Prime Minister Chris Luxon has pledged more than NZ$1.1 billion for public-sector construction projects, a move that could prove a lifeline for New Zealand’s struggling timber processing industry. After a six-month spending freeze, Luxon’s Cabinet approved more than NZ$600 million for defence housing, NZ$413 million to fast-track school infrastructure and NZ$100 million to modernise hospitals.
For domestic mills struggling amid a surge of low-cost imports, the timing is critical. Last week, Wood Central revealed that imported plywood sheets are arriving at roughly 60 per cent of local production costs—undercutting Kiwi manufacturers by about 40 per cent and eroding margins to near zero.
“These announcements come at a time when the wood processing industry is doing it tough, with some mills saying domestic timber sales are the worst they have ever witnessed,” according to Mark Ross, the CEO of the Wood Processors and Manufacturers Association. “With a flat domestic market and challenging global sales, any new spending in building and construction is welcome.”
However, Ross warns that without procurement rules that favour local supply chains, regional jobs remain at risk: “Wood is a key component of buildings, and it is anticipated that these new projects will lead to increased timber orders from domestic mills,” he said. “With the wood industry employing over 30,000 people in regional New Zealand, it is essential that the government procurement process supports the purchasing of locally produced sustainable timber and lumber over imported wood products.”
Statistics New Zealand’s June-quarter GDP figures underscore the urgency: building work put in place fell 2 per cent year-on-year—one of the steepest declines across all sectors. Regionally, Otago (including Queenstown) posted a 47 per cent surge; Auckland eked out a 3 per cent rise; Wellington plunged 11.4 per cent; and nationally, 34,000 consents were granted in the year to June, up just 1 per cent over the long-run average. Renovations continue to dominate activity, while new-build work remains uneven.
Early next year, tenders for defence housing will be awarded, lining up thousands of cubic metres of timber for service-family homes. Schools nationwide will queue for seismic strengthening, new classrooms, and facility renewals, and hospitals in both urban and provincial centres will upgrade their theatres, wards, and outpatient units. Each project presents a vital opportunity for domestic sawmills to reclaim volume lost to overseas competitors.
- To learn more about WPMA’s plans to use wood processing to unlock a $11 billion export industry for value-added timber products, click here for Wood Central’s special feature earlier this month.
