Australian Softwood Sawmills
Inefficient, but Profitable
Australian softwood timber mills are among the least efficient, but most profitable, in
the world according to a new report on the international timber industry published by BIS
Shrapnel.
From the Financial Review (George Lekakis) 10th June 2003
Australian timber mills are among the least efficient, but most profitable, in the world
according to a new report on the international timber industry published by BIS Shrapnel.
The report, which benchmarked the operating performance of five Australian sawmills
against 33 mills in North America, Europe, Chile and New Zealand found Canadian timber
companies were the most efficient on a measure of labour productivity.
While the average Australian mill generates annual output of 889 cubic metres of softwood
timber per employee, Canadian plants were almost three times as productive.
One of the report¡¯s authors, Peter Grist of BIS Shrapnel
Forestry, said the main reason for Australia¡¯s low
productivity was that local mills were less automated.
¡°Australian operating costs for producing structural lumber
are substantially higher than the other regions studied,¡± he
said.
¡°A significant factor is the lack of automation in many mills
which has led to low labour productivity.¡±
Mr Grist said despite this handicap Australian mills were found to be
the most profitable because of the growing supply of cheap plantation tree logs and
relatively low wages.
Australian mill operators also appear to have greater pricing power than their offshore
peers, but Mr Grist warned market conditions could soon change.
¡°With Australia being a net importer of sawn timber and
distant from key supplying regions, such as Europe and North America, the domestic price
of sawn timber is very high,¡± he said.
¡°This situation may change over the next five years when
domestic production is expected to exceed consumption.¡±
The findings of the report drew guarded reactions from two leading
domestic sawmill operators, Carter Holt Harvey and Willmott Forests.
CHH¡¯s chief operating officer, Ian Unwin , agreed with most of
the conclusions of the report, but believed local demand for softwood timber would
continue to expand in line with forecast growth in the construction market.
However, he conceded Australian mills were probably less sophisticated in the use of
technology and small operations would struggle over the next decade.
Mr Unwin said CHH recently expanded the annual capacity of its largest Australian sawmill
at Oberon in NSW by 50 per cent to 725,000 cubic metres.
¡°To get the highest level of productivity in this industry,
size really matters,¡± he said.
¡°Most of the sawmills in Australia are relatively small by
global standards and the capital needed to upgrade these operations is prohibitive.¡±
The managing director of Willmott Forests, Marcus Derham , said his
company was planning to upgrade its sawmill processes at Bombala in NSW over the next few
years. But he disagreed with the report¡¯s finding that wages
in the local sawmill industry were the lowest in the world, except for Chile.
Source: nafi.com.au/news/ |
