Re­port finds plan­ta­tion fi­bre sup­ply se­cu­rity is crit­i­cal

Study of so­cio-eco­nomic im­pacts of the soft­wood plan­ta­tion in­dus­try in the South West Slopes and Bom­bala re­gion, NSW. This re­port is the first of six so­cio-eco­nomic stud­ies be­ing un­der­taken for the FWPA.

Australian Forests and Timber - - Industry Report -

Across Aus­tralia, more than 80% of the wood fi­bre and tim­ber used by wood and pa­per pro­ces­sors is supplied from Aus­tralian soft­wood and hard­wood plan­ta­tions. How­ever, this plan­ta­tion­based in­dus­try is chal­lenged by a lack of in­vest­ment in new plan­ta­tions, and to re­main com­pet­i­tive in­dus­try re­quires on­go­ing in­vest­ment in the plan­ta­tion es­tate as well as in in­te­grated hubs of pro­cess­ing fa­cil­i­ties lo­cated near plan­ta­tions.

The South West Slopes and Bom­bala re­gion of New South Wales is an example of this type of in­te­grated pro­cess­ing hub. The re­gion is the base for a large wood and pa­per pro­cess­ing in­dus­try that has de­vel­oped in prox­im­ity to 165,000 hectares soft­wood plan­ta­tions es­tab­lished in the re­gion from the 1920s on­wards. De­spite the im­por­tance of the in­dus­try to this re­gion, which in­cludes the lo­cal gov­ern­ment ar­eas of Al­bury City, Shire of Bom­bala, Greater Hume Shire, Snowy Monaro Re­gional Coun­cil, Snowy Val­leys Coun­cil and City of Wagga Wagga, there is lit­tle cur­rent data on the so­cioe­co­nomic con­tri­bu­tion of the in­dus­try to the re­gion, or the key ar­eas in which in­vest­ment is needed in skills and train­ing to help main­tain the in­dus­try into the fu­ture. This study ad­dresses this gap, col­lect­ing data via a sur­vey of the in­dus­try and anal­y­sis of data pro­duced in past stud­ies and by the Aus­tralian Bureau of Statis­tics. This en­abled pro­duc­tion of upto-date in­for­ma­tion on the value of the in­dus­try, the jobs it gen­er­ates, its con­tri­bu­tion to the re­gion, and the skills and train­ing needs of the in­dus­try.

The soft­wood plan­ta­tion in­dus­try in the South West Slopes and Bom­bala re­gion (re­ferred to as the ‘South West Slopes’ re­gion) has grown sub­stan­tially over time as more of the plan­ta­tion es­tate reaches har­vest age and the to­tal vol­ume of log pro­duc­tion ex­panded in the re­gion, with older plan­ta­tions now in their third ro­ta­tion. The re­gional in­dus­try based on these plan­ta­tions pro­vides a mar­ket for logs of dif­fer­ent sizes.

Util­i­sa­tion of all logs

Sawlogs (gen­er­ally straight logs with larger di­am­e­ter and few knots) go to sawmills, with residues from the sawmilling process then be­ing supplied to com­pos­ite wood man­u­fac­tur­ers and

• Gross value of fi­nal out­put from the in­dus­try was $1,050 mil­lion in 2015-16

• $155 mil­lion in wages boosts re­gional econ­omy

• Level of em­ploy­ment is par­tic­u­larly sig­nif­i­cant for the re­gion

• Grow­ing de­mand for work­ers with spe­cialised skills

• In­dus­try cau­tiously op­ti­mistic in terms of out­look for busi­ness con­di­tions

pulp/pa­per mills. Pulp logs go to pulp and pa­per mills in the re­gion as well as to com­pos­ite wood prod­uct man­u­fac­tur­ers. This en­ables util­i­sa­tion of all logs from plan­ta­tions in the re­gion. Fi­bre de­mand from the pro­ces­sors now es­tab­lished in the re­gion ex­ceeds the pro­duc­tion abil­ity of the lo­cal plan­ta­tion es­tate, with ad­di­tional re­source brought in from other re­gions, par­tic­u­larly north­ern Vic­to­ria. A key con­straint to any fur­ther ex­pan­sion of the in­dus­try is sourc­ing fi­bre, with the lo­cal in­dus­try fully util­is­ing all the fi­bre avail­able within an eco­nomic trans­port dis­tance of the re­gion. Both ex­ist­ing pro­ces­sors, and new pro­ces­sors, such as the cross lam­i­nated tim­ber (CLT) man­u­fac­tur­ing plant be­ing con­structed in Wodonga by

XLam, re­quire se­cu­rity of sup­ply of plan­ta­tion fi­bre to be suc­cess­ful.

