Australia's forestry and forest products sector is warning that locally based manufacturing facilities are close to breaking point with spiralling energy, logistics and insurance costs taking a major toll on business operations, Chief Executive Officer of the Australian Forest Products Association (AFPA), Diana Hallam said today.
The warning comes as Australia and New Zealand based paper and packaging manufacturer Oji Fibre Solutions (Oji FS) today announced it will likely end paper production at one of its major NZ mills because it's no longer profitable. The closure will cost around 230 local jobs. The mill supplies paper to Oji FS's three Australian packaging facilities.
Diana Hallam said, "The forestry and forest products supply chain is Australia's 6th largest manufacturing sector and the processing and manufacturing facilities that employ local people and create local products, from timber house-frames to packaging, cardboard and paper and other home furnishing products are under extreme pressure with rising costs. The challenges we face here are the same as those across the Tasman.
"One of AFPA's member manufacturers has reported its future Queensland electricity contract will increase threefold from $50 per megawatt hour to over $150 early next year. Rising energy costs like this, along with increasing transport and logistics and insurance costs, coupled with the depressed market for building and construction products like timber - is proving to be a very difficult storm for manufacturing businesses to weather.
"Our sector is responsible for injecting $24 billion into the economy annually. We directly employ 80,000 people and indirectly employ another 100,000 on top. Many of these jobs are the lifeblood of regional centres. It is vital to maintain the scale and integration of our sector – if the cost of one element in the supply chain becomes too difficult it will have a huge ripple impact across the rest of the sector.
"The cost of local manufacturing and the flow on impact to local jobs and communities is shaping up to be a huge Federal Election issue in 2025. Large manufacturers need affordable and reliable power to run their equipment and make local products. Right now, those costs are out of control and flowing onto those other input costs like transport. "Forest products manufacturing needs a solution to this crisis and AFPA along with the rest of our sector will be campaigning on this issue ahead of the 2025 Federal Election," Diana Hallam concluded.
