While the value of City Forests' $9.1 million Milton sawmill
has been written down to $3 million, the company has no
regrets being out of the sawmilling market, which is showing
signs of revival.
The closure of the sawmill was announced in April 2012,
because of an untenable 20% revenue decline for City Forests
at the time, with the loss of about 30 jobs.
Craigpine Timber took a five-year lease on the mill, and
employed at least 10 of the affected staff.
City Forests chief executive Grant Dodson said when contacted
it was a well-considered attempt to diversify into
sawmilling, but ultimately ''the US market fell over,
virtually weeks after opening''.
Mr Dodson said 39ha of farmland had been initially purchased
for the project and City Forests was about to start marketing
30ha for sale, which could raise around $500,000.
Given sawmillers were successfully exporting to the US again,
Mr Dodson was asked if he regretted not still having the
Milton sawmill working directly for City Forests.
''No. I don't regret not being in the sawmilling market.
''It's a low [profit] margin and hard work. Our primary
expertise is log growing,'' he said.
Since opening more than six years ago, during each of the
(two) most recent financial years the sawmill depreciated in
value by $3 million, and at the end of the year to June its
book value was just above $3 million.
City Forests chairman Ross Liddell said it suited City
Forests to have the sawmill leased to Craigpine, with four
more years to run, and also because it was selling its ''best
quality'' logs to Craigpine for processing.
When quizzed on City Forests going into sawmilling, Mr
Liddell said it was ''poor timing'', in that the global
financial crisis struck at the time and US demand ''dried
''The market just worked against us that time,'' Mr Liddell
In cutting 302,000cu m from its forests this year, City
Forests was 10% above its long-term sustainable cutting
level, but Mr Dodson defended that decision.
''The marginal over-cut is the right thing to do when there's
a strong market, and has only a minimal impact on the
long-term harvest levels,'' he said.
Safety issues in the forestry sector across the country,
including severe accidents and deaths, has been under
increased scrutiny during the past two years.
Mr Dodson said while the 70-80 contractors used year-round
were technically not direct employees, he highlighted safety
certification with the Forest Stewardship Council, and
improved safety across all operations during the past year.
''There was not a single 'severe accident' recorded across
operations this year. We want everyone working for us to be
safe,'' he said.