Lapoinya and Forestry Tasmania profitability and commercial management

Here’s a great video interview with economics commentator John Lawrence who has been following the mismanagement of Forestry Tasmania for a very long time.

His comments relate somewhat to the current conflict around the logging at Lapoinya in north west Tasmania. But much of his observations relate to FTs general business operations.

I have two comments to make in relation to what Mr Lawrence has to say:

1. John talks about FT profitability and covering the costs of harvesting and overheads. But the discussion is almost as if the objective is to breakeven. Forestry is a business! It’s about making profits NOT breaking even!! I think the best analogy is to remember that FT competes in the marketplace with private forest growers. And private forest growers do not grow trees in order to break even. They grow trees so they can make a profit. They grow trees so they can put food on the table and a roof over their heads. Forestry Tasmania needs to be run just like the private businesses against which it competes. Forestry Tasmania needs to set commercial performance objectives and meet them ever year without fail!
2. Later in the interview John Lawrence talks about selling our native forest wood as if it were all special species. It’s about marketing and product placement. Every single log needs to achieve top dollar. It’s a great idea. I remember making the same recommendation 25 years ago to a meeting at FT. The FT senior managers at the meeting laughed at the idea.

But it’s way too late!

The forest industry should have been reformed along commercial lines back in the mid 1980s when the Hawke-Keating economic reforms were in progress. But the forest industry refused to reform. By my reckoning the last chance the forest industry had to reform was during the RFA process in the late 1990s. But once again the forest industry resisted change.

And now it’s too late!

The public native forest industry is all but gone. Decades of politics, conflict and waste have driven the industry to the point of extinction.

Any idea that there is still something that can be rescued is pure delusion.

Forestry Tasmania is now just a political play thing. A toy to help win the next State election.

The problem for Tasmania is that no politician has the courage to face the truth.