A case of ‘cut staff or close’

The total workforce at South East Fibre Exports (SEFE) stands at 42 following the departure of 20 workers last week. 

The forced and voluntary redundancies were rolled out as the woodchip exporter takes drastic measures to return to profitability in 2013 or face closure.

Eight workers were forced to take redundancy packages on Friday after 10 took voluntary redundancy packages earlier in the week.

A total of 20 full-time equivalent jobs were axed across the board, cutting the chip mill’s highly skilled, aging workforce to 42.

Divisions affected were management, forestry, production, security, maintenance, administration and catering.

Managing director Peter Mitchell said the mill had entered survival mode to weather an extremely tough market generated by growing competition from Asia, reduced demand, a high Australian dollar and the Japanese tsunami.

For the second time in its history, the mill will scale back from two to one shift in response to external factors.

The first, in 1996, was in response to export restrictions (cuts of 40 per cent) and government regulations.

This time, Australia’s market share has dropped 21 per cent from last year because of competition.

“We’re a price taker not a price maker,” Mr Mitchell said.

“All of a sudden Vietnam and Thailand, who are cheaper and closer to the market, have really increased their sales.

“Vietnam is now the biggest exporter of hardwood and acacia chips for paper making.”

He said production costs were cheaper in those countries because of different standards for sustainability, compliance and safety.

The mill’s fate lies in shareholders’ hands, with Nippon Paper Industries expected to decide the ongoing viability of the mill by the end of the year.

“People should be concerned, but not panicking, we’re still confident that the shareholders will let us keep going to see when it will improve,” he said.

“Part of my role is making sure the shareholders understand how important the links are between the industry and that you can’t take one part away with affecting another part.”

Sawmills and contractors have an anxious wait until that decision is made and negotiations surrounding supply are concluded with New South Wales and Victorian state governments.

“It’s undecided yet where most of the trimming is going to go,” Mr Mitchell said.

“We always attempt to take all (the sawmill) chips because it’s important to their business, the ones further out we’re not exactly sure what their future is, hot because of what we’re doing but because of their own log supply situation.”

Mr Mitchell said the process of cutting the workforce had felt “terrible”. 

“The mood leading up to it was worse, people were tense not knowing who was going and who was staying.

People were spoken to individually beginning with the volunteers.

“Every one that asked for it was accepted but one,” Mr Mitchell said.

“Some of the others expected it and some of them didn’t.

“I reckon overall the way the employees have responded and their reaction has been pretty good, mature and understanding.”

He described the redundancy package as “generous”.

“People would always like more but we gave them what their entitlements were and nothing less, for someone that was considering retirement it was a golden handshake.

“It’s a bloody unfortunate time and I can’t say whether there will be a recovery that we’d like, I just don’t know.”

Workers in other related industries are also watching the situation carefully.

Allan Richards, manager of Blueridge Hardwoods, which prepares high value dressed hardwoods and green sawn timbers for the building industry said it was not possible to predict what the flow on impacts would be post Christmas.

When asked what would be the worst outcome, he said conservative industry reports estimated that the collapse of forestry in the South East Region would result in the loss of 700 jobs.

However, the Federal Member for Eden-Monaro, Mike Kelly, said he remained confident about Eden’s future.

Dr Kelly said a wind-farm developer on the Monaro was considering using Eden rather than Port Kembla to bring in 22 ship-loads of materials.

He says billions of dollars in renewable energy facilities were earmarked for the region, and Eden was the logical transport hub.

He said the company involved, Downer Engineering, had told him there was  a possibility of using Eden.

He said a decision could be made in 2013.

20 jobs gone

20 jobs gone