Juken’s Gisborne mill will have no white knight after management told 60 workers that they will lose their jobs before Christmas. Production will stop three days before Christmas, with a transitional crew of 20 operating until March 2024.
Wood Central can reveal that Juken New Zealand’s owner, Forest One, told staff this morning that the mill will close amid ongoing financial difficulties and falling demand.
It comes as Wood Central’s Senior Editor reported earlier this month that the surge in Chinese LVL has made it difficult for New Zealand manufacturers to compete in the local market.
The Hiroshima-based company has invested over $700 million in processing machinery for LVL and plywood production at Gisborne, most of it well past the use-by date.
The company’s plywood mill was shut down seven years ago, with the company pivoting to manufacturing high-value specialised wood products for the Japanese housing market.
However, a crashing yen (now reaching a 53-year low) and weakening demand in the Japanese construction market have made the mill unviable.
After consulting with staff on options to keep the mill open, Juken, New Zealand Managing Director Hiroyuki Kawado, made the difficult decision to close the mill.
“It is with sadness that I have advised them that the decision has been made to stop production as we cannot continue with the ongoing losses being made by the mill and have not identified an alternative solution that will turn the situation around,” he said.
He said demand for its products had continued to decline over the past five years and is not expected to improve in the short to medium term – and the ageing mill would need significant investment to operate effectively and safely.
“While we are still open to having conversations about selling the business, or part of the business, to suitable buyers, this is likely to take a significant amount of time,” he said.
“We are now consulting with affected staff to understand who may be interested in being part of that transition crew and/ or redeployment within our wider business.”
“Notice of redundancy will be given once we have considered all requests for such roles. That is likely to be given next Friday.”
Like Australia, New Zealand is sinking under a flood of engineered wood products from China.
“Mountains of Chinese LVL are coming into New Zealand almost every week, seemingly out of nowhere,” an industry observer told Wood Central.
“To establish a new LVL plant in New Zealand, or Australia for that matter, would need at least a five-year lead time that includes two years of planning and two years to get council approval and process another year to complete construction.”
“The Chinese are building one LVL plant every three months.”
He said the Engineered Wood Products ‘ mix’ from China more than likely also included logs from Russia processed into LVL in a ‘back-door diplomacy’ arrangement by the two countries.
The decision to close the mill was difficult for Forest One, with founder Toshio Nakamoto having a soft spot for Gisborne, where he purchased the grand old Acton Estate in 2002 – which the Wood Central Publisher visited in mid-2019.
His son Yusho is chairman and president of WoodOne and has been a director of Juken NZ since 1991.
Wood Central understands that the decision does not impact the company’s East Coast and Wairarapa forestry operations.