More signs of trouble have arisen in the forestry and timber industry in Tasmania, raising further concerns about a potential hollowing out in the domestic supply chain for many raw materials which are vital inputs to the building and construction industry in Australia.
In the latest sign of trouble, government-owned business Forestry Tasmania recorded a financial loss of $27.6 million in 2011/12 – the third straight loss in a row and more than double the previous year’s loss of $12 million.
Forestry Tasmania chairman Bob Annells is pulls no punches about the result, which he says reflects the most difficult trading conditions since the business was incorporated in 1994.
“Revenues are down from $176 million in the previous year to $103 million, reflecting very significant falls in timber production and sales,” Annells says. “These are bleak numbers.”
The latest developments come as the forestry and timber industry in Australia battles a combination of plummeting timber prices, tough competition from imports and low levels of demand due to poor residential construction conditions in Australia and overseas.
These conditions are largely responsible for the collapse of forestry products group Gunns Ltd, which was forced into administration last month after massive write-downs on the value of forestry assets.
Such conditions are not just affecting timber and forestry but are impacting manufacturers across a range of areas which service the construction industry, including steel, bricks, tiles and roofing products. This has raised serious concerns about a hollowing out in the domestic supply chain – fears underscored by the collapse of Gunns.
Aside from this, the latest developments have ignited a political storm about the future of Forestry Tasmania.
While the government says the business is not viable in its current form and needs restructuring, the opposition has accused the government of interfering in the business to stop it entering a new contract for producing manufactured wood products.
The Tasmanian Greens, meanwhile, say the circumstances surrounding the reappointment of Managing Director Bob Gordon for a further five years should be investigated.