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Funds rift threatens jobs

THE Federal Government’s hardline stance on assistance for the timber industry could derail plans for new investment and jobs.

Forest Industries Federation executive director Bob Pearce doesn’t believe Canberra’s long-awaited $15 million assistance package will be paid.

This would have a big impact in Manjimup, which has been gearing up for the development of an integrated furniture precinct.

It could also put a spanner in Wesfarmers’ plan to sell Manjimup-based Sotico (formerly Bunnings) to a consortium of furniture and joinery firms.

Federal Forestry Minister Ian McDonald has stated that the $15 million will be provided only if the annual jarrah harvest is set at 200,000 cubic metres, which is even higher than the 180,000cu metres requested by the timber industry.

Mr Pearce, who met recently with Senator McDonald, believes there is no prospect of the Federal Government relenting on its hardline stance.

“He was absolutely adamant that the money would not be paid unless they agreed to 200,000 cubic metres,” Mr Pearce said.

“The industry feels that we have been let down.”

State Development Minister Clive Brown has described the Federal Government’s threat as “a bullying tactic aimed at forcing the State Government into logging WA’s old-growth forests”.

Senator McDonald has claimed that 200,000cu metres can be logged sustainably using mature and regrowth forests.

If the Federal money is not paid, it could have a flow-on effect through the industry.

“I think the Manjimup plan is very dependent on getting access to the $15 million,” Furnishing Industry Association president Ian Hearn said.

Bill Clare of Maddington-based furniture maker Clarecraft echoed this view.

“We would certainly need some government support if Clarecraft was to invest outside of Perth,” he said.

Mr Clare’s main concern was the uncertainty plaguing the industry, as a result of both the funding issue and the long-running debate over the Forest Management Plan.

“It’s a terrible situation for a business to be in, not being able to plan ahead,” he said.

Clarecraft, along with Malaga-based Inglewood Products and Busselton’s Jensen Jarrah, are the State’s largest manufacturers of jarrah furniture.

As such, they are seen as critical to the proposed Manjimup furniture precinct. They will also be key targets of Wesfarmers as it seeks to sell Sotico.

“We are about to commence that process in earnest,” Wesfarmers spokesman Keith Kessell said.

Wesfarmers recently wrote to about 100 firms outlining its intention to sell Sotico, and plans to commence discussions next month with potential consortium members.

Mr Hearn believes the purchase of Sotico could still proceed.

“There are at least three manufacturers interested in seriously exploring the possibility,” he told WA Business News.

Inglewood Products spokesman Dino Gosatti said his company had prepared a plan to establish operations in Manjimup and had also looked at the possibility of acquiring equity in Sotico.

But, like everyone else in the industry, he needs certainty before making any decisions.

Sotico is proceeding with an extensive restructuring of its business ahead of the sale negotiations.

Mr Kessell said Sotico would have annual revenue “in the order of $30 million” and about 250 staff. This compares with a peak of about 800 staff.

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