The gross value of fi­nal out­put from the in­dus­try was $1,050 mil­lion in 201516, and $2,130 mil­lion when flow-on ef­fects to other in­dus­tries are in­cluded.

Con­tri­bu­tion to Gross Re­gional Pro­duc­tion (GRP) (or the ‘value-added’ to the econ­omy ex­clud­ing trans­fers be­tween in­dus­tries) in the re­gion was $1,014mil­lion, in­clud­ing $580 mil­lion from flow-on ef­fects. The in­dus­try is thus a sig­nif­i­cant com­po­nent of the re­gional econ­omy. The di­rect net ex­pen­di­ture of the in­dus­try (the amount spent by the in­dus­try, rather than the sales value of its out­put), was $734.8 mil­lion in 2015-16. Of this to­tal ex­pen­di­ture, just over 80% was con­trib­uted by the wood and pa­per pro­cess­ing sec­tor, with the balance fairly evenly split be­tween for­est grow­ers and the con­tract­ing sec­tor.

Largest com­po­nent was wages

The largest sin­gle com­po­nent of ex­pen­di­ture for the in­dus­try over­all was wages and salaries, with $155 mil­lion in­jected di­rectly into the re­gional econ­omy via house­hold in­comes. In­clud­ing flow-on ef­fects, the to­tal con­tri­bu­tion of the in­dus­try to house­hold in­come in the re­gion was $468 mil­lion in 2015-16.

The in­dus­try di­rectly em­ployed 1917 peo­ple in the re­gion as of Fe­bru­ary 2017, with 66% of these (1260 jobs) gen­er­ated by wood and pa­per pro­cess­ing. When flow-on ef­fects of the in­dus­try on other in­dus­tries are in­cluded – mean­ing the num­ber of jobs gen­er­ated as a re­sult of the de­mand gen­er­ated by the in­dus­try and its work­ers -the di­rect and flow-on em­ploy­ment gen­er­ated by the South West Slopes soft­wood plan­ta­tion in­dus­try pro­vides jobs for a to­tal of 5,375 peo­ple within the re­gion, and for 6,026 peo­ple across NSW as a whole.

Sig­nif­i­cant em­ploy­ment for re­gion

This level of em­ploy­ment is par­tic­u­larly sig­nif­i­cant for two lo­cal gov­ern­ment ar­eas (LGAs), with 22% of jobs in Bom­bala Shire di­rectly de­pen­dent on the in­dus­try, and 18% in the Snowy Val­leys Coun­cil lo­cal gov­ern­ment area. When in­di­rect em­ploy­ment is added, more than 50% of jobs in each of these LGAs is di­rectly or in­di­rectly de­pen­dent on the plan­ta­tion in­dus­try of the South West Slopes.

Anal­y­sis of time se­ries data sug­gests that the to­tal amount of jobs di­rectly de­pen­dent on the for­est in­dus­try in the South West Slopes has de­clined by ap­prox­i­mately 5%, or slightly less, in the last six years. This is not sur­pris­ing for an in­dus­try in which a large pro­por­tion of jobs are re­liant on man­u­fac­tur­ing: in­vest­ment in new technology in the man­u­fac­tur­ing sec­tor, a re­quire­ment for main­tain­ing com­pet­i­tive­ness over time, typ­i­cally re­sults in de­clin­ing em­ploy­ment even as pro­duc­tion vol­umes are in­creas­ing. A sim­i­lar de­cline (5.2%) oc­curred in the to­tal num­ber of man­u­fac­tur­ing jobs in Aus­tralia over the five years from 2006 to 2011.

Ex­am­i­na­tion of the de­mo­graphic char­ac­ter­is­tics of the in­dus­try shows that the in­dus­try is of­fer­ing full­time, long work­ing hour jobs that have good pay and are par­tic­u­larly at­trac­tive to men, and is main­tain­ing re­cruit­ment of men into the in­dus­try in most parts of the in­dus­try. The big­gest so­cio-de­mo­graphic chal­lenge is to achieve re­cruit­ment of a greater di­ver­sity of work­ers, par­tic­u­larly women, into the in­dus­try. This may be achieved through ac­tions such as of­fer­ing jobs with more flex­i­bil­ity in terms of work hours, but will likely also re­quire chal­leng­ing and chang­ing key as­pects of the cul­ture of the in­dus­try that con­tin­ues to make it more ap­peal­ing to male than fe­male work­ers.

