The Fast Death of Our Major Forestry Mills

Written By: - Date published: 8:53 pm, November 20th, 2024 - 14 comments
Categories: Deep stuff, Economy, jobs, Politics - Tags:

2024 is the worst-ever year for our forest export industry as a whole, with most of our largest sawmills closing and the loss of hundreds of jobs.

In the latest, Kinleith is about to close with the loss of 230 jobs. 

The politics of this is simple and clear: National and New Zealand First blamed power companies for the closure of Winstone Pulp’s two plants near Ohakune and Waiouru after 45 years. With all their talk this government achieving absolutely nothing for them. Same result will occur here.

The closure of Kinleith , with another 230 jobs going, leaves no mill of that scale left. It takes decades and decades to build and support major export manufacturing in New Zealand, with central government funding and institutional support, foreign investment, and decades of local worker and union and community support to make it all happen.

Labour knows this. Only last year the previous Forestry Minister Peeni Henare said that working with Oji Fibre Solutions, a new large-scale sawmill to supply timber and bespoke engineered mass-timber products could provide hundreds of jobs and boost the economy.

The Wood Beca study, a project between the government and Oji, showed that upgrading the mill could create an extra 200 jobs and generate up to $566 million in additional GDP, and reduce greenhouse gas emissions by 65,000 tonnes of CO2 per annum.

Labour and National, for multiple decades, treated the Kinleith Mill as a key strategic asset for New Zealand, investing in the infrastructure required for one of our largest industrial sites. Only last year the previous government announced a $57 million fund to partner with wood processors to co-invest in wood processing to create sawn structural timber and engineered wood. 

Across the fields of low-quality volcanic plateau land, Pinus Radiata was identified back in the 1940s as a viable crop that also needed significant investment to turn into export products. By 1947 the Tokoroa township and housing area were being constructed for millworkers. 

State investment to help this massive industrial site become viable is illustrated in the New Zealand Railways purchase of the tramway between Lichfield and the mill, with extensive rail line reconstruction to reduce steep grades and eliminate tight curves. The upgraded line finally opened in October 1952, and continued to be a major source of revenue for Kiwirail.

Government also came to hand with huge investment in geothermal energy at Wairaki to power Kinleith, using steam from the nearby Waiora Valley. This had state support all the way through it, from the scientists and engineers from the Department of Scientific and Industrial Research, Ministry of Works, and the Electricity Department, who together conceived, built, and operated Wairakei.

Kinleith’s massive industrial site was built by F. T. Hawkins for New Zealand Forest Products Ltd: a huge workshop and store, a pulp store, and a causticizing building for bleaching paper. In the 1990s Hawkins became part of Downer NZ.

The whole thing was opened by Prime Minister Syd Holland and NZ Forest Products Chair David Henry in 1952 together with 6,500 people.

Kinleith was a true nation-builder project. 

One of the larger demands for this paper was the large broadsheet-format newspapers such as the NZHerald that was printed in Penrose through Wilson and Horton. Of course, printed newspaper is in rapid decline.

But now Oji Ltd is in full retreat. They were $103m in the red last year, have closed their big recycling plants in Auckland and Wellington, and after Kinleith it’s hard to see Kawerau surviving let alone Oji staying in the country. Revenues shrank 14% from $1.4b to $1.26b, and margins shrinking to 1.8%. 

To add to the damaged Ohakune and Waiouru, we may add Tokoroa with 14,000 people.

Another chapter  to David McGill’s Ghost Towns of New Zealand.

Kinleith will never be able to be replicated again. 80 years of major manufacturing, just gone.

For any political party, this is the truth: New Zealand will simply die without a value-added export economy.

The pulp and finished timber industry here is collapsing on National’s watch and they are letting people and towns and factories simply go to waste. 

This rapid decline in this core exporting industry is entirely on this National-led government, just as it needed central government support to make it happen right from the beginning. 

14 comments on “The Fast Death of Our Major Forestry Mills ”

  • Comments are now closed

  1. adam 1
    20 November 2024 at 11:02 pm

    These guys…

    Not an economic brain cell between the whole coalition.

    Great piece Advantage

    • powerman 1.1
      23 November 2024 at 8:54 am

      I don't wish to be labelled a conspiracy theorist but, the current government look to be hell bent on bringing the country to its knees to meld it into? We see cuts across the board but few positives from this coalition.

  2. Tony Veitch 2
    21 November 2024 at 5:32 am

    But . . . but . . . but . . . now the "market" will decide!

  3. Bearded Git 3
    21 November 2024 at 6:50 am

    Great post.

    I listened to Chris Bishop on RadioNZ's Checkpoint last night when the loss of jobs at Kinleith was put to to him. All he could do was blather on about was claiming credit for falling inflation (wrong) and how the government was slashing government spending to gets the books in order.**

    Not a word about help for crashing industries.

    They must be spending $32 billion on roads so people can drive quickly to pick up their Jobseeker Support.

    **Oddly I can't find a link for this on RNZ's Checkpoint site.

  4. Tiger Mountain 4
    21 November 2024 at 7:10 am

    Good article reminding of what can happen with a positive relationship of industry, public infrastructure and a non neo liberal state.

    I still have some booklets about the famous “Kinleith Strike”–January 5 to March 28, 1980–that instigated several films, publications and a new approach to disputes where families and community were actively involved.

