Jobs will be created from financial lifeline thrown to Rotorua and Bay of Plenty timber firms

Regional Economic Development Minister Shane Jones and Redstag Group chief executive Marty Verry. Photo / File

Rotorua timber businesses are among four Bay of Plenty operations that will get investments totalling nearly $22 million through the Provincial Growth Fund.

The boost will create jobs and cement the futures of the businesses struck with financial blows following the Covid-19 pandemic.

The funding was announced today by Regional Economic Development Minister Shane Jones.

Rotorua-based sawmill Red Stag Wood Solutions will receive a $15 million loan to develop an engineered wood products manufacturing facility.

"Red Stag is a major employer in the region and a well-respected member of the industry," Jones said.

"This funding will enable the company to bring forward by two to three years construction of the facility which will focus on the production of cross-laminated timber."

Its products will be used in the construction of 2000 new houses, which is part of the Government housing initiatives.

"This is going to provide significant employment to an area in need. It is estimated that the project will initially create 30 jobs through construction and is expected to employ 62 people when completed," Jones said.

Red Stag Timber chief executive Marty Verry said the funding was great news for Rotorua, New Zealand and the planet as engineers and architects increasingly switch to mass timber to address the climate emergency.

"Having a scale operation centrally located in the North Island will mean New Zealand will have its own locally-owned source of cost-effective cross laminated timber.

"We're already fielding a lot of project inquiry and the loan means we will be ready to supply the demand from the first few months of next year."

Another Rotorua-based timber manufacturing company, KLC Ltd, will get a $3 million support package that will support around 100 jobs and create 20 new jobs in a low socioeconomic area. KLC is one of the largest employers in Kaingaroa and Murupara.

"The loan to KLC Ltd will help the company weather the storm created by Covid-19 and provide more jobs in one of the areas most at risk," Jones said.

KLC was approached for comment.

Edgecumbe-based Tunnicliffe Timber Solutions will receive $2.25 million to help the business expand, creating an additional 30 jobs over the next 18 months.

"The investment in Tunnicliffe Timber Solutions will enable the company to buy new machinery and create a new market locally for high-quality thermally modified doors and windows."

Tunnicliffe will also receive a Te Ara Mahi grant of $314,000 for an education programme to develop and upskill employees in sustainable manufacturing. Te Ara Mahi is a fund within the PGF to specifically support regional employment through the development of skills and capability.

Tunnicliffe managing director Scott McCabe said the company was "absolutely grateful" it was able to get funding support.

"Tunnicliffe's has been part of the Edgecumbe and Eastern Bay fo Plenty community for over 90 years and the PGF funding will enable us to be a part of it for many years to come."

McCabe said the funding would help Tunnicliffe's pivot into environmentally sustainable thermally modified timber products which was the way of the future.

"We'll be upgrading our machinery and purchasing state of the art timber modification systems to be able to provide environmentally sustainable timber products for customers and markets."

Te Puke-based Pukepine Sawmills will get a loan of $1.6 million to increase production. This will create an additional 15 jobs.

Pukepine is one of the largest permanent employers in Te Puke.

"The PGF loan will not only create more jobs but bring an estimated $9 million into the region each year," Jones said.

"A number of sawmills have closed or gone into receivership. We are not only helping these businesses secure workers' jobs, they will also be able to take on more employees. We need to boost the industries already supporting their communities to ensure the regions are able to weather this economic storm."

Pukepine in Te Puke is one of the town's largest employers. Photo / File

Pukepine general manager Jeff Tanner said it applied for the funds as conditions were tight, sawmills were closing and banks were taking a conservative approach to the industry.

"We could see opportunity but we needed to ensure our cashflow could handle a growth push. During the course of the application Covid occurred and it became even more important to put in place cashflow support so that we could take an optimistic view rather than retrench.

"We have pushed ahead with employing more people to increase productivity and have already employed more than the 15 that were proposed."

He said the funding had enabled them to grow through uncertain times without putting the company into distress through cash flow issues.

"In terms of employment, while unemployment is still low right now and it is challenging to find people to fill roles, economists are forecasting a rise in unemployment later this year and into next year. By employing people now, more funds are put into our local economy helping to insulate against this rise in unemployment."