By Gini Stanley
In the debate over export woodchipping, the argument promoted by the loggers seems to be one of either jobs or forests. Most reporting on the issue has been highly emotive, and few facts have been available to the general public. A factual look at the timber industry shows that there are three players here rather than two. And only one player stands to benefit from the continued logging of old-growth forests.
Of the loggers, the conservationists (not "greenies" but a majority of Australians) and the large timber companies, only the timber companies will gain. Many loggers will lose their jobs anyway when there are no old-growth forests left to log — most estimates run at five or six years. Timber companies will no longer make their windfall profits — at least not by exporting Australia's high conservation value forests to Japan as woodchips.
The Australian timber industry employs 59,300 people, about 0.5% of the work force. This includes the areas of forestry, log sawmilling, resawn timber, veneer and boards, woodchipping, contracting and pulp and paper production. Only 1% of workers in the industry (600) are involved in woodchipping.
The forest products industry contributes about 1% to the gross domestic product and represents only 1% of the value of all rural production (Resource Assessment Commission, 1992). All forest products (including woodchips) constitute 1% of our total exports, as compared to mineral resources at 40% and farm produce at 20%.
Employment in the forest products industry has been falling steadily since the 1950s due to mechanisation. In the 25 years prior to 1988, more than 20,000 jobs (a 60% reduction) were lost in sawmilling and almost 10,000 in timber felling and removal (a 40% reduction). However, in NSW alone, the total production of hardwood from crown land increased by 40% over the same period.
Australia is a net importer of forest products. Our main imports are paper and paperboard products and sawn timber. Our main export is woodchips. The deficit on the balance of trade in forest products for 1993-94 was $1780 million.
It is often argued that exporting woodchips helps Australia's balance of payments. However, research has shown that factors such as the cost of imported capital equipment used in logging and transport, the repatriation of profits by foreign-owned companies involved in woodchipping and the cost of large subsidies provided by forestry commissions quite likely render the net outcome on the balance of payments negative.
Low royalties constitute a subsidy to the forest industry by state governments — and so from your pocket. As a result, export woodchipping companies are making windfall profits. For instance, Harris-Daishowa, which exports woodchips from Eden in NSW, recorded a 33% return on capital for the calendar year 1993. In stark contrast, by the end of the 1980s the state forestry commissions had accrued a debt of $5 billion.
Australia has almost a million hectares of softwood (pine) plantations. Some of these are maturing now, and most will mature within the next five years. Thus, employment in plantation harvesting and associated value-added industries is about to expand rapidly. In the case of sawn timber, plantation softwood seems likely to increase its market share from 36% to almost 100% by the end of the 1990s. Native forest timber currently constitutes a 36% share, while 28% of our sawn timber is imported (mainly from New Zealand).
Plantations are already the main source of wood supply to Australia's producers of wood-based panels and paper. Australia's wood-based panels producers source over 90% of their wood from softwood plantations. Our paper producers source about 64% of their wood input from plantations, mainly softwood, to make newsprint, packaging papers and tissues.
In NSW, CSR Limited has recently been awarded tenders to buy softwood plantation logs at Oberon and Bombala over the next 10 years. The company plans to upgrade the fibreboard mill at Oberon, thus creating 320 new jobs.
This year the company will begin construction on both a modern sawmill and an oriented strand board plant at Bombala. By mid-1995 these will be employing 110 people, rising to 405 in 1997. According to the South East Forest Conservation Council: "All employment in the woodchip industry in the south east forests can be absorbed by the growth in permanent positions in softwood plantation processing within 2 years". In the interim, construction of these two mills will require 100 workers.
All of Victoria's major softwood sawmillers are planning to expand existing mills or to construct new ones. In Victoria, it is estimated that if the softwood sawmilling industry expands to its full potential, mill employment would increase by 75% to 1280 by the year 2000. However, for this to happen, additional finance is needed for three new world-class mills.
The Industry Commission in its 1993 report on "Adding Further Value to Australia's Forest Products" found that Australia's most competitive wood export is particle board (made from softwood). Australia is also competitive in its production of softwood plywood, medium density fibreboard and sawn softwood. Our most competitive pulp and paper products are packaging and industrial papers (made from softwood).
Most softwood plantations consist of closely planted trees which require thinning to enable sawlogs to continue growing. These thinnings, together with softwood sawmill residues (the off-cuts from converting round logs into rectangular pieces of wood plus the defect in the core of the log) provide a large resource for manufacture into pulp, wood-based panels and other products.
The thinnings and sawmill residues resource is large, and Australia does not have sufficient industrial capacity in place to process what is available now. A respected researcher in the field, Judy Clark, suggests that the surplus to current processing capacity is large enough to supply either three world-class pulp mills or 20 new world-scale wood-based panels plants around regional Australia. Currently we have the equivalent of five.
Such projects would be very significant for employment growth throughout regional Australia. They can generate hundreds of skilled jobs in mills and mill construction in most plantation regions.
It is important to note that the skills required for jobs in the hardwood industry are different from those in the softwood industry. Workers would need to be retrained. However, the plantation industry would give workers a security that they do not enjoy in a native forest industry where jobs are continually being taken over by machines and where forests are running out.
Managing the transition to a plantation and regrowth forest industry is the key planning issue. Decisions around this will influence the number of jobs in the industry and how much forest is saved.
Processing all of the available plantation resource is a major challenge requiring considerable effort to secure export markets, simply because it is too big to be absorbed in the Australian market. If Australia processes all its plantation resource, an inevitable result will be the turning of the $1.78 billion wood products trade deficit into a surplus — in the complete absence of native forest logging.
The main impediment to the expansion of the softwood industry is not access to resources or finance but the limited business horizons of the smaller producers in the industry.
Some forms of assistance which will help to restructure the timber industry are: price incentives to encourage a more rapid shift from hardwoods to softwoods; assistance for firms to develop business planning and industry networking; use of Austrade to develop export marketing strategies; provision of free or subsidised technical and scientific advice on plant modernisation and new technologies.
Similar restructuring has occurred in the car, steel and textile industries. Workers displaced by the cessation of woodchipping could be offered the same package as other workers were when their industries were restructured. At least in the plantation industry their jobs will be free both from the pressures of "greenies" and the pressures of mechanisation.
[Gini Stanley is a volunteer researcher for the Australian Conservation Foundation.]