Deal­ing with change

Australian Forests and Timber - - FRONT PAGE - By Nick Reynish

IT WAS only seven years ago that the Aus­tralian plan­ta­tion for­est in­dus­try was boom­ing off the back of Man­aged In­vest­ment Schemes. Money seemed to be quite lit­er­ally grow­ing on trees for fund man­agers, con­trac­tors and ser­vice providers. To­day paints a dif­fer­ent pic­ture when the cost of labour is se­verely dam­ag­ing our abil­ity to com­pete com­pet­i­tively in global mar­kets and plan­ta­tion own­ers are in­vest­ment fund man­agers with a fo­cus on steady re­li­able re­turns.

Busi­ness now

The change in for­est own­er­ship has changed the way forestry busi­nesses are run. For­eign own­er­ship has brought some sta­bil­ity and con­fi­dence back into the in­dus­try, but it is not all smooth sail­ing as many are re­al­is­ing.

With the squeeze put on es­tate man­agers by land own­ers due to their fail­ure to com­mand prices that are favourable to yield good mar­gins, they in turn are fight­ing to pro­vide their clients a re­turn on in­vest­ment due to coun­tries such as China, In­dia and Asia pro­duc­ing wood prod­ucts for roughly a third of the price be­cause of the sim­ple fact they have at their dis­posal cheap labour and lots of it.

So, when con­trac­tors and ser­vice providers are be­ing forced to work with low profit mar­gins, ris­ing su­per­an­nu­a­tion, (as of 1 July 2014 su­per payable is now at 9.5% up from 9% in 2012) and in­creas­ing em­ploy­ment levies mak­ing for chal­leng­ing times as a busi­ness owner.

OH&S in­creas­ing dom­i­nance in the forestry land­scape

To add to the al­ready firm noose of com­pli­ance in the forestry in­dus­try, but for the right rea­sons, Oc­cu­pa­tional, Health & Safety reg­u­la­tions are be­ing in­creas­ingly scru­ti­nised. Not to any fault of our own, but as ma­chin­ery ad­vances and tech­nol­ogy be­comes more ac­ces­si­ble, es­pe­cially in the on­line sphere, there is an ex­pec­ta­tion for small com­pa­nies to carry sys­tems sim­i­lar to that of their larger par­ent coun­ter­parts. Although this is good for the for­est in­dus­try, as it pro­motes a safer work­ing en­vi­ron­ment and min­imises bad pub­lic­ity, it still car­ries with it a fi­nan­cial bur­den to SMEs that have to spend large sums of money and in­cur on­go­ing costs to main­tain their sys­tems.

Sus­tain­abil­ity

Many busi­ness pro­fes­sion­als out­side the forestry in­dus­try look­ing in are ask­ing how these struc­tures can be sus­tain­able. We have al­ready seen two rounds of demises in the last two decades. A no­table way for­ward for many is think­ing out­side the square; own­ers have to be smart, in­no­vate, spread their risk, scale busi­ness ac­cord­ingly and col­lab­o­rate.

These words may sound fa­mil­iar but will work if fol­lowed through and pro­fes­sional ad­vice en­gaged in.

By way of many, the shift in the na­ture of what land man­agers and own­ers want can be ben­e­fi­cial to ser­vice providers who are pre­pared to step up and take on some risk, in­crease their ca­pac­ity, com­ply with strin­gent OH&S mea­sures and up­skill, es­pe­cially in the dig­i­tal field. Be­lieve it or not in most cases these days tech­nol­ogy will en­hance ef­fi­ciency, im­press clients and save money in the long term.

What does the fu­ture look like?

We all ask our­selves this from time to time and to be hon­est I can’t give an ac­cu­rate an­swer, prob­a­bly not many peo­ple can, but this I can tell you, in order to com­pete in a global mar­ket and to en­sure the Aus­tralian forestry sec­tor stays afloat and then con­tin­ues to grow, tech­nol­ogy is the most ob­vi­ous an­swer, both by in­vest­ing in and us­ing phys­i­cal prod­ucts and on­line, us­ing the in­ter­net. These are the ques­tions we need to be ask­ing -- does my busi­ness have a web­site, use so­cial me­dia, and have avail­able to me pub­li­ca­tions that keep me in­formed and up to date when new tech­nol­ogy be­comes avail­able? Am I in­vest­ing in the right ad­vice and am I ap­ply­ing it to the right ar­eas of my/our busi­ness.

Although there are many myths out there that with the ad­vance­ment of tech­nol­ogy the world pop­u­la­tion will be us­ing less pa­per and re­lated for­est prod­ucts, here are some sta­tis­tics to prove that this in fact is not true.

The ta­ble refers to sta­tis­tics from the United Na­tions Pop­u­la­tion Fund, where growth to­day in­creases at around 1.7% • 1800 - 1 bil­lion • 1927 - 2 bil­lion • 1960 - 3 bil­lion • 1974 - 4 bil­lion • 1987 - 5 bil­lion • 1999 - 6 bil­lion • 2011 - 7 bil­lion* • 2025 - 8 bil­lion • 2043 - 9 bil­lion • 2083 - 10 bil­lion

With global pop­u­la­tion growth comes de­mand for prod­ucts, es­pe­cially pa­per and struc­tural tim­ber. In fact, we are now us­ing more pa­per than we ever have. Thirty years ago the rise of com­put­ers was hailed as the begin­ning of the ‘pa­per­less of­fice’ and busi­ness and peo­ple alike were urged to re­duce the flow of pa­per, ul­ti­mately aim­ing to abol­ish it to in­crease pro­duc­tiv­ity. Since these bold state­ments, ac­cord­ing to The Econ­o­mist, global pa­per con­sump­tion has in­creased by half.

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