Smaller forestry contractors are looking for other work and some have been forced to sell their houses to pay debt as the industry spirals down a dark hole.
Wakefield-based Brad Pyers, who owns Woodlot Harvesting, is now trying to find any work going to keep nine employees working at least two to three days a week after harvesting contracts dried up.
Until recently he had 11 employees and work for two forestry contractors, and he is not the only one feeling the pinch.
He knows of contractors who have sold their homes to pay debt and one of them now lives with his family in a caravan.
“We’re parked up. We’re just out doing the odd trucking work or earthworks – anything I can scratch up. From time to time some guys will only get two to three days a week. If they need more hours, I’ll try and find them more hours.
“It’s an unsettling time for me and the guys. It’s going to be tough.”
New Zealand Forest Owners Association’s communication manager, Don Carson, says the industry thought it would turn a corner about the Chinese New Year, but that did not happen. New Zealand is largely dependent on the Chinese market to export logs and now demand remains weak while the supply of logs increases.
“We have thousands of economists looking at it with a microscope, trying to decide if it’s a blip or long term. No-one knows,” he says.
Brad says the industry usually goes through a six-to-seven-year cycle of highs and lows, but in the past few years it has been more unpredictable with two to three highs and lows in one year. He does not expect it to improve quickly.
“I don’t think there’s a quick fix to it. When the market is good, we pour the wood into China, but if you look at the figures, we’re one of the major exporters of logs to China and don’t do ourselves a favour. We get held to ransom at times.”
He says the smaller contractors carry considerable debt due to expensive equipment which they cannot sell now because there is so much on the market.
“To get into this industry needs a huge amount of debt and a lot of people now are trying to get out, so there’s a lot of machinery for sale. These machines can be $1 million or more and second-hand gear at the moment isn’t selling and so people can’t afford to get out.
“You can have businesses operating insolvently because the value of their gear has dropped so much.
“As a business, we’re just trying to tread water until we can hopefully see good times and you just have to burn equity.”
Brad says the downturn has a domino effect on other businesses associated with forestry such as logging transport and services.
His team are now turning their hand to digger work, firewood, gravel, retaining wall – “whatever we can get our hands on”.
“I’m doing everything in my power to hang on to them. It’s hard to get good, skilled guys in the industry.”
He says the economy, with the high cost of living, makes it harder to find other work because people have tightened their belt and are putting off jobs that can wait until they have more money to spend.
That includes farmers who have been a good source of work in the past, but now face poorer returns and have curbed spending, he says.
Don says there is still a worldwide appetite for wood products, especially replacing concrete and steel with renewable resources such as New Zealand wood to reduce carbon emissions.
He says New Zealand has to develop its domestic processing industry, but to do that, it needs to do more to make it appealing for investment.
