Tasmanian Times

Economy

Tasmania teeters

What company has received $500 million in cash from the issue of new shares over the past 3 years but only has a market value of $300 million?

Why Gunns of course.

What company, when faced with the daunting prospect of repaying or renegotiating almost all its borrowings of $600 million within 12 months, pretends that the announced sale of all assets is to finance a new pulp mill rather than to enable the solvency declaration to be signed?

What company, having announced the sale of all assets, will be forced to publicly reveal in its annual accounts the write down of the values to reflect current market offers rather than pie-in-the sky expectations?

What unprofitable company, whose operations have been sold, about to be sold or closed down, can still claim ‘underlying profit’ of $40 to $50 million?

What company, operating in the native forest sector with decrepit assets and diminishing markets, is demanding compensation for a cessation of its loss-making activities?

What company failed to foresee the decline in global demand for native forest woodchips, yet nevertheless books income from plantations not due for 6 years as current year income?

What company brazenly tells the market that it is confident of gaining finance of $2.5 billion without a joint venture partner – but is yet to reveal the new business case despite adverse exchange rate movements, the proposed sale of all forestry assets and the plummeting market assessment of its assets?

What company has not bothered to explain a material matter as to how second and third rotation tree crops needed as feedstock for a pulp mill, will be arranged and financed now that MIS schemes are defunct and plantation land about to be sold?

That’s right, Gunns, in every case.

This company is in its death throes yet continues to delude itself and the market and the Australian public that it has a future.

And perhaps it has, if Government bails it out.

For that is the only way forward for Gunns.

Institutions are wary of bold new developments at the best of times, let alone a proposal from a teetering company with no experience in the operations of a high-tech, supposed state-of-the-art pulp mill.

Institutions once provided the stability, the authority, the credibility and most importantly most of the cash that has allowed Gunns to survive.

But Gunns has slipped out of the Top 200 on the ASX charts and institutional interest is waning.

The current share register now more closely resembles a hotel register of a 2-star private hotel.

Gone are the long-term boarders.

It’s the itinerants who only stay a night or two whose names continually appear on the register.

Here one day gone the next.

Similar to the politicians who have overseen this farce … Paul Lennon and David Bartlett.

With change comes hope. When Lara Giddings accepted the poisoned chalice as Premier, hopes were raised that someone would at last recognise that rebuilding a new Tasmanian economy on the foundations of an almost insolvent entity was not necessarily a prudent plan.

Alas Ms Giddings still sees Gunns’ pulp mill as the shining beacon, guiding the State forward.

Unfortunately most advice on forestry matters has come from the Government-owned Forestry Tasmania, now hopelessly conflicted and closer to insolvency even than Gunns. The advice from that source is unlikely to be impartial.

It took the State Government forever to realise that it might need to be a little more proactive, so it has recently called tenders to provide advice via a Strategic Review.

For years Forestry Tasmania, entrusted with the care of the State’s native forests, has conspired with Gunns to split the proceeds of woodchipping in proportions that favoured the latter.

But now both are facing a bleak insolvent future, and are accusing the other of price undercutting as they play leapfrog in the race to the bottom.

Only when that inevitable destination is reached will Tasmania be able to move forward.

John Lawrence was employed as an economist for five years before returning to Tasmania where working life has been spent as an accountant in public practice and an observer and researcher on finance and economic matters at the State level.

Also published on Crikey, HERE

Gunns Share Price, HERE

• Kim Booth: Forestry Contractors Agree With Kim Booth MP That the Native Forestry Industry Has No Future Without Substantial Restructure

FORESTRY CONTRACTOR STANDS WITH BOOTH
Forestry Contractors Agree With Kim Booth MP That the Native Forestry Industry Has No Future Without Substantial Restructure

Kim Booth MP
Greens Forestry spokesperson

Thursday, 9 June 2011

The Tasmanian Greens today congratulated Mr Charlie Davis for having the courage to stand up and represent the interests of the silent majority of the native forestry industry, and Mr Davis is standing alongside Kim Booth MP to demand that that the State and Federal Forestry Ministers help him and his fellow workers exit the industry with dignity.

Greens Forestry spokesperson Kim Booth MP, said the fact 83 out of a 120 forestry contractors put their hands up to get a buy-out in the recently botched federally funded Tasmanian Forest Contractors Exit Assistance Program, is clear evidence that the Tasmanian native forestry industry does not have a future.

“Almost 100% of those working at the coalface of the native forestry industry put their hands up to get out. That number is an indisputable indication of an industry without future,” said Mr Booth.

“I have argued for years that the current Tasmanian native forestry logging is uneconomic and unviable. The markets don’t want it, the Tasmanian community don’t want it and now even the people that work in it can’t make a decent wage in it.”

