Glass does not want to comment directly on Government policy but says it was good to see Regional Economic Development Minister Shane Jones say he was “the champion of the provinces”.
A chartered accountant for 20 years, Glass moved into the timber industry in Northland five years ago.
“We started by buying and harvesting forests for export.”
It soon became clear that they should be adding value to their products, he said.
“Why ship your products overseas for others to add value — it doesn’t make sense.”
Far East Sawmills now operates a truck fleet in Northland and the Tregoweth Sawmill in Te Kuiti, and last month it was announced it had purchased the former Prime Sawmill in Gisborne from Eastland Community Trust for an undisclosed sum.
Glass said overseas competitors such as China were starting to automate, as they were losing their comparative advantage of low-cost labour.
“They have done so well over the past 20 years that people want higher wages.’’
Those competitors were now focusing on efficiency gains.
But New Zealand had a significant advantage because power costs were 20 percent cheaper here, said Glass.
There would always be a market for wood products in places such as China and India, although Far East Sawmills would be targeting the European and United States markets — replicating the product mix from its existing mill in Te Kuiti, such as peeled veneer and appearance-grade lumber.
These high-value products would prove competitive in the market place, he said.
Being at the high-value end of the market was vital, as the cost of sea freight was not such a large component of the total value.
Primed for exportThere were many inefficiencies in exporting raw logs compared to a finished product.
Glass said raw logs were heavy, round, full of water and took up a lot of volume.
Finished products were kiln-dried, square and half the weight by volume.
“So they should be more efficient to export.”
Glass said he was confident the Gisborne mill would be a success, with a further $9 million of capital expenditure planned.
Those plans include an optimising plant, a new 5000 square-metre building and an automatic grading machine, all to be built in the near future.
Mill manager Tony Desmond, a 36-year veteran of the industry, said a sorter and another building were the last priority and would probably be built in 2020 as “an efficiency improver”.
About 50 or 60 staff now being recruited would begin work in late March or early April.
“We are very fortunate in Juken New Zealand’s (JNL) misfortune,’’ said Desmond.
There were a lot of experienced workers on the market after JNL’s announced restucturing that involved up to 100 job losses.
“But not all of the employees would come from JNL,’’ he said.
The company intended to produce around 60,000 m3 of timber a year initially, and ultimately aimed to run multiple shifts and employ up to 100 staff.
Glass said the Government’s policy of planting 1 billion trees over the next 10 years provided confidence in the long-term future of the industry.
“But the reason we moved here is that there is a maturing wood resource, especially in pruned trees.
“We need to know we have a long-term supply. That is why we chose Gisborne, and the mill at Te Kuiti 18 months ago.”
Eastland Community Trust (ECT) and the previous owner had done a good job of maintaining the former Prime mill, which had not operated since its closure and mothballing eight years ago.
Switching machinery on every six weeks or so had prevented the plant from becoming scrap metal.
He also thanked forestry companies P.F. Olsen and Hikurangi Forest Farms for their support.
Glass said if Gisborne’s rail line was reinstated it would be useful for transporting their finished products.
But most of the forestry was north of Gisborne where there was no rail line.
“So what’s the point?
“We are not fixated on rail. We’ve discounted that as a likely way of getting our wood out.
“We are focused on working with Port Eastland around coastal shipping.
“In the meantime, like everyone else, we will use trucks.”
The next stages for the Prime siteTen days ago the Government announced a $200,000 grant to “kick-start” the $20 million Prime Wood Processing Centre of Excellence. While Eastland Community Trust CEO Gavin Murphy welcomes the news, the funds and the Government’s commitment to regional economic development, he says the community had already kick-started Prime “and we should all be damn proud of doing so”.
ECT has an eight-stage master plan for the wood processing centre of excellence. Last month’s sale of the sawmill plant to Far East Sawmills and ECT’s earlier investment of $4.7 million in the Wood Engineering Technology (WET) joint venture represent the completion of stages one and two. Between them they will create an estimated 100 of the 120 jobs ECT expected to generate on-site when it purchased the mothballed sawmill and 22.3-hectare site three years ago for $7.4m.
The trust is now focused on realising the remaining opportunities for the Prime Wood Processing Centre of Excellence.
Stage three is already under way and sees ECT seeking an environmentally-sustainable wood modification operation, which turns sawn pine lumber into high-value architectural products. ECT subsidiary Activate Tairawhiti, the district’s economic development agency, is in advanced discussions with a wood processor interested in establishing its business at Prime.
Targeting 170 jobs now“The region’s radiata pine stocks are an ideal substrate for wood modification, which generally involves treating sapwood to improve its hardness and density,” says Mr Murphy.
“Over the past several years there have been significant developments in wood modification technologies, especially in the commercial sector, and our region is well-placed to support the growing demand for thermally-modified wood products both nationally and globally.”
As well as the eventual expansion of WET Gisborne Ltd operations, Mr Murphy says there is also room for a particle board or medium-density fibreboard operation, and a combined heat and power plant to support the growth.
On the back of these plans, the milestone for jobs has moved, with a figure closer to 170 now likely.
“The $200,000 grant towards the Prime Wood Processing Centre of Excellence will enable us to put together business cases that motivate central government to co-invest in the region at an even higher level, accelerate development, and enable our community to eek every bit of value out of Prime,” he says.
“This is an exciting position to be in and one we certainly would not be in had we not invested in the site. We’ve created this opportunity as a community and, as a community, we will continue to realise the potential of this increasingly strategic community asset,” he says.
