Saturday, March 30, 2024

Wall of wood threatens local processors

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New Zealand needs to get ahead of a wall of subsidised wood products heading this way as overseas players shore up their processing industries in response to the covid-19 pandemic, local manufacturers say.
‘First and foremost, our workforce needs to get back to work,’ Forest Industry Contractors Association chair Robert Stubbs says.
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An export log ban announced by Russia a month ago is the latest in a string of measures that are going to drive “major shifts” in the direction of wood product flows out of China and Europe, Wood Processors and Manufacturers Association chief executive Jon Tanner said.

He says the Russian ban, proposed from January 2022, will reduce log supplies to China and likely increase that country’s demand for logs from NZ and Australia. At the same time, cheap loans will be available from next year to encourage Russian wood processors to modernise and expand their operations.

The Russian measures come just as Canada opted to join the US in imposing high tariffs on Chinese wood products. The ongoing spruce beetle infestation in Europe continues to kill forests which are then felled, pushing more volume into international log and timber markets.

Tanner says those combinations will see more subsidised wood products heading this way and into NZ’s export markets and officials will have to act.

“We can’t wait for this for another couple of years,” he told BusinessDesk.

“It’s getting more and more difficult by the day because of the trade restrictions being put in place.”

Prime Minister Jacinda Ardern yesterday appointed Stuart Nash as the new Forestry Minister, replacing NZ First minister Shane Jones, who held the portfolio in the last Parliament.

NZ manufacturers were already pushing for stronger controls against dumped and subsidised imports before the pandemic as part of a programme of initiatives to help reinvigorate the sector. Forest owners and processors were also looking for ways more local processing could be developed in the face of subsidised log buying by Chinese processors. 

Since then, all countries have poured billions of dollars into their economies to maintain industries and jobs. Some of those initiatives are specifically directed at export expansion, while others, such as a A$1.5 billion programme announced last month to help modernise Australian manufacturing, will have the same effect.

Tanner says officials are monitoring other countries’ economic initiatives and is not convinced their potential impact on NZ’s economy is understood.

On Friday, more than 70 forestry sector executives participated in a scoping exercise for an industry transformation plan the Ministry for Primary Industries is developing with the sector to identify ways to target investment and increase productivity.

Tanner says there was an encouraging focus on how change could be effected and generally broad agreement on what needed to change.

But he says officials were thinking about long-term transformation of the sector, whereas participants were pressing for action that could be taken in the next one to three years.

“We need urgent changes, the competition is moving quite fast,” Tanner said.

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