THE PERFECT STORM
By midnight tomorrow the forestry industry will be at a near standstill due to what has been described as “a perfect storm” of factors, including the coronavirus outbreak.
“Wood from Europe is flooding the market, there is wood that has been salvaged from the Australian bushfires coming to the Chinese market too — and then the virus,” McIndoe Logging Limited owner Rodney McIndoe told The Herald this morning
“The markets are flooded so we need to stop supply. The whole country is stopping supply, which is the good thing until the dust settles.
“It all hinges on when the Chinese people get back to work to unload boats and clear the port.
“That's the long story short.”
Mr McIndoe described the situation as “a perfect storm” and said he would not be surprised if Gisborne was a ghost town by early next week.
“We employ 24 people so I estimate this is going to affect at least 1300 employees on the East Coast.
“The flow-on effect will be phenomenal through the local economy.”
Logging contractors have been told they have until midnight tomorrow to work as several companies temporarily stop logging exports.
Eastland Port chief operating office Andrew Gaddum confirmed major exporters from China had stopped sending ships — 85 percent of log exports from here go to China — but stressed the port would remain open.
“Some exporters have stopped buying wood. That is the problem. The port is open for business. We are not closed to anybody. If people want to export logs through the port, we are open.”
Mr Gaddum said the situation was changing all the time.
Squash would continue to be shipped out and cruise ships would continue to come in.
Mr Gaddum said log contractors had been asked to stop work because exporters had stopped buying wood because it was not being moved off the ports in China.
Most harvesting crews in the region had already stopped cutting down trees, with the focus today and tomorrow on log trucks getting as much of that cut wood to Eastland Port so they could be paid.
Wood that sits on skid sites loses its value rapidly.
Mr McIndoe's company operates in the harvest and log transport areas.
Because he kept a close eye on the markets, he saw this shutdown coming, he said.
As well as the coronavirus affecting Chinese being able to work, the country had also had two weeks off for the Chinese New Year.
Mr McIndoe said the situation was evolving day-by-day.
“Everyone needs to tighten their belts and get through it and we will come out the other side.”
Another company owner in the log truck industry said their five drivers were devastated to be told they had no work from tomorrow.
“They have bought homes and cars. The New Zealand Government has to come on board, we all have GST and taxes coming out next week as well.
“It is going to affect everyone in Gisborne, every business. The people we get tyres off could not believe it, the auto electric place, the Tolaga Bay pie shop — it affects everyone.
“As soon as we saw the virus, we saw the potential they could close everything. The worst-case scenario is that we are looking at six months before we can go back to work.”
Silviculture crews, those who plant and prune the forests, have been told their work will continue.
Mr Gaddum said the situation was evolving rapidly, as exporters responded to these “unprecedented and incredibly challenging circumstances”.
As of Monday afternoon, they understood several companies in the region would soon temporarily stop all log exports, he said.
“Several others are planning to keep sending product through Eastland Port, to markets including Korea.
“There will be some product going to China although at significantly reduced volumes.
Eastland Wood Council chief executive Kim Holland said it was a worrying time for everyone with the global, national and regional effects of the coronavirus lockdown in China.
“From a regional forest industry perspective, we are starting to feel the effects of the situation in China and are taking a day-by-day approach.
“The impact is already being felt due to high stock levels already in China, ships unable to be unloaded at port, no construction or processing due to the extended Chinese New Year, and then the flowback to our own forestry supply chain.
“Our member companies are meeting with owners, stakeholders and contractors. One of the major log export buyers is stopping taking logs in from Wednesday and further assessments are to be made following the long weekend.
“Smaller companies are trying to keep harvesting and operations going, with the possible option to sell some pruned and A grade saw logs for processing locally.
“Craig Penfold, chief operating officer for Far East Saw Mill, this morning said they have the potential to increase production to assist the smaller operators like wood lot owners, with pruned and A grade saw logs. But this will not solve the problems to the wider forest industry and workforce.
“From the Eastland Wood Council perspective, supporting our members, contractors and workers is the focus. We will continue communicating with our members and regional and national government agencies, to look at how we can support our contractors and workers at this challenging time.
“All companies and contractors are mindful that this impacts directly on our workers and their whanau.
“We will also be keeping up with the Government's response as the pressures hit the national economy.
“The forest industry employs a significant number of people directly and indirectly, so the effects will be felt across our community.”
Te Uru Rakau-Forestry New Zealand deputy director general Julie Collins said there were no formal restrictions on exports from New Zealand to China.
“Ports in China are continuing to accept ships from New Zealand. However, due to the Chinese Government extending the New Year shutdown period, there are limited people working at ports.
“We are aware that some log exporters are delaying shipments due to the issue of limited staff in China to unload ships.
“Te Uru Rakau is closely monitoring the situation and working with forestry industry leaders. Forestry leaders are advising that sawmills are yet to reopen after the normal Christmas break and Chinese New Year period as they assess this evolving situation.”