Forestry Tasmania stares into the Abyss

FORESTRY Tasmania has forecast its first operational loss since the company formed in 1994, as the crisis in the timber industry deepens.

The Government Business Enterprise has been hit hard by a global downturn in demand for forest products and the collapse of major customer Forest Enterprises Australia.

FT managing director Bob Gordon gravely said yesterday it had been a “very difficult” year.

“I expect we will probably make an operating loss for the first time since corporatisation,” Mr Gordon said. “FEA was a major customer through the softwood joint venture and we also lease land to FEA for plantations. Like others we are hoping to get paid our rent payments but we will be in the queue like everyone else.

“The huge rise in the Australian dollar from 63 cents towards the end of last financial year to over 93 cents for most of this financial year has meant that any sales in US dollars have been at a much lower return than you would expect.”

The business recorded an operating profit of $9.3 million for 2008-09 but only managed to pay a dividend of $500,000 to the State Government.

Despite the financial woes, Mr Gordon denied the Tasmanian forest industry was mired in an irreversible crisis.

“I think we have turned the corner. It is a bit like a large ship we are trying to turn around,” he said.

“We hit an iceberg 18 months ago, we have repaired it and we are back on track again but it is just a matter of how long it takes to see the result on the ground.”

He pointed to agreements to ship between 200,000 and 400,000 tonnes of sawlog to China.

But that will come as cold comfort to contractors who have warned they will have to sell their assets and machinery and quit the industry.

Gunns Limited has confirmed it will temporarily shut down its Tasmanian woodchip mills at the end of this month making 15 weeks in shutdown since Christmas.

Liberal resources spokesman Peter Gutwein called for an immediate short-term assistance package for forest contractors so that workers were still around when economic conditions recovered.

“Tasmania’s forest contractors are bleeding and it is simply not good enough that they are being ignored by the Labor-Green government, half of whom significantly contributed to the problem in the first place by poisoning our woodchip markets in Japan,” Mr Gutwein said.

“The question that needs to be asked is: Where is [Bryan] Green, who didn’t even know that further shutdowns of Gunns’ woodchip mill were imminent?”

The Forest Contractors Association has called for the $1.8 million support package announced before the election to be increased and the eligibility criteria expanded to include silviculturists and other downstream jobs.

Resources Minister Bryan Green would not commit to a new support package yesterday.

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Examiner:

‘Final nail in coffin’ for many in forest industry
BY RACHEL WILLIAMS BUSINESS REPORTER
08 May, 2010 08:06 AM
FORESTRY contractors had been forced to sack half their staff in the past year, and another three weeks of shutdowns at Gunns’ woodchip mills would be the final nail in the coffin for many businesses, the Tasmanian Forest Contractors Association said yesterday.

Gunns yesterday confirmed that its Tamar mill would close for three weeks from May 31; Triabunna would shut for two weeks from Monday; and Burnie would close for two weeks from May 31.

TFCA chairman Rodney Bishop said the closures would devastate an industry already battling with a quota of just 40 per cent.

“It is more than serious – they are wondering how they are going to survive,” Mr Bishop said.

“I know people are finishing up on a particular coupe and are calling it quits because it’s silliness to go into more debt to continue on the path we are going down.”

He said the silviculture industry had been reduced from 700 jobs to 150 in the past year, while TFCA executive officer Ed Vincent said the 120 contracting companies around the state had halved their workforce from a combined total of about 800.

Mr Vincent will meet Industry Minister Bryan Green next week to discuss a “viable plan”.

Mr Green and Premier David Bartlett met representatives of the forest industry on Thursday and he said the Government would continue to explore all avenues of assistance.

“Commercial negotiations with Asian woodchip customers are ongoing because securing further shipments is vital to the jobs of contractors,” Mr Green said.

A 40,000-tonne shipment had recently left and a further two were expected “in the near future”, Mr Green said.

Opposition industry spokesman Peter Gutwein said contractors were being ignored by the Labor-Green Government – “half of whom significantly contributed to the problem in the first place by poisoning our woodchip markets in Japan”

Mark: Cartoons HERE

Monday update: Forestry war cabinet, HERE:

MICHAEL STEDMAN

May 10, 2010 12:01am

A COALITION of forestry heavyweights has held an emergency meeting to discuss the timber industry crisis.

The group intends to pressure the state and federal governments for a forestry assistance package and, in a startling twist, it wants conservation groups to help steer the future of the forestry industry.

Members agreed there needed to be a radical shift in forest practices.

The April 23 meeting in Melbourne was attended by representatives of the Australian Forest Contractors Association, the Tasmanian Forest Contractors Association, Timber Communities Australia, the National Association of Forest Industries, Gunns Ltd chief executive Greg L’Estrange and Forestry Tasmania managing director Bob Gordon.

The industry leaders agreed on the need for immediate action to support forest contractors reeling from a combination of the global financial crisis, the high Australian dollar, a downturn in woodchip exports and the collapse of managed investment schemes.

Australian Forest Contractors Association chairman and Tasmanian forest contractor Colin McCulloch said it was clear the industry would never be the same again.