Log-jam looms as jobs in forestry go begging

Falling prices, bad roads and a lack of skilled labour are obstacles stopping logs being turned into jobs, SIMON COLLINS reports

Trees maturing in the next six years could transform the two regions with the highest unemployment, but the opportunity is going begging.

Falling log prices, which are forcing Fletcher Forests to put more capital into its joint venture with Chinese-owned Citic, are only one of the obstacles holding back the further processing needed to turn those logs into jobs.

The industry also faces years of under-investment in the roads required to get the logs to ports, under-developed international markets, and an astonishing shortage of skilled labour in regions swarming with jobless workers.

In a hard-hitting submission to the Government, the East Coast Forestry Industries Group warns that if it cannot get trained workers through a proposed state-subsidised, fast-tracked scheme, it will seek to import labour from Fiji and the Philippines.

"Crews recruited from these countries in the past have shown excellent work performance and social behaviour during their stay in NZ," it says.

The stakes are high. On the East Coast, where 2800 people were unemployed in the last census, the amount of maturing wood available for harvesting will quadruple by 2006.

With continued planting and 60 per cent local processing, the industry says 19,000 jobs could be created in the region by 2030, almost doubling the region's present total employment.

In Northland, where 5000 people are unemployed, maturing wood available for harvest will more than treble by 2006 - enough to at least treble the region's 1545 forestry and processing jobs.

The Ministry of Agriculture and Forestry says we need to invest $6.5 billion in processing to cope with the national increase in wood supply by 2015.

Yet current investments amount to only $467 million, including a $132 million laminated lumber mill at Marsden Point and a $50 million expansion of Juken Nissho's Kaitaia triboard mill.

On the East Coast, nothing is being built.

Forest Industries Training chief executive John Blakey says skilled labour shortages are on the East Coast (100 workers), Hawkes Bay (20-25) and the central North Island (40).

This is partly because skilled workers were laid off after the Asian crisis in 1997 and went to Australia.

"There would be 80 to 100 New Zealanders working in Victoria alone," he says.

Trainees working in forestry companies have doubled in the past four years and 41 apprentices have been signed up since late July under the new Modern Apprenticeship scheme.

But, Mr Blakey says, "we are running into a bit of a brick wall in terms of getting people."

The East Coast Forestry Industries Group has asked the Government for $1.9 million to subsidise the wages of 80 silvicultural trainees for six months.

"Contractors are pulling their hair out," says forest manager Peter Clark. "There are young fellows that come on the job for a day, and they are not motivated to get up the next day."

Warwick Olsen, who has helped run the Waiapu Work Trust at Tikitiki since he and others were laid off when the Forest Service was corporatised in 1987, says the reasons include "ratshit conditions," low pay, and being dumped whenever markets dip.

"Everything has been stop-start," he says.

"In 1987, we were just thrown on the scrap-heap and told, 'Go and fend for yourself.' A lot of anger and bitterness came out of that.

"Then suddenly we are expected to stand up and charge off into the forest again and everything is kei te pai (okay). Well, it isn't."

Pine Dewes, who runs a forestry training course in Ruatoria, says silvicultural workers often have to drive two hours and then walk for an hour before they start work. They are paid only for the number of trees they prune.

Once they start work, most can earn $15 to $25 an hour on fine days. In bad weather, access may be impossible and there is no work.

"All they really need is a good, strong union," he says.

Economic Development Minister Jim Anderton says the rules for paying trainees also need to change so that they are better off than they would be on the dole.

And somehow the industry has to get the message out to young people that forestry is no longer unskilled work.

"It's increasingly the high-tech outdoors," Mr Blakey says.

Forestry roads have difficulty meeting the 3:1 benefit/cost ratio required for Transfund subsidies.

Benefits are higher where traffic is dense, not on remote rural roads.

"There are now huge differences in the quality of the roads between the East Coast/Bay of Plenty and Auckland," East Coast industries chair Julian Kohn says.

Transfund pays for only about half the costs of local roads, with local councils paying the other half.

With councils short of money, Transfund predicts a drop in its local road subsidies this year from $360 million to $335 million.

Of that, Northland will get $22 million and the East Coast $12 million.

Yet the Tairawhiti Development Taskforce says it could cost $80 million just to upgrade a single road, along a ridge about 15km inland from the main road from Gisborne to Te Puia Springs, from which feeder roads run into the forests.

"It's a narrow, windy, gravel road," Peter Clark says. "It needs a sealed, two-lane, 10-metre carriageway."

Altogether, upgrading the region's roads could cost $200 million.

Three key road upgrades in Northland, including the road to the new deepwater port at Marsden Point, are priced at $100 million.

Transport Minister Mark Gosche hopes to have a new transport funding system approved by Christmas to replace Transfund's present "one size fits all" benefit/cost ratio system.

This could involve less rates financing and more from petrol tax, road-user charges and other mechanisms.

Mr Anderton says ministers plan to introduce "a proper capital budget" for the Government next year.

Asked if work will start on East Coast and Northland roads next year, he says: "Not only will it have to be possible, it will have to be done."

The national wood harvest has already doubled from 9 million cubic metres in 1985 to 18.4 million this year. Exports have quadrupled in value to $3.1 billion.

But the proportion of the harvest being exported as raw logs has grown from 4 per cent to 35 per cent.

The Ministry of Agriculture and Forestry says our forest product exports are "confined to a small, although slowly expanding, number of markets."

"Marketing activities tend ... to be uncoordinated, company-orientated, and thereby lacking the critical mass to make an impact."

In 1998, Trade NZ and 60 forestry companies formed a joint venture, Wood NZ, to break into new overseas markets.

It put one person in China.

Forest Industries Council chairman Devon McLean says his council has now taken over the venture.

It is "still alive", even though its representative in China is now working on contract, rather than as an employee.

Just south of Gisborne, a modern sawmill built by Pacific Pine in the late 1980s, has been in mothballs since Pacific Pine went broke 10 years ago.

US-based Rayonier, which bought it, last looked at reopening it 18 months ago.

"What principally kills it is nothing that Jim Anderton and the Tairawhiti Taskforce haven't discovered - the cost of roading, the shortage of skilled people, poor facilities," says Sylvia Hunt of Rayonier.

Labour's industrial law, ACC and tax changes have made the company "very wary," and overseas markets are also uncertain.

The region's second-biggest forest owner, Malaysian-owned Hikurangi Forest Farms, is reviewing its options.

"We will not be in a position to complete that review for another 18 months because in making a decision on a major investment in processing there are a lot of issues to be considered," general manager Paul Ainsworth says. Roading is "a key one."

Koji Tachikawa, the Japanese owner of NZ's second-biggest sawmill at Rotorua, wants to build a similar-sized sawmill elsewhere in the country, and visited the East Coast last month.

He is also considering Northland and the South Island.

The head of Mr Anderton's Economic Development Ministry, Paul Carpinter, is convening a steering committee including key companies to work on a forestry strategy. Working parties are planned on labour, infrastructure, international marketing and investment promotion.

Mr Carpinter has been to the United States to see companies interested in investing in forestry processing here, and is "quite buoyed by the response."

Mr Anderton plans a similar trip to Japan, Malaysia and Singapore. "We've got irons in the fire all over the world," he says. "I'm sure some of them will come off."