Tough times in the timber industry

By PAM GRAHAM

Forest contractors have the most beautiful and dangerous of workplaces - and they love it.

At the end of gravel roads burrowing deep into the green plantations they climb up and down ladders at least 140 times a day to prune branches, or harvest with chainsaws and heavy hauling equipment.

But forest contractors are going through tough times. Carter Holt Harvey and Kaingaroa Timberlands, the country's two biggest forest owners, have cut back their harvest and Huaguang Forests on the East Coast has gone bust.

The boom-bust cycle was damaging the contracting industry and would reduce safety in forests, said John Stulen of the Forest Contractors Association.

His members talk of the frustration of dealing with "spread sheet loggers", their name for the frequently changing middle managers inside the big corporations.

They said they would not treat their own staff the way they are treated.

If, for example, a load of pulp wood includes a log good enough to use for lumber, they don't get paid for the load.

Contractors are responsible for sorting the good wood from the bad - the corporates see such payment terms as incentive to get the sorting right.

Carter Holt outsourced the management of forest contractors to key suppliers five years ago but contract terms keep changing, with the latest round of change starting around Christmas.

Contractors say their contract values are being cut by up to 20 per cent, Carter Holt says the average is 8 per cent to 10 per cent.

Some contractors have taken legal action against the company, which is still pending.

Stulen said contracts in Australia tended to be longer and less subject to change and this gave more certainty to contractors.

"In the past there has been a partnership feeling in the industry. At the moment, we feel we are being pressured because we are the weakest link."

Carter Holt forest chief Devon McLean said the Australian industry mostly supplied a domestic market while the export-focused New Zealand industry took a big hit from increases in freight rates and the high New Zealand dollar.

Changes in contracts were negotiated and in some cases payments were made to compensate, he said.

"The harvest level around Kinleith was always going to be reduced because we had used, in recent times, the maturity there to allow the Northland trees to get old enough to harvest.

"So there was a plan managing the estates together which would have led at some point in time to an increase in the harvest level in the north and a reduction in the central North Island even if the harvest level had stayed the same."

McLean said the company put vast effort into health and safety.

"I fully understand their comments about boom and bust but there is nothing we can do about the exchange rate going from 44USc to 71USc, and nothing we could do to predict the freight rates trebling in a very short period of time."

Returns to growers have dropped through the floor.

McLean said the company still wanted key suppliers. It had been through its forests block by block and looked at the economics of each location.

"In the process of that we have got more detailed information probably than we have ever had in the past to show the spread of costs with individual contractors."

The company was trying to get all of its contractors performing at the level of its best providers.