their investment.

"Most forest owners sell somewhere between half and two thirds of their product to domestic mills but there's always competition for those logs from overseas buyers, so it does come down to a matter of economics, which markets the domestic mills are selling into and what they can afford to pay for logs."