Timber Globalco idea mooted as a crisis looms

Friday 18th May 2001

Jay Goodenbour

By Graeme Kennedy

Timber giant Carter Holt Harvey is putting forward the idea of a marketing "Globalco" for the wood industry.

CHH Forests chief executive Jay Goodenbour warns the $3.6 billion timber industry must consolidate its export marketing into a single unit to avoid a looming crisis created by a 30 million tonne "wall of wood" within five years.

He suggests the marketing group could follow the dairy industry concept with major companies selling their trees through a corporation or joint venture, rather than individual firms trying to find their own markets.

He said Carter Holt Harvey, Fletcher Challenge and the Central North Island Forestry Partnership, although in receivership since February, handled almost 80% of New Zealand's export log business and could form the basis of a single approach to off-shore marketing.

New Zealand last year harvested 20 million tonnes of timber, of which 15 million tonnes was processed and five million exported as logs.

In five years, he said, the harvest would be 30 million tonnes but processing would increase by only two million, leaving 13 million tonnes available for export.

"But in four or five years we would not sell 13 million tonnes of logs, so we have got to start opening more markets quickly," he said. "There will always be markets at a price but we have to find a home for our high-grade wood. Asia is interested in middle-class and low-grade logs for paper and bench-tops, so the dilemma is that while we have markets for low-end product, New Zealand has product for the high end.

"We have got to target specific markets and those efforts would be helped if marketing was consolidated into one entity and our wood sold as a single brand. We are talking to influential people in the industry and making progress but the three major companies have got to accept the idea before we can take it further. After decades of competition, it won't happen overnight."

Mr Goodenbour said New Zealand's domestic consumption of processed wood was only five million tonnes and while the industry would like to process more to add value and provide jobs, particularly in the regions, foreign subsidies and tariffs were a problem for increased exports.

Tariffs on finished products existed in Australia and Asia, with a 40% tax on plywood exported to India.

"We have got to break down the barriers," he said.

"We need a level playing field before we think about increasing processing for export here but once it happens it comes down to the economy of processing here compared to other countries.

"It is not an intelligent investment if we cannot get access to the markets where the product is to be sold."

Comments from our readers

No comments yet