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Rationalisation of the sawmill industry will continue, says Marty Verry, chief executive of Red Stag Timber, which is building a $60m 'supermill' at Rotorua.
Verry told the ForestWood conference that data analysis showed another 16 mills will close in the next six years – 12 small mills, four medium and one or two larger mills. He was not sure how that played into the 2022 sector strategy of doubling forest and wood production exports (to $12 billion). The trend line of a declining number of mills was well established, but they could still produce more timber and be profitable.
"It is just the story of automation and consolidation happening around the world," he said.
"Some of the risk areas include a drop in building consents – from 2018 they are predicting a big drop off." Some struggling sawmills could get supported if they were part of a forest or bigger operation.
Rapid technology change and rapid uptake of information and technology will be the trend.
"You will see fewer mills.... Those that are surviving would have invested heavily; they will be very competitive and highly automated and productive."
It is not unique to New Zealand: Australian data shows the same consolidation story – sawmills getting larger and more automated.
Since 2006-07 there has been a significant fall in the number of sawmills in Australia, hardwood sawmills falling by 60% and softwood by 25%. Over the past decade their domestic softwood industry has become much more capital intensive and larger in scale.
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