Jobs risk as log prices fall
Forestry companies are trying to maintain work for thousands of employees and sub-contracting crews as forest owners stop harvesting due to a sharp fall in the value of logs.
Allan Laurie, managing director of Forestry Marketing and Sales, said the fall in prices had taken the industry by surprise, and business development manager Scott Downs at PF Olsen said his firm was scaling back harvesting.
It is estimated there are about 200 sub-contracting firms employing about 1000 people who may be without work or have to take an enforced holiday.
‘‘Some of it is to do with tariff wars with the United States, which has affected confidence of buyers in China. Some of it is the failure of log suppliers to recognise the signals,’’ Laurie said.
The price of logs has fallen 15-20 per cent.
‘‘We have 120 people who work for us and they are significantly affected. They may look on it as an enforced holiday, but maybe put off buying that new car. We want to keep these good people in the industry.’’
Laurie said market uncertainty began in late 2018 but the tipping point came as the Trump administration tariffs came into effect.
Canada and Russia had provided more logs to China where construction had slowed because of the wet season – ‘‘all these things have come together in a perfect storm.’’
‘‘It will eventually bounce back. But the drop will have a shortterm severe impact on logging crews as owners stop harvesting or impose restrictions rather than take low prices.’’
Laurie said the latest downturn came against a background of overcutting young forests in recent years as the price of logs boomed.
‘‘The industry is not well organised and it’s impossible to know how long the current situation will go on but I’d expect at least a couple of months based on past experience,’’ he said.
Downs said the industry was pinning hopes on prices bottoming out and recovering after August when construction in China was expected to increase again. ‘‘We’ve slowed down harvesting on some of the big jobs but it’s the smaller ones owned by retirement funds where work might dry up in the meantime.’’
Mike Hurring, owner of Mike Hurring Logging & Contracting, said it was a case of ‘‘battening down the hatches’’, and it affected all parts of the sector, from engineering workshops to trucking firms.