One of Benalla’s largest employers DR Henderson may scale back production and therefore employment if energy prices continue to skyrocket. Source: Riverina Herald
Executive director of the soft timber and particle board manufacturer David Henderson has slammed the state government for closing the Hazelwood power station without offering businesses alternative renewable energy solutions.
“It’s unsustainable,” Mr Henderson said. “What’s going to happen after 2020 (when the Andrews Government’s moratorium of gas exploration expires).
“Is it going to get worse, is it going to get better? Are we just going to shut up shop and import it and sell it through our sales force instead of making it here like so many other people do?
“We don’t want to do that, but the way the country is pushing everybody is just crazy.
“Like it wasn’t difficult enough to be a manufacturer in Australia.
“Let’s just give everyone a real kick in the guts again. Put our head in the sand and shut up shop and we’ll all become baristas and sell coffee.”
DR Henderson currently employs 178 staff, equating to 14% of Benalla’s workforce. The plant operates 24 hours, seven days a week and is a huge user of power to process timber.
“In the past two years, electricity costs have risen 113%, while gas has gone up 97%,” Mr Henderson said. “We’re talking millions and millions of dollars here, millions — just like that.
“And we can’t absorb that, we have to pass it on to the market,” Mr Henderson said a meeting with Shadow Energy and Resources Minister David Southwick and Member of Euroa Steph Ryan to talk about what could be done to ease the company’s spiralling power costs.
Mr Henderson said the company usually had power companies falling over each other to win its three-year electricity contact. It was just about to go out to tender, when the state government announced plans close Hazelwood.
“And that’s what I think shocked everybody,” Mr Henderson said. “As soon as that happened the price went through the roof.
“People were scrambling… We had tenders come back from three different retailers.
“Then my broker rang and said Energy Australia have just pulled their bid, the other ones were considering pulling their bids because everyone was freaking out over when the closure of Hazelwood was going to happen and what the impact to the market was going to be because now Victoria is going to be importing energy from other states, or so we hear.
“The gas is even more surprising.
“Normally we would have four or five respondents to a gas tender.
“This time we had one. Origin Energy. Nobody else responded.
“AGL, Energy Australia, they couldn’t get any gas contracted this calender year because it’s all going up to Gladstone and getting exported.”
Member for Euroa Steph Ryan said the State Opposition recently proposed amendments to an energy bill proposing that resumption of conventional onshore gas exploration (not fracking) if, and only if, it was developed for domestic consumption.
The government used its numbers to reject the proposal and to stick to its 2020 moratorium of onshore gas exploration.
“I’ve got a stock feed manufacturer at Colbinabbin who is now looking at buying diesel generators because it’s cheaper for him to run his mill on diesel,” Ms Ryan said
Shadow Minister for Energy and Resources David Southwick warned Victoria could end up with a power crisis like that seen recently in South Australia.
“The South Australian experiment (with renewable energy) failed and they’re now building a gas-fired station to cope with the intermittent energy and Victoria is following exactly the same play-book,” Mr Southwick said.
However, Mr Henderson favours developing renewables.
“There needs to be more incentive for business to use renewable energy solutions: solar, co-generated heat plants using wood and things like this, so we can get off the grid for gas and electricity… there’s lots of different ways they can tackle this problem.
“But there needs to be better support and stronger incentives from government to help industry along.
“Even things like government guarantees to facilitate loans.
“Not ever just grant funding, just getting these projects under way.
“What will happen… everyone is going to suffer the same shell shock of the energy crisis and the cost of building materials will go up and it will exacerbate the housing affordability issue.
“Houses are going to become even more expensive.
“It’s not just the forestry and timber industry, it’s any processor that uses heat or produce with products.
“Everything is going to go up next year. There’s going to be huge pressure on inflation across the country.”
Mr Henderson was also pessimistic about the future of employment.
“You just have to cross that bridge when you get to it,” he said. “We’re kind of fortunate that we’re big enough that we can get the economies of scale, we’re small enough that we can be nimble.
“If we have to pull back on our production, we can do that.
“We don’t like doing that. I don’t like letting people go.
“We want to expand our workforce, not let it contract, but we’re trade exposed.
“We’re selling our product in a very trade exposed industry.”
Ms Ryan said the energy crises would spread its tentacles across the region.
“We’re talking about Hendersons in this instance, but they’re not the only business town to get this shock,” Ms Ryan said.
“Schneiders are obviously exposed to energy costs, Thales, McNulty’s, all of our big employers are quite energy intensive industries and that’s going to flow right through to the small business sector as well.
“Everyone from the butcher who requires refrigeration who may not yet be seeing it in their power bills but they will when Hazelwood closes.
“There’s a direct employment impact. Irrespective of what happens in the case of DR Hendersons, there will be employment impacts across regional Victoria.”
