David Turner, CEO of Sequal Lumber at the Kawerau sawmill Photo: Sharon Brettkelly
At a timber mill in Kawerau, the biggest challenge isn't paying the electric bill: it's managing an expansion to double production.
When a log of pinus radiata goes through the Sequal Lumber mill in Kawerau, parts of it can end up in six different countries.
State of the art software at the mill scans each log for its size and shape, then cuts it precisely according to customers' orders.
In an industry overshadowed by news of forests and mills closing down, Sequal is struggling to meet growing demand and is getting ready to double production.
Soaring power prices are nowhere near the biggest challenge for chief executive David Turner.
It is ensuring his customers do not run out of wood when the factory shuts down for six weeks to upgrade.
"Basically 60 percent of my supply goes to about 12 companies around the world and I need to make sure that they don't run out, because once they get forced into a position where they have to find an alternative it will be difficult for us to reassert the relationship as it was."
The upgrade will involve rebuilding the main sawline so that it can double production to meet growing demand from customers. Demand is insatiable in Asia and the Middle East but Turner says Sequal is "competing with Russian wood, European wood, South American wood".
"You need to have that presence and relationships to get that continuity of demand. It's taken a lot of investment."
That investment includes the software programme that enables the mill to custom cut the logs and "maximise the yield".
From the green mill, which overlooks the piles of logs and sawdust in the yard, with the Kaingaroa Forest in the background, Turner explains how the sawdust and woodchip make up 45 percent of the processed log.
The residue is valuable, he says, but only if it can be sold.
"If you can't sell your residues, your woodchip and your sawdust, then sawmilling's not a profitable industry."
Turner points to trucks that are lining up to take away the waste to the neighbouring Oji pulp and paper factory, and to Nature's Flame in Taupō, which creates wood pellets for Fonterra to burn in its factories.
"So there is an integrated supply chain that's quite dependent on each other," he says.
Turner says Sequal does not face the same pressures of volatile power prices as other mills in part because it hedges the electricity price, but also because his sawmill is not a high energy user in the same way as pulp and paper mills.
Of the closure of the two Winstone mills, he says it is not the government's role to be directly engaged with independent businesses, but it should take steps to shield companies from price extremes.
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