“The Greens tabled a motion in Parliament on the 26 May 2011, noting that the extreme financial stress placed on forest workers and contractors demanded that the State and Federal Ministers step up to the plate and secure an industry support package that enables contractors to exit the industry permanently, whilst placing their contracted volume or quota into conservation reserves.”

“Time after time, contractors have been driven further into debt and only given lifelines to hang on to. Contractors are being left to cover mortgages and the loss of life savings whilst Gunns Ltd is running to Canberra crying poor and Forestry Tasmania just goes knocking on the Department’s door for more money.”

“Today I stand here with Mr Charlie Davis and call on the Labor and Liberal parties to support my Motion in Parliament so that these men and women can exit the forestry industry with dignity, and have the capacity to keep putting their practical skills to good use in the Tasmanian community” said Mr Booth.

Text of the Motion:

522 Mr Booth to move—That the House:—

(1) Notes with grave concern the financial stress placed on forest workers and contractors as a result of the collapse of the forest industry.

(2) Further notes:—

(a) the collapse is due to the financial unviability of the native forest industry;

(b) the unit cost of production is too high in Tasmania; and

(c) the industry cannot survive in its current form.

(3) Calls on the State and Federal Governments to recognise the financial unviability of the industry, and work together to secure an industry support package that enables contractors to exit the industry permanently, and which also places their contracted volume or quota into conservation reserves. (26 May 2011)

9th June 2011

image

•Environment Groups call on Liberal Party to Act in the Interests of All Tasmanians

Environment groups today called on the State Liberal Party to stop playing politics and support the current forest process by a direct protest at the office of the Leader of the Opposition Will Hodgman.

Scott Jordan from the Tarkine Nation Coalition said “It is time for the State Liberal Party to stop being the wreckers and accept that both ENGOs and the broader forest industry both want protection for the environment and a long term sustainable timber industry.”

“The continued public degrading of the process and attacks on parties to the Statement of Principles by members of the Liberal Party is not constructive and clearly demonstrates that they have little regard for the future of Tasmania, Tasmanian workers, Tasmanian communities or Tasmania’s unique environment” he said

“Tasmanian communities, including the towns along the north-west coast will benefit from the protection of Tasmania’s forests. It is time that the Liberal Party showed the coast that it supported local communities and workers” concluded Mr Jordan.

“As signatories work to deliver a forest agreement, we call on all parties — including the State Liberal Party — to work in the interests of all Tasmanians and support this effort to secure environmental protection and transition to a sustainable timber industry.” said Dr Phil Pullinger Director of Environment Tasmania.

This action was supported by ET member groups, Florentine Protection Society, Nature Photographers Tasmania, West Wellington Protection Group.

Emma Anglesey
Member Liaison
Environment Tasmania Inc.
The Conservation Council

Author Credits: [show_post_categories parent="no" parentcategory="writers" show = "category" hyperlink="yes"]
45 Comments

45 Comments

  1. Freddi Mazoudier

    June 15, 2011 at 6:48 pm

    Wow ..I had a look at the stock market at about 10 30 this morning and Lo and behold Gunns were 0.25.5
    Are we all to start rejoicing in the near future, or is LaLa going to sneak some more money from some hidden fund and bail out this looser yet again?
    What excuse will be used this time? Keep your eye’s peeled for some financial skulduggery.Freddi Maz

  2. Russell

    June 15, 2011 at 5:24 pm

    Oops! 25 cents.

    I guess the market and shareholders no longer believe the (MIS)information continually trotted out by the Gunns Board.

    How long ’til the Governments wake up?

  3. David Leigh

    June 15, 2011 at 2:42 pm

    And now we see the resurrection of Messrs’ Gay and Grey, popping up like puppets in a Punch and Judy show…

    “There they are”.

    “Oh no it isn’t”.

    Triabunna, a paradise lost to the Tasmanian state, is to be once again turned into a giant pile of minced native forest that nobody wants or dares to touch. Gunns may no longer be involved in native forest destruction but the two G’s certainly are and why? Maybe the other G Mr Greg L will join them once the share price drops below 26c?

    It all appears to be one big scam, with the same people popping up here and then over there and meanwhile, the forests are still being plundered and for what? Commodities took another hit over night. A global ceiling is about to be put on the ever-increasing price of woodchips, because many paper manufacturers are doing it tough. Just because you can get it cheap or even free doesn’t mean anybody wants it. You can get any amount of dog shit for nothing but is there a market?

    Gunns should be wound up now, before any more government money gets sucked into the bottomless pit and any venture that has Mr Gay at the helm should never be allowed to succeed.

  4. Barnaby Drake

    June 14, 2011 at 10:28 pm

    Is it true that Greg L’Estrange has had to remove some floor boards in his office to accommodate the share price graph?

