29 Mar 2021

Wood supply uncertainty: Tariffs on export logs suggested

12:39 pm on 29 March 2021

A building sector figure says the government could introduce a tariff on logs sent to be processed overseas, as small building crews face uncertainty over timber supplies.

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Retailers now face issues with supply of structural timber. Photo: 123RF

Certified Builders Association chairperson Mike Craig told Morning Report smaller work gangs faced the biggest difficulties arising from a decision by major timber supplier Carter Holt Harvey to stop selling structural timber to some local retailers.

The firm has stopped selling structural timber to Bunnings, ITM and Mitre 10 because of supply problems exacerbated by the pandemic.

Craig said it was hard to tell the effect supply chain problems would have on the building sector, particularly because the retailers affected had stockpiled materials and could be in a position to keep up with demand for a period.

But smaller builders who weren't capitalised and were simply finishing one job and moving on to another would suffer from any shortages badly.

"If it's not on the shelve their men can't work," he said.

Rationing of stock remained a possibility.

He said New Zealand had ample logs, but it was mainly a matter of having the capacity to process and chemically treat the wood. Supply chain issues at ports had led to the industry constantly attempting to 'catch-up'.

"Some of the treatment hasn't arrived and it's still sitting in containers," he said.

"The whole supply chain has slowed down completely, getting ships in here and getting them unloaded. They get them unloaded and they distribute around the country and then they're out again, waiting for the next lot to come in."

Government help in finding solutions to unclog ports would help matters, Craig said.

"If we can unload the boats, find a solution, like when they went to Whangārei to unload boats- things just need to be flowing, if we can get the products flowing into New Zealand the problem will start to ease."

Forestry consultant and property developer Dennis Neilson said the shortages of treated timber could push prices up at a time builders and developers were already dealing with higher material costs.

He said small businesses would suffer the most and may need to consider transferring the cost into the final house price.

Craig said he didn't blame logging companies getting good money to send unprocessed logs overseas, but that this did leave local supply companies short of material.

"What do you do about that? Maybe put higher carbon credits on the logs leaving the country," he said.

There was also the option of builders looking to other materials and carrying out jobs differently in the meantime, using materials like concrete instead of wood for projects like floors and cladding.

However, Craig said despite rising costs and delays at ports, the construction industry remained buoyant, with builders busy all over the country.

"Costs have risen and they're rising daily," he said. "You get price increases coming across your computer weekly, because of the cost of freight.

"Some people are having to fly products into New Zealand, But people are still getting work done. I've never seen the industry being so busy, it's absolutely nuts."

Minister for Building and Construction Poto Williams said officials would brief her today about Carter Holt Harvey's decision.

Williams said the government was talking with industry representatives to better understand the problem.

She said many sectors had supply chain problems in the past year and she expected the construction industry would work together to find a solution.

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