Socio-economic impacts of forest industry change in Tasmania

1. Socio-economic impacts of forest industry change in Tasmania J. Schirmer, C. Dunn, E. Loxton, M. Dare Fenner School of Environment and Society, ANU Cooperative Research Centre for Forestry

2. Overview • The study • Current status of the industry • Impacts of downturn • Vulnerability to change • How to support those impacted? • Businesses • Workers • Communities

3. Background: Tas forest industry • Growth (2006-08, 7% ↑jobs) followed by downturn • GFC, $AUS, ENGO campaigns, MIS collapse, closure of old & uncompetitive processing facilities • 1/3 jobs lost 2008-2010 (2310 jobs) • Spread across both native forest and plantation sector • Negotiations over future of industry - Statement of Principles • Heads of Agreement announced 24th July • Uncertainty about the future remains

4. Socioeconomic impacts of forest industry change • Study undertaken March-May 2011 • Funded by: • Cooperative Research Centre for Forestry • Department of Agriculture, Fisheries and Forestry • Follows on from ongoing work since 2006 on Tasmanian forest industry

5. Study goals • Analyse impacts of downturn on forest industry businesses, workers • Identify exposure of communities to change (limited) • Analyse vulnerability to further change • Identify how best to assist people impacted by downturn – or future change • We didn’t: • Fully assess impacts of downturn on communities • Assess impacts of specific scenarios of future change • Study provides a baseline for doing this work

6. Methods • Surveys of: • Processors (82.3% response rate) • Contractors, nurseries (72 responded, 35.8%) • Workers (249 surveys returned, 24.9%) • Ex-workers (124 surveys returned, 14.6%) • Interviews • 53 business managers, workers, ex-workers • ABS data • Previous data from Forest Industry Survey Insert/remove name of area (view > header and footer)

7. Current status of the industry • Also 1750 jobs in woodcraft sector (Farley et al. 2009)

8. Jobs by forest/plantation type Insert/remove name of area (view > header and footer)

9. How many of what type of jobs are there? Insert/remove name of area (view > header and footer)

10. Impacts of job losses on Tasmanian economy? • 3500 jobs lost Aug 08-May 11 • Approx. 1.5% of employed labour force in Tasmania • Remaining 3460 jobs = 1.5% labour force • Flow-on impacts add considerably more employment dependent on industry Insert/remove name of area (view > header and footer)

11. Processors - overview • In March 2011, 64 sites (50 businesses) • 4 woodchip mills, 44 sawmills (some doing downstream processing), 9 downstream, 6 other (post/pole, veneer, pulp/paper) • 47 depend solely on native forests (33 small, 13 medium, 1 large) • 4 softwood, 10 mixed sources Insert/remove name of area (view > header and footer)

12. Processors - impacts of downturn • 2011 turnover compared to 2008: • 33% lower • 38.9% same • 27.8% higher • Native forest sawmills, diversified businesses most likely to report ‘same’ or ‘higher’ • Key pressures since 2008: • Increased operating costs (79%) • Difficulty maintaining competitiveness (57%) • Changes in quality of raw material (51%) • Reduced demand for product (45%) Insert/remove name of area (view > header and footer)

13. Processors – adaptation strategies • Reducing costs & improving efficiency • Seeking alternative markets, diversifying customer base • Improving quality of product to ensure customer loyalty • Expanding downstream processing • Downsizing business operations • Running down financial reserves • Putting up prices (viable only for small price increases) • Several reported no strategy beyond ‘surviving’ Insert/remove name of area (view > header and footer)

14. Processors - vulnerabilities • Business management: • Stress, capital needs, attracting workers, management skills • Markets and finance: • Rising operating costs, low profitability (large processors), debt (mostly large processors) • Dependence on woodchip sales for profitability • Lack of certainty about the future • Only 33% confident will operate into future • Viable processors considering closing, delaying investment Insert/remove name of area (view > header and footer)

15. Processors - tipping points • Loss of access to resources • Loss of 20% supply would lead to closure for almost 50% • Little ability to diversify outside forest industry or downsize • Loss of markets • Most confident can maintain market for primary products • Woodchip market critical - difference between profit and loss • Native forest processors • 29% could utilise more private native forest • 19% might be able to use eucalypt plantation – in future • Current resource not mature enough • Can’t make their products from plantation timber • Current infrastructure cannot process plantations Insert/remove name of area (view > header and footer)

16. Processors - what is needed to adapt? • Certainty of supply (90%) • Assistance to develop markets (67%) • Access to finance (57%) • Staff training (43%) • Financial/business advice (40%) – but many have limited view of what this might entail • Time to adapt Insert/remove name of area (view > header and footer)

17. Contractors – impacts of downturn We included harvest and haulage, silvicultural, roading contractors; and nurseries Those still in the industry in March 2011 have experienced the following since 2008: • Reduced revenue associated with demand for services (78% moderate-large impact) • Increased costs of operation (64%) • MIS collapse (45%) • Difficulty upgrading/maintaining equipment (44%) Insert/remove name of area (view > header and footer)