  5. Russell

    June 14, 2011 at 6:04 pm

    Re #28, 30 and 35
    Well, it’s 27.5 cents per Gunns share now.

  6. Brenda Rosser

    June 12, 2011 at 4:26 am

    John Lawrence writes: “This company is in its death throes yet continues to delude itself and the market and the Australian public that it has a future.”

    Gunns Ltd is not ‘a company’. It is a group of companies. Big (taxpayer bailed out) banks are the major shareholders of Gunns, which is in turn bailed out continuously by the taxpayer. The big banks – and the conglomerates they own and ‘trade’ with – will eventually own the Tasmanian plantation base and almost everything else. They’ll use different corporate names when they acquire our land. But essentially it will be the same conglomerate ‘trading’ with itself.

    This is our modern day feudalism. Groups of companies, owned and operated by the same people, pretending to trade with themselves. Pretending to be different entities. Pretending they are engaged in market exchange when they’re not. They make themselves, at the behest of their exlusive parliamentary representatives (dressed up as ‘our government) Too Big to Fail. Zombie enterprises; the living dead. They can’t die, they own our government and will force us all to pay and pay and pay to keep their pseudo ‘enterprises’ going.

    [when you go to vote at the next election ask yourself which party refuses to support industrial plantations.]

    A new Australian anthem:
    Australian bums let us no longer rejoice for we were cheap and free. We sold out our golden soil and wealth. Gave it to them for no toil at all…our land is their land abounding with nature’s and taxpayer’s gifts…sing along!

  7. Karl Stevens

    June 11, 2011 at 3:10 pm

    I find James Crotty’s (13) neo-colonialist, post-genocidal view of Tasmania too sickening. Does Crotty seriously believe only islands that have been stolen from their indigenous owners and are mostly vegetated have any chance of surviving in the modern world economy? If you are such a visionary Crotty why don’t you take-up a collection and actually BUY Tasmania from its original owners rather than simply STEALING it and then claiming its essential to keep 500,000 people in beer and sport. Get real Crotty!

  8. KarlDavidRussellMikeBobRussellKarlBobMikeWilliamDa

    June 10, 2011 at 11:19 pm

    Crotty, spot on.

    Other comments are the same old blokes club, same old bile and group think.

  9. David Obendorf

    June 10, 2011 at 1:23 pm

    Tamar Devil [comment #9] in my view, is correct: “Gunns are desperately grasping for the lifebuoy that the Forestry Roundtable Agreement might offer, courtesy of the ‘representative’ Environmental NGOs with their solid support from the Greens.”

    The only qualification I would make is ‘some Greens’ – I don’t think Kim Booth supports this negotiation charade.

    The two forestry brutes – Gunns Ltd and Forestry Tasmania – have now turned on each other; much the same as Tasmanian Devils do when they both want to eat the same dead flesh.

    A stark metaphor and an obvious one.

    The next step is also biologically-inevitable – one dies and the other eats it; it’s called cannibalism!

  10. Mike seabrook

    June 10, 2011 at 7:05 am

    Ref 35
    Now consider directors announcing compulsory conversion of the gnspa to gns- they had brilliant boffins advising on these.

    The gns share price will be under massive pressure as the gnspa holders look to massively short sell or otherwise look to offset the prospective exposure to gns which gnspa holders will never ever ever want to have.

    My view is that gns shareholders have barely comprehended this yet, though if a cornerstone investor wanted say 20 percent or so of gns they would be already gorging on gnspa debt at an est. 30 plus discount to face value.

    Being a holder of gnspa am hoping that the gns directors do not reneg/default on the quarterly distributions on gnspa debt.

  11. Barnaby Drake

    June 9, 2011 at 9:46 pm

    #28 and #30. If this is the case then they had better hurry. I don’t think they can wait as long as the 1st quarter of 2012 to cash in the gnspa as Gunns ordinary share price has just hit $0.305 today. It has shed 45 cents in a week and at this rate, they will be below the critical 0.28 cents next week.

  12. Karl Stevens

    June 9, 2011 at 7:29 pm

    I agree with David Obendorf 33. Groups like this give the environmental charities a bad name. It’s about time we had a Royal Commission into Tasmania’s ENGO’s. We have the same board members on multiple ENGO boards, large sums of tax free dollars being transferred between groups, people from one group being paid by another group, government inquiries being stacked by groups that represent other groups that are also in the same inquiry, donations to implement government policy and the support of projects while donations are still being solicited to fight those projects. This must be one of the most rotten sectors in Tasmania today. They have almost complete political immunity as well. Lets have a Royal Commission into the ENGO’s NOW?

