Timber sees supply and demand drop despite housing crisis

The peak industry body says it requires more support to meet future demand if the country is to meet its housing targets. The industry is also suffering from a downturn in home construction.

Sharon Musson, CFMEU NSW manufacturing president and long-time timber worker in Tumut, at a softwood plantation site that burnt down during the Black Summer bushfires. Picture: Noah Yim/The Australian

The timber industry is reeling from “whiplash” as high interest rates and sluggish new home construction have dried up demand, following a boom period during the past several years.

In the long run, however, the forestry industry peak body said it needed support to expand softwood plantations, which took a significant hit during the 2019-20 Black Summer bushfires. It said Australia faced a “supply cliff” if it was to meet its housing targets as the nation struggled to keep pace with housing needs.

At the centre of this double whammy is Tumut, a town of just under 7000, two hours west of Canberra in regional NSW. It is situated in the Murray Valley, which itself was the nation’s second-most productive softwood ­region – 18 per cent of national production – before the Black Summer fires, according to the federal agriculture department.

“This facility was processing 500,000 cubic metres of logs, today we process 250,000,” AKD Softwoods chief executive Shane Vicary said at the company’s Tumut mill.

AKD is the largest sawmill company in the country, producing about a quarter of the nation’s timber consumption, according to Mr Vicary.

AKD Softwoods chief executive Shane Vicary.

“This mill is doing half the volume that it used to do, and it’ll do half for the next 20-plus years, based on the fact that those logs got burnt,” he said.

Despite this dramatic reduction in production, timber continued to sit on the shelf without being sold, he said.

“We can’t get enough people to buy the timber,” he said.

“At the moment, most of our employees are earning less ­because there’s less activity: we’ve got overtime bans, we’ve got ­employment freezes.”

Long-time Tumut timber worker and CFMEU NSW manufacturing president Sharon Musson said the industry was vital for Tumut.

“It’s a trickle-down effect,” she said. “The whole structure of families, they rely on the timber coming through.

“We’ve got one family, there’s eight people all related to each other working together – you know, uncles, brothers, sons.

“For them to lose their jobs, it wouldn’t just be the impact of one person losing their pay.”

Mr Vicary said reduced supply and demand made them weaker. “You become more fragile,” he said. “You become a smaller operation. You become more susceptible to cold winds.

“The irony of our situation at a time when we need to be building more houses … we need the state governments to be investing in more infrastructure to enable more suburbs.”

AKD Softwoods’ Tumut facility. Picture: Google Maps

Australian Forest Products ­Association NSW chief executive James Jooste said the conditions for the industry had to stabilise amid the headwinds, especially if the nation was to meet its housing targets.

“There is no other solution to meeting our housing needs other than making sure we have a stable supply of timber and the demand needs to be stabilised,” he said.

“It’s so important that we make sure that when we have these ambitious targets, we also have a plan and a road map to get there, but underpinning that all is making sure over the next 20, 30, 40 years we have a consistent supply of domestic Australian timber to meet those needs because timber goes into 90 per cent of the new detached houses built every year.”

The federal government has previously laid out ambitions to build 1.2 million new homes in the next five years. NSW Premier Chris Minns recently admitted the state would not meet its target this year.

The Australian earlier this month reported construction industry chiefs warned the country was not on track to meet the target.

“Targets are just targets without action so we need to make sure that we’re not seeing this boom-and-bust cycle continue in our housing construction industry,” Mr Jooste said. “We need an even pathway and we need investment in our most important material in that housing construction cycle, which is timber.”