Log supply an ongoing challenge: Hyne

The Hyne mill at Tumbarumba. CEO Jon Kleinschmidt said the company is committed to Tumbarumba.

In a submission to a NSW parliamentary  inquiry examining the viability of the timber industry, Hyne Timber joined in the chorus of voices calling for an increase in the plantation estate, whilst also noting challenges around freight.

Hyne CEO Jon Kleinschmidt said its Tumbarumba mill underpins the economic success of the town.

In the wake of the devastating bushfires of 2019-20, Hyne  engaged consultants to undertake an economic impact analysis of the bushfires on the Tumbarumba community due to the loss of logs.

The analysis found that over the next three years, the loss of log supply could result in some 157 few jobs across the Snowy Valleys, with around 140 of those jobs lost in Tumbarumba across a range of industries as a result of direct and indirect economic loss.

The report found that Tumbarumba would lose $177m in gross revenue, while there’d also be a significant reduction of by-prodcut supplied to manufacturers such as Visy.

“Hyne has been able to secure log supply from alternative sources, further afield with crippling increases to the cost of manufacturing due to the increased freight costs,” CEO Jon Kleinschmidt said.

“However, Hyne is committed to the Tumbarumba community and the long-term supply of softwood for the construction sector.

“As a result of Hyne maintaining higher log volumes to the mill, the modelling indicates that $244 million in gross revenue in NSW including $144 million locally in Tumbarumba will be supported. This represents up to $8 of retained revenue across NSW and up to $5 of retained revenue in Tumbarumba for every $1 of Hyne Timber’s investment in extra log with additional freight costs.

“It is important to note, that the extra log Hyne Timber has secured was otherwise being exported with no additional value add to the Australian economy. A failure to process these logs onshore would also result in an increase of imported timber for our construction sector and a need for by-product customers to seek alternative materials for solutions such as animal bedding and commercial scale potting mix for our agriculture/fresh food sector.

Hyne applied for a number of government grants support bushfire recovery and was successful in securing $2.989 million to support a mill optimisation project.

Mr Kleinschmidt said increasing the plantation estate was critical for the growth of the timber industry.

“This is a great opportunity to create jobs, improve our environmental footprint through increased managed forestry estates, contribute to our economy and grow the potential for Australian construction solutions / by-product supply,” he said.

“Concerningly, not only is the plantation estate not growing, projects seemingly fail to appreciate the value of plantation and propose to reduce it such as the Humelink project currently out for public consultation at the time of writing this submission. In addition to policies and incentive to grow plantation, existing plantation must be protected. It should not be an option for any project proposals to reduce the much-valued plantation without so much as a mitigation strategy to replant at the very least. 

Another major challenge was the supply chain, including significantly increased freight costs.

“Saw logs are highly sought after due to high demand on their products and as a result of the bushfires,” he said.

“It should be of national concern that European manufacturers can manufacture finished goods and ship them to Australia at a competitive rate to the Australian timber manufacturers.”

He encouraged the NSW Government to look at upgrading existing road and rail infrastructure to make it more cost-effective to transport logs longer distances. This could include optimising truck routes and capacity –  such as fast-tracking new A double routes and bridge upgrades – improving rail infrastructure including at strategic intermodal terminals and innovation support to develop a system to backload log trucks.  Mr Kleinschmidt said Hyne was committed to the Tumbarumba community and its mill operation into the future.