Lumbercube to close Rotorua timber mill - about 80 jobs on the chopping block

Thursday, 30 June 2016

Staff at Lumbercube timber mill in Rotorua, which produces square logs, were blindsided by the announcement that the mill will close.

E tu union representative Raymond Wheeler said when staff arrived at work on Thursday morning they were told that the mill would close and were sent home, 

The closure was 'bizarre' and staff had not been given an explanation for the decision, Wheeler said.

The mill, which is owned by Pedersen Group, was established in 2014. 

READ MORE: Mill noise grinding people down

Pedersen Group was bought by Maui Group earlier this year.

The mill aimed to add value to the export log market and make New Zealand's wood fibre supply more efficient.

Consultation with about 80 staff had begun.

A Lumbercube spokesman said it was too early to say whether those employees would be made redundant.

Wheeler said it was not consultation as it seemed the decision had already been made.

'I got told of the decision to cease the operations effective immediately at 7.50am. Staff were told at 8am.

'Then they were told to go home.

'I don't view it consultation because the decision has already been made. We got told no reason, all we were told was that there was a game-changer on Monday.'

Wheeler said he was writing a letter to the company asking for a formal explanation about why the mill has closed.

'Prior to this, there was significant investment in the plant, they had dealt with the noise issue, this is out of nowhere. 

Staff were shocked and angry at the news, he said.

They have been given five days to consult.

Rotorua Lakes Council monitored noise levels at the mill in March after it received multiple complaints.

A Lumbercube spokesman the decision to close the mill was due to challenges in becoming commercially operational, but he would not provide further details.

He would not comment on whether the noise complaints had played a part in the decision to close.

The mill processed logs into three component parts - square logs for export, high quality chip for the pulp and paper industry, and bark and sawdust for use in green energy products.

Square logs also removed the need for fumigation treatment of export logs.

Chief executive Gavin Hudson said Lumbercube wanted to add value to the forestry, and pulp and paper  industries by producing square log which were more efficient to transport than round logs and also reduced waste by creating value from every part of a traditional log.

Wood Processors and Manufacturers Association chairman Brian Stanley said the closure posed a risk to the pulp and paper industry in New Zealand. 

'This is actually a bit of a disaster. What it could mean, is those logs that are being squared up will just be exported now as round logs,' Stanley said.

'That means that the chips that are coming off won't be going to the domestic pulp and paper industry, [so] that industry is going suffer.' 

Wood supply is difficult for the pulp and paper industry and its just going to be more and more difficult, Stanley said.

'It is a bit of a kick in the guts for the processing industry of New Zealand.'

Stanley said the site was not ideal as it was too close to residential properties, he was hopeful that the mill would be shifted somewhere else.

'They should never have put it on that site. It's where residential starts to meet industrial … then you get these issues,' Stanley said.

'That operation needs to be where there's no residential.'

Hudson said: 'Despite the positive impact of the project and significant long-term potential, it became clear that a number of commercial and operating factors the business has been addressing to ensure continued successful operation could not be resolved in a timely manner'.

'Today's decision is made with immediate effect to cease mill operations and to commence a managed wind down plan at the site. '

'We are now focused on doing everything we can to support our staff over the coming weeks and to honour all obligations to our suppliers and customers,' Hudson said.

The mill's closure would not affect the broader operations of Pedersen Group, which continues to operate contracting and services businesses across New Zealand and Australia, he said.