Time for forest owners to pay for their profits

GEOFF FISCHER* argues for higher pay and better career security for forestry workers if the industry is to thrive.

There is now a general recognition in the forest industry that "the market" is not delivering a situation favourable to the long- term interests of either investors or the workforce.

The question now becomes, "What are the real reasons for the difficulty being experienced in recruiting silvicultural workers, and what should be done about it?"

One view is expressed in the report East Coast Forestry Labour Shortage: Proposal for Recruitment and Training, presented to the Government by the East Coast Forestry Industries Group, a consortium of forest owners and their management companies.

The report candidly acknowledges that "There is easier money elsewhere," that forestry work is "very physically demanding" and "not continuous."

But the only examples of "easier money" cited in the report are "Living with a partner on the DPB or drawing the dole" and while this no doubt applies to a number of cases, as John Blakey pointed out in the Weekend Herald last Saturday, there has also been an exodus of forestry workers to Australia, where they are welcomed for their high productivity, and paid accordingly.

Remuneration is one important element in the equation, and it is unfortunate that the forest owners should be so reluctant to give it the attention it deserves. At the rates of pay prevailing in 1999, a silvicultural worker might make as little as $300 for a hard week's work adding value to plantations of radiata pine.

And the amount of value added is not insignificant: the consortium's own figures show the forest owner making a profit of $30,000 a hectare at harvest time from a $2000-a-hectare investment in pruning during the crop's first 10 years of growth - a marginal rate of return of more than 12 per cent.

It needs to be acknowledged, though, that many forest owners are beset by cash problems, affecting their ability to pay for even such profitable activities as pruning and thinning.

Publicly owned forestry companies are under pressure to pay shareholders market rates of return on their investment (sometimes difficult when the long-term rate in New Zealand forestry averages out at 7 per cent), and high debt burdens remain from the purchase of state forests in the 90s. In the case of start-up forests, "investor fatigue" can afflict an industry where returns trail investment by 30 years.

It is in this context of cashflow difficulties, a reluctant workforce, and some deep-rooted social problems that the East Coast group is seeking $1.9 million from the Government for a programme which will have, it is suggested, the three-fold benefit of training a new cohort of forestry labourers, breaking the cycle of drug abuse and welfare dependency, and getting essential forest maintenance work completed.

On the other hand, it can be argued that, rather than relying on taxpayer assistance for a small-scale project with mixed objectives, forest owners should be addressing the twin issues of remuneration and career paths for forestry workers.

Pay rates have improved this year, and a keen worker retained by a fair and reasonable prime contractor could expect to earn $500 gross a week; a "crew leader" at least $700. But in order to attract young workers who want to build significant personal capital over a few years of hard work, or students seeking holiday work, or to encourage skilled workers home from Australia, possible weekly gross earnings would need to be closer to $1000 than $500. Such rates of pay should be affordable even while maintaining the traditional 7 per cent rate of return on capital.

The second issue, career path, is of more concern to the prospective long-term employee. In the Forest Service era (pre-1987) "woodsman" (skilled forest labourer) and "ranger" (forest technician) were coveted career positions which offered security, exposure to a wide range of forest types and operations, and the possibility of advancement to senior management positions.

But under the prevailing short-term contract system, there is, as the East Coast report says, "little enthusiasm among young people to move location for better employment prospects" - largely because the prospects are not as good as they once were. There is little variety, less security, and no clearly defined career path.

The combination of large-scale corporate ownership with a fluid contract labour system - what has been called "the New Zealand model of production forestry" - created the conditions for a healthy rate of profit for most of the decade from 1987 to 1997.

But the downside has been that 1000ha of East Coast forest alone have now failed to receive proper attention, resulting in a $30-million loss in potential earnings. To repair the imbalances in the industry, there need to be higher rates for short-term contract work, more and more varied permanent career positions for young people, and more production forests in individual - as opposed to large-scale corporate - ownership.

If forestry workers could aspire to a genuine stake in the industry, it might enjoy the same success as its Finnish counterpart.

* Geoff Fischer, of Rotorua, is a former forestry trainer and forest manager.