  13. David Obendorf

    June 9, 2011 at 6:25 pm

    Regrettably ET Inc. is disengaged with Tasmanian Times except when it comes to putting out media releases. They also seem unable to reply to emails these days; their staff must be very busy in Forest Reference Group meetings and meeting with Forestry Tasmania. Yes/no?

    Could I suggest a small edit on their press release above?

    Last Paragraph:

    “This action was supported by three ET member groups – Florentine Protection Society, Nature Photographers Tasmania, West Wellington Protection Group”.

  14. David Leigh

    June 9, 2011 at 4:24 pm

    Mike Adams – on 09/06/11 at 03:55 PM, It is interesting you should mention the NEWG paper by Pitt and Sherry. Many people in the region, myself included, put ideas forward to help redevelop the North East, following Gunns’ pullout. Among many other ideas I put forward, which were not credited in the report, I suggested replacing the woodchip industry in NE Tasmania with Industrial Hemp. The idea of a rotational crop for farmers, providing food, fibre and biofuels, which could fuel all industrial and agricultural processes and create many jobs in down line processing and product manufacture, is something many in the region embraced. Hemp was only mentioned in passing, within the report and given no budget. The report also suggested a timber processing precinct, based around Ling Siding (that suggestion was also part of my own paper) The idea was to convert E. Nitens into solidwood products. Plantations were not mentioned in the report; just that radial sawing could be set up. The biggest items, as you suggested, included upgrading road infrastructure between Scottsdale and Bell Bay, it even mentions freight road infrastructure. How deep into Tasmanian governance and society does the long arm of this defunct (or defucked) company reach? Even in its death throws does this delusional beast suck at everything in its path and Gunns will likely consume until its expiring breath.

  15. salamander

    June 9, 2011 at 2:03 pm

    #24 The side effects of the Triabunna shutdown are beginning to have an impact, with Southwood apparently dumping offcuts and bark in a valley near Judbury.
    This preference for polluting the landscape rather than dealing with the problem by using the resource in another way (firewood, landscaping) suggests a similar problem to those displayed by Gunns – a total lack of intelligence, ethics and common sense.

  16. Mike seabrook

    June 9, 2011 at 12:43 pm

    Gnspa
    Re 28

    Fairly correct
    Gnspa put a bit of stability on a gns share price of est. 28c & at gns share price of below 28c, the conversion ($100 million of debt converted to equity at the option of the directors at any time),is theoretically positive to the gns share price on the asx

  17. William Boeder

    June 9, 2011 at 12:07 pm

    The former and present State government ministers that aided Gunns Ltd to arrive unto the edge of their financial Rubicon, will now no longer be required, as Gunns Ltd are poised to wander aimlessly across this point of no return alone, guided only by themselves and the phantom idea originating from their former executives.
    the lingering shadow of the now departed/depleted board of executives are no longer of consequence, for they had wrought this financial collapse upon the company of Gunns Ltd.

    Interestingly, the pending final fatal splash across those ancient wide waters now so beckoning to the remnants of this former corrupting greed group, is that they now must complete their predicted final journey to cross their river of no return.

    Let us not forget the cast of those past and present renowned persons who have contributed to the soon to be insolvent, (shackled to the official receiver,) greed machine, for the cast is a long one.

    Perhaps it may also cause the dispersal of the dark cloud menace Tasmania Incorporated, e’er hovering at the head of this cast of villains?

  18. Garry Stannus

    June 9, 2011 at 12:01 pm

    Mike Seabrook #27:
    Hybrids and investor pain:

    I think I found a figure of 27.2c, and another of 25c. I’d never heard of hybrids till you mentioned them. I tried to get my head around them. They seem to me to a special type of share, offered by a company which come with interest (paid by the company?) and at the end of a certain amount of time, the company converts the hybrid into ordinary shares. The company offers them in order to raise funds.

    It seems that these hybrids can be regarded as a type of debt, or liability and that Gunns, in order to resolve general debt, will be converting these hybrids (‘Gunns Forests’ is their name) into shares during the first quarter of 2012, as well as paying back other debt.

    If the share price is, as you say, less than 28c, then it seems as if these holders of hybrids will have made a loss. Not only that, but the number of Gunns Forests hybrids seems to represent about 28% of the total number of shares in the company. Conversion of hybrids therefore means an increase in the total number of Gunns shares and therefore a watering down of its share price.

    I’m only thinking aloud here, perhaps everyone knows this, Maybe you could straighten out the bits that I’ve got wrong.

  19. Mike seabrook

    June 9, 2011 at 7:44 am

    Re 5,6& 7
    My recollection is that gnspa holders( est. $ 100million of hybrids) on the asx do not cop any pain unless gns is less than 28cents,which is a critical share price for gns on the asx.

