6.3.a Employment in the forest sector

Rationale

This indicator provides information on the level of direct and indirect employment in the forest sector. Employment is a widely understood measure of economic, social and community wellbeing.

Current state

Forest management and timber processing are seen as one of the drivers of regional economic activity in New Zealand. The sector is a significant employer in its own right and underpins economic activity in several regional towns and centres. The sector also has significant downstream employment in further processing and support services, such as transportation, furniture manufacturing and timber wholesaling. The wide geographical spread of the forest estate means employment opportunities exist in nearly all districts. These opportunities include not only operational activities in the forest or mill but also positions in marketing, accounting and management. Employment activity has declined over the past decade, due to a combination of increasing productivity, restructuring within the sector and changes in market and foreign exchange conditions. Longer term, the potential exists for additional employment opportunities as the plantings of the 1990s mature and new uses for timber fibre are commercialised.

The central North Island has the largest number of workers employed in forestry and first-stage timber processing. The region had 37.6 percent of direct forestry employment in 2013. This concentration of employment reflects the distribution of mature forests and processing capacity.

The New Zealand Forest Service sought to broaden the distribution of plantings in the decades following the Second World War, with the establishment of new planted forests in regions such as Northland, Nelson/ Marlborough and Otago/ Southland. Private investors also took on a larger role in forestry development during this period. A noticeable development was the growth in small, farm forestry plantings. These plantings have created a geographically dispersed estate. The maturing of these plantings from the 1990s has enabled regional harvest rates to be sustainably increased over the past 20 years.

The increase in regional harvest activity led to a period of new investment in processing facilities during the 1990s and the early part of this century. This generated employment growth across the country. The growth in regional harvest volumes generated additional employment across the country.

In looking at forestry employment activity, it is important to examine not only direct employment but also indirect and induced workforce activity. In the Otago/Southland region, the indirect and induced impacts of the sector generated a further 3,047 FTEs and $214 million in real GDP elsewhere in the region. In broad terms every one FTE employed in the sector generates a further 1.3 FTEs elsewhere in the region. A similar study in the Marlborough district found that, including indirect and induced effects, the forest industry generated $170 million in regional GDP and employed 1,090 FTEs in the year ending March 2007.

Trends

The forestry sector has been a significant contributor to employment and economic activity in New Zealand since the mid-19th century. The modern picture of the sector is of a diversified industry, with employment opportunities ranging from logging and sawmilling through to laminated veneer, pulp and paper manufacturing, energy production and research on bio-material applications.

In 2002 nine regions had over a thousand workers directly employed in forestry management, harvesting or first-stage processing. While the level of forestry employment has declined over the past decade, the sector remains a significant employer across the country.

Recent trends in employment activity

Over the past 10 years, the forestry sector has seen a decline in employment activity. This has been due to improvements in productivity, along with market and exchange rate conditions. The sawmilling and processing sectors have experienced tight margins over several years (for both domestic and export markets). This has led to a number of mill closures and initiatives to improve mill throughput and productivity. The rise in the log harvest over the past four years has stabilised the employment levels in forestry and logging.

Between 2002 and 2013, the workforce engaged in forestry and first-stage processing has declined by around 30 percent. All 10 wood supply regions have seen a reduction in employment activity. The central North Island has seen the largest fall, with the employee count declining by 3977 or 38 percent.

The downturn in new planting at the beginning of the century, and tight economic conditions, had a significant impact on the number of workers employed in nursery operations, site preparation, planting and silviculture (that is, support services). This segment of the industry declined by 1550 workers between 2002 and 2007. The workforce has stabilised in more recent years.

  • Logging: the numbers employed in logging are determined by the annual harvest and improvements in productivity (particularly on steeper slopes). Harvest volumes in 2007 were nearly 5 percent lower than in 2002, due to exchange rate and market conditions. Employment numbers experienced a sharp decrease (nearly 1000), as contractors sought to reduce costs by adopting new technology and systems to increase employee productivity. Employment levels have increased by nearly 10 percent from the 2007 low, due to the rise in harvest volumes over the past four years.
  • Log preparation: employment in log preparation and sawmilling has fallen by 33 percent since 2002. The decrease has been felt particularly since 2008, with domestic and international markets affected by the global economic downturn. Tight margins, a fall-off in demand from major overseas markets and more recently higher log input prices have seen restructuring and further efforts to improve productivity in the sector. The sector has seen several mill closures over recent years.
  • Re-sawing and dressing: the re-sawing and dressing segment of the industry (for example, floorboards, mouldings and kiln dried timber) experienced a 25 percent increase in employment between 2002 and 2007 and absorbed a proportion of the employment that was lost from sawmilling. This employment trend has been reversed over the past five years (due to the factors listed previously) and employment numbers are on par with 2002.
  • Pulp and paper: ongoing rationalisation in the pulp, paper and paperboard industry has seen employment numbers decline by 43 percent since 2002.
  • Structural components: one of the growth areas for employment in the early 2000s was the structural component industry, which includes the manufacturing of wooden structural fittings, wooden components for prefabricated wooden buildings, wooden door frames, roof trusses and the like. Between 2002 and 2007, the industry experienced positive growth of 36 percent (1630 workers). In line with the wider sector, the structural component industry experienced difficult market conditions post 2008 and this led to a period of restructuring and job losses.
  • Furniture: the furniture industry has traditionally been a significant employer of skilled cabinet makers and wood machinists, producing for both the domestic and export market. This industry has experienced a decline in employment of 46 percent (2930 workers) since 2002. This is attributed to a combination of increased imports of furniture and a higher New Zealand exchange rate.

 

Trend Status

Data Quality H

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