Winston Peters: Potential felled by log exports

It has become a feature of motoring on certain New Zealand roads to either follow or be confronted by motorised leviathans carrying logs in their most unprocessed state. This timber is not destined for a local sawmill or wood factory but to a port staging area, many football fields in size, and then onwards overseas where the real added value of further processing occurs, creating countless jobs and billions in wealth annually. But not for us.
In a recent article, the managing director of Rayonier NZ, a New Zealand-based forestry company, part of US-based Rayonier Inc, wrote "rather than go head to head with local sawmills or plywood factories in countries such as China, where we are unable to compete on labour costs, we are better off exporting our logs to these factories". That statement by Paul Nicholls is indeed astonishing and begs the question why Rayonier added New Zealand to its name or is that just one further element of delusion.
New Zealand is a first world country where unions are legal, where a workers' accident scheme is the law, with a minimum wage, to mention but a few advantages of living in a modern state. For the cost of a New Zealand worker, a Chinese company can employ 18 of their countrymen, face none of the requirements of running a New Zealand business and yet benefit from a deeply controlled currency where exports are concerned. So if it is the intention to argue that New Zealand can't compete then we might as well shut up shop now and export all of our resources in their most raw state, because what holds for timber can be replicated in nearly every other primary production industry.

That way we use our land and sea to benefit some other economy to the maximum while advancing our own to a minimum.
It's not as though New Zealand hasn't got the workers or the business nous to maximise added value. After all, when the Labour Party closed down West Coast sawmilling, we were one of the few countries exporting finished wood products into Scandinavia, the infrastructure for which was paid for by New Zealand taxpayers. How we are expected to go on maintaining and improving that infrastructure, including roads and ports, whilst getting a fraction back from our home-grown resources is never in the Rayonier argument ever addressed.
Instead bold claims are made that the timber industry is thriving and that "foresters are on a roll", or so says Paul Nicholls.
China and Japan are huge importers of wood and much of this is being supplied by New Zealand forests.
In this respect, the recent disaster in northern Japan and China's plan to modernise housing and business construction are having a significant effect.
Apologists for the unrealised asset value of our products claim that we don't have the local capacity to process and export at a competitive price. Three countries, Denmark, Norway and Chile, somehow do and take-home pay in Norway is more than twice that of New Zealand. That country was also virtually unfazed by the economic crisis so disastrous for most countries, including our own.
Forestry might be New Zealand's third largest export earner but that boast simply demonstrates how much more wealthy we could be if we ever re-learnt the lesson that Japan, Scandinavia and, indeed, Chile have to teach us.
Those countries understand that vertical integration, where they clip the ticket at every point of added value and sale they can, is about economic nationalism, jobs and wealth for those who have the resources in a resource-hungry world.
Like so many of New Zealand's resources, forestry has benefited from rises in commodity prices worldwide and that might be great news for those seeking a quick cash in, but is of reduced benefit to our nation's economy. Nowhere in the Rayonier argument is there a mention of our hugely inflated dollar, so harmful to exporters. And there is another irony for New Zealand because where those forests are growing are areas of the highest youth unemployment.
There was a time when our young people could expect skilled employment in timber processing. Now it seems it's cheaper having them pick up the dole for doing nothing. And when that happens, it's clear that as a nation we cannot see the wood for the trees.

- Bay of Plenty Times

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