  20. Greg James

    June 9, 2011 at 4:51 am

    I would draw the conclusion that Gunns by inviting Government interference into their industry suffered what you would historically expect, financial collapse.
    The ideas of Paul Lennon and his mentor Bacon were as silly as the beurocrats who carried them out.
    I believe that the stupidity of John Gay was in a belief he would get a free lunch from the State. The writing was on the wall the day Gay and Lennon had lunch in Blue Skies. Lennon wanting to be Mr Big Business unreasonably interfered and confused his ambition with his vision. Hindsight shows us what simpletons these political types are when it comes to business.
    Lara and Will are caught in Lennon’s paradigm, both of them incapable of seeing the woods for the trees. Unfortunately they are like siamese twins, they agree too much on the same issues and have very little differentation on most others, except free school buses.

  21. Tom

    June 9, 2011 at 4:50 am

    Re the ET protest outside Hodgmans office. Its hard to believe a so called ‘environment group’ could be in lock step with the CFMEU and Lara Giddings.
    http://tasmaniantimesnorth.blogspot.com/

  22. William Boeder

    June 9, 2011 at 3:57 am

    I am yet to find out as to how the material so designated for wood-chips which was to be the sawmill residues and the forest detritus that remained after saw-logs were cut and loaded, to then become almost all the clear-felled Native Forest trees that provided the huge bulk of the fodder, (so plainly wasted saw-log material,) for Gunns Ltd’s infamous wood-chip mills?

    At about this time the quality grading of timber must have suffered a serious plunge into confusion, in order to conform to Gunns Ltd cries and demands for more feedstock supplies, from of course, Forestry Tasmania?

    Was this new insatiable desire of Gunns Ltd for all and every amount of Native Forest originating timber, given as a directive to the State government by Gunns Ltd, or was it a decision by way of the rogue management and executive board of Forestry Tasmania?

    The questions are relevant to this subject matter as they exemplify the strategies thereafter employed which went on to become that of an enormous wood-chip marketing entity, thus to enable its entry into the international realm of paper producing countries seeking wood-chips, and were so provided with such Gay and Gray abandonment.

    That this matter of consent being so given by such a witless government or whoever government minister, or indeed this consent given by Forestry Tasmania, for such voracious volumes of Native Forest to be allocated to Gunns Ltd seems to have become the catalyst now rebounding against, the former wills and wishes of Gunns Ltd.

  23. max

    June 9, 2011 at 3:34 am

    !3 # Paton and Balwins employed 2400 people and it has gone, Kelsall and Kemp went the same way and all industries in Australia are under the same threat. The reason industries have gone or are under threat is free trade, we can not compete and never could without tariff protection. The timber industry is no different from any of the other industries that have gone, or are failing. The timber industry has only survived so far because Forestry Tasmania has sold below cost and the Australian tax payers are subsidising the timber industry. Gunns have sold every thing and are still going under and Forestry Tasmania even with give a way prices and subsidies is owed money because the people they sell to can not afford to pay. The big question is, how long can the tax payers continue to prop up a failing industry.

  24. Barnaby Drake

    June 9, 2011 at 3:23 am

    Gunns says it is looking for $200 Mill in compensation for not doing what they are currently doing, which seems to be accumulating debt. With this Free Gift they hope to build a Pulp Mill’

    It seems that simple math is a real problem for them and they consistently show their inability to count. $2.5 Billion is a LOT bigger than $200 Million and it is also a LOT smaller than the amount they owe. If you add one to the other it comes to over $3.1 billion, plus or minus a couple of million or so.

    By my calculation, it would need a further $2.85 Billion to get them a pulp mill even if Santa delivers, and that is if they don’t incur any further debts in the meantime. The other problem is they need a large chunk of it NOW. In a month and a half their permit to build expires, they have to find $61 million before the end of this month for current repayments and a lot more before the end of the year. As far as I can see, what little assets they have left will need to be sold to service these ongoing debts, and although thay say the interim period while they build the castle in the air will be covered by hard and softwood milling and sale of chips, they don’t seem to have any chip mills left and the saw mills are closing by the end of this month.

    Coupled with this is the fact that their share price closed today at $0.315 and it is cheaper to buy the whole company than to invest in a partial share by becoming a JVP, it bodes ill for Greg (Mr Micawber) L’Estrange. “I am hourly expecting…..” etc.

    Any offers on a few coloured cows and a commercial property in Lindsay Street?

  25. Tim Thorne

    June 9, 2011 at 2:41 am

    James (#13), for the last 40 years the “timber” industry in this state has been morphing into the woodchip industry.

    Gunns have lost all credibility as an employer contributing to the Tasmanian economy because they have shed more jobs than they can ever create.

