Economy

The forest and wood products industry plays a vital part in the Victorian economy, creating jobs and opportunities for the state.

The industry is a major driver of economic activity and jobs in Victoria, generating $7.11 billion of sales and service income annually. Much of the income generated by the industry remains in local communities, particularly so in regional Victoria.

The industry in Victoria is a significant employer in both metropolitan and rural areas, directly employing around 21,000 people across Victoria and indirectly supporting another 40,000 to 50,000 jobs through flow on economic activity. Many of these jobs are located in rural and regional areas of the state. Employment in the industry includes value-adding roles, such as the nearly 10,000 people who work making furniture from timber.

The employment opportunities offered by forestry also tend to provide a higher than average level of income to a diverse range of workers.

Victoria’s forest and wood products industry supports crucial infrastructure in the regions producing many economic and community benefits, including fire management and suppression, recreation and tourism.

Operating in a high cost economy is a business challenge that is especially demanding for trade-exposed industries in Australia, such as the forest and wood products industry.

ForestWorks ISC

For the last few years, business activity and workforce development in the industry has been shaped by the economic downturn, changes in plantation ownership and diminution of access to significant native forests areas. Many businesses have restructured or ceased operating, and a number of workers have been retrenched resulting in a loss of skills to the industry. Company restructures and considerable reviews of business activity and workforce utilisation also resulted in a reduction of the workforce and therefore a further loss of critical skills.

Although patchy, industry stakeholders are reporting a level of recovery from the economic downturn and there are signs of increasing interest in investing in and adopting advanced workforce development plans.

Trade Deficit

Victorian forest and wood products industry participants produce a wide range of product types from superb quality appearance and structural grade timbers through to woodchips and all paper types for the Australian and international markets. 60% of respondents to the 2016 VAFI Members Survey export their products.

trade deficit
Source: ABARES Australian Forest and Wood products statistics September and December Quarters 2013

Australia’s trade in wood products increased in 2014-15 with imports increasing by 10% to $5.1 billion and exports by 9.6% to $2.8 billion. The international trade of forest products is a key influence on Australia’s forest and wood products sector. Overall, Australia imports more forest products than it exports, with an average trade deficit of $2 billion in value per year.

While imported forest products increase competition for Australian manufacturers, they will remain a key part of the industry. Imported products provide an important resource for construction and other applications, particularly where products in demand are not, or cannot, be processed or manufactured in Australia.

It is in Australia’s long-term interests to increase local production and to be less reliant on imports. The Commonwealth Government has stated that reducing the balance of the current trade deficit in forest and wood products may be achieved through changes in the industry but should be market-led.

To best serve the domestic forest and wood products industry, negotiated international trade agreements need to be transparent, balanced, equitable and contain provision for the continuation of a strong anti-dumping and countervailing measures regime enforceable in Australia.