East Gippsland mill mergers herald end game

he possible merger of three East Gippsland sawmills, Terra Timbers, Auswest and Austimbers, was announced in mid-November. This is rather good news for forests as it reflects the ever-increasing difficulty in selling native forest hardwood in a market now dominated by pine. These mills are unable to stay afloat unless they cut back on costs and improve their economies of scale. No doubt jobs will be lost in such a merger, yet they are claiming it will actually create more jobs.

The demise of the native forest sawmilling industry is due to poor planning and the cold hard market realities of consumers and builders preferring plantation timber. As much as we’d like to, we can’t claim all the credit for this one.

Markets for the value added timber these mills are now pinning their hopes on have never been large or secure. The trend of the building and renovation industry has been moving away from native forest wood for the last two decades.

The failure of the Terra Timbers value adding enterprise, even with $1 million public assistance money, does not come as a surprise. It predicted huge growth and 55 jobs – which have never gone beyond 15. Many sawmillers were convinced to sink a lot of money into value adding and kiln driers when the trend away from native forest timber in favour of plantation was clearly increasing.

Value adding mainly relies on the flooring and furniture market. However, flooring is now a very competitive area with cheaper pine composites, laminates, melamine and strip flooring. All of these are more stable and faster to lay. As a result, hardwood’s share of the flooring market has dropped to just 5%. On the furniture front, solid wood accounts for only 20% of all furniture made and most of this would be plantation pine as well. Veneers, chipboard and other pine composites are now the main material used.

The merger of mills is stalling the inevitable downfall of hardwood sawmilling in East Gippsland. The writing has been on the wall for years yet the players seem to keep their eyes tightly closed and just hope like hell.

The value adding catch-cry is not reflected in market trends over the past 20 years and the overseas markets are very minor. This is despite many official sorties to overseas buyers, with samples of polished hardwood tucked under arm.

We hope the Bracks Government will now stop sinking millions into a dying industry and start helping the more publicly acceptable and healthy industry of this region – nature-based tourism.

The trend away from hardwood is expected to continue, which would leave woodchipping as the only use of our remaining native forests. This will be a very difficult one for the government to sell the public.
 

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