More losses to come - warning

The loss of 160 mill jobs would be replicated many times if the kiwi dollar remained where it was, timber industry representatives said yesterday.

The dollar was up at a post-float record of US73.73c yesterday - 90 per cent above a trough touched just under five years ago.

On Monday, Tanner Group gave notice to workers at two sawmills in Northland and Tirau and a wood-processing plant in Coromandel.

General manager Alan Tanner told the workers in Kerepehi, Tairua and Kaitaia the rising dollar had forced TGL's "winding-down and closure over the next four months".

The company makes timber framing, decking and other products for the building industry and exports about a third of its $30 million annual turnover to Australia and the US.

Timber Federation executive director Wayne Coffey said the currency was having a major impact on the whole forestry industry.

"Everybody's in pain. Many companies are under serious pressure."

Some forest owners had cut production by 30 per cent.

Coffey said TGL had been around almost 40 years and was respected as a quality producer. It was a pioneer exporter to the US and considered one of the industry's best exporters.

He cited the currency as 70 per cent responsible for the industry's problems, followed by soaring compliance costs.

Coffey accused the Government of over-heating the economy with pre-election pump priming.

He took a contrary view to most commentators, saying the Reserve Bank should keep raising interest rates to cool the economy.

The forestry and logging industry lost $1 billion last year.

Economic Development Minister Jim Anderton's hopes that billions of dollars of investment to process the so called "wall of wood" coming on stream look set to be dashed.

Sawn timber exports in 2004 fell 26 per cent to $683 million from $920 million in 2003 while log exports in the December quarter fell 27 per cent to $98 million from a year earlier.

Coffey said sawmilling had been held together by the booming domestic construction market.

However, Northland Forestry Development Group chairman Derek Colebrook said TGL's situation was "a blip on what's going on" in Northland and other companies were bullish about the industry's future.

- NZPA