A multi-million dollar investment by New Zealand’s Eastland Community Trust has given a green light to the creation of a wood processing “cluster” and centre of excellence at the former Prime Sawmill. Source: The Gisborne Herald
The trust has approved NZ$7.4 million to buy the sawmill. This is the biggest single investment decision in its history.
In May, John Rae, interim chairman of the district’s economic development agency Activate Tairawhiti, told a Gisborne District Council long-term plan submission hearing that Activate Tairawhiti was in discussions with a number of potential lessees for various parts of the site and was hopeful a high-profile sawmilling operation would be established within three to six months that would result in 50 new jobs.
Mr Rae said the project was also looked at as the base of a wood-processing centre of excellence.
“The analysis we have done is that the rest of the country is creating demand for the Prime site. While a number of New Zealand sawmill operators are going broke because the wood supply is tied up by people exporting logs, Gisborne, according to the people who want to invest here, has a more effective ownership model of untreated logs,” he told the hearing.
There were two saw millers competing for the site and “a whole lot of interest” from tertiary and industry training organisations.
“What we’re looking to do is cluster a whole bunch of activities that are logically adjunct. Were one person to own the site and control it, you could not make it work with the money required for one sawmill — but if we can share it across a whole bunch of players, it becomes reasonable,” he said.
ECT chairman Richard Brooking says buying the mill demonstrates the trust’s absolute commitment to improving the economic outlook of the region.
The project has the potential to create 120 jobs onsite, 300 jobs offsite and inject NZ$6.7 million into the local economy within three years.
“In the short term, we should see the creation of 50 jobs and the injection of around NZ$1 million into the local economy via site works,” he said.
Market research has demonstrated the time is right to invest in the site, he says.
The forestry and forestry services sector is important for Gisborne, with logging still rating among the fastest-growing producing sector in the last three years, he says.
“Key to this growth is our privately-owned stock of wood, which is significantly higher than other regions in New Zealand. We have a substantial volume of uncommitted, clear-pruned, good quality, quick-grow logs close to the processing site.
“Tree rotations are anywhere from 23 to 28 years and we have been waiting for the right raw product to grow. It’s ready and so are we.”
There are already a number of interested parties looking to commit to long-term tenancies.
Buying the mill now sees ECT taking an active leadership role in economic development. This is consistent with community expectations and the strategic objectives of the trust.
“One of the key messages we received from our community last year was that we must take an active leadership role in economic development.
“Our community told us what we all know — the key economic issues facing our region are job creation and the attraction of new business and investment.
“According to that same data, our community overwhelmingly felt the most important priority for ECT is to undertake projects that create jobs.”
Mr Brooking says economic development projects have the potential to carry risk and uncertainty.
At times, the level of risk is one reason why projects need to be incentivised by suitablyresourced organisations such as Eastland Community Trust.
The trust expects to complete negotiations and announce confirmed tenancies in the coming weeks.
