Northland wood processors continue on growth path

Northland’s wood processors have held their own over the past year, despite difficult conditions for the wider forestry industry.

Enterprise Northland has released the results of the third annual survey of members of the Northland Wood Processing Cluster, which was formed in 2002 to work towards collaborative solutions to barriers to the growth of the industry.

The 2003/04 survey shows that although growth rates have slowed, the majority of members have recorded growth over the past year and remain positive about the future.

The Northland Wood Processing Cluster now has 14 members, nine of which supplied information for the survey. The nine companies account for the annual processing of 409,000 cubic metres of timber, a combined turnover of $142 million, exports valued at $65 million and the employment of 530 people.

Processing logs increases their value many times over. The cluster members – sawmillers, remanufacturers and timber treatment plants – create products such as weatherboards, framing and structural timber, interior mouldings, flooring and panelling, and timber for use in high-quality furniture. In addition to the New Zealand market, export destinations include Australia, the United States, Asia, Europe and the Middle East.

Industry analysis indicates that for every job at a wood processing company, the sector supports at least two other jobs in businesses supplying goods and services to them.

The figures produced by Enterprise Northland also include year-on-year comparisons of performance, using figures from the original six cluster members which participated in the first survey in 2002.

The six members achieved a three percent increase in the volume of wood processed and five percent growth in turnover. The value of exports rose by 10 percent. Employment was the only factor to slide, by four percent.

The proportion of output exported remained relatively steady at 48 percent.

Five of the six members expected to increase the volumes of wood processed and their turnover during the next two years. These expectations have been constant over the three years of the survey. Five of the six are also planning to increase exports.

However, only half said they were likely to employ more staff in the next two years.

The project manager for the cluster, Derek Colebrook, commented: “Although there has been a lot of publicity about the effects of the downturn in international log prices, these figures show just how different the story has been for the added-value side of the business, the wood processing sector.

“Northland’s wood processors are well-managed companies which are competing successfully, both within New Zealand and overseas.

“It’s significant to see that their plans for future growth have not shifted greatly over the three years that the survey has been carried out, despite changing conditions in that time,” said Mr Colebrook.

The forestry and wood-processing industries are Northland’s third-biggest income earner.
A strategy for the two industries in Northland is currently being finalised, with the objective of ensuring that more wood processing takes place within the region, reducing the proportion of logs which are exported before value is added. The strategy is scheduled to be launched later this year.

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