Forestry woes, worker shortages, China lockdown, and log exporters worried if NZ dollar strengthens

A timber mill boss who has about 180 employees is back on the tools because he desperately needs another 30 full-time workers.

On Friday the sawmill could not operate due to the dire shortage while productivity had nose-dived by 25 per cent, a scenario which was affecting businesses across New Zealand, he says.

This was just one dilemma the forestry industry was facing amid a ”perfect storm” with slower log vessel loading times at the Port of Tauranga and concerns over China’s Covid lockdown policy – which was the sector’s biggest export market.

PukePine general manager Jeff Tanner said the sawmill at Te Puke could not run on Friday because of staff shortages.

He said productivity was down dramatically and it lost a full week in March due to people being off with Covid and having to self-isolate. Shifts had dropped from two to one and a half.

”So we have lost an enormous amount of production… about 25 per cent as a result of that.”

Tanner said he needed 30 more permanent employees, and even though it had increased pay rates, filling the gaps was a struggle: ”it’s just crazy”.

”We are not looking for anyone particularly experienced – if timber machinists come along that is great. But for the most part, we just want people to stack timber and operate simple machines.”

He had also swapped working in the office to helping out in the sawmill or in distribution because ”we are just so short”.

Demand for timber was still outstripping supply and other challenges included ”being screamed at” by customers due to the truck driver shortage, which had held up deliveries and the increasing price of wood.

”We obviously rely on trucks to get wood out of the gate. We are 25 per cent short of trucks and can’t get those trucks to get materials to our customers.”

In his estimation, due to two timber price hikes and another one due in May materials had gone up by 25 per cent in one year.

Red Stag Group chief executive Marty Verry said it was still seeing strong demand and the industry had a good pipeline for the next 12 months.

The company was continuously recruiting and would need 15 new workers in the next three months.

Mahi Rākau Forest Management’s health, safety, training and recruitment co-ordinator Joe Taute said the silviculture sector was also up against it and he was looking for 30 workers.

He said finding people who were drug-free and would show up was hard.

Taute said in his view tree planting programmes could be under threat alongside the Government’s aim to plant one billion trees by 2028.

”Everyone is under pressure. If we can’t get trees in the ground harvesters won’t have them to cut down.”

It was also hoping to bring in migrants as it became increasingly difficult to get Kiwis.

Forest Industry Contractors Association chief executive Prue Younger said the harvesting side of the industry had stabilised following a variation of shutdowns in December due to falling log prices.

”I wouldn’t say we are back to full speed but we are back to some normality because the markets are stable.”

An exemption by the Government meant 300 migrant workers were now allowed into the country, which would help with the planting season which started in May.

”So that’s been a bit of a coup for us.”

Forest 360 director Marcus Musson said the lockdowns in China were problematic and demand for logs was falling, despite the sales price there being higher than the long-run average.

However, that was being eroded by fuel and shipping costs which were ”completely obliterating it”.

”The last couple of months have been quite erratic in terms of prices so it’s anyone’s guess where it’s going to head.

”So once again it’s probably another perfect storm.”

Musson said the average export price at the moment was six to seven per cent below the three-year average but he acknowledged that it fluctuated hugely, sometimes by 50 to 60 per cent.

He preferred to err on the side of optimism but said there were so many things up in the air, including the possibility that Russia could divert its wood to China as Europe wasn’t taking it.

Scott Downs, from PF Olsen, said fundamentally he believed New Zealand was still in a good position as the world was short of timber.

But if the New Zealand dollar did strengthen against the US it meant less return for growers.

”So that is a bit scary because we sell and pay in US dollars and then it’s converted back.”

Downs said all forest owners wanted to supply the domestic market first ”but they can only take so much and they can’t take all the grades”.

”We do need export markets and can’t survive without them.”

Craigs Investment Partners head of private wealth research Mark Lister said the NZ dollar had been ”going sideways for the best part of this year”.

He said it was not particularly strong at the moment but it could push higher over the next six to 12 months.

”Interest rates have a big factor on where the currency is, so if our interest rates go up faster than other countries then our dollar could go up.”

A Port of Tauranga spokeswoman said March log export volumes were about 25 ahead compared with last March, but fairly consistent with the five-year average.

Storage was busy but not full. However, vessels were loading slower than usual primarily due to labour shortages, she said.

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