Just as the local failure of HarvestPro came to light the same thing appears to be happening in related markets on Canada’s west coast and around New Zealand. Sources: Timberbiz, Scoop NZ, Radio New Zealand
Operating losses by contractors of over half a million dollars in six months have been reported in British Columbia (BC).
Last week the second massive sale of forest contractor equipment was held in the space of just six months. This time, more than 420 pieces were sold at auction and 95% of it was equipment from logging contractors in coastal BC.
“This business failure highlights how fragile forest contracting is right now in many places,” said the CEO of the Forest Industry Contractors Association (FICA), John Stulen.
“Here in New Zealand there’s been pressure from forest companies and export markets on forest contractors for months now and unfortunately one company has caved in. Many workers’ jobs are at risk here and in other rural regions.
“Low export prices and high log stocks in China are only part of the problem. Higher capital costs have come with a rapid change to mechanised forest harvesting. The message we are hearing is that contract rates are not keeping up with the true cost of the equipment being employed to do the work more safely.”
The collapse of this large contracting company sheds some light on a larger problem. Many more smaller forest contractors in our association have been complaining of the undue pressure they are under.
Many contractor principals in forestry feel they have nowhere else to go with their skills, so are just hanging on in the hope business conditions will improve.
FICA has systems in place to offer financial advice to business owners finding conditions tough.
Timely advice can give them options and alternatives to shutting up shop and putting more workers’ jobs in jeopardy.
“One of the problems is that forest contractors carry all of the risk but have none of the power in our industry,” said Mr Stulen.
“Among our members we’ve already seen several other large contractors walk away from contracts as the prices offered were just a recipe for the very financial disaster we’re now seeing. Both outcomes put their workers at risk of redundancy.
“Pressure has come from the top for the need to purchase more mechanised harvesting equipment however, contract rates are not being lifted to compensate.
“With the tough market conditions FICA wants to offer support to other contractors who feel they are in tough financial positions. Any forest contractors should contact us as soon as possible before they or their business suffers any further losses. Financially stressed contractors and workers are also at risk of having accidents and that’s the not an outcome that anyone wants.”
General manager of Kajavala Forestry said the decision will create a lot of uncertainty in Māori communities and other workers are at risk of losing their jobs.
Jacob Kajavala, of Tūhoe and Ngāti Kahungunu, said some small contracting firms are failing and the Harvestpro redundancies are an example of the problem.
He said Māori often work on the forest floor, and are the most vulnerable because of various challenges facing the industry such as mechanisation.
“Workers are at risk of redundancy, especially with this Harvestpro. I mean that’s a lot of people suddenly on the job market in small communities where there are not that many options. They are more than just at risk of losing their jobs, they are at risk of not being able to find a job – that’s the more significant risk.
“Tāngata whenua are the people most affected. This is a big blow, this leads to uncertainty, anxiety, not just for the workers, but their entire families and finding other options for employment, that doesn’t come easy.”
He said it was not just the workforces of big companies such as Harvestpro that were at risk.
“Harvestpro is a very large firm, but there are a number of smaller contracting firms that hire up to a dozen people that are sailing very close to the wind, and this is a very large example of that failure.
“I’m aware of a number of contractors, some of them very experienced and very capable who have, looking at the trading conditions, just decided enough’s enough – that’s a change I’ve never seen in the industry before.”
