Midway exits WA amid labour shortages, fuel costs

National forestry services company Midway will wind up its Bunbury-based logistics arm and exit Western Australia, after supply disruptions, labour shortages and rising fuel costs strangled its profits.

In a statement released to the ASX this morning, Midway’s managing director Tony McKenna told investors the company could no longer justify investing additional resources to grow Midway Logistics in the “current environment”.

He blamed pandemic-related supply disruptions, the state's difficult labour market and increasing fuel costs for having hindered the business’s operations.

Mr McKenna said the company had gone to great lengths to build strong relationships with its customers and suppliers, but the decision was in the best interests of Midway’s shareholders.

Business News understands Midway Logistics employed 25 staff in the South West, working across its forestry management, harvesting and haulage services.

A spokesperson for the company told Business News the state government’s decision to stop native logging by 2024 had played no part in the company’s decision.

“Midway Logistics clears mining land, which is still allowed in WA, but does not generate a sufficiently high return to justify ongoing investment,” the spokesperson said.

Midway acquired the Bunbury-based Softwood Logging Services for $5.5 million in October 2018, which had operated since being awarded a contract with the state’s own Forest Products Commission 35 years ago.

According to the Midway Logistics’s website, it processes more than 650,000m3 of product annually, working with mining companies and local governments to clear land and provide chipping, harvesting, roadside processing, forestry consulting and transport services.

McGowan heads to Manjimup 

The move comes six months after the state government announced plans to restrict logging to forest management and approved mining activities by 2024 amid mounting pressure to make the industry more sustainable.

While the decision didn’t play a role in the winding up of Midway Logistics, other parts of the industry are grappling with workers leaving in droves in search of more secure jobs.

The state’s subsequent industry support packages have also been met with criticism, labelled by Forest Industries Federation WA chief executive Adele Farina as “offensive”.

During a visit to Manjimup this morning, Premier Mark McGowan told reporters he intended to meet with some members of the softwood nursery industry and the Native Forest Transition Group today.

He defended the decision and the state government’s subsequent support packages and the $350 million investment in future softwood plantations.

“These will all ensure the long term future of the timber industry, but we've made a decision we're not going to cut down native forests anymore,” he said.

“The yields are declining, climate change is having an effect and knocking over our native forests is not something we're prepared to do any longer.

“These communities have been transitioning over time in any event.

“Pemberton, Manjimup, other towns around the South West and even in the Peel region have been transitioning over time. 

“Whether it's into agriculture, downstream processing of agricultural products or tourism, whether it's people who just want a change of living from the city, who come and live here and work in these communities. 

“That has been happening now for the better part of 20 to 30 years - and that will continue. 

“The fact that we're moving Main Roads maintenance out to regional communities and creating nearly 700 jobs out of that is pretty big as well, and those sorts of things will continue.”

But opposition forestry spokesperson Steve Martin labelled the visit a "blanket WA Labor announcement for union jobs" which had failed to address compensation for forestry businesses.

“The Premier’s visit to Manjimup today was used to announce 660 new jobs for new Main Roads regional offices," he said.

"This is an insult to the thousands of jobs in regional WA axed by this Government’s populist decision to ban hardwood logging."