By AIDAN KNIGHT AND PHILIP HOPKINS

 

FEDERAL Member for Gippsland, Darren Chester, has blamed the state government’s axing of Victoria’s native forest industry as a key factor in the closure of the AKD softwood timber mill at Yarram, which will result in the loss of 73 jobs.

Mr Chester said the sawmill closure was a result of a series of issues, including the Victorian Labor Party’s decision to abolish the native hardwood timber industry.

“That illogical decision to ban native timber harvesting has set off a cascading effect across the broader Gippsland region,” Mr Chester said.

“We are continuing to see the downstream impacts of the native timber industry closure, with job losses in several towns, along with the closure of paper production at the Maryvale Paper Mill, leading to less demand for wood chips, and the AKD (Associated Kiln Driers) Yarram sawmill has been caught in the backwash.

“We now have the bizarre situation where Australia is not building enough houses to meet a growing population, but a local sawmill is closing because there’s a downturn in the housing market, construction and compliance costs are killing investment, our energy prices make manufacturing uncompetitive and cheap imports are displacing locally-made timber products.”

The Leader of the Victorian Nationals, Gippsland South MP Danny O’Brien, said the announcement was “a shock and a massive hit” for Yarram and the surrounding district. “Seventy-three jobs lost in a town the size of Yarram is enormous,” Mr O’Brien said.

Mr O’Brien said he had contacted the Minister for Regional Development and would work with the state government to support those affected.

He added that while AKD cited industry and construction-sector pressures, broader economic conditions and state government policies had worsened the situation.

AKD’s decision, confirmed on Monday last week, puts 73 local jobs at risk. That’s more than one worker for every year it has been operational.

The Yarram site, which has produced lower-grade fibre products for landscaping, pallets, and packaging, is being shut down amid challenging market conditions and a prolonged slowdown in housing construction nationwide, the company said. AKD employs about 1000 people across Australia, with Yarram being one of its smaller operations.

AKD chief executive Shane Vicary said the closure followed an organisational review, which determined the Yarram mill was no longer sustainable given rising operating costs and forecast demand.

“This has been an extremely difficult decision to arrive at – but a necessary one to take – when we consider all the external factors at play and prioritise what’s best for AKD’s long-term future,” Mr Vicary said.

He added that production will be consolidated across AKD’s four larger sites in Colac, Caboolture, Tumut, and Oberon, which will continue supplying the full range of structural softwood products.

For Yarram workers, AKD said employees would be supported through an Employee Assistance Program and offered redeployment opportunities .

Mr Chester said he had been assured that AKD Yarram Sawmill workers will receive their full entitlements and additional assistance to manage the shock announcement of major job losses.

Mr Vicary acknowledged the closure’s impact on the local community.

“Having operated in regional communities for 70 years, the significance of our departure from Yarram is not lost on us. We understand how important our operations have been to the fabric of this region and we are committed to working with local stakeholders in Gippsland to reduce the impact of the closure where reasonably possible,” he said.

Local industry representatives expressed concern about the mill’s closure, citing its importance to the town and surrounding communities.

“This mill has been part of Yarram for decades,” one source said. “Losing it affects more than just jobs – it touches families, local suppliers, and the wider economy of South Gippsland.”

While the Yarram closure marks a difficult chapter for Gippsland, AKD insists it will not affect its ability to deliver products to customers nationally.

AKD has not yet confirmed when the site will formally cease operations.