Australia’s largest sawmilling company AKD Softwoods has temporarily stopped production at four mills due to the predicted decrease in demand for building products. More than 800 workers have been forced to take leave in a bid to prevent an oversupply of timber products as the effects of Covid-19 hit the housing construction market. Source: Timberbiz
The four mills are: the Colac and Yarram mills in Victoria, the Tumut mill in New South Wales and the Caboolture mill in Queensland.
Up to 43,000 new homes will not be built in the next 12 months as a result of COVID-19 according to new economic modelling released this week by the Master Builders Association.
The company’s chief executive Shane Vicary said demand for new housing had fallen off the edge of a cliff.
“We’re facing a calamitous reduction in demand and we’re calling on the state and Federal governments to put in place a housing construction stimulus,” he said.
AKD Softwoods produces 20% of the timber for housing construction in Australia and its predicted orders will dry up from the middle of May.
“Basically, with COVID-19, it’s very difficult to go and look at display homes … immigration has basically stopped, and you’ve also got significant unemployment,” Mr Vicary said.
“These factors are weighing heavily on new house construction.
“We see no point in generating and producing inventory in the face of a declining market.”
The company said it was looking at scenarios where it would operate at half of its production rate for the coming six months.
Mr Vicary said it would be the regional communities where the mills are based that would feel the consequences.
“We have to look at what’s going to enable us to get through a really difficult six to 12 months … scaling the business relative to what the market is,” he said.
“An organisation like us, we’ll look at reduced hours, reduced overtime, forcing people to take leave, potentially asking people to work four days a week — all of that has a flow back through regional communities.
“We really need stimulus to see housing construction re-started.”
Master Builders Australia CEO Denita Wawn said the new modelling highlighted the devastating impact the lockdown of the economy was having on the building industry, the economy and the community.
“In the light of the economic impact being wrought by COVID-19 we have now revised our previous industry forecast which was released in February this year. While we obviously did not expect good news, the scope and depth of the potential damage to our industry and the economy is devastating,” she said.
“We previously forecast that there would be around 159,000 new housing commencements in 2020/21. We now expect there to be only around 116,000, a drop of 27%,” Ms Wawn said.
She said the housing industry was vital to the economy and jobs. There were nearly 400,000 building and construction firms in Australia and more than 90% work in the residential building sector.
“There is already a current shortfall in achieving the required target of 200,000 homes a year which means that the impact on housing needs of our community will be severe,” Ms Wawn said.
“To be clear, Master Builders commends the Federal Government and State and Territory Governments for the stimulus measures they have already announced. We have proposed a range of stimulus measures to the Federal Government and are working with them in an effort to advance them.
“But what this forecast shows is that stimulus measures cannot wait. Our industry, the economy and the community cannot afford to wait months,” she said.
“We want the building and construction industry to be in shape to rebuild Australia. We want to protect the viability of hundreds of thousands of small businesses and the jobs of a million Australians. For that we need governments to act now.”
