forest talk
CHH, China, Russia, the building boom and the FTA: A recipe for domestic shortages WITH THE WHANGAREI MILL BEING the latest casualty in the closure of up to 15 mills in recent years by the country’s largest structural timber supplier, Carter Holt Harvey (CHH), debate is raging over the true cause of domestic structural timber restrictions. Grant Dodson, Chief Executive of City Forests and Chair of the Southern Wood Council, says while demand in Asian and other markets for New Zealand logs remains solid, domestic mills are now “flat out” due to escalated building sector demand. In contrast to complaints by producers that the current supply issue stems from China’s inflated and subsidised prices for New Zealand logs, he says domestic use still represents about 43% of this market, indicating this is more than a simple export issue, with the root cause of supply restrictions of structural timber relating to chronic, long-term underinvestment in wood processing . “This really starts with processors, who are limited by a lack of capacity,” he says. Now CHH has cut supply to its smaller customers, prioritising Placemakers,
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owned by Fletcher Building, and Carters Building Supplies. This leaves building supplies cooperative ITM and Mitre 10 on the lookout for alternative supplies on the back of a residential building boom that saw building consents move up 5% to a record 39,725 dwellings for the year to February. The CHH move has sparked a Commerce Commission enquiry. CHH issued a statement that the shortage was short-term and industrywide caused by a huge timber appetite as well as CHH’s difficulties with upgrading capacity at its Kawerau mill. Red Stag Chief Executive, Marty Verry says there is a worldwide building boom and New Zealand is no exception with COVID and its construction aftermath. Chief executive of the New Zealand Building Industry Federation, Julien Leys, explains that CHH only closed its Whangarei plant because the Northland region no longer has any more structural graded timber to make the sawmill economically viable. “Closure of the Whangarei plant has been planned for many years, so despite the unfortunate job losses, it had no impact on CHH’s
manufacturing capacity or the structural timber supply for domestic housing,” he says. The total shortage of structural wood in the building supply chain is approximately 5 to 10 per cent – not ideal in the middle of a housing boom. President of the New Zealand Institute of Forestry (NZIF), James Treadwell, emphasises that this short supply is not an export-related issue “as about 90% of logs that are exported don’t meet the structural specification for domestic mills anyway”. “What we’re exporting is what the domestic mills don’t want in general,” he says. The Wood Processors and Manufacturers’ Association’s (WPMA) Jon Tanner disagrees, saying the increase is because New Zealand is shipping an extraordinary amount of logs overseas. “New Zealand wood processors pay the price that is being set at the wharf, so we’re paying the same prices as the people who are importing.” Of all the logs New Zealand cuts down, more than half of them end up at the port to be shipped overseas. China is