    There have been plenty of positive, socially beneficial, economically and ecologically sound alternative proposals put forward, but those with the political power refuse to consider them, and those with the capital to invest are wary of committing anything while the situation here is in such a mess.

    The long term future of paper production is not from trees, and certainly not from trees grown at the arse-end of the world with relatively high labour and shipping costs and a soaring dollar.

    If we could get a real timber industry back, that would be great, but it is, unfortunately, not up to you, me or any other poster on Tasmanian Times to do this.

  26. Russell

    June 9, 2011 at 1:17 am

    Re #13
    Note the continued nose dive in share value since the infamous PMAA in 2007, James.

    And what do you mean by this, “there best be some realisation that the decline of Gunns is a significant and presently and for the foreseeable future, irreplaceable loss to the Tasmanian economy”?

    Are you kidding? The jobs have already been shed by Gunns, James, wake up you’re on another planet. The only loss now will be the loss of a parasite, continuing corruption, the fatal bleeding of our state coffers and the backward movement in our economy. Gunns is the problem, James, once they are gone prosperity is the only option.

    “For whatever reason Gunns previously refused to do other than build their mill on the Tamar. That is the past.”

    It’s not over yet, James, not until Gunns is dead and buried and FT is held to account.

  27. Steve

    June 9, 2011 at 12:58 am

    13; I understand the point you are making but I believe it to be based on a fallacy. The fallacy is that Gunns is the timber industry. They have made themselves the biggest player by gobbling up the opposition. As is inevitable with any highly geared, highly aggressive corporate, the time comes when you have to pay the piper. If they can’t, they fold, and others, who’ve perhaps pursued a more prudent strategy, take over.
    The timber industry is not one greedy corporation and government intervention to prop up a failed company would be both economically and politically reckless.

  28. John Maddock

    June 9, 2011 at 12:37 am

    James at #13 says”My point is, the timber industry is not bad.”

    At the risk of appearing pedantic, I disagree.

    “the” timber industry is very bad.

    “A” timber industry could be very good.

    The problem as I see it is the leadership in the industry, backed up by unfathomable politicians.

    Tasmania once had a forest resource which was very high quality (on a world scale) but small (on a world scale).

    Now, it has a forest resource which has been highly degraded by the industry’s management practices, and is still small scale.

    Instead of producing low value plywood veneer (FT’s principal customer now appears to be Ta Ann) we should be looking to produce products of the highest value.

    Seems to me that the industry as presently run must die, to allow a new industry to be born.

    Social justice suggests there should be some compensation for industry workers, but when many of them ignored many warnings of an impending industry collapse, where do you draw the line?

    JV

  29. john hayward

    June 9, 2011 at 12:13 am

    There is a remarkable similarity between the reasoning of #13 James Crotty on the necessity of Gunns, and that of Tony Abbott on the necessity of the coal industry.

    Both seem unable, or unwilling, to contemplate the inevitable disaster of the status quo.

    John Hayward

  30. William Boeder

    June 8, 2011 at 11:52 pm

    Finally we arrive at some form of truth regarding the viability and sustainability that collides head-on with the Forestry Tasmania delusional pursuit. in their continuing slaughter of our Native Forests.

    This truth (as we shall now refer to it “as the truth,”) as is given by one of Tasmania’s renowned Foresting Contractors Mr Charles Davis, does attest to that of which Forestry Tasmania continues to deny.

    How much clearer or so simply plain and straight can this issue now be understood, that the Lib/Lab hypnotically fixated forestry parties, might at last attend to this truth rather than listen to the wily dictums of Gunns Ltd and that of the rogue GBE of Forestry Tasmania?

    Thank you Mr Charles Davis and Mr Kim Booth MP.

  31. Barnaby Drake

    June 8, 2011 at 11:38 pm

    The only problem with Gunns seems to be, ‘It is an unconscionable time a dying.’

    My wreath of nettles and foxgloves is starting to wilt!

  32. David Obendorf

    June 8, 2011 at 10:57 pm

    Turnover in Gunns shares continues, share price down to 31.5 cents. The dead cat bounce of last week to 42.5 cents and a big transfer of shares – over 51 million in a few days. The madness of the company never ceases to amaze. The intimidation of its sacked employees and redundant contractors in the face of this fallen forestry monolith is also astonishing.

    As John states: “For years Forestry Tasmania, entrusted with the care of the State’s native forests, has conspired with Gunns to split the proceeds of woodchipping in proportions that favoured the latter. But now both are facing a bleak insolvent future, and are accusing the other of price undercutting as they play leapfrog in the race to the bottom.”

    Tasmania desperately needs an Integrity Commission investigation into these matters.

    Lastly, how can the ENGOs peace dealers – in all ethical conscience – still be prepared to liaise with Forestry Tasmania over the boundaries of the HCV forests? Sheer madness!

