Southern Wood Sector Leads The Way In GDP Growth

17th May 05

Southern Wood Sector Leads The Way In GDP Growth

The southern wood industry is punching above its weight with its contribution to the regions GDP, Southern Wood Council chairman Matt Hitchings, said today.

The Southern Wood Council in conjunction with the Dunedin City and Clutha District Councils commissioned BERL to complete a detailed Economic Impact Assessment of the contribution of the forest and wood processing sectors in Otago and Southland.

This report reveals the industry is a key growth driver in the southern region.

The volume of wood removed from the region has doubled from 780,000m3 in 1990 to 1,560,000m3 in 2003.

“What is really great news is that the increase in wood supply has been matched by new investments in processing capacity and there is still considerable scope for further investment in value-added processing.

“These changes have seen the sector’s direct economic contribution to the Southern region increase significantly, Mr Hitchings said.

- The total (direct, indirect and induced) contribution of the sector in 2003 is measured as 5,473 FTEs (Full time equivalents) and $478 million per annum in real GDP.

- Real GDP growth in the sector has averaged and impressive 4.9%pa since 1994, compared to the region’s real GDP growth average of just 1.8%pa.

- The sector’s increase in real GDP has been achieved through more employment and increases in labour productivity, which has increased on average by 1.3%pa since 1994. This growth in labour productivity compares well to the average of 0.7%pa for the Southern region as a whole.

- The southern sector also accounts for between $180 and $200 million per annum in exports.

- The sector has been a major contributor to growth in the region with FTE’s growing on average by 3.6%pa compared to the regional average of just 1.1%pa.

- New investments in processing capacity has seen the volume of wood being processed increasing to 1,160,000m3 per annum in 2003 or by about 800,000m3 since 1990.

- Log exports have remained at about 400,000m3 per annum but have reduced in significance from about 50% to 25% of the region’s total wood removals.

- The sector also directly generated about $264 million per annum in real Gross Domestic Product (GDP) for 2003.

“The report clearly indicates the forest and wood-processing sector is making significant contributions to the region across a range of areas such as economic growth, local community and regional employment, community funding and infrastructure, and the environment. “

“The future of the southern wood sector is looking bright. It is expected to continue generating wealth and employment in the region and to continue making a strong contribution to the sustainability of the southern economy.”

However Mr Hitchings sounded a word of caution.

“The industry still has some significant impediments to accelerating the rate of growth. Local councils differential ratings policies are causing the sector concern as are the longer term implications of Kyoto on forest replantings.”

“The Southern Wood Council is leading the country in sector organization. This report gives us a useful economic yardstick to benchmark the sectors performance in the future and will be a useful tool to develop a sector wide strategy.

“We can really only accelerate the southern wood sectors growth if we all work together and we are confident we are well placed to make the best of future opportunities,’ Mr Hitchings concluded.

Key Facts

- The Southern Wood Council members include all major forestry companies, saw mills and wood processors and local body council representatives and port authorities.

- There is an estimated 242,341 ha of planted production forests in the southern region.

- Further information on the region’s forestry industry and the Southern Wood Council can be found on www.southernwoodcouncil.co.nz

ENDS

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