More job losses could be ahead for Gippsland as Heyfield’s hardwood timber mill faces a crippling supply crisis.
Australian Sustainable Hardwoods last week told its workforce of about 250 that layoffs would begin by September, when the last of its on-hand timber is cut, unless negotiations with supplier VicForests improved.
The mill’s current long-term supply agreement for Victorian ash timber expires at the end of June and state-owned VicForests has offered reduced volume in a short-term contract beyond that.
ASH spokesman James Lantry said the offer was 80,000 cubic metres for next year and 60,000 for the two years following, well short of the 130,000 he said was the minimum for sustainable operation.
“We don’t get a viable business below 130,000… for us to be competitive against imported products,” Mr Lantry said.
“We had to talk with the workers as soon as we could after we got the news from VicForests. There was a full stop at the end of that offer, not a comma and let’s talk about what else could be done.
“I think they (the workers) are pretty shocked, as we were last Thursday (12 January) when we got the news from VicForests that all they could offer was less than half our supply over the next three years.”
Mr Lantry said ASH now had a matter of weeks to secure supply or jobs would be lost.
He revealed the mill had signed a new 20-year agreement with VicForests in 2014 for 155,000 cubic metres which would have kept ASH afloat, but Treasurer Tim Pallas never signed off on it.
He said the company was not given a reason for the snub, and that Minister for Agriculture and Regional Development Jaala Pulford had refused to meet with them in its wake.
“It was an agreement I’d say neither of us were happy with but we were going to work with,” Mr Lantry said.
“We want to keep the mill open and we will do everything we possibly can as we have been doing for the last five years to secure a long-term supply deal.
“It really sits with Daniel Andrews and Minister Pulford as to whether there is a future for us and a future for the workers.”
Ms Pulford said she would meet with ASH regarding the mill’s future now a “long-running legal dispute” between ASH and VicForests had been resolved.
She said VicForests continued to engage with ASH about a future agreement, but it could not offer the same level of supply.
“VicForests has a legislated obligation to manage Victoria’s forest resources in a sustainable and responsible manner,” Ms Pulford said.
“This includes modelling the availability of future timber resources, with sales contracts built around this.”
A VicForests spokesperson said its offer was based on industry sustainability.
“Improved modelling of the available future timber resources shows the level of supply of ash timber needs to be reduced from the current levels to help ensure the ongoing sustainability of the industry,” the spokesperson said.
“Any future sales agreement offered to ASH will be based on lower supply levels to ensure this aligns with available timber resources.”
Federal Member for Gippsland Darren Chester called on Federal Opposition Leader Bill Shorten to step in and put pressure on his state colleagues to save the mill and its workforce’s livelihood.
He said the State Government must guarantee timber supply for the mill, which provides about 7000 downstream jobs in Melbourne, beyond June 2017.
The mill processes Victorian ash hardwood, sourced from the central highlands which is home to the endangered Leadbeater’s Possum.
ASH is Australia’s biggest hardwood timber mill, employing 230 full-time staff and about 30 contractors.