19 January 2011
Media Statement

Forestry Sector demands leadership

The loss of well over 100 jobs in the sawmilling industry in one month epitomises what is happening to New Zealand's productive economy, says Labour's forestry spokesperson Stuart Nash.

At the end of last year, WPI announced that it was going to shed 80 jobs at its Tangiwhai Mill. This followed the closure of its Gisborne-based Prime sawmill, with the loss of 30 jobs, on Christmas Eve. At the same time, CHH also announced the loss of 26 jobs at its Kawerau sawmill.

The timber processing industry is heavily dependent upon export markets and the consistently high USD-NZD exchange rate is beginning to impact on the long term viability of many in the sector, said Stuart Nash.

"Once companies become unprofitable, they either remain open but shed jobs in the hope that markets will rebound and the dollar drop, or they close down. We have seen both responses recently in the forest industry.

"The fact is we are an export driven economy, and when factors outside the control of those engaged in international trade begin to significantly impact upon business profitability, then the whole economy suffers."

High prices currently being received for export logs are also forcing up the cost of logs for the domestic industry, said Stuart Nash.

"What is happening in the forest industry is that those engaged in value-added industries, like sawmillers and timber processors, are barely breaking even, whereas the commodity exporters are doing okay. We are, in effect, exporting jobs when we export raw commodity logs to countries like China.

"The time for the government to show vision regarding the forest industry, as well as the country, is well upon us, but the government continues to sit on its hands and let the country go to hell in a hand basket. It is simply not good enough", said Mr Nash.

"I recently met with one of the country's major timber product exporters who told me that with the exchange rate at these levels, they are marginal, but if it goes any higher New Zealand will lose its timber and wood products industry. This is a company that generates millions in export receipts and employs over 300 people. We simply cannot allow such companies to close, let alone effect the viability of whole industry sectors."

One of Labour's election pledges is to reform monetary policy, and thus exchange rate levels. That would provide relief to struggling exporters, said Stuart Nash.

"The Government's rhetoric around growing the size of the economy is just that: rhetoric. These job losses in the forest industry should act as a call to arms for the Government, but I guarantee we will continue to see inaction. This is unacceptable."

ENDS

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