New Zealand’s forestry contractors are at breaking point, with compounding pressures from the last three years mounting. Some are already in liquidation and many more are at risk of losing their livelihoods. Source: Timberbiz
Forest Industry Contractors Association (FICA) is hugely concerned for the viability of forestry contracting businesses. Pressure has been exacerbated by Cyclone Gabrielle, but it comes on the back of a tough three years, with Covid-19, fuel hikes, high inflation resulting in significant interest rate rises, and continuous wet weather all thrown into the mix.
Pressure is compounding with increased operational costs, staffing and employment issues, market instability and contractual issues. The already low log price, which is expected to drop again next month, will definitely mean reduction of harvest targets and cancelled contracts, which many will not be able to endure this time round, says FICA spokesperson Ross Davis.
“A recent survey of our members showed a widespread reduction in production over the past year, 57% of respondents indicated their production had been reduced by 20% or more, with 16% down more than 30%,” Mr Davis said.
“When asked if they could survive at an 80% production level for a year, only 26% of respondents indicated that they could.
“At the moment 21% of the responding contractors do not have a current contract while 40% only have a one-year contract.”
In recent weeks, two larger Gisborne-based contractors have had no option but to cease operations and ‘shut up shop’, after operating in Gisborne for 15-20 plus years.
“Each day we are getting phone calls that confirm more and more contractors are falling over. Our role at FICA does not stop at the forestry gate – we want to support our members.”
“Working with the wider industry and the Ministry of Social Development on the best possible subsidy schemes is imperative. We are working with Ministry for Primary Industry -Te Uru Rakau to get better recognition at Government level,” Mr Davis said.
He said it is extremely worrying and is calling on Government and the wider industry to understand what is happening. The forestry sector is the third biggest contributor to NZ export earnings alongside dairy and meat, and there is concern for contractors, workers, families and communities that rely on it for income. Mr Davis said that the need was to retain people in the industry to ensure a sustainable industry for the future.
“We’re still seen as a turn-on, turn-off industry. It’s not a blame game at all, but if we want logging contractors to be around in another 12-24 months then something needs to change now. We employ thousands of people, and we cannot keep operating at a loss. Jobs will be lost. Homes will be lost. Communities will be lost,” he said.
“Without enough contractors, the industry will really slow down and that is not something any of the sector groups want. It is a matter of becoming more business savvy and having a good partnership between contractor and principal with any negotiation being fair and demonstrating the sharing of the risk.”