Spe­cial­ist skills in de­mand

As the soft­wood in­dus­try evolves, there is grow­ing de­mand for work­ers with spe­cialised skills, in­clud­ing spe­cial­ist en­gi­neers, sci­en­tists and me­chan­ics. More gen­er­ally there is in­creas­ing de­mand for skilled mo­bile and fixed plant op­er­a­tors. De­mand for less skilled fac­tory process op­er­a­tors is de­clin­ing. A need to have a skilled haulage work­force and to have work­ers with­high level financial, mid­dle man­age­ment and in­for­ma­tion and com­mu­ni­ca­tion technology (ICT) skills re­mains strong, with ICT skills needs oc­cur­ring across most oc­cu­pa­tions within the in­dus­try.

While many busi­nesses use reg­is­tered train­ing or­gan­i­sa­tions to pro­vide skills train­ing, the in­dus­try work­force con­tin­ues to have lower than av­er­age for­mal ed­u­ca­tional qual­i­fi­ca­tions.

In­vest­ment in train­ing

This presents a key chal­lenge for the in­dus­try, with for­mal ed­u­ca­tional at­tain­ment pro­vid­ing not only spe­cific com­pe­ten­cies, but also pro­vid­ing the base skills (in lit­er­acy, nu­mer­acy and over­all learn­ing skills) needed by work­ers to con­tinue to learn new skills and adapt to on­go­ing change in the in­dus­try as­so­ci­ated with in­creas­ing ef­fi­ciency and pro­duc­tiv­ity. This sug­gests a strong need to con­tinue to strengthen in­vest­ment in pro­vid­ing for­mal ac­cred­ited train­ing op­por­tu­ni­ties for the work­force, which cover the di­ver­sity of com­pe­ten­cies iden­ti­fied as im­por­tant across the in­dus­try.

Re­cruit­ing skilled man­agers and pro­fes­sional staff, trans­port work­ers, fi­nance man­agers and heavy ma­chin­ery op­er­a­tors is dif­fi­cult for many busi­nesses in the re­gion, sug­gest­ing a crit­i­cal need to ad­dress the chal­lenges that are caus­ing a lack of skilled staff. These chal­lenges in­clude a lack of suit­ably skilled lo­cal work­ers, the high cost of in­house train­ing of staff, and dif­fi­culty at­tract­ing skilled work­ers from else­where to live in the re­gion.

Over­all, the in­dus­try was cau­tiously op­ti­mistic in terms of the out­look for busi­ness con­di­tions, al­though many op­er­a­tors felt busi­ness con­di­tions were more chal­leng­ing than usual. Most felt de­mand for their ser­vices or prod­ucts would re­main sta­ble over the next 12 months, and few felt it would de­cline. Most re­ported be­ing slightly to mod­er­ately prof­itable, and few re­ported dif­fi­cul­ties with ei­ther ser­vic­ing of debt or busi­ness cash flow. Most were plan­ning to in­vest in their busi­ness, but this cau­tiously op­ti­mistic out­look will not bring em­ploy­ment growth.

Key chal­lenges

A key chal­lenge for the in­dus­try is en­sur­ing ac­cess to a suit­able sup­ply of fi­bre for wood and pa­per pro­ces­sors. Given that a sig­nif­i­cant pro­por­tion of in­puts are sourced from out­side the re­gion, this is a crit­i­cal fac­tor af­fect­ing the abil­ity of pro­ces­sors to fur­ther in­vest. Main­tain­ing com­pet­i­tive­ness in a mar­ket place with in­creas­ing com­pe­ti­tion from im­ports was also iden­ti­fied as a key chal­lenge. For con­trac­tors, lack of cer­tainty about fu­ture con­tracts re­duced their abil­ity to in­vest in their busi­ness. Fall­ing prices, ris­ing in­put costs, dif­fi­culty ob­tain­ing labour and poor telecom­mu­ni­ca­tions were the four most com­monly re­ported chal­lenges ex­pe­ri­enced by busi­nesses in the last three years.

For the fu­ture, the work­force is likely to re­main at cur­rent lev­els, al­though there could be some slight de­cline as a re­sult of im­prove­ments in labour ef­fi­ciency and pro­duc­tiv­ity. Skills re­quired will in­clude a large num­ber of work­ers need­ing to have the skills to in­ter­face with of­ten com­plex com­pli­ance/ ac­cred­i­ta­tion sys­tems, for large numbers of work­ers, an in­creas­ing need for a num­ber of spe­cial­ized pro­fes­sion­als, and a strong re­quire­ment for generic skills such as busi­ness and financial man­age­ment.

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