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Sawmills fire up to cut into construction shortages

Business

A decision to allow the resumption of structural timber production in the state’s sawmills will let the industry to play catch up for a week in a bid to reduce shortages threatening to derail the residential building boom.

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The building industry has been forced to down tools during South Australia’s seven-day coronavirus lockdown, which initially prevented sawmills from operating.

However, a change of direction from the State Government yesterday has allowed the mills to crank up again at a time when a reduction in supply and a spike in demand have collided to create the potentially crippling shortage.

Master Builders SA CEO Will Frogley said federal politicians including Scott Morrison became involved in the discussions that led to the backflip that now allows sawmills to resume operation.

“It’s pretty significant – in a week’s production they’ll be able to build up a fair bit to be able to help out with that shortfall when we are able to reopen so it will help us catch up a little bit as well,” he said.

“We think it’s very low risk for a mill in the South East to be processing timber at the moment.”

Frogley said there was a similar need for other suppliers to be able to open up as well to address shortages while the building industry was at a standstill, such as those that manufacture steel framing.

The State Government last month announced a $2 million fund to increase the supply of structural timber for local South Australian home builders.

An Expression of Interest (EOI) process was opened on June 25 and applicants had until July 15 to submit their case.

Depending upon the proposals received, there is up to $2 million available to increase the supply of house building timbers but the government is yet to announce any grants.

Frogley said the Master Builders Association was pushing for a decision to be made quickly.

“They have to give it to someone who has put a proposal in who has got a clear plan to get going quickly and get the timber to small South Australian builders first and foremost,” he said.

“The smaller builders are telling us they can’t get delivery until February or March and they might only have a month or two of timber left so they are not going to be able to go six months with no building activity, they’ll go under.

“If we put a bit more supply onto the market but it continues to go to the same people who are getting the limited supply now and not the ones who need it the most then that’s not going to help those who are most risk of insolvency.”

About 20 per cent of Australia’s structural timber is traditionally imported from Europe.

But that supply has become unavailable due to a similar housing boom in the United States where American builders have offered premiums of up to 400 per cent to secure additional timber initially earmarked for other markets including Australia.

Timber previously sourced from Western Australia was now being consumed in the local Perth market.

There are two sawmills in South Australia, both in the South East, that supply structural timber; One Forty One’s Jubilee Sawmill in Mount Gambier and Timberlink’s Tarpeena Mill.

South Australian Forest Products Association CEO Nathan Paine said the two SA mills processed about 30 per cent of Australia’s structural timber and both were at capacity.

He said the resumption of work at SA sawmills was an opportunity to make up lost ground and would potentially reduce waiting times for builders.

“All of these lockdowns are urgent actions taken with short timeframes and the reality is they had to make some quick decisions,” he said of the initial decision to close sawmills.

“The great thing is they were able to listen to the industry and make the changes needed to ensure the mills could get up and running again and start producing structural timber.

“Obviously it’s not great for the construction sector being tools down but this will give us a week to build up some inventory, which should provide more stability for builders seeking to get access to structural timber in the weeks and months ahead.”

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