A SLUMP in woodchip exports is driving a “worrying” downturn with reports emerging up to 100 jobs have been lost across the region’s forestry sector.
It is understood the woodchip stockpile has reached capacity at the Port of Portland, which is one of the world’s largest woodchip export facilities.
There is also speculation that some of the stockpiled woodchip is now affected by mould because it has been sitting there so long.
According to sources within the industry, there have been significant lay-offs and cuts in operating hours within the harvesting and haulage sector.
The situation is being fuelled by the lack of export ships flowing into the Portland commercial harbour and a drop in global woodchip prices.
While the industry is trying to “ride out” the downturn, key union leader Brad Coates yesterday warned further jobs were on a knife-edge.
“It is a worrying time – it is the biggest downturn since the global economic crisis,” the Construction Forestry Maritime Mining and Energy Union manufacturing division South East secretary said.
He said it appeared the major drop in woodchip prices was being fuelled by instability in European markets driven by Brexit as well as United States and Chinese trade war.
“These are having an impact,” Mr Coates told The Border Watch.
He said the downturn was evident given “the reduced number of timber trucks” on the regional road network.
While sawlog and pulplog export bulk carriers were continuing to dock at Portland, he understood the woodchip ship movement had come to a standstill.
“The Port of Portland is full of woodchips and the port is not taking any woodchips apart from a small amount,” the veteran union official said.
He foreshadowed the situation could take between three to six months to resolve and companies were reducing their workforce, cutting back working hours and instructing employees to take leave.
Mr Coates suggested between 50 and 100 jobs had already been affected and the union was representing some employees who had been laid-off.
It is understood the issue was also impacting on the bottomline of some regional processing mills given they also produced woodchip.
“This would be the biggest downturn in the industry since the global financial crisis in 2009/10,” Mr Coates said.
He warned some regional harvesting companies had already cut production by 50pc with one major operator “laying off” more than 10 truck drivers last Friday.
Mr Coates said the downturn had re-ignited the argument for a facility to be established to process this export product.
“The export industry is cyclical in nature and the industry has no control of it – we just have to sit and cop it,” the union official said.
He said the establishment of a pulpmill or processing facility would mean the region would be a “market leader instead of a market taker.”
Mr Coates said workers within the industry were “pretty worried” about the current situation.
Adam Merrett – from Merrett Logging based in Penola – confirmed yesterday the harvesting sector was feeling the brunt of the downturn.
“The Chinese buyers are pushing back with prices,” Mr Merrett said.
He said there were “massive amounts” of woodchip sitting at the Port of Portland, which was at capacity.
Explaining the woodchip market had “boomed” over the past seven years, Mr Merrett hoped the current situation was just a short term “hiccup”.
He said harvesting companies were “geared up” following years of buoyant market conditions, but now faced slowing demand.
“The situation will not go away in five minutes. We have to take the good with bad and ride this out,” Mr Merrett said.
While the company was reducing operating hours, he said they had not downsized its workforce and were explaining the situation to employees.
He said employees were now working around eight hours per day.
While this was positive in terms of fatigue management, he said it was impacting on families’ budgets.
Meanwhile, Timberlink sales and marketing executive general manager David Oliver said the company was not impacted by the global price woodchip downturn.
He said the company – which was investing $90m in redeveloping its Tarpeena mill – had “long-term” contracts with two Japanese paper manufacturers, which were buffering them from the current market conditions.
Mr Oliver said the company had also reached a five year agreement with Porthaul that would see its A-double fleet ferry its woodchip to Portland.
In fact, he foreshadowed the company was gearing up for increase in woodchip export in 2021.
It is understood the issue is also not impacting on Green Triangle Forest Products.