18. 2011 turnover compared to 5 year average – for those remaining in industry Insert/remove name of area (view > header and footer)

19. Contractors - dependence on forest industry Insert/remove name of area (view > header and footer)

20. Contractors – adaptation strategies • Downsizing business • Seeking new business within or outside forest industry (eg civil construction) • Reducing business costs – unpaid work, delay maintenance, replacement of equipment • Run down financial reserves (business & personal) • Applying for contractor exit package Insert/remove name of area (view > header and footer)

21. Contractors - vulnerabilities • Business management: • Stress, capital equipment, attracting workers, management skills • Certainty about the future • Lack of confidence in future (90%) – particularly harvest & haulage, native forest contractors • 21% considering closing business (many others have left) • 33% confident they will operate into future • Lower social capital than processors • Approx. 20-30% feel can access support from local community, others in forest industry Insert/remove name of area (view > header and footer)

22. Contractors - vulnerabilities • Markets and finance: • Lack of demand for services • Poor current financial position of business • 43% harvest and haulage contractors making a loss • 14% of silvicultural contractors making a loss • Rising operating costs • High fixed costs • particularly for harvest & haulage, roading contractors • High debt • Harvest and haulage contractors have 100% debt:revenue ratio • Silvicultural contractors 52% DRR • Overall, native forest & harvest/haulage contractors most vulnerable Insert/remove name of area (view > header and footer)

23. Contractors – tipping points • Loss of 20% of business would likely lead to business closure for almost 40% • 2/3 likely to diversify activities within forest industry • 2/3 likely to diversify outside forest industry • Harvest & haulage least able to diversify outside industry • Roading most able to diversify outside industry • Industries: agriculture, mining, construction, transport, earthmoving, NRM • Downsizing limited for many Insert/remove name of area (view > header and footer)

24. What support would reduce impacts? • Security of access to forest resources • Assistance to develop new business opportunities • Market development assistance • Access to finance (loan guarantees; grants) • Business planning advice (e.g. RFCS) • Exit assistance • For those unable to adapt • Needs to be adequate to enable successful exit • Must be accompanied by assistance for business managers, workers, communities affected by exit Insert/remove name of area (view > header and footer)

25. Workers – changes resulting from downturn • More than 50% report: • Reduced job security • Increased stress, depression or anxiety • 25% reported ↓ work hours and/or income • Harvest and haulage, silvicultural workers • 2011 income compared to 2008: • 20% lower income • 68% same income • 12% higher income • 16% had increase in work hours Insert/remove nme of area (view > header and footer)

26. Workers - impacts of changes • Those who reported downturn had led to greater changes (income, stress, certainty) also had significantly lower levels of satisfaction with their: • Life overall • Own health • Standard of living • Financial situation • Sense of belonging to local community • Work (income, daily interactions, stress, feeling of accomplishment) Insert/remove name of area (view > header and footer)

27. Workers - vulnerabilities Confidence in own capacity to adapt • 46.3% confident can find new work outside industry • 23.5% confident can find new work within industry • Harvest & haulage, silvicultural contractors least confident Attachment to forest industry • Those who want to stay in forest industry, and have worked longer in industry, more vulnerable (HH, SILV) • 87% have spent most/all working life in industry Certainty about the future • Skilled workers leaving due to uncertainty Insert/remove name of area (view > header and footer)

28. Workers – vulnerabilities Educational attainment • Forest industry workers less educated than average member of Tasmanian labour force • Highest level of educational attainment: • 28.2% - 4th year high school • 26.1% - high school certificate • 23.9% - TAFE diploma • 21.8% - university/postgraduate degree • Native forest workers lower attainment than those in plantation sector • Harvest/haulage & processing workers lower educational attainment Insert/remove name of area (view > header and footer)

29. Workers - vulnerabilities Financial capital • Lack of financial buffer • 41.3% report income just enough to cover living costs with nothing to spare • 45.7% report income enough for living costs plus some extras such as holidays • Lowest income earned by those working in native forest dependent jobs, processing jobs • High dependence on industry for income • 53% obtain all household income from industry; only 17% obtain <60% income Insert/remove name of area (view > header and footer)

30. How has downturn impacted those who left industry? • Included people who have left industry voluntarily and involuntarily • Have they found new work? • How did losing a job impact on them? • What helped them to adapt/find new work? Insert/remove name of area (view > header and footer)

31. Ex-workers – employment outcomes Insert/remove name of area (view > header and footer)

32. Ex-workers – employment outcomes Insert/remove name of area (view > header and footer)

33. Ex-workers – finding a new job • 85.1% - new job was outside forest industry • Most common industries: • Construction • Agriculture • Transport • Manufacturing • Mining • Tradesperson • On average, took 4.3 months to find new work Insert/remove name of area (view > header and footer)

