Anger felt across the community over Mill outcome
Anger, betrayal and disappointment is being expressed by local community members, council representatives and members of Parliament this afternoon, as news comes that the Heyfield Mill management will be forced to begin closure proceedings after failing to successfully negotiate viable terms for the life of Australian Sustainable Hardwoods.
STATEMENT FROM ASH OWNERS - HEYFIELD MILL CLOSURE
On Tuesday afternoon the owners of the Mill received a response from the government in the form of their attempt to prevent the forced closure of the Mill. The original offer of timber supply in January from the government was for 80,000 cubic meters in 2017-18 and 60,000 each year for the two years following. That supply offer did not allow the business to operate at a viable level and well below our normal operating level of 150,000.
In January this year, having waited 2 years to talk to the current government with no response and having received that offer, we unfortunately had to advise staff that the Mill would close.
Following our announcement the government then requested a 4 week delay from ASH in acting on the forced closure. The board agreed to delay and provided the government over 5 weeks. At the end of that 5 week period the government asked for a further 7 days to propose a viable option to keep the mill open. The board agreed to provide a further 10 days.
During this period Ash provided the government, in confidence, access to all areas of our financial accounts and operational modelling. It is fair to say that the board and management of the mill were disgusted to hear commentary about our financials by the premier in the media this morning. This may be a warning to other companies that are asked to trust the government and the bureaucracy in such a manner in future.
The minimum supply for the Mill to be viable is 130,000 per annum under current tooling.
On Tuesday afternoon we were provided with the following proposal from the government:
- The same supply offer as in January – 80,60,60 000 cubes
- $4.75m over three years as effectively an operational subsidy
- They would provide $250,000 to further work up a retool arrangement
The losses that would be felt by the business each year under this scenario would be over $12m per annum with a government operational assistance of just over $1.5m. Which after the subsidy is factored in, would see the business lose over $10.5m per year. With full access to our financials and models, the government understood this loss position from the information provided and yet continued with an offer it knew was not sustainable.
In terms of the $250,000 it is worth noting that ASH has already expended over $150,000 in the last seven weeks meeting the government’s information requests.
The offer provided on Tuesday had no recognition of the commercial reality that was facing our company. The offer was so far from being a viable possibility as to be offensive.
In a desperate attempt to find some way to keep the mill open, keep our staff in jobs, the attached two alternative proposals were put to the government late on Thursday. These proposals would have given the government time to work up a solution and to keep people in their jobs.
The second of the proposed options put late yesterday:
- would not have to cost the Victorian government any money,
- would have used the 80,000 they had offered but with it delivered 1st July 2017 and 31st January 2018,
- would have kept all staff in work until at least March 2018,
- provided the government 12 months to find a way forward
This was, to our disbelief, also rejected.
It is clear that as a result of the offer from the government on Tuesday and again the Government’s response to our offer yesterday, that the last seven weeks did nothing but string out the workers and owners of ASH on what appears to be a journey of false hope. Even the final offer from us to work with the 80,000 cubic metres through until January 2018 which kept everyone in a job until at least March next year being rejected by the Andrews Government has left the ASH Board with a sincere lack of understanding of what is happening in government.
The Board of ASH met for an extended period Thursday afternoon through to the evening to explore any possible options that could keep the business open. Unfortunately there are none. The Owners will now begin the closure process and within 18 months the Heyfield Mill will close permanently.
The Board has written to the CFMEU in terms of working through an orderly support programme for our staff and to open discussions around processes for redundancies.
We had also asked government not to announce our decision until we had a chance to tell our staff first, when we advised them last night of the outcome of the board meeting. The ASH directors are appalled and disgusted at the disrespectful actions of the Premier this morning in releasing our decisions before we had a chance to talk to our staff.
We would expect to begin the closure process in April with the most significant reduction upon closure of the Green Mill, which we would expect to be in August this year. Complete closure would be expected late in 2018.
