Forest Products Industry

New Zealand’s Tertiary Education Union is slamming cuts currently proposed that if confirmed, would see up to 20 jobs lost and the end of highly valued courses that industry leaders say they can’t do without. Source: Timberbiz Courses at risk across campuses in Taupō, Tokoroa, Rotorua, Tauranga and Whakatane include Apiculture; Forestry; Forest Management; Timber Machining and Pest Operations among many others. If the proposal goes ahead, it may result in the closure of the Waipa campus – a dedicated training facility that currently operates a working wood manufacturing plant. “Our Waipa campus is the only facility of its kind in the Southern Hemisphere, and once it’s gone it will never come back. If it closes there will be no timber machining or saw doctoring block courses left in Aotearoa,” Kerry Parker, a Senior Academic Staff Member in Forestry and Wood Manufacturing said. “Industry leaders are distraught. They strongly prefer the on-campus delivery we provide over on-the-job training. They describe Toi Ohomai graduates as tradespeople whereas those trained on-site are more operators. And they are angry there has been no consultation or communication with them. “I train students who have come from Invercargill right up to Kaitaia. About 40 of them are currently part way through their qualifications, some with three years to go to complete their trade, and they are really upset about the possibility of being left out to dry.” Additional proposals have the rumour mill spinning that Taupō campus, in the heart of the North Island, is also at risk of closure. TEU’s Assistant National Secretary – Industrial, Daniel Benson-Guiu says that educational provision across Aotearoa is at risk and campuses outside the big cities, like the Taupō campus, is a case in point. “We need institutional leaders to come clean about their plans – and importantly they should be consulting early with Iwi, industry, local councils and affected communities. These campuses, and the training that comes out of them, are the lifeblood of regional New Zealand,” he said. “These proposals also come at a time when there is no clarity from the Minister of Tertiary Education and Skills about what the future holds for Te Pūkenga. So, decisions like this being made now will be inherited by future institutions and will result in a weaker vocational education and training system.” TEU has received 18 letters of support from forestry industry leaders strongly advocating for the retention of the current course offerings at Waipa.

New Forests has acquired almost 91,000 acres of forest in Oklahoma, in the US South from Rayonier, Rayonier also sold 109,000 acres on the Olympic Peninsula in northwest Washington. Source: Timberbiz This means that New Forests has expanded its portfolio in the US. The company already has forestry assets in California and has made investments in the Klamath River watershed. The Trinity Headwaters Forest is an almost 11,000-acre property situated in northern California, and forms part of New Forests’ 265,000-acre Klamath Forest estate portfolio. Its McCloud Forest is a 19,000-acre forest in the Mount Shasta region of California, made up of mixed conifers including true fir, Douglas fir, and Ponderosa pine In the past New Forests acquired several forest properties in the Klamath River watershed, including the Hilt-Siskiyou Forest and the Trinity Headwaters Forest New Forests said in a statement its new forest assets have a “wealth of biodiversity that includes recovering indicator species such as the American black bear.” The new assets are located near other related industries such as sawmills and pulp and paper mills. “This investment is well aligned with our underlying investment thesis that sustainable forest management in North America has the potential to deliver attractive investor returns,” Jeff Briggs, MD of North America at New Forests said. “We believe a forest management strategy that sequesters additional carbon compared to past management practices while producing a sustainable supply of wood fibre, has the potential to be successful across the US, and in particular the US South, a geography that presents substantial opportunity for New Forests and our investors.”

Turning native hardwood timber forests used for selective harvesting into carbon storage credits has been slammed by a leading native hardwood timber expert as a “dangerous” attempt to close a viable industry. Source: Timberbiz REEF Research Forestry Awareness Program chair Mr Noel Atkins regards this latest proposition as a ludicrous attack on the highly regulated Australian native hardwood timber sector, essential to sourcing hardwood timber for the country’s growing housing, construction, mining, railways and infrastructure needs. “Native hardwood timber is the only renewable sustainable resource that already captures and stores carbon,” Mr Noel Atkins said. “Taking a lock up and leave approach to forests is extremely dangerous.” “Unmanaged forests cause catastrophic bush fires, causing death to people and animals and destroys property. Setting aside the forests for carbon credits under a yet to be proven method of measurement sounds good, but it is a hair brained idea set to raise a paltry $100 million per annum. “The native hardwood industry in NSW currently generates more than $2.9 billion each year and provides 8900 full time jobs (Ernst and Young Report 2023) and up to 22,000 indirect jobs in the NSW regions. “Australia already imports $5 billion worth of hardwood timber, often from developing countries that don’t have the strict regulatory framework to protect fauna such as koalas and sugar gliders as we do here. “This short-sighted carbon credit proposal would see the decimation of the native hardwood industry in NSW and the rise of imported hardwood timber to nearly $8 billion each year, smashing an Australian regional industry, putting fauna at extreme risk and throwing productive Australians on the scrap heap.” REEF Research argues the vast quantity of timber in National parks could be used for carbon credits. “Closing native hardwood timber forests for selective harvesting would be short sighted when it is sustainable, promotes healthy ecosystems and is the ultimate renewable,” Mr Noel Atkins said. “The fact is, koalas prefer to live in managed forests due to the succulent leaves of new trees, and CSIRO data shows their population is on the rise in NSW!” The native hardwood timber industry only has access to 12% of the total public forest estate with 88% controlled in National parks and reserves. The 12% comprises approximately two million hectares of which around half is not available to harvesting due to inaccessible terrain, zoning restrictions and regulations to protect riparian zones, waterways, seed trees, old growth trees, habitat trees flora and fauna. Less than 1% of the public forest estate is harvested each year, supervised by the NSW Environmental Protection Agency (EPA) complying with the Integrated Forest Operations Agreement (IFOA). REEF Research is committed to the native hardwood forest sector and improving its environmental footprint, protecting jobs in the region and delivering economic benefits. REEF represents and supports native hardwood timber businesses   and communities operating in the NSW regions.

