The country's sawmills have joined other businesses infected by coronavirus fallout as their log supplies start to dry up - but a recent string of closures is unrelated to the sickness that is scaring the world, says the industry.
This week, Te Kuiti's 80-year-old RH Tregoweth (RHT) sawmill told staff it was partially closing with the loss of about 35 of the 48 jobs at the site.
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Further up the highway at Putaruru last month, Pacific Pine Industries was put into receivership with the loss of 60 jobs.
In Whangārei this week, Carter Holt Harvey confirmed it would close its sawmill there, with the loss of 111 jobs. The closure was expected as the operation had experienced log shortages for some time.
And in December, Claymark Industries, New Zealand's largest manufacturer of premium pine products, went into receivership after a failed sale. The company, which has operations in Bay of Plenty, Thames and Auckland, has 510 staff and is now on the market.
Industry insiders reject any suggestion that the processing side of New Zealand's $7 billion-plus forestry industry is in trouble, saying the closures are due to different, individual reasons and not to the state of the market.
However a sector-wide headache is around the corner if tree harvesting - paralysed by big delays in log shipments to China because of workplace shutdowns there - does not resume soon. About 80 per cent of all New Zealand log exports go to China.
Kiwi Lumber managing director Adam Gresham, whose company employs nearly 300 people at three mills in the Waikato and Wairarapa, says it has enough log supply for two more weeks.
A continuing log shortage could prevent the country's timber processing mills from being able to run at full capacity, he says. Export logs are piling up at ports but aren't a total solution because they are generally different grades to what sawmillers need, though Gresham's staff did visit Napier Port this week to try to source logs.
Meanwhile, the recent sawmill closures are being attributed to various causes, including: more processing capacity than log supply; a price premium on logs for domestic use; the difficulty of small, aged sawmills to fund upgrades and new technology; and issues with economies of scale.
Wade Glass, director of Te Kuiti's RHT sawmill owner Spectrum Group, says high prices for central North Island-sourced pruned logs have forced the closure of the log-to-lumber processing side of the business. The operation that removes visual defects from wood will continue.
"The short version is that the cost structure in Te Kuiti is too high. With high log costs in the central North Island, we just can't continue to pay these costs."
He claims the company was being forced to pay a 20-30 per cent premium to export log prices and has the spreadsheet analysis to prove it.
Spectrum bought RHT in late 2016. The group also owns Gisborne's Far East Sawmill, which started operations in 2018 at the mothballed former Prime Sawmill. It employs about 48 people, including 12 contractors, Glass says. The sawmill was bought from the Eastland Community Trust for an undisclosed sum. The trust, now called the Tairāwhiti Trust, still owns the land and is a 10 per cent shareholder in Spectrum.
Spectrum also owns Global Forest Products, which sells logs to China and India. In March last year the group bought the shut-down Waverley Sawmills site near Whanganui but has never operated it. A proposal for a new $30m facility on the site is still being worked on.
Glass isn't keen to talk about the Gisborne operation's future.
"It has a lot of the same issues as Te Kuiti does in that log costs are too high, but we think we can work with forest owners there to get a better outcome. It has a slightly different configuration so long term we think we can make that more efficient than the Te Kuiti mill.
"They all have their own challenges - I don't want to talk about Gisborne and I specially don't want to talk about log prices."
He says the Te Kuiti mill's proximity to central North Island forests hasn't reduced the cost of logs against those trucked to the Port of Tauranga for export.
"Let's say a pruned log is selling for $180 at the Port of Tauranga. It's cost them (the forest owner) $30 to cart it from their forest to the port. So the forest gate revenue is $180 minus $30, which is $150. In an ideal world they'll say 'it's only $10 to go to Tregoweth mill, it's only 10km'.
"But what they're saying is 'we're going to charge you $190 and if you don't like it somebody else will pay it'. They're playing domestic mills off against each other."
Kiwi Lumber's Gresham, who also has harvesting and marketing business interests, agrees premiums are being charged but they apply to pruned logs, not saw logs for framing timber.
He says forest owners "probably are" playing sawmills off against each other in the competition for supply.
"The reality is in the central North Island prune [log] mills had to change the log type they were cutting or there had to be some rationalisation. The supply of logs had to come into balance with the amount for processing."
Gresham says Kiwi Lumber is "having a decent year" and wood processing is no tougher than any other manufacturing sector in primary industry.
"It's a capital intensive industry where you have to keep making investment in your plant to maintain your recoveries and efficiencies. You have to be at the top of your game to make it work."
That said, Gresham signed a recent open letter from more than 50 industry chief executives, representing 10,000 employees, which calls on the Government to honour its 2017 election promise to implement a wood procurement policy for government buildings.
The election pledge was for the Government to require all state-funded proposals for new buildings up to four storeys high to have "a build-in-wood" option at the initial concept stage.
The letter said 10 per cent of New Zealand's climate change emissions could be easily addressed by converting building structures from "polluting steel and concrete to mass wood ..."
