Forestry downturn hits Bay's economic pillar

The Bay of Plenty's log and timber trade - one of the region's economic pillars - has been plunged into crisis with at least 150 job losses, wage cuts and a bleak outlook for next year.

The crisis follows a strengthening dollar undercutting export returns, static prices in most key markets, competition from lower value currencies like Chile and a near doubling in log ship freight rates.

Executives agree the downturn for forestry is now worse than during the Asian crisis, with sawmills, transport operators and portside marshalling companies all shedding dozens of staff.

"It is the flattest I have seen for many years," said Lambert Group financial controller Russell Lellman.

Ships - which handle the bulk of the log trade - were in short supply because of greater profits from short-haul work such as between China and Japan and even servicing United States' commitments to Iraq.

Mr Lellman said the Asian crisis came and went fairly quickly but the latest downturn had left Lambert Group's interests in cartage and wharf handling "pretty much in survival mode".

Lambert's marshalling company Quality Marshalling, which handles Carter Holt Harvey's log exports, was down 50 per cent on last year's volumes.

It has laid off 15 of its 58 staff - 10 on the wharf and five at Kinleith.

The turnaround in Lambert Group's fortunes could not be more dramatic compared with a year ago, when the industry was so buoyant it was bringing in truck drivers from Scotland.

So far it has avoided laying off truck drivers.

Quality Marshalling has laid off 10 staff and the Maritime Union is negotiating with the port's other log marshaller, Owens Cargo.

Tauranga branch organiser Phil Spanswick said it was apparent in March that redundancies would be necessary and the squeeze really started in June.

The port's 30-40 casuals working the log trade are looking for other employment.

Log shipments had dried up from 3-4 a week to only one if they were lucky, he said.

Forest owners were holding off felling in anticipation of better times ahead.

One of the Bay of Plenty's biggest trucking firms, Rotorua Forest Haulage, has laid off 14 staff and business is down at least 10 per cent on a year ago.

General manager Martin Hyde said the real impact was that they had geared up in anticipation of a "wall of wood".

Instead the forestry industry had actually slowed from 18 million tonnes of wood a year to 15 million tonnes.

Investment in support staff, training and new capital had not been realised.

New gear was sitting idle and the effect had gone all the way down the chain, including log trailer manufacturers, one of whom had laid off 40 staff.

The second major downturn in five years was eroding confidence in the long-term sustainability of the industry and people were starting to look elsewhere for their future, Mr Hyde said.

Frank Davis, general manager of Arbor Resources which jointly owns sawmills on Matakana Island and in Tauranga, said his firm was really feeling the pinch and the worst had yet to come.

Volumes were down 40 per cent and they had laid off 20 of the 90 staff employed between the two mills - Hunters Creek Sawmill and Finsaw BOP.

Mr Davis said they were scouring the world for new markets.

Te Puke's Pukepine sawmill financial controller Jeff Tanner said it had avoided redundancies by the timely purchase of neighbouring moulding plant HW Hooper.

- NZPA