Exchange rate cuts sawmillers profits

Waimarino Bulletin, Volume 5, Issue 21, 20 October 1987, Page 1

Exchange rate cuts sawmillers profits

The present exchange rate of the New Zealand Dollar is destroying the timber industry, according to the President of the NZ Timber Industry Federation, Bob Hawkins. He believes the industry is being squeezed out of business by "funny money" exchange rates on one hand and a government monopoly (the Forestry Corporation) on the other. "Even on a firming market in Australia orders were having to be cancelled because of the exchange rate," said Mr Hawkins. "At A92 cents timber exports were literally being stopped in their tracks." According to Mr Hawkins two thousand jobs have been lost in sawmilling in the last year - 500 in the last two months. The interest bill on current stocks was an incredible $1.0 million per week and the industry had suffered a cash outflow of $207 million in the year to March. "In the last two years export volumes had dropped 30 percent and export prices fallen by around 25 percent, yet the log prices charged by the Forestry Corporation had, on average, increased by at least 25 percent," he said. The Federation has proposed to government that the Corporation's assets be sold off to a wide range of buyers to try and generate some real competition. "If our log suppliers had shared the downturn we might have all survived this recession," said Mr Hawkins. Recent discussions with Ministers had revealed sympathy for the damage being done to a high-po-tential export industry but apart from some good support for new export initiatives proposed, no solutions were offered. "It seems crazy we have all this wood and plenty of markets yet our plants are idle and people are being laid off. At the same time we are now increasing our exports of premium unprocessed logs to the Japanese", said Mr Hawkins. "I don't believe our forests were planted to provide raw material for subsidised Japanese sawmillers. If we want to become another economic colony for Japan we are going the right way about it."