30 Mar 2021

Widespread implications to wood shortage - industry leader

2:28 pm on 30 March 2021

Some building industry players are stockpiling materials as supply line pressures choke timber and other products, an expert says.

Stacked wood spruce and pine timber for construction buildings

(File Photo) Photo: 123RF

Shortages were being felt across the sector, but Carter Holt Harvey's decision to stop supplying structural timber to some major retailers adds further panic for builders, Building Industry Federation chief executive Julian Leys told Morning Report.

The Commerce Commission said it would investigate the company's decision to stop supplying to some parties, while continuing to supply other large customers.

The shortage was alarming, Leys said.

"It doesn't come at a good time. We're in a booming market that we haven't ever seen before, in terms of the demand. What we're looking at here is a shortage of somewhere between 5 and 10 percent of wood overall.

"So it's a matter of - can we increase our capacity within our existing mills to meet that supply?"

He said the short answer was no.

"If you look at even things like the laminated veneer lumber, we've got three mills around the country, all of them have been at capacity since August. The other mills clearly are also at capacity.

"We can't import timber because every other market around the world's in a similar situation to our own."

He said the situation may have reached the point where intervention by industry or government would be needed, and each could consider ways to keep more home-grown wood from being sent overseas as raw materials so more material could be fed to local sawmills.

"We're seeing top dollar being paid for our export logs, and some of that includes structural timber," he said.

"Some of the mills, Carter Holt Harvey for instance - they've put $100 million into upgrading their mills. If there was some form of tax break I'm sure some of the others around the country - and there are a lot of them - that would certainly help to increase capacity going forward.

"Maybe it's whether some of the exporters here ... could they be putting some of that back into the local market? I imagine there might be some levers or incentives to make that happen ... that'd be a matter for industry and perhaps government to talk about."

He hoped some stability would also be provided by "contracts ... loyalty, trust and networks".

The high prices for unprocessed wood exports were good for growers, but came amid efforts to increase house building to address the shortage.

"I think government is certainly listening," Leys said. "They're doing some good moves in terms of getting more supply into the housing market. I think [the wood and timber shortage] is an issue for industry and ... if they increase the [export] tariff that would have some dampening effect on some of the timber going overseas, definitely."

National deputy leader Shane Reti told First Up he was concerned by the shut down of Carter Holt's Whangārei mill, that he thought employed about 150 people.

"We have some significant concern around the planning that Carter Holt Harvey has or has not been doing, and the wisdom of their decisions. This is lousy timing when we're wanting to build houses, when we're needing materials. This is terrible timing.

"Carter Holt could have done much better planning and I believe there must still be ways for them to better distribute what is clearly going to be a scare resource."

In a statement yesterday, Carter Holt Harvery said there had been short-term industry-wide supply issues.

The company said it was continuing to meet contractual obligations and the curtailment of supply related to about 10 percent of the company's structural timber volume.

"Without doubt the building industry is going through a boom. There have been some short-term industry-wide supply issues," it said.

"Since 2018, CHH has been investing significant capital in capacity expansion ... this has resulted in a 40 percent lift in the supply of structural timber compared to 2019. Further capacity expansion is also well under way."

It said there was no issue related to log supply, and it was not exporting structural timber.

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