This is a tremendously sad day for the owners, support staff and most importantly our workers. The owners will do everything to support our staff through this period. Having had discussions with the executive of the CFMEU, it is the Boards understanding that the CFMEU will now do whatever it can to change the position of the Government. Having engaged with the government in good faith over the last 7 weeks and seen little to no understanding of the industry by the government and no movement in the supply needed, even in the short term, the Union certainly have a very difficult task.
The Committee for Gippsland will also be continuing the fight for the workers and the town of Heyfield.
In terms of the supply of timber not being available, this again is completely incorrect statement by government. The government have the ability to reduce exclusion zone size, potentially cap the number of exclusions zones in the commercial forest area, review the non-peer reviewed science that underpins the Leadbeater possum listing, intensify efforts in the 94% of the forest that is protected to look for the possum and this would have all been possible under our option provided to government late Friday keeping the Mill open for a further 12 months.
It should also be noted that there is no offer on the table from the government to purchase the mill and in any case the poorly informed and constructed option put forward by the premier on radio this morning would see about 200 staff lose their jobs, leaving about 60 staff remain in a business model size that has every other time fail and would require a further $20 - $30m retooling exercise.
In any case the timber industry does not and cannot operate on a 3 year supply cycle.
Daniel Andrews has again been disingenuous with the Heyfield Mill staff and the rest of Victoria for suggesting he will take over the mill and keep people in jobs. He is also being disingenuous to suggest that our financials supported operation of the Mill at 60,000 as viable.
The owners of the mill would be looking to repurpose the land the mill occupies. Discussions will now recommence with the Tasmanian Government around milling operations based on E.Nitens in Tasmania and this may see parts of the Heyfield mill, specifically the manufacturing plant relocated to Tasmania. We have also been working closely with Forico in terms of plantation based E.Nitens.
Statement from Federal Member for Gippsland, Darren Chester MP
Daniel Andrews has today ripped the heart out of Heyfield.
The announcement by Australian Sustainable Hardwoods it will close the Heyfield mill by September 2018 is entirely the Premier’s fault.
Politics is about choices.
Daniel Andrews made a choice and he chose possums before the people of Heyfield.
I promise to the people of Heyfield, and Gippsland, that I will work to keep the mill open.
There is no reason why anyone should lose their job.
It is a viable, world class business that could continue to operate if Melbourne Labor MPs voted to support hard working local people.
Our community will not stand by and let this happen.
The fight to keep this mill going is not over.
Statement by Wellington Shire Council
Wellington Shire Council will urgently meet over the next 48 hours to discuss its response to the State Government’s decision to provide only minimal support to the ASH facility and the Heyfield community.
Wellington Shire Council Mayor Carolyn Crossley said that Council was bitterly disappointed the state government was unable to release further timber to support this important national industry, despite what appears to be overwhelming evidence that one of the main reasons for the decline in supply, the protection of the Leadbeaters possum, was based on conflicting and incomplete data.
“The real loser in this stoush is our Heyfield community. They are an amazing and resilient bunch who have been through so much, including fires, but this will rip the heart out of the town. We understand from Vic Forests’ own data that between 40,000 and 50,000 cubic metres of forest per annum have been lost to production because of the government’s policy on protecting the possum”.
“While Council would never advocate destruction of a critically endangered species’ habitat, we also understand that the possum’s numbers are significantly higher than first thought, with detections of habitats in places where experts said they would not be found. It seems to us that this evidence is being ignored and now at least 250 jobs could be extinct as a result!
“We also believe that the Governments view that the Mill can be downsized and then sold to another operator, or even run by the Government themselves, completely misses the point. The fact remains that the Government’s own agency, VicForests, believe the necessary timber volume can be found based on a reasonable and logical response to the Leadbeaters possum.
“Council will call an urgent meeting with the Premier to discuss the future of the mill and how the 250 jobs can be saved,” added the Mayor. “We understand that the company has already written to the government with the sensible suggestion that the 80,000 cubic metres on offer be provided to the mill to cover them for a period of 7 months. This then gives the government ample time to validate and confirm the data and their policies around Leadbeaters Possum protection, which is the real issue here. The government has nothing to lose by this proposal, and can refer this matter to an independent body or even a parliamentary committee to allow proper analysis so their decisions are based on fact and evidence. And not a single job would be lost – what has the government got to lose?”
