Northland building industry leaders are warning there'll be delays in constructing new homes and commercial premises due to a nationwide timber shortage.
Recent announcements from Carter Holt Harvey that it is halting the supply of structural timber products to major retailers means people currently building should expect major delays, according to Northlanders in the industry.
"There are going to be longer delays and delays create real problems," said managing director of Northland's Trigg Construction and director of the Registered Master Builders Association, Darrell Trigg.
Carter Holt Harvey announced last week it would no longer provide building supplies retailers Mitre 10 and ITM with structural timber products but would continue to supply Fletcher Building-owned PlaceMakers and Carter Holt Harvey subsidiary Carters.
With many anticipating delays in construction times, builders are anxious about how the announcements will affect their businesses. The anxiety is especially prevalent among those in the commercial construction industry.
"In commercial, there may be liquidated damages due to the delays. Well, who pays for the delays? The people that I've spoken to are all a bit nervous about it and are questioning what it means for them," said Trigg.
The Northland-based operator has more than 26 years' experience in the building industry and said unprecedented demand for construction materials both domestically and globally has led to a severe shortage of timber products for supply.
"It's a shortage of logs, we're sending logs overseas ... There's going to be more pressure on domestic log supplies because they are going to get more money sending them overseas unprocessed," Trigg says.
In recent months, New Zealand sawmills have been under pressure to supply a booming domestic timber market, due in most part due to the Government's drive to build new homes.
According to managing director of Whangārei's Rosvall Sawmill, Mark Hansen, Aotearoa went from 28,000 house starts down to 10,000 after the global financial crisis. Over the last five years, Hansen said, house starts have again increased, this time to around 38,000.
"The industry is running out of capacity in the short term. There is a shortage across the industry. We might be producing 90 or 95 per cent of market demand but there's a shortage," said Hansen.
"If we push housing too quickly and not give the industry time to respond, we're going to continue to see shortages for at least a year ... When you crank us back to 10,000 house starts and then push us up to 40,000, you're going to see some cracks appear."
The booming domestic market coupled with increased global demand and prices has left log exporters between a rock and a hard place. Last month, the total value of all log exports was $305 million, a 48 per cent increase compared to February 2020.
Increased demand for logs in markets such as China, where other suppliers such as Australia and Europe have encountered difficulties in supply, has been advantageous for New Zealand exporters. Over a five-day period, the Chinese market alone is consuming more logs than are exported out of the South Island in a month.
"The market needs more than they [Carter Holt Harvey] can produce. The market demand has gone up and they've fallen behind," Hansen said.
Although some have blamed log producers for the shortage, Hansen says the supply of logs is steady. Instead, he says the announcement is due to Carter Holt Harvey's inability to process enough raw logs into timber products.
"I think that's unfair. I think most mills are getting the logs they need, but we have to pay good money for them," Hansen said.
Five of the country's largest timber mills, including one in Whangārei, have closed over the last two years. These mills produced around 400,000 cubic metres of timber. A major factor cited in these closures was uncertainty around the supply of logs.
"Northland has a unique situation. Our crop was out of balance and we were harvesting five million tonnes, faster than it was growing. Now we're harvesting around 3 million tonnes and within a couple of years, we're forecasted to get about 2.3 million tonnes or half of what we were harvesting," said Hansen.
Due to this forecasted decrease in the Northland region, Hansen says, Carter Holt Harvey decided to close the Whangārei-based mill and turn its focus to Kawerau, where a 12-million-tonne harvest is under way. The decision appears to have severely affected the company's ability to process and produce timber supplies, leaving many in the industry with unanswered questions.