FORESTRY contractors in the South West and Great Southern regions are adjusting to a ‘new normal’ as they rebuild after the collapse of the large managed investment schemes and plans to build a broader forest products sector.
The collapses of Timbercorp and Great Southern in 2009, and lower demand for woodchips due to the effects of the GFC, led to a number of contractors reducing staff, equipment and growth plans.
That impact was keenly felt in areas around Albany, and resulted in some contractors having to stop working after their existing contracts were completed.
“There were some job losses in the supply chain side of it, but we haven’t seen much of that in recent years,” Great Southern Development Commission CEO Bruce Manning said.
Contractors servicing plantations in the greater Bunbury region have not felt that impact as greatly, with most of the supply in that region going to long-term customers in Japan, which has resulted in export volumes actually increasing in recent years.
“Our quotas aren’t far away from where they were prior to the global financial crisis,” Bunbury-based Plantation Logging Co’s Geoff Lowton said.
There is also growing concern among some contractors that the continued low price for woodchips is starting to impact on prices contractors are able to charge their customers, particularly in the transport area, where some customers are starting to squeeze contractors on their haulage rates.
Harvesters have also reported that coming under increasing pressure to raise wages in order to compete with the booming mining industry, particularly with the some mining companies now offering fly-in, fly-out employment from Albany and Busselton.
Other businesses connected to the planting and coppicing, which is the process of growing new trees from the stumps of harvested trees, are also seeing a lower level of work as growing is consolidated on more productive lands.
However, Mr Manning notes that a number of people employed in that part of the industry were casual and able to move on to other roles quickly.
While contractors are adapting to operating at a lower level, plans to build a strong forest products industry at Mirambeena near Albany have hit difficulties, with two major projects having stalled.
In February this year Plantation Energy, which produced pellets for energy production from plantation and native forest waste residues, mothballed its operations as the high Australian dollar and economic weakness in Europe led to a significant drop in demand for its pellets. It is hoped that an improvement in the market prospects for its bioenergy pellets may kick start its operations.
Similarly, Lignor Limited’s plans to establish a factory producing engineered strand timbers and boards from blue gum waste residues have so far come to nothing, after the company could not secure finance to start production at its site at Mirambeena following an attempted capital raising in 2007. The company last reported that it was focusing on establishing a joint venture in China.
Despite those setbacks, Mr Manning said there was still interest in building value-adding industries, with energy production from biomass seen as a bright prospect.
“We’ve got some interesting innovation happening locally to suggest that there is movement in that area,” he said.