34. Ex-workers – finding a new job • Factors assisting finding work: • Having local employment opportunities • Social networks • Access to training (machinery operator tickets, new skills) • Factors hindering finding new work: • Lack of support (eg employment referral, CV assistance) • lack of available work (particularly locally) • Lack of confidence and self-perceived ability to find work • costs of looking for and travelling to new employment. Insert/remove name of area (view > header and footer)

35. Ex-workers – assistance offered • ¾ offered some type of assistance (usually 1-2 types, from ex-employer/union or government): • Redundancy (62%) • CV/resume preparation (35%) • Retraining (26%) • Financial planning advice (25%) • Unemployment benefits (19%) • Career referral service (16%) • Psychological counselling (12%) • Relocation assistance (5%) Bold indicates workers more likely to rate as useful form of assistance Often difficult to identify available assistance Insert/remove name of area (view > header and footer)

36. Ex-workers – Comparing new jobs to old • Income of new job compared to old job: • 66.2% lower • 16.9% same • 16.9% higher • Overall working conditions: • 29.3% better • 33.3% about the same • 37.3% worse • New jobs • Often lower income, higher hours, lower job security and higher stress Insert/remove name of area (view > header and footer)

37. Ex-workers - Impacts of losing job • Worsening of: • personal stress (46.8%) • certainty about the future (59.1%) • financial stress (63.9%) • Improvements in: • Time spent with family and friends (39.3%) • Health (30.6% reported improved compared to 26.1% reporting worsened health) • 34.2% reported decreased personal stress Insert/remove name of area (view > header and footer)

38. Ex-workers – factors associated with more negative impact • Involuntary redundancy • Type of work • Harvest/haulage & silvicultural contractors more impacted • Those who manage forest/plantation least impacted • Human capital: • Those with less confidence in their own skills and resources more likely to report negative impacts • Educational attainment: • 4th year high school – 58% found new work • High school – 68% found new work • University degree – 73% found new work Insert/remove name of area (view > header and footer)

39. What support would reduce impacts? • For both current workers and ex-workers: • Cost of living support for those in high financial stress • Retraining opportunities • Psychological support – many means through which this can be provided • For those who lose employment: • Employment referral services targeted to skills; liaison with construction, mining, agriculture, manufacturing industries • Assistance applying for new work (preparing CV, financial costs of travel, phone etc) • Redundancy assistance Insert/remove name of area (view > header and footer)

40. Exposure of communities to change • Very limited analysis identified: • where jobs lost • which communities most dependent on industry • likelihood of migration out of forest industry dependent communities Insert/remove name of area (view > header and footer)

41. Change in employment 1996-2006 Insert/remove name of area (view > header and footer)

42. Change in employment 2006-2011 Insert/remove name of area (view > header and footer)

43. Change in % labour force working in forestry – 2008-2011 Insert/remove name of area (view > header and footer)

44. Exposure to change • Most exposed to change (>4% labour force + >50% forestry jobs lost since 2008): • Dorset • Central Highlands • Glamorgan-Spring Bay • Derwent Valley • Southern Midlands • Circular Head • Waratah-Wynyard • Burnie • Kentish • Huon Valley • Meander Valley Insert/remove name of area (view > header and footer)

45. Likelihood of migration with job loss Outmigration most likely in: • Dorset • Hobart • Central Coast • Glenorchy • Huon Valley Outmigration least likely in • Circular Head • Glamorgan-Spring Bay (based on level of attachment to community, confidence that would be living there in five years time or able to find a job there) Insert/remove name of area (view > header and footer)

46. What support would reduce impacts? • Direct assistance for communities is needed • Business/worker assistance won’t necessarily reach local communities • Short-term: • Community activities to build social capital, support those impacted • Ensure local support services adequately resourced to assist those affected • Medium and long term: • Regional development assistance grants, strategies Insert/remove name of area (view > header and footer)

47. Conclusions • Impacts of downturn severe • Every number is a person • 3500 individuals, their families, and those affected by flow-on impacts • Uncertainty about future of the industry is exacerbating impacts of downturn • Lack of investment, inability to make decisions • Stress, anxiety • Certainty is needed as soon as possible – requires implementation of agreement • Any decision must provide adequate time for businesses and workers to adjust Insert/remove name of area (view > header and footer)

48. Conclusions (cont.) • What assistance is needed? • Short term: • Help with cost of living • Community and industry support • Medium to long term • Build on existing initiatives being taken by businesses, workers, communities • Funding to help people build new economic opportunities – within or outside forest industry • Go further than exit funding – support people to adapt and find new futures • Use one stop shops • Reduce confusion and stress of applying for assistance • Good communication essential Insert/remove name of area (view > header and footer)

49. Conclusions (cont.) • Use existing programs • Rural Alive and Well, RFCS etc • Use forest industry organisations to reach people • Needs support for those organisations • But need to target/reorient to forest industry • Unfinished work • This assessment is limited – assessment of flow-on impacts to communities urgently needed • Further work should be done as assistance is implemented Insert/remove name of area (view > header and footer)