Products are available, engineers and architects are using them and the sector has invested on the basis of the policy's promise. The letter said implementation of the policy, known in the industry as the wood preference policy, was "urgently needed to support the wood processing sector".
"We are seeing a spate of mill closures with more to come. Hundreds of jobs are being lost in the regions, many of which are a result of the delay in implementing this policy.
"Meanwhile foresters want a stronger domestic market given fears that long-term, China will increasingly be self-sufficient or over-supplied by the plethora of billion tree programmes and cheap climate change-affected forests worldwide," the letter said, concluding that the sector would co-ordinate to be a voter block at this year's election if necessary.
The letter said the hold-up was reportedly with the Labour Party ministers responsible: David Parker and Phil Twyford.
Forestry and Regional Economic Development Minister Shane Jones told the Herald that Twyford, as Minister of Economic Development, was working on a forestry industry strategy.
"That's being put together by his MBIE officials and Te Uru Rākau (Forestry NZ) and covers a whole range of issues including tax treatment of capital assets and incentives to expand the number of entrants to the sector, and genetics to improve wood quality."
Asked about progress on the wood preference policy and to comment on alleged price premiums on domestic market logs, Jones said as part of the strategy work, Te Uru Rākau was also developing a Cabinet paper proposing a registration scheme for log exporters.
"[It would] require all log mongers trading logs internationally to be registered and a key feature of maintaining their registration will be demonstrating that logs, before they are sold overseas, are offered to the New Zealand domestic industry."
Jones says the paper will be presented to Cabinet before the election.
However, the procurement policy part of the wood preference pledge is "still outstanding", he says.
It's being managed by MBIE "under the leadership of Phil Twyford", says Jones.
"We're continuing to work with MBIE to bring back [to Cabinet] options how the procurement policy can work to give a higher accent and emphasis to wood, which in itself should drive more emphasis to domestic investment."
On the registration plan, Jones says he had hoped the industry would have found a solution itself to the tension between the price for export logs and those for domestic use.
"The forest sector tends to rely a lot on forest consultants and specialists and it's often easier for them to sell internationally and feel no obligation whatsoever to support New Zealand industry. Registration will bring that thinking to a head.
"There's a rich irony in the fact that a forest sector excessively reliant on the Chinese trade udder is now suffering an enormous problem [with coronavirus]. The sad thing is the casualties, the men and women in harvesting and logistics."
Sawmill industry group the NZ Timber Industry Federation says lack of a consistent log supply and a labour shortage are the current main issues.
"Some will say there are plenty of logs available but it ebbs and flows," says director Kevin Hing.
"It's difficult to run a business with no certainty of supply. There are only lots of logs available until the next log boat comes in. What we'd like to see is secure supply for six months or a year - a guaranteed supply."
That would be up to sawmillers and forest owners to negotiate, Hing says, but bargaining strength isn't usually on the side of sawmillers, who tend to be smaller customers.
To his knowledge, he says, there is generally price parity between logs for export and domestic use.
"There are no real issues there but the price does fluctuate - but that affects export prices."
Hing notes there are price differences between log types - for example, between a pruned log and a knotty one.
While logic suggests a high number of building consents ensures a healthy sawmill sector, not all wood processors produce framing timber, he says.
This is a commodity product that tends to be produced by large players, whereas many sawmills produce treated timber for fencing, decking and outdoor products, while others make packing products for primary industries such as dairy and horticulture.
About 45 per cent of all sawmill production is exported, Hing says.
Forest Owners Association spokesman Don Carson says log exporters like to have a domestic market as well because they value a sales option.
"We are highly exposed in our log trade to China - the coronavirus is showing that has the potential to be pretty disastrous. Eighty per cent of our logs go to China and 50 per cent of our market is in China. Stack that up against dairy, which is only 30 per cent."
While New Zealand's total forest harvest has been rising - it was 37 million cubic metres last year, 62 per cent of which was exported according to Government figures - domestic log consumption has held "remarkably consistent" for several years, at about 15 million cubic metres a year, says Carson.
About 16 per cent of all logs harvested annually in New Zealand end up as product which remains here, says Carson. (With dairying, only 5 per cent of total milk production stays at home.)
Construction cycles tend to drive the fortunes of that 16 per cent slice, he says.
"But probably the overwhelming factor is scales and economies. The Te Kuiti plant had been there for donkey's ages. I suspect a process of losing small provincial mills which do not have capacity ..."
More than some industries, the wood industry lent itself to automation, resulting in a big investment in technology and a smaller one in humans, Carson says.
"If we were losing domestic production you would say there is something institutionally wrong and we have to look at the structure of things. But while we lose mills and maintain that production, it would tend to indicate the efficiency and scale of those mills is the deciding factor."
Forestry by the numbers:
• Export value: $6.9 billion (2019)
• Contribution to GDP: $3.5b
• Total harvest: 37 million cubic metres (62% exported)
• Sawn timber production: 4.4m cubic metres
• Wood panel production: 1.8m cubic metres
• Wood pulp: 1.4m tonnes
• Processing sector exports 45% of total production
(Source: MPI, Forest Owners Assn; Timber Industry Fed)