MILL closure rumours are rife in Wairoa with the mothballed rail line possibly the final straw for Clyde Lumber.
It appears other factors might be at play as well, though, including a tough timber market and a history of financial difficulties over the past decade.
The 15 workers employed at Clyde Lumber were reportedly told by boss John Ebbett on Tuesday that if they were able to secure another job, they should go for it.
A staff member told the Wairoa Star this week the company lost its main timber customer when the railway service was stopped because it was not viable to truck timber via the road.
It was understood Mr Ebbett was trying to find a replacement customer but it was a slim hope someone would come along, the unnamed staff member said.
Production stopped at the timber processing mill about the time the rail service stopped just before Christmas.
Earlier, Mr Ebbett said Clyde Lumber would become a marginal operation when KiwiRail stopped its freight service.
Two associated companies, listed as 1479385 Limited and Ebbco Management Services, were placed into liquidation in August last year according to reports prepared by PricewaterhouseCoopers, the company appointed as liquidator.
A search of the NZ Companies Office register shows Mr Ebbett has been struck off as a director and had other companies associated with him liquidated going back to 2004. The Herald has tried numerous times to contact him for clarification on the Clyde Lumber situation but has not been able to reach him.
High log prices will have made business more difficult for Clyde Lumber.
The NZX Agrifax January log price report says good demand for New Zealand logs, especially into China, had defied expectations that prices would soften. Log prices were 5 to 6 percent higher than in January last year.
Moving its heavy product by rail was also cheaper for Clyde Lumber than using trucks, and Mr Ebbett was vocal in his support for efforts to keep the line open.
Wairoa Mayor Les Probert said he and fellow Hawke’s Bay leaders had by no means given up the fight to save rail.
“We’re still pursuing it and would like to see it kept open all the way to Gisborne, but if it can be open to Wairoa we will be happy with that.”
Mr Probert’s view was KiwiRail should give them two more years, and in that time hopefully the freight would come.
“The potential is there in Wairoa but if the rail is mothballed with only minimum maintenance, my feeling is that it will deteriorate to the stage that it is really not viable,” he said.
Mr Probert, fellow Hawke’s Bay mayors and the regional council chairman Fenton Wilson were still seeking a meeting with Transport Minister Gerry Brownlee but had been unsuccessful so far.
A KiwiRail spokeswoman said keeping part of the line in operation, for example Wairoa to Napier, had been investigated in the original viability report last May.
Under that scenario the likely revenue would fall from $1.5million per annum to $700,000 per annum as the majority of freight originated from north of the Beach Loop slip. Wairoa traffic was limited to forestry-related freight and had a lower yield than Napier-Gisborne traffic, the report said.