This is the heading of a recent media release by the New Zealand Timber Industry Federation Inc. in which they claim that the number of logs exported (mainly to Chain and India) are twice as high as the volume of logs processed domestically. Many sawmills experience downtime and production losses because they are unable to buy enough logs (at reasonable prices). They also mentioned that the sawmilling industry has lost over 3000 jobs since 2008 and is at great risk of losing many more.
I am not sure why they release this “news” now as many of us know this has been going on for many years; as matter of fact I have been highlighting this fact in many articles in various publications. My question to the New Zealand sawmilling industry is; what are you going to do about this? Why you are not more united and force your government to take action? Most of your forefathers used to be emigrants pioneers who worked very hard to establish the basis of today’s industry. They were fighters and left no stone unturned to survive but it seems today’s generation of saw millers has lost that skill?

Radiata pine 1

Radiata pine 1

I just returned from a two week trip visiting taeda/elliottii pine sawmills in Brazil and radiata pine sawmills Chile and was a pleasantly surprised with the positive feedback about South America’s current softwood export business. All of the mills I visited recorded very good sales to Central America, Middle and Far East and they are very optimistic about the future. Some of the mills are investing in either new sawmills or upgrading their existing equipment. A lack of kiln capacity used to be the norm in South America but they are catching up fast with the installation of good drying plants suitable for appearance timber. The general quality is improving as many of the mills are adapting their grading to export standards.

This is in sharp contracts to the situation in New Zealand where many of the suppliers are struggling to maintain the current exports volumes and most of them are struggling to survive. It is pretty obvious that the future supply of taeda/elliottie and radiata pine to Asia is going to depend heavily on South America and less on New Zealand radiata pine. My only worry is that the forest ownership in Chile is almost 100% owned by three large companies (Arauco, CMPC and Masisa) and as such they basically “own” the whole Chilean timber industry and the independent mills rely on the log supply from these giants.

Taeda/elliottii pine 1

Taeda/elliottii pine 1

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Taeda/elliottii pine 2

 

I was informed today that Southland Veneers Ltd. (in short SVL) will close their operations by the end of the month. The factory produces mainly plywood face and core rotary veneers from radiata pine. It is owned by a good Danish friend, a true veteran in this business, who has been working very hard the last 12 years to make the operation profitable but regretfully it was not for many years.

My friend called me today and explained that the current log supply is very problematic as the good quality logs are being exported and all what is left are either low grade logs or higher grade sold at extreme high prices. In the past most of the surrounding forests were controlled by “local” people living at South Island but the last few years many newcomers (often none Southerners) have been buying up forests to exploit log exports to China and India.

Another problem is the unfavourable exchange rate since the New Zealand dollar has strengthened over the last few years (for reasons unknown to many of us). But, as my friend told me, the exchange rate was more or less a “fait compli” and they could live with it as long as they could produce quality products which is not the case anymore.
So at the end THE main reason is the diminishing availability of good quality logs sold at reasonable prices. This also affects other sawmills based all over New Zealand. For many years I have been advocating that the New Zealand government should impose an export log ban or at least impose a high export levy on logs to encourage processing in New Zealand rather than selling unprocessed resources to, for example, the Chinese who than in return will compete with more expensive New Zealand made products. It seems that the government is totally not interested in supporting their own industry and does not care mills close.

The Kiwis are proud of their All Blacks rugby team and support their nation’s sports to the extreme; a pit they do not do the same for one of their prime industries. Rest assure that regretfully the closure of SVL will not be the last one.