19 Mar 2015

Fragile forestry industry causing concern

3:39 pm on 19 March 2015

The body representing forestry contractors says about 200 people could lose their jobs as the result of one of the country's largest logging contractors ceasing operations.

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Photo: 123rf

The Forest Industry Contractors Association said the logging and harvesting contractor Harvestpro had its equipment possessed by finance companies last week, forcing its work to stop.

Harvestpro has not yet spoken publicly but its website said it employs more than 200 people in Gisborne and Northland.

Association chief executive John Stulen said it was concerned more contractors could go out of business because of the fragile state of the industry.

He said a combination of low export prices, a slow down in the Chinese market and higher capital costs had all coincided.

"When you've got a large diversified contractor, as they were, they were operating in both logging, log transport and they were also operating quite unusually in two regions. When a forest contractor has been this large and this diversified they've done that for a reason, they've done it to try and give themselves strength through diversity," he said.

"A lot of contractors don't have that diverse capability because they're smaller, because they typically operate in one region, so certainly it sends a shock wave through the industry.

"There's another trend that's also worrying and that is there's a number of large number of contractors who are our members who have actually walked away from jobs because the prices simply weren't going to generate the numbers that they need to continue operating."

Mr Stulen said more and more companies were turning to mechanised tree felling, which was seen as a safer option, however higher capital costs were creating financial disasters in some cases.