Timber industry’s race against the clock

Logs burned by the Dunns Road fire are sent into a Reducing Bandsaw at AKD’s Greenmill, the first step in cutting down the logs.

Thirty thousand hectares of Forestry Corporation land burnt. Thirty-nine crews currently harvesting timber (up from 23 before the fires). Twelve to 18 months before the fire damage makes the logs unusable.

The numbers surrounding Forestry Corp after the 2020 bushfire season are slightly grim, but Regional Manager Dean Anderson insisted he’s optimistic; “fairly,” he clarified.

The fires last summer claimed about 4 million cubic metres of standing timber (aged 12 years or older) in Forestry Corp’s softwood plantations. Mr Anderson said they’ve been ramping up production to try to salvage as many ‘black logs’ as possible before they deteriorate. 

“We would normally harvest between 1.3 to 1.8 million tonnes per annum,” he said. “Next month we’ll be operating close to 4 million tonnes per annum, pro rata.”

Four months after the fires, they’re now just 13% of the way through the burned timber.

To try to extend the life of some of the logs, Forestry Corp is searching for a facility where they’ll be able to store logs under water sprayers, keeping them damp and still usable. Mr Anderson said they want that facility operational by the end of the month.

Keeping the black logs damp prevents them from deteriorating as quickly.

“We’ve been looking at a number of sites, but unfortunately some of those have fallen through,” he said. “We’re further investigating one more.”

The storage facility would need to accommodate 125,000 tonnes of logs – a three month supply for a mill like AKD Tumut. Mr Anderson said they will recycle as much water through the facility water as possible, with about 1 megalitre per day of additional water needed.

“To get the right spot has proven a lot more difficult than we’ve imagined,” he said, facing complications like adequate water and road access, with room to store trucks and recover logs and pump water, when water is “always a scarce resource.”            

While crews rush to harvest the logs, Covid-19 has brought a raft of new considerations, from housing new workers coming to dealing with a slump in the construction industry related to the virus’ economic impacts.      

“They’re self-isolating in houses,” said Mr Anderson, describing crews which have been brought in from Tasmania and migrant labourers who have joined the harvest. 

“[The overseas workers] have had their isolation period and they were generally already out here [before the pandemic], working up north in rural areas.

“We’ve made sure with all the planting contractors that they’ve got Covid plans.”

Those plans include having harvesters work in small groups, so that if one person falls ill, the entire group can be stood down and isolated.

“We don’t want to bring anything into town,” said Mr Anderson.

Peter Crowe, President of the Softwoods Working Group, said the housing market has dropped by as much as 20% since Covid-19 began. Building associations are calling for Federal stimulus packages to encourage people to continue building. 

The Chief Executive Officer of the Australian Forest Products Association Ross Hampton said with fewer families moving into Australia, and existing families feeling uncertain because of Covid-19, construction will take a serious hit.

“Our sawmills are the canary in the coalmine when it comes to new housing,” he said. 

“The order books are emptying. The mills are now expecting a 50% plus drop off in timber demand by Christmas with devastating consequences for the 45,000 regional Australians who work in the softwood timber sector.”

Mr Hampton called for consideration of the 40,000 people employed in creating trusses, framing and other timber building products who will feel the flow-on effect of the downturn.

“Net migration has made up over half of our annual population growth over the last decade and is a vital driver of new home construction. With that key element missing even more effort will have to be put into encouraging Australians back into the new home market.”

The AFPA specifically asked for measures such as: increasing new homeowners’ grants and other stimulus (for any new home built); bringing forward government-funded construction projects such as affordable housing commencements; and tax and land price support. 

They also advocate for streamlining the regulatory process for new home construction to make it “simpler and reduce the time between approvals and construction.”

AKD Softwoods announced last Tuesday that their mills at Colac, Caboolture and Oberon would slow production “to better align production volumes with expected demand.” Tumut Sawmill Manager Warren ‘Rab’ Green said part of the benefit in having the other mills scale back was that Tumut can continue “full steam ahead.”

“The other sites are taking some time down and they’re letting us continue to run because of the salvage operation,” he said.

“We’re assuming the market’s going to take a bit of a dip, but Tumut’s not changing at all.” 

The Tumut AKD mill employs close to 200 people. Mr Green said they brought on about nine additional staff to help with the bushfire salvage operation, with those workers arriving before the pandemic hit.

Mr Green confirmed that the mill’s priority is to process the logs and store them as a finished product and monitor the market before making further decisions. He said they were fortunate that the virus hasn’t had a significant impact on mill operations, aside from its economic effects on the construction industry.

AKD headquarters have also joined the call for a Federal stimulus package to encourage construction.

“People are looking at the wider market and trying to work out how much volume you really want stored as finished goods if there’s going to be a slump in housing because of Covid, and that’s a national issue,” said Mr Anderson.

“We’re working through with [the mills] about how to price the logs appropriately so they can keep operating.”

Mr Anderson said it’s preferable to have the logs stored as dry, finished goods, rather than keeping them as damp logs, but the figures have to pencil out for the Forestry, the mills and the markets. 

As they harvest, Forestry Corp has been prioritizing domestic customers for their logs, targeting the larger sawlogs (24 years and older) for local mills, then pulp-quality logs for Visy (which comes from the tops of larger logs or from clearing younger 12-18 year old trees) and finally the in-between sizes are harvested for export.

While domestic construction has taken a hit, foreign markets are still eager to buy Australian timber, with China snapping up a lot of the mid-range logs in the 18 to 24-year age bracket, which Mr Anderson said aren’t as useful for Australian buyers. 

“That material we’ve started exporting. It would be used for holding up formwork in construction or for packaging. It may go into a range of other products, but that’s where it will often end up,” he said. 

Export markets took a hit during the early days of the Covid pandemic, as ports closed and foreign economies spiraled. Now that conditions are easing and the spread of the virus has slowed, Mr Anderson said activity is increasing and the mid-range logs have found a market in China, because of the vast scale of their construction industry. With so many people and so much construction going on, Mr Anderson said Chinese builders are always needing timber. 

“It’s not major structural timber and it’s just a wee bit smaller than what the mills would normally take,” he explained.

While foresters continue to fight against time and market limitations, they’re also watchful for blue stain fungus, which can more easily enter fire-damaged trees. 

“That’s something that we’re monitoring,” said Mr Anderson. “There’s always a bit of blue stain out there, especially when you have warm, humid weather, but when you have damaged trees, that means there’s more access points for the fungus to get into the tree.”

He said the recent cold snap across the Snowy Valleys was “brilliant.”

“If it could be that cold for a while, it’d be good,” he added, since the fungus thrives in warm, humid weather. 

Ultimately, the fungus is killed through the sawing process, halted once the lumber is sawed and dried. 

“We monitor it closely, because if it gets too much, because it won’t be good for the sawmills,” he said, adding that there’s still a potential to sell blue stain timber to export markets as formwork and packaging, since those products tend to be single-use. 

“If the market is tight and there’s plenty of logs available, it might be difficult to sell it, but there is a potential.”

Despite the challenges facing Forestry Corp, and the slowdown of the building and milling industries, Mr Anderson remained positive that the forests will be replanted and the market will recover. 

“There will be an impact on the volume that’s available, and we’re working through with our customers what’s going to be the best way to manage that,” he said, adding that the bushfires impacts are unlikely to change the building markets long-term. 

“They’ll still continue to use timber framing. It’s such a great product. Someone will fill the gap.”