Volatile forestry market signals tough winter for contractors

The forestry industry has always been “pretty brutal” but contractors say it’s currently in the worst cycle in three decades, and the ripple effects will be wide-reaching.

Gillespie Logging owner Ralph Gillespie said he had always seen “ups and downs” in his 30 years in forestry, but had always managed to “scrape through”.

However this year he had been forced to reduce his Marlborough staff from three crews to one, and he was struggling to keep on staff he had employed for decades.

“We don’t have any work, whatsoever … I just told my staff yesterday, you know, it’s not looking good.”

READ MORE:
* Southern Wood Council describes forests amendment bill as ‘a lemon’
* Marlborough wine industry gets funding to train 200 Kiwi job-seekers
* Coronavirus: Ministry of Social Development swamped, as job losses mount

Having heard about lots of other companies in the same situation, Gillespie said he wanted to see Government support packages for affected forestry companies, the way farmers had received support during difficult times, to ensure the companies survived until things picked up.

He also thought more reliable markets could be found for the industry to supply.

“That’s what’s needed in the industry, is obviously more markets and better markets, and more consistency so that there’s work available for people.”

The Forest Industry Contractors Association (FICA) said in a recent report that 21% of its members did not have a current contract for work, and 40% only had a one-year contract.

The forestry sector was the third-largest contributor to New Zealand’s export earnings, alongside dairy and meat, and employed 35,000 to 40,000 people.

The industry showed signs it was in trouble shortly before Covid hit, when the Chinese market slowed down substantially, FICA chair Ross Davis said.

The industry had always been “pretty brutal”, Davis said, but this unusually slow period was a combination of lower exports, a rise in fuel costs, and the impacts of natural disasters such as Cyclone Gabrielle.

April brought a substantial drop in the price of logs, and another drop was forecast for June, Davis said.

FICA was hearing many stories of struggling contractors, particularly in regions that relied heavily on forestry, such as Marlborough, Southland, Gisborne and Hawke’s Bay.

Davis said the Ministry of Social Development (MSD) had reached out to FICA to discuss subsidies for employers within the industry.

FICA was also in discussions with the Government about potential tax relief, and there had been attempts to get a meeting with the new forestry minister as well.

“To us, it’s a shame to lose good people in the industry because we know we’re going to need them back,” Davis said.

Heagney Bros chief executive Mickayla Kerr said the effects of the downturn would be felt far beyond the industry itself.

Her trucking company did a lot of work transporting logs around Marlborough, but had also seen a reduction in jobs in recent months, she said.

“Anyone in the community who thinks that this won’t impact them is probably a little bit blind, because forestry is one of the three primary industries, and one of the big-money income earners, for our region,” Kerr said.

She said the company would be better off with consistent work and less income, than going through the “turbulence” of the past two years.

“There’s been too many lows in the last two years.”