Statement from the Nationals Member for Gippsland East, Tim Bull MP
The announcement by Australian Sustainable Hardwoods (ASH) today that it will close its Heyfield operations is devastating news and a real "kick in the guts" for the local community, said State Member for Gippsland East, Tim Bull.
"It is now clear that for Daniel Andrews to say he cares about jobs, is nothing more than weasel words,” Mr Bull said.
"Almost eight weeks ago the Government released a statement saying it would negotiate in good faith for a positive outcome, however after all that time it has not changed its offer of timber volume at all. Why did it take eight weeks to decide to do nothing?
"It's clear that this government has never intended to negotiate at all and has simply been stringing the workers and their families along with false hope.
"As late as yesterday afternoon, ASH offered to accept the 80,000 cubic metres on offer to be able to continue to operate until early 2018. This would have allowed more time to find a possible resolution – but even this was rejected.
"Daniel Andrews has not bothered to visit Heyfield throughout this process, which shows his care factor on this issue is zero and he never really intended to resolve this.
"He waltzes into the Latrobe Valley last week and announces sporting facilities that will provide next to no long-term employment and wants everyone to say thanks, but when he has a chance to save real jobs, he goes missing.
"The statement today that the Government would be prepared to buy the mill is bizarre to say the least when the company itself does not have it on the market and knew nothing of it.
"The owners have since made statements that they could well relocate the equipment interstate, so there may not be mill infrastructure to sell. This makes a mockery of the Premier's statement before he has even spoken to the mill owners.
"It is clear this comment was only based around trying to shift the argument from resource allocation, which is the real issue here.
"His claim today that the timber is simply 'not there' is in direct conflict with his own government agency, VicForests, which has stated the timber is there, but the reason for the reduced offer is because of what has been placed into leadbeater possum reserve in the past two years and its forecasts on what will be placed into reserve in the future, under the current system.
"This clearly indicates a change of policy would allow more future resource allocation. VicForests has stated this very clearly, so for the Premier to say the timber is not there, it needs to be asked who is right – him or his agency, VicForests?
"A review of possum reserve and timber allocation was meant to be undertaken at the identification of 200 leadbeater colonies. We are now up to 569 and no review has been completed. I think this speaks for itself about the Government's intentions.
"Daniel Andrews should allocate the 80,000 cubic metres to ASH in line with the company's offer yesterday and allow for the review of the regulations around possum colonies in the interim. If he really cared about the jobs, this would be a no brainer.
"However, the reality is, this is a government that is scared of losing inner-city seats to the Greens and who have 24 MPs who rely on Green preferences to hold their seats," Mr Bull said.
Statement from The Nationals Member for Gippsland South, Danny O’Brien MP.
“The closure of the Australian Sustainable Hardwoods mill at Heyfield is an utter disgrace and an indictment on the Labor Party led by Daniel Andrews.
“Never before have I been so angry about such a bad public policy decision.
“My heart goes out to the workers and their families, and to the people of Heyfield and all those in the timber industry.
“This will have a devastating effect on Gippsland at a time when we are already suffering high unemployment and with the closure of Hazelwood pending in the next few weeks.
“Daniel Andrews’ comments about this issue in the past 24 hours, including his thought-bubble of an idea to buy the mill, demonstrate that he is either ignorant of facts surrounding the industry or simply doesn’t care.
“While it would be great to see the mill continue to operate under any ownership, it cannot continue to support 250 jobs with the volume that has been offered by this government.
“It is simply not true to say the timber is not there. It is there if the government has the will to stand up to the Greens and deliver it.
“For the government to have strung along these workers and the Gippsland community for 8 weeks now and come back with exactly the same offer on timber volume is shameful and the Premier stands condemned.
“From my own perspective, this is not over. The Nationals will continue to fight to save these jobs and the mill and will do whatever we can in coming months to support the industry.”