    Our South Auckland car industry site, and many others, donated throughout the strike. Then in 1988 we had an extended strike and Kinleith unions were among the first to contribute, enabling us to go 10 weeks with a successful conclusion.

    Unions can struggle to overcome macro economic decisions–but an important point many miss is that organised workers transfer million to local communities that would otherwise be trousered by corporates.

    That element aside, it is very sad indeed to see Kinleith go and another chapter in “Ghost Towns”

  5. Tiger Mountain 5
    21 November 2024 at 9:30 am

    Why does capital wind down manufacturing capability? Sistema in Auckland is another one with redundancies, which was a blow after a 3 year organising effort by Etū.
    https://www.stuff.co.nz/business/360482203/sistema-proposes-cut-102-its-workforce-union-says

    Was reminded of Jane Kelsey’s “Fire Economy” book. Jane along with various other Academics identified that FIRE as in Finance, Insurance, Real Estate is where it is at for the parasite class.

    https://www.bwb.co.nz/books/the-fire-economy/?srsltid=AfmBOorE143PosJ7e91M6NCATiUBoSL0poyTOwfzjurfg5AbgqO9NSQ5

    • Ad 5.1
      21 November 2024 at 11:47 am

      See if you can find Rod Oram's "Reinventing Paradise: How New Zealand's economy is diversifying". Not sure I got the title perfect but it shows the alternative to FIRE.

      Prof Kelsey was sure right for her time. But there's been good new sectoral growth since then.

      • Ad 5.1.1
        21 November 2024 at 12:54 pm

        … and to argue against myself somewhat, this forestry processing collapse back to raw exported logs, is very similar to Fonterra selling all its brands back to commodities, just like our wool for the most part, and most of our fish catch, and deer velvet, and apples.

        …so we stay in a low tax base,

        … so we can't have nice things.

        • Jenny 5.1.1.1
          21 November 2024 at 3:15 pm

          A Banana Republic Economy.

          Ad @5.1.1

          21 November 2024 at 12:54 pm

          … collapse back to raw exported logs, is very similar to Fonterra selling all its brands back to commodities, just like our wool for the most part, and most of our fish catch, and deer velvet, and apples.

          Banana Republic

          From Wikipedia, the free encyclopedia

          …..the term banana republic describes a politically and economically unstable country with an economy dependent upon the export of natural resources…..

          In a country mostly too cold to grow bananas, we grow grass, pine trees and other temperate crops.

          As well as whole logs, wool, most of our fish catch, deer velvet, apples, and one more to the list live sheep and cattle exports.

          As most of the mark up and profit comes from the working up of these natural resources into usable finished products, If we want these finished products, we we will have to import them, leaving us with a negative trade imbalance. A country with a banana economy and a negative trade balance is kept forever poor and forever in debt.

          We will need to invent a new category to describe New Zealand. An 'Undeveloping Country'

  6. Patricia Bremner 6
    21 November 2024 at 12:42 pm

    Some economists are bravely calling out this and past Governments austerity drives and lack of support for infrastructure. See the Subtrack NZCTU Boniface article, and The Kaka. This 3 Party ad hoc pull down of perceived "woke" actions of the previous Government is causing a tsunami of collapses. Perhaps people are now perceiving a job is more important than a tax cut. Governing should be for all, not just the "sorted".

    Act through Curia is running misinformation to twist perceptions of reality, but as they are assisting Act in its take over of regulations they will not be checked. Vote carefully in 26!!

  7. Binders full of women 7
    21 November 2024 at 2:17 pm

    The worst is yet to come. There's a castastrophe coming. Successive governments have incentivised tree planting for (cue northern accent) — you're not going to believe this— to NOT harvest the trees. Something called carbon credits. So the likes of Ikea pay way above market rates to buy perfectly good sheep & beef farms — to plant in pines to offset big euro factories. And then: 1) small towns die, 2) mills close, 3) meatworks close, 4) meat becomes more expensive. Little old Wairoa will be next— if about 4 more big farms get sold for trees the works will close– 300 jobs in a tiny town GONE. Those that can will move to OZ and only the old and the meth addicts will be left.

  8. barry 8
    21 November 2024 at 5:13 pm

    I spent far too much of my youth working in various jobs at Kinleith, so this hurts. I loaded paper on to railway wagons for destinations all around the pacific.

    Oji will continue to make paper at its plants in Japan. My question is how can it be cheaper to make paper there than here? The trees (some of which I planted) grow right there, and are much cheaper than Japanese wood. Electricity and labour is at least as expensive there.

    I can understand us no longer making cars and TVs, but globalisation should make NZ the perfect place to make paper.

    • SPC 8.1
      21 November 2024 at 5:31 pm

      If it is economics, it is the power price and or related to tech modernisation (automation/robots).

      Maybe a lower price to move wood about or otherwise cheaper wood from ASEAN nations.

      It maybe also be a form of economic self-sufficiency, as per China and loss of sea lanes risk.

  9. Mike the Lefty 9
    23 November 2024 at 4:17 pm

    When they can't get away with blaming the previous Labour government, this CoC regards the loss of hundreds of jobs as "business as usual" or "market forces".

    To put it in a few words – they don't give a f…