  33. James Crotty

    June 8, 2011 at 9:58 pm

    Go here for a better historical view of share price and activity. If it does not come up choose the monthly prices over 10 years option.

    http://hfgapps.hubb.com/asxtools/Charts.aspx?asxCode=GNS&compare=comp_index&indicies=0&pma1=0&pma2=0&volumeInd=9&vma=0&TimeFrame=M10

    Before everyone gets too carried away with themselves for triumphing over the beast that was Gunns, there best be some realisation that the decline of Gunns is a significant and presently and for the foreseeable future, irreplaceable loss to the Tasmanian economy.

    Try to talk re-structuring to a contractor set to lose their livelihood and probably house when the mortgagee forecloses. And its not just those in the industry. Flow on effects are real. Economies work on the production of wealth. Extractive industries are quick and reliable multipliers. Good in good times; devastating in reverse in bad times and in rural economies.

    A bail out appears inevitable.

    Shouldn’t we all become attuned to the very simple notion that no party, not even the Greens as we have seen from recent behaviour, can allow a significant portion of the Tasmanian workforce and infrastructure to be cast onto the scrap heap.

    Maybe we should now be planning to win the peace once the war is over.

    We need a forestry industry, we need value adding processing. If government assistance is to come let it come with conditions that reflect present concerns for pollution, sustainability and the myriad other concerns to which Gay & Gunns formerly didn’t listen.

    No responsible politician could allow the collapse of an industry. Something will be done to assist Gunns. The question is on what terms.

    Obama did it with the US car industry. I look at that action as instructive, you look at that action as instructive, surely it is reasonable to think our political masters look at that action as instructive.

    For whatever reason Gunns previously refused to do other than build their mill on the Tamar. That is the past. I do not know if funds exist to locate an acceptable mill in an area which wants it. I hope they do.

    Because without those funds, the undoubted win for the environment that is the besting of Gunns, will be a significant loss of jobs, opportunity and wealth.

    My point is, the timber industry is not bad. Gunns at its worst was bad, present Gunns is much, much better. We have to make a future, transparently taxpayer reliant Gunns engage in acceptable best practice and get behind it and the rest of the industry in creating wealth and opportunity.

    In case I haven’t made the point plainly enough before. We are not heading into hard times; we are in hard times, and have yet to do anything other than talk about what should be done to improve things.

  34. Russell

    June 8, 2011 at 9:53 pm

    Wake up you NGO dunderheads, the SoP is a crock

    It does absolutely nothing to protect native forests and is purely an instrument of Gunns to try to get its nightmare pulp mill up.

  35. David Mohr

    June 8, 2011 at 9:34 pm

    The Gunns Ltd share price has now fallen for six straight days! It may dip below 30 cents in the next day or two.

  36. Karl Stevens

    June 8, 2011 at 8:56 pm

    How does Emma Anglesey explain that because the Wilderness Society is a member of Environment Tasmania they ratified the statement of principles twice, thereby invalidating the agreement? Lara Giddings has already pleaded with Will Hodgman to support Gunns pulp mill by supporting the SoP. Good to see Emma and Lara singing from the same hymn sheet.
    http://west-tamar-talk.blogspot.com/

  37. Tamar Devil

    June 8, 2011 at 7:57 pm

    Thanks John for the excellent summary of the very deep hole that this greedy, arrogant Company has dug for itself.

    Very heartening to note that their condition appears terminal and the sickening blight they have visited on Tasmania could soon be no more than a bitter memory.

    Your suggestion that they could yet be saved by a Government bailout is nightmare material for many here in the Tamar Valley. Gunns are desperately grasping for the lifebuoy that the Forestry Roundtable Agreement might offer, courtesy of the ‘representative’ Environmental NGOs with their solid support from the Greens.

    A very large ‘compensation’ rake-off of more taxpayer funds could well extend the years that we have put into fighting for our Valley but even if our corrupt, brain-dead Government committed to funding life support for this obscenity, they will eventually realize they have a very angry tiger by the tail and the only sane move would be to let it go.

    In the immortal words of Peter Cundall, this stinking Pulp Mill is a “sinking turd” and “We shall never give up”.

  38. Mike Adams

    June 8, 2011 at 7:55 pm

    NB also that the Plan for Northern Tasmania, written by Pitt and Sherry for state government perusal and guidance, not surprisingly strongly backs the Tamar Valley pulp mill.
    Pitt and Sherry drew the plans for the mill, were the firm entrusted with the Dilston By-Pass leading to the mill and Mr Pitt persuaded the ‘Gunns 100’to sign up to a half page advert extolling its benefits.
    It ain’t just Forestry Tasmania.

