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FICA E-newsletter - April 2024

I officially started in my roles as FICA CEO on 2 April 2024. 

I want to take this opportunity to thank Prue Younger for all the hard work she has done for FICA. FICA is a well-respected industry association and has a seat at the table in many places that make key decisions affecting our industry, our members and sponsors. 

It has been a busy few weeks visiting a number of major sponsors, being involved in meetings on industry training, hauler guarding, visiting specialist forestry accounting services, insurers, financiers, NZFM operations, machinery importers and manufactures, Government agencies, a number of forest managers and most importantly FICA members. 

Unfortunately, many of my conversations have focused on the export market which is once again in a state of turmoil. This due to NZ Forestry industry’s heavy reliance on commodity export prices in China and the decline of that market. NZ Forestry simply has too much capacity and not enough sustainable demand. 

Market Update

As I write, the spot AWG export prices are such that many forest owners in many parts of NZ are struggling to make positive stumpages, let alone a satisfactory return on investment. Unfortunately, contractors will be first in the firing line, but ultimately it will affect forest managers, owners and the value of assets they own. This volatility is killing the industry. 

As identified in the ITP, the FICA inspired ‘reality check’ meeting held in Rotorua July 2023 and the subsequent setting up of the Pan-Sector Group, NZ Forestry Inc has failed to develop sufficient alternative markets to Asian log commodity markets.  

Some of the feedback I have had since taking on the role is that I have joined at the worst possible time, given the state of the markets. There is a saying that change doesn’t happen until the price of not changing becomes greater than the price of changing. I would suggest that 2024 could be one of the worst years in the forest industry or it could be the year that we finally see real change and not just another industry group set up to discuss how we sort things out. 

The recent announcement of the $300M wood processing plant in Kawerau is a step in the right direction, why can’t the same be done in Tairawhiti? To me it seems like a huge opportunity to solve a multitude of challenges in the region. It will take a willingness of forest owners, local and central Government, Iwi and other stakeholders to jump in the same waka and make it happen. 

In time it would be good to see such a project appear on Ministers’ fast-track consenting process. I appreciate this may not deal with immediate issues, but you have to start somewhere.

What's Next?

I will be taking my first visit as FICA CEO to Tairawhiti April 16-18 to visit FICA members and other stakeholders. 

FICA members will be aware that invoices have been sent out in April for current years’ membership fees. Given the current state of the market we are seeing requests to cancel membership. Some are driven by businesses no longer trading but others are under financial stress or not believing they are getting value. 

My goal is to ring each one of the members who have chosen not to renew to understand their reasoning. Some have changed their minds, to those that haven’t I have asked them to monitor FICA’s performance over the next 12 months and consider rejoining in 2025. 

My view is that with the current state of the industry, a strong voice from FICA is required more than ever, we can’t do this without member support. To those members and sponsors who have signed up again, thank you for your support.

At the last Board meeting the FICA Board and myself reviewed the current FICA strategy. I will present the strategy and budget to support it at the May 14th Board Meeting for consideration. Without letting the cat out of the bag, I can tell you it will be a no-frills budget focused on delivering core value to members and sponsors. 

In the coming month my objective is to start visiting the regions to meet with FICA members, sponsors and other key stakeholders. I hope to meet you in my travels. In the interim, if you have any queries or advice please contact me. We have a wealth of knowledge in our membership and I would like to tap into that.

Thanks for your support.

Rowan Struthers