New recruits have joined OneFortyOne’s Summer Fire Crew and have undertaken their practical skills training this week. Source: Timberbiz Over the past three days, the 10 new recruits were trained in practical skills that covered four-person canvas hose lay, operation of fire tankers, managing grass fires, and using radios effectively. Source: The Border Watch The crew included employees of OneFortyOne, and those contracted through Gildera Forestry Services and A&M Contracting. More than 100 people make up OneFortyOne’s fire organisation including firefighters, supervisors and a logistical support team. The new recruits were supported by OneFortyOne fire crew members Phil van der Hoek, Dane Handreck and Chloe Mackenzie. OneFortyOne fire manager Justin Cook said the OneFortyOne crew attends a range of fires and support other brigades. “OneFortyOne attends more grass fires than we do plantation fires, we will attend fires that are close to our plantation and assist the CFS to put out the fire in a paddock, before it reaches the plantation,” he said. “So that’s important to the training.” Mr Cook said fire risk is calculated daily, and crews respond accordingly. “Every day during the fire season OneFortyOne declares fire reaction, based on the fire risk for the day. “And depending on the fire reaction, we can have four, seven or eight fire tankers on standby.” Fires can be reported by OneFortyOne’s fire tower networks, a notification from the CFS or a phone call from a member of the public. The regional duty officer is then responsible for dispatching resources to a fire. “We don’t go to every fire in the landscape, but we do to those that are within our plantation, other forest growers land, or that buffer around our and other forest growers’ plantations,” Mr Cook said. There are six fire depots located through the OneFortyOne estate: Mount Gambier, Mount Burr, Penola, Glencoe, Noolook, and Comaum. OneFortyOne’s plantation also extends throughout western Victoria from Edenhope to Dartmoor. “We spread out resources across the area so that the travel time to any fire occurring on our estate is minimised,” Mr Cook said. “Getting to a fire and putting it out whilst it’s small is always the best option.”

After a remarkable 65 years of dedication to Australia’s forest industries, Peter Crowe OAM, is retiring from his last official position as Chair of the Softwoods Working Group (SWG). Source: Timberbiz “Peter’s unwavering commitment and invaluable contributions have been instrumental in shaping the future of the softwoods industry in Australia,” SWG Executive Officer Carlie Porteous said. “Peter’s journey with the SWG began in 1987, and over the decades, he has played a pivotal role in advancing sustainable forestry practices, fostering industry collaboration, and advocating for innovation. “His knowledge, leadership, and vision have left an indelible mark on the industry, earning him the respect and admiration of colleagues and stakeholders. “Peter has been a driving force behind numerous initiatives that have strengthened the softwoods sector. His efforts have enhanced the industry’s economic viability and helped ensure its environmental sustainability for future generations, including the commitment to good fire management practices, weed management and tree breeding. “He started work in the forest industries in 1959 when he joined the NSW Forestry Commission, where he worked in various positions until 2006. Since then, he has worked as an industry consultant and advocate, championing many advancements in the timber industry including plant breeding initiatives, which have improved the quality of timber grown in plantations.” Mr Crowe said he could enter so many older plantations and remember when the first trees were planted and in numerous cases, he helped plant them. “I am extremely proud of working in such a vibrant renewable industry alongside so many fantastic, committed individuals who have recognised the importance of forestry and its contribution to the development of regional Australia,” he said. Ms Porteous said as the industry celebrates Mr Crowe’s retirement, it is a time to reflect on his remarkable achievements and the legacy he leaves behind. “His passion for forestry, dedication to excellence, and unwavering commitment to the industry’s growth will continue to inspire us all,” she said. “The SWG extends its heartfelt gratitude to Peter for his exceptional service and wishes him all the best in his well-deserved retirement. “We look forward to continuing the work he has championed and building on the strong foundation he has established.”  

