A fresh start for the Whakatane Paper Mill opens a new era for the forest products industry.
The mill, which its previous owners Switzerland-based SIG Combibloc AG said would be closed this month with the loss of 210 jobs, has been sold to a consortium led by European investor Dr Dermot Smurfit and including the NZ company Direct Capital headed by financier Ross George.
At the time SIG announced the closure it said there was no buyer for the mill and no viable option was found.
The mill is Whakatane’s largest private employer and has, for more than 80 years, produced paper and packaging products, mostly for export.
The new owners say they believe the Whakatāne Mill has a very bright future as the only folding box board mill in Oceania. They say they intend to invest heavily in the mill to support both their customers and NZ’s forest products industry.
The question is whether other elements within the industry which also have been under threat — the Kawerau paper mill, for example — will take on a new lease of life. The industry generally has been hit by rising costs and changing consumer demand.
As it is, critics have argued that the forest products processing industry has become attenuated, with vast quantities of logs exported in raw form to China.
Toi Eastern Bay of Plenty Development Agency’s Karl Gradon expressed caution, saying while the sale of the mill is good news there are still clouds on the horizon with the fibre-processing sector.
“China has announced self-sufficiency in logs by 2035, which creates significant risk for the forestry sector.The majority of NZ logs are exported to developing countries in their raw form in anticipation of their domestic logs becoming available in just a few years.
Toi EDA wants the government to work on policy that incentivises investment in added-value processing in NZ, rather than shipping the value creation offshore.
Understandably, news of the purchase of the mill has reinvigorated the Eastern Bay of Plenty region. Whakatāne mayor Judy Turner says it’s a great outcome.
“I’m particularly thrilled for the contractors outside the direct employment of the mill as this has been a very nervous time for them and their staff.”
Turner said the mill’s closure and loss of jobs would have been devastating for the local economy.
A spokesman for the Smurfit Consortium, Ian Halliday, who will become chairman of the Whakatāne Mill, said the consortium looked forward to developing a more competitive operation.
The mill will stop producing liquid packaging board and will focus on its customers’ requirements for high-quality folding box board, carrier board and food service board, all of which are currently manufactured at the mill.
Mill general manager Juha Verajankorva said the agreed acquisition by the Smurfit Consortium represented a new era for the mill.
“Our preference was always for a sale of these assets so that they could continue to be productive. It took until almost the final whistle, but this is a satisfying outcome,” Verajankorva said.
On a broader front, the Whakatane outcome should trigger a fresh look at an industry plan to transform the wood industry . It’s reported to have been in the works with government officials for some time. But clearly ministers, instead of kicking it to touch, should be actively pursuing it.