Dialogue: Liaison group sees trees for the wood

By COLIN JAMES

Economic Development Minister Jim Anderton insists that his wood processing strategy is the only reason Juken Nissho is still making triboard in Kaitaia.

The Japanese company was considering closing the plant after a strike. Now, Mr Anderton told the Business Herald, Juken Nissho is "looking at expanding".

The company's boss, Toshio Nakamoto, is coming to talk to Mr Anderton next week.

Juken's representative on the wood processing strategy group, East Coast manager Sheldon Drummond, cannot confirm an expansion, though he does say that in the economic policy climate it is "now possible to move ahead a bit further".

And Mr Drummond is enthusiastic about the wood processing group, which was set up just over a year ago to bring together industry executives, cabinet ministers and Government officials from all relevant departments to identify and overcome roadblocks to getting the most jobs and export returns from the "wall of wood" - the looming huge increase in trees ready for harvest.

The group, Mr Drummond says, has "tabulated issues the industry has known about for years and is working to resolve issues. Things are happening".

Are they? Industry sources say new investment is unlikely because there is still uncertainty on a range of matters at the core of the wood processing strategy group's work.

The four main barriers to industry expansion the group identified are:

* Infrastructure - roads and port upgrading.

* The Resource Management Act.

* Shortages of skilled workers.

* The Kyoto Protocol on climate change.

No money has been committed to roading and port development. Changes the Government is making to the resource act make it less business-friendly.

Skill shortages remain and the protocol will be ratified, with pre-1990 forests outside it, putting this country's industry at a potential disadvantage to countries not bound by Kyoto.

The industry has taken some heart from Kyoto minister Pete Hodgson's declarations last week that he does not want to lose existing or new investment in major plants and may not charge major greenhouse gas emitters the full price.

But the industry will not know for weeks how the "removal units" - credits for trees' absorption of carbon dioxide - will be allocated and how much individual companies will be able to trade in those credits.

Despite this unpromising list, both Forest Industries Council chief executive James Griffiths and Mr Anderton say the processing group has made progress across a range of fronts.

Mr Griffiths also makes a point other industries might ponder: "The wood processing group has enabled us to be on the inside [with the Government] on big issues that affect the industry."

That does not mean the Government automatically toes the industry's line, but that its arguments are heard as policy is developed.

One success Mr Griffiths cites is convincing the Ministry of Economic Development (formerly Commerce) to see foreign building codes and forest products standards as matters of trade access - needing Government weight overseas - and not just as marketing issues for the industry.

The codes and standards can determine whether radiata pine, New Zealand's core crop, is accepted for building and processing in export markets.

A strategy is being developed to try to influence standards in a number of priority Asian markets, notably Japan, China, Taiwan and India.

The standards issue illustrates that the group has ranged far beyond the big four barriers. It has become a sort of umbrella body for all issues affecting the industry, from logs to export furniture - though it is refocusing its work this year on the big four, plus energy.

Other issues have covered biosecurity (the Ministry of Agriculture and Forestry has beefed up procedures and relations with the industry); research and development (a strategy was ticked off in August that tilts research spending from "business as usual" to added-value and new products); the Forestry Stewardship Council, an independent international green group, has pronounced that the industry is sustainably growing and harvesting its forests (certification is near); and the forest industry now has a place in trade policy.

There is also progress on two of the big items:

* The industry is developing a code of practice to smarten up its resource act consent applications and improve local councils' processing, as reported in the Business Herald on Tuesday.

* Specific training programmes for life skills and working in forests have been developed and wage subsidies are available for those starting out.

There are also plans for a national diploma in wood processing at the Waiariki Institute of Technology in Rotorua, and a bachelor of wood engineering degree at Auckland University. A centre of excellence is proposed for Rotorua.

The bugbear is infrastructure. Mr Griffiths classifies work on this as "stalled".

Unless there is movement, some of the "wall of wood" might be left in the ground.

The national benefit of wood processing has been cited in calling for road investment, but the cost is enormous - $120 million over the next 10 years for the East Coast alone.

Any allocation is in part waiting on the national transport strategy still in the cabinet mill.

The industry now wants funding and cost-sharing options explored, such as debt financing by local bodies, capitalisation of future industry rates into roads and tax concessions on industry inputs.

Port development is yet to fire.

So what has the wood processing group achieved? It has broken down some barriers between the industry and officials and got them all in the same boat - including making some officials take the industry seriously as a matter of national interest.

It has produced movement on some fronts earlier and wider than would have been likely otherwise. It has put initiatives in place that might not have occurred.

All of that is a lesson to other sectors - though many are not as clearly defined or as economically vital as wood.

But there is a long way to go, as the infrastructure problems show. Keeping up momentum will be the real test of the group's second year.

* ColinJames@synapsis.co.nz