Support for wood processing sector 'a masterstroke' for Twyford

Saturday, 9 May 2020

Work has started on the southern-most part of the City Rail Link project at Mt Eden earlier this year, marked by Auckland Mayor Phil Goff, CRL CEO Sean Sweeney and Transport Minister Phil Twyford.

This year’s implementation of Labour’s long-promised policy to use government procurement to support the wood processing sector will be a masterstroke for jobs, the economy, the environment and politically for Economic Development Minister Phil Twyford.

So why the need for a government procurement policy on construction material use favouring sustainable materials?

In short, jobs. Lots of jobs. More than 100,000 of them, made up of 38,500 people employed by the forestry and wood processing sector directly, and more than 65,000 indirect jobs.

Including families, up to 400,000 are supported.

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As we go into a recession, or perhaps multi-year depression if a vaccine takes years, we need to think strategically about were every dollar goes, and how many local businesses and jobs that dollar supports along the way.

Only the Government has a mandate to consider the bigger picture impact of procurement policy on NZ Inc in terms of jobs, climate change, balance of payments, wellness, waste and a whole range of other aspects that favour wood over its climate polluting alternatives concrete and steel.

Plus, a policy will tip off building developers and designers that wood solutions now exist for practically all building types, and are cost competitive, faster and safer to build.

A dollar spent on a concrete or steel building quickly ends up in the bank accounts of manufacturers in Thailand, Indonesia or China. That same dollar spent on an engineered timber structure supports local wood prefabrication plants, who in turn pass it to local steel connection manufacturers and sawmills, who pass it to local foresters and transport companies, who pass it to logging and planting gangs and nurseries.

The 400,000 people supported are spread across regions like Northland, Gisborne, Bay of Plenty, Hawkes Bay, Horowhenua, Auckland, Nelson and Canterbury. Regions that need that dollar now more than ever. Regions where it can be hard to find alternative employment.

Chain reaction

Marty Verry, chief executive of the Red Stag group, says as the country heads into a recession, New Zealand needs to think strategically about were every dollar goes.

Here’s a real-life example to help explain the opportunity being missed and the need for a centralised policy.

In early March, I was in a project management and quantity surveyors’ office in Christchurch, and the team there showed me the designs for classroom blocks being built for the Ministry of Education right now in Springston and Rangiora. I asked, “what is the structure made of”. The answer; “heavy steel”.

So, I asked them to run the costings assuming equivalent glue laminated timber (glulam) was used instead, using current New Zealand pricing. Two days later I got the report back. “Negligible” cost difference. I probed for the exact number and it was just $100 per classroom.

The next two blocks planned are for Mount Cook School and Hororata later this year. So fast-forward six months from now, and with the Carbon Zero Construction procurement policy in place, these blocks, plus the demand from government departments nationwide will trigger a chain reaction that will ultimately deliver the investment, innovation, jobs and climate change outcomes New Zealand needs. Here’s how it will work.

The new government baseload demand triggers investment in efficient local factories using world-class technology to produce glulam, Cross laminated Timber (CLT) and a range of other wood solutions. A number are shovel ready now.

The resulting economies of scale and supply-side competition lowers the cost of these products, not just for the departments, but also for private sector projects.

Next, the architects, engineers, quantity surveyors and construction firms used by the government departments are now familiar with mass timber and start offering their expertise to private clients.

That next wave of demand increases economies of scale and lowers cost even further. Now New Zealand factories have the scale and cost-base to target export markets in Asia for the high-value engineered products. Instead of exporting logs for $120 per tonne, we are exporting high-value wood products worth $2000 per cubic metre.

We’re also processing over a million tonnes more logs that would otherwise be exported.

Climate change

Forestry will be restarting once we reach Alert Level 3, good news for an industry that began to feel the affects of the global pandemic weeks before the rest of New Zealand went into lockdown.

Within five years it is expected the policy can lead to a 25 per cent market share change to wood. Analysis based on Deloitte research indicates this – along with less cement and steel imports – could lead to a balance of payments benefit to New Zealand exceeding half a billion dollars annually.

Then consider the climate change advantages of eliminating 920,000 tonnes of emissions annually if the 25 per cent target can be hit. Concrete and steel produce an estimated 13 per cent of the world’s climate change emissions. If the world’s concrete was a country, it would be the third largest emitter behind China and the USA.

The policy can put us well and truly on the pathway to meeting the World Green Building Council target of carbon zero buildings by 2030, and New Zealand’s Zero Carbon Act target by 2030. Forget 2050, we can do it in ten years.

Back to the classrooms

These are now portable thanks to being made of wood, meaning as urban demands change, they can be moved instead of demolished to waste.

But most importantly is the effect on kids from being in an environment where natural materials are expressed in the form of timber walls and beams. Research studies conducted in the UK and Australia found increased rates of learning, improved test results, concentration levels and attendance, and reduced impacts of ADHD.

A big tick for Grant Robertson’s wellness budget, and kids’ mental health post-Covid.

Clean green

Fast-forward to 2021, and Australia, the US and countless other countries look to New Zealand’s clean green economic recovery using procurement policy strategically and feel the pressure to follow suit. Parts of Australia and the US already have the policy, but New Zealand’s lead encourages them to adopt it nationally to fight climate change.

New Zealand’s biggest contribution to climate change may not be the emissions we reduce ourselves, but rather the leadership we show that others follow.

All this enhances New Zealand’s clean green international brand, benefiting all other exporters and the tourism sector recovery.

One policy, so many economic, social and environmental outcomes. Therein lies Phil Twyford’s opportunity for greatness.

He’s not the architect of the policy, but he has a rare chance to be the one to score the touchdown. The policy ball was first picked up by the late Jim Anderton. Ministers Jones and Nash ran with it for the last decade and it was part of Labour’s 2017 election manifesto pledge. Now it has been passed to Twyford.

For Labour it is a chance to resurrect Twyford’s reputation. As such, he can be sure of the full weight of the Labour forward pack, his coalition partners, and 400,000 Kiwis when the Government implements this in June as is expected.

Marty Verry is chief executive of the Red Stag group, which operates the Southern Hemisphere’s largest sawmill with vertical integration form forestry to property development.