Kaingaroa Layoff Announcement Hits Hard

12 August 2004

Forest Industry Contractors Association

Kaingaroa Timberlands Layoff Announcement Hits Hard

Today’s announcement that the reduction in harvest levels from 2.4 to 2.0 million cubic metres of wood by Kaingaroa Timberlands has been achieved means up to 70 job losses. Earlier this week the contractors who tendered for 11 harvest packages were notified of the outcome of the tender process used by Kaingaroa Timberlands to select the contractors required for the reduced level of harvest.

Seven contractors employing 86 people who currently work for Kaingaroa Timberlands are have missed out on new contracts as a result of the reduction in harvest levels. While to help mitigate these losses the company will be offering alternative harvesting work and it is expected that this will provide work for only 20 affected staff.

Chief Executive of the Forest Industry Contractors Association, John Stulen said today “Our concerns are for all those forest contractors and partners and families, who, through no fault of their own, will now find themselves the victims of the flow-on effects from past blunders – bad, short-term decisions in the recent past by short-sighted previous corporate forest owners. The Asian crisis was not long ago in people’s memories and this is yet another blow the national contractor base did not need.” “Many of these contractors have grown their businesses borrowing millions of dollars to become key suppliers under the illusion that harvest volume increases of recent years were both sustainable and under careful stewardship by the forest owners. Now these contractors can only stare at their idle gear and ballooning interest costs.”

“We are not at all critical of the current management of Kaingaroa Timberlands, they are merely dealing with the legacy of past owners,” Stulen is quick to point out, “they are trying to make the best of a decimated forest which they purchased. We have a lot of respect for their tender processes, as it would have been a difficult balancing act. But the consequences of the cuts will have a dire long term effect on the industry and the Rotorua economy.”

Mr Stulen added, “FICA applauds many of the actions the new breed of forest owners who are making sound long-term forest decisions. The smart forest owners are those looking to buy forests right now … at the right price.”

At the heart of the problem Stulen says is forest management executives who acted to gain the best for their own bonus packages, rather than striving to maintain long-term shareholder value in public forest companies. What is even sadder is that the increased corporate harvest volumes of recent years did not lift shareholder returns even though the volumes being processed were well-ahead of sustainable cuts.

“The sooner we can put this sorry chapter of corporate stewardship behind us and move to a sustainable industry, focussed on long term value the better,” said Mr Stulen.

ENDS

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