The South East Fibre Exports (SEFE) wood chip mill in Eden is cutting back operations with voluntary redundancies called for and production expected to be reduced from double to a single shift in early November.
The company attributes the cut backs to continuing difficult economic conditions.
Managing director Peter Mitchell delivered the news to SEFE staff yesterday (Wednesday) afternoon.
“It’s probably the hardest couple of months we’ve had to experience in coming to this realisation,” Mr Mitchell said on Wednesday.
“This is our only course of action. We understand how there are a lot of people relying on our business to keep regional communities surviving.
“That’s all we’re doing, trying to survive so they can survive as well,” he said.
“We’ve already done some restructuring at the management team level. Our finance manager was recruited from within and Vince Phillips was not replaced.
“We’ve put up some possible business models to our shareholders (Nippon Paper Industries) that have us surviving. NPI has to choose which one is most appropriate. So the ultimate decision is with the shareholders. All we’ve done is our best efforts to put a few options in front of them given their own direction which has set what assumptions we should make to develop those models,” he said.
Mr Mitchell says around 20 voluntary redundancies could be called for depending on which model the shareholders adopt.
“The short to medium term market is not very favourable for our products.
“The whole timber industry is haemorrhaging. It’s just as bad in plantations as in native forests, and in soft wood as in hardwood.
“We’re saying around 20 voluntary redundancies will be needed depending on which model shareholders adopt,” he said.
SEFE says the Japanese tsunami, the high Australian dollar and increasing competitiveness from Vietnam and Thailand are the major factors behind the scale down.
Also an issue has been the high cost of ensuring the Australian product adheres to strict compliance standards by meeting the highest environment and sustainability requirements in the world.
Asked about SEFE’s future Mr Mitchell remained positive.
“I can definitely say we will be in the woodchip business in 12 months’ time. We have to push hard on diversification such as mineral exports, and we’re looking at other options other than iron ore. I’m trying to get some contacts in the minerals area to enlighten them on the option of our facility here as an export hub for minerals.
“We won’t be sitting on our hands and lamenting what used to be, but are looking for future options. Mineral prices are down but they’re in cycles just like everything else. If they come up we might be offering opportunities for people.
“We’ve been in this situation before. In 1996, after the export licensing restrictions and the Regional Forest Agreements took their toll on the industry, we dropped to a single shift and were able to successfully ride out that crisis to return to a double shift in 2005,” Mr Mitchell added.
“There will always be a market for the dependable source of sustainably harvested wood pulp that we supply. I believe we’ll get through this and save a lot of jobs for the region.”