Interesting times. Trump’s in, and resoundingly with the senate, electoral college and populist votes. It looks like Elon is going to take the knife to as many government jobs as he can, tariffs will skyrocket, and democrats are top of the list in googling ‘how to move to New Zealand’. Those that understand the US economy and politics and, don’t pay much attention to media, will understand that there needed to be some major structural economic and social change if the US is to remain as a viable superpower, and this may be what is needed – only time will tell. What does this mean for our forest industry? China is our largest purchaser of logs, and it has been pretty well documented that the main sector our logs have previously been used in – construction – is about as popular as Rieko Ioane at the Sexton dinner table. Exports of logs to China in 2023 totalled 18 million cubic metres and 2024 is looking to be slightly under that. Luckily, China has a massive wood-based furniture industry accounting for around 39% of total global furniture production, making it the largest in the world. In addition, exports of wood furniture from China have risen 24% in the first seven months of 2024 – great news, then along came the Don. The US accounts for around 27% of the furniture exports out of China which totalled $20 billion in 2023. The current tariff for Chinese furniture into the US is 5.4%. A report commissioned by the US National Retail Federation explored the impacts of proposed tariff increases on demand in the US. Trump hasn’t set any definitive tariff as yet, but the expected range for furniture is between 32.8% and 54.3% which the report predicted to result in a reduction in demand for Chinese manufactured product of between 73% and 87% respectively. If we assume the mid-point of 80% is likely, this will result in a total demand reduction of around 350 million pieces of furniture, a $16 billion drop in revenue and an overall 20% drop in total Chinese furniture exports, which is all a bit untidy. NZ radiata is a favoured product for the Chinese furniture industry due to its versatility and availability and as such, a reasonable volume of our log exports is utilised in this sector, therefore any reduction in demand for Chinese furniture products is going to directly impact us. What does the quantum of this impact look like? We won’t know until the tariffs have been set, but it’s very likely we will feel the impact in the medium term in the way of reduced supply volumes from NZ. Irrespective of the above bit of naval gazing, the current market conditions are the best we have seen since March with A grade shorts priced at NZ$126/m3 in the mid third of the country. Northern ports are a few dollars up on this and southern ports between NZ$10 and NZ$20/m3 less depending on which port you supply. This increase has been a result of slightly higher CFR prices in China and a 3-cent reduction in the US:NZ exchange rate. Unfortunately, shipping didn’t play the game in late October with a sharp cost increase which negated some of the gains however, this has recently softened somewhat. Inventory has dropped to around 2.7 million m3 and off-take remains around 65,000 m3 per day. These are all good numbers and, provided we continue to see declining inventory, the next few months look reasonably solid. It would be however, dangerous to read this as a strengthening market as sentiment is still relatively subdued in China. The recent Chinese government stimulus package didn’t really hit the mark, and this was followed by a further US$1.4 trillion debt package last week targeted at easing local government financial strains by rebalancing their balance sheets. Local government debt has been rising steadily and now total government related debt sits at around 117% of GDP, which has been making for some uncomfortable discussions around the CCP board table. Since 2008, local governments have enjoyed the significant revenue from construction projects, but recently this has dried up faster than Golriz’s court appeal and left local governments in a pickle. It will take a significant shift in the sentiment of the Chinese populus to reignite the construction sector in the near term, but we have seen stranger things. Back home, things are looking better domestically with September building consents up 2.6%. So long as Adrian Orr plays ball and keeps dropping the OCR in a sensible manner, we will likely see some further buoyancy in 2025. The domestic market is the backbone of our industry, so we need to see strong numbers returning to keep forest owner returns at an acceptable level. All eyes will be on the NZU auction on the 4th of December, and we will need to see an NZU price of over NZ$64 to see at least a partial clearance. There has been some discussion around the Climate Change Commissions’ view of the size of the NZU stockpile in ETS accounts. What needs to be remembered is that a reasonable number of those NZU’s will likely not be available for sale due to harvest surrender requirements and NZU pricing not meeting owners price points. In summary, what happens to log demand and therefore pricing in the next 12 months will have some influence from Trump et al., and it probably doesn’t look too positive for NZ exports as a whole. With some luck, shipping rates will ease, the $USD will strengthen under the republican rule and if we can keep a lid on inventory, log prices should look reasonable until late January when the Chinese New Year shutdown rears its head again. Fingers crossed the Europeans get a hankering for Chinese made furniture, and lots of it. Marcus Musson, Forest360 Director