Big boost in harvest to translate into overseas sales but sector needs locals to use timber

Forestry and wood products put $4 billion into the economy and exports could soar during the next 20 years, according to NZ Wood.

A report by the Institute of Economic Research, commissioned by NZ Wood for the Wood Council of New Zealand, said that in the year to March the combined exports of forestry and wood-related products earned $4.6 billion, the sector making a direct contribution to gross domestic product of $4 billion.

NZ Wood said the "wall of wood" available to harvest early next decade gave the potential for exports to increase by 40 per cent over the next two decades.

Wood Council chairman Doug Ducker said the forest and wood value chain was on a growth trajectory and new strategies were needed to ensure optimal economic gains were realised locally and overseas.


"If we look at the domestic market, we need to be mindful that New Zealanders have options in terms of the construction materials they select," Ducker said.

"If we get our supply chain right, those involved in architecture, engineering and property development represent some of the key influencers in terms of how the sector increases its contribution to GDP."

New Zealand was at the cutting edge of breakthroughs in engineering excellence and in the application of engineered timber, he said.

"On this basis, the forest and wood sector offers the potential to lift its manufacturing base but this won't happen without key influencers being enabled to specify such products."

Research among architects and engineers, who attended seminars co-ordinated by NZ Wood, had highlighted a lack of knowledge and outdated standards as key drawbacks limiting the uptake of engineered timber.

An advisory centre had been established to help improve local knowledge of options, particularly for engineered timber, NZ Wood said. However, a critical issue was the need to update building standards to make them relevant to the materials that were available.

The NZIER report said the forestry and wood processing sectors employed nearly 31,800 people in 2010, which accounted for 1.7 per cent of employment nationally.

Job numbers had fallen in the past decade but the GDP input of the sector had risen, which suggested considerable productivity improvement.

NZ Wood chairman Lees Seymour said about half the harvest in the year ended March was exported as logs.

"There's not a person in the forest industry or in New Zealand that doesn't want to do more of that [processing in New Zealand]," Seymour said.

Parts of the domestic industry which processed logs struggled to compete in export markets and there was the compounding effect of the exchange rate reducing returns on exports sales.

However, overall the future for the sector looked positive, Seymour said.

"If you look at the trends that we've had in recent years in terms of harvest volumes increasing, and export volumes increasing, it softened a little bit with a soft domestic market.

"I think overall, you look at the forestry industry and there's certainly a bright future there."


Forestry products exports, year ended June

* China $1.4b

* Australia $825m

* Japan $520m

* Korea $460m

* India $226m

* United States $209m

* Total $4.5b

Source: MAF, provisional data