New Zealand sawmills face tough times, industry warns or further closures

Every time a ship leaves New Zealand loaded with raw logs the jobs of 38 sawmill workers for a year go down the tubes, industry spokesman Dr Jon Tanner says.

The chief executive of the Wood Processing and Manufacturing Association (WPMA) has been lobbying Government to improve conditions for wood processors since March last year.

"One of those ships can carry 200,000 tonnes of logs, enough to keep a medium-sized sawmill employing 38 people working for a year," he said.

He heard about the closure of Waverley Sawmills and loss of 65 jobs, and said the main problem was the high prices China is paying for logs.

Log prices usually go up and down, but are increasing in "a very unusual and longlasting cycle" at present.

"You are going to get casualties like this right across the country."

Wood processing is very highly subsidised across the world, he said. It's prohibited under international trade law, but lots of countries do it.

A double whammy can happen for New Zealand, when finished products, with artificially low prices due to the subsidies, are imported and further undermine products made here.

China is one of the countries subsidising wood processing, Tanner said, despite the free trade agreement it has with New Zealand. The World Trade Organisation should be able to police this, but is hamstrung by the way the United States is treating it.

The only way the New Zealand government can help struggling sawmills is by reducing their other expenses to compensate for high log prices. It could reduce taxes by increase depreciation rates, for example.

First Union divisional secretary Jared Abbott would like even more government intervention. One measure could be a policy to use only New Zealand timber for big projects like Kiwibuild.

Government could also limit log export and keep the ownership of forests in New Zealand hands, he said.

But Tanner said log exports can't be stopped, and the Overseas Investment Office has failed to ensure overseas owners of forests commit to supplying local sawmills - "a missed opportunity". Domestic legislation is what's needed, he believes.

The Minister for Trade and Export Growth, David Parker, has in inquiry into the wood processing situation at present.

Both Tanner and Abbott say New Zealand could get more value from its wood by processing it into high value products such as furniture, cellulose suitable for making plastic or ethanol for fuel.

But mills making such products are highly automated and expensive to build. Companies would risk investing more money in them if they could be confident of the long -term environment they were in, Tanner said.

At the moment regional employment and a low-carbon economy are both being undermined by the subsidies, he said.

Abbott agrees.

"While we are shipping raw logs overseas we are buying processed wood from overseas. It hurts the local economy and is also environmentally crazy with all that transport."