  39. William Boeder

    June 8, 2011 at 6:20 pm

    When the preceding events of this resource plundering and corrupting company are laid out, say of the many ugly events over the preceding 10 years, then to lay open the enormous grab-all millions of dollars that has entered and been absorbed into this same company, (eg; its own revenues, the frequently snaffled Tasmanian taxpayer fundings, the improperly contrived Federal allocated grants etc,) the resultant graphic pan-demoniac depiction would rival that of any former rebellious law-despising greed-mongering institution that existed anywhere around the world?
    That, dear attendees to this forum, would tell the world that it nigh the time this vile ruinously directed private enterprise company should at last, be hammered and fragmented into oblivion!

    How any even mildly democratic government could ever permit or allow this poisonous clouded company to build and operate a huge Pulp-Mill complex, is beyond any and all sane comprehension!

  40. D Beechey

    June 8, 2011 at 5:44 pm

    A gloomy picture indeed

  41. David Leigh

    June 8, 2011 at 2:48 pm

    John, in this bleak and inclement weather, your warming thoughts are both timely and pleasing, in fact you brought laughter into the crisp air. Your article has it all: It is factual, humorous and yet there is pathos, when one thinks of the poor, deluded souls trying to steer this stricken ship into DJ’s locker. If there were even a market for the pulp it so wants to produce it might even have a grain of hope.

    French court sends envelope manufacturer Groupe GPV into receivership
    BRUSSELS, June 6, 2011 (RISI) – The commercial court of Aubenas placed Groupe GPV in receivership on May 31, granting it an observation period of six months. A GPV spokesperson attributed this to a drop in activity on the envelope market.

    French packaging paper producer Papeteries Grégoire to be liquidated
    BRUSSELS, May 31, 2011 (RISI) – The commercial court of Epinal today placed Les Papeteries Grégoire, based in Remiremont in northeastern France, in liquidation. The company’s 84 employees will be made redundant.

    There are similar stories from other parts of the world and it looks as though only a few giants will remain to fight it out for pulp supremacy and none of those companies will be Gunns.

  42. max

    June 8, 2011 at 2:44 pm

    Gunns is an enigma, how they continue is anybodies guess. Another thing that intrigues me is how the ASX allows them to trade and claim as principle activities, Milling, processing and merchandising of timber, merchandising of hardware and building supplies and building contractors. I thought that they had sold their interests in the merchandising of hardware and building supplies and building contractors. If this is the case Gunns must be deceiving share buyers.

  43. Russell

    June 8, 2011 at 1:15 pm

    That would have to be the same company which cries “jobs, jobs, jobs” while sacking hundreds, even thousands, of workers while buying up opposition companies then shutting them down.

    GUNNS Ltd.

  44. Garry Stannus

    June 8, 2011 at 1:06 pm

    I’m not someone who knows about finance. But I seem to remember there was a time when Gunns were said to be worth about $1.3b, and the next Tasmanian company in value, was Roberts, and they were then about $83m. Maybe I’m remembering wrongly, but that’s what I recall.

    I don’t get it. It’s like as if they’ve all been bitten by a mad dog. Premiers past and present. And Greg L’Estrange: John Gay was exited when the share price had collapsed to 26c. Well, right now Gunns is hanging on by the fingernails at 34c. When will L’Estrange be shown the door? What is it with investors? Did the dog bite them too?

    Where are the watchdogs? ASIC?

    Its legislated role* includes and requires ASIC to: ‘maintain, facilitate and improve the performance of the financial system and entities in it’ and to ‘promote confident and informed participation by investors and consumers in the financial system’.

    ASIC has powers to investigate where it suspects breaches of the law. What is the true state of Gunns? Is the pulp mill, as John Lawrence says, an illusion, maintained to ward off pressing solvency concerns? Has there been proper disclosure by Gunns, during the years of promises and explanations? Why were the ‘non-core’ assets sold, if not to stave off insolvency?

    Gunns have sold off the farm, their motives and objectives are opaque and their announcements, both to the public and to the ASX, do not satisfy reasonable, questioning minds.

    *The Australian Securities and Investments Commission Act 2001

  45. Dr Gordon Bradbury

    June 8, 2011 at 12:44 pm

    Good article John.

    So what will be the trigger that sends Gunns to the corporate graveyard? Waiting on death row must be very stressful.

    And what of FT? Unlikely that the Government will send them to the graveyard. Will they linger on as the ghost of forest industries past?

    And with the calibre of our pollies, the forest industry really does have a bleak future. A strategic review of FT will not be enough to resurrect the industry. More like a complete review of State forest policy from the ground up. But the pollies don’t have the cajones for such an adventure. And who has the vision and ideas to create a new forest industry? See my last article re. comparison with industry in NZ.

    PS. I wonder if the TT-Line is a Gunns shareholder?

To Top