Clarky's Comment - April 2011, Science & Innovation Opportunity

Science & Innovation Opportunity

While NZ ranks an abysmal 22nd of 30 OECD nations in terms of labour productivity growth since 1990[1] the good news is that forestry, along with fishing, topped labour productivity growth during the period 1996 to 2009[2]. Recently released Statistics New Zealand data shows that forestry (and fishing) labour productivity grew at an average annual rate of 4.7 per cent during the period.

This is excellent news, but alone will not make NZ plantation forestry sustainably internationally competitive, given our small domestic market and remoteness from major Asian markets. Ultimately we must produce wood products and customer solutions at lower cost and higher quality than a multitude of competing wood producers and materials. Many of these competitors are investing heavily in R&D and productivity improvements. We must do that too. At the end of the day the ONLY real competitive advantage we will have is application of new knowledge to grow better raw material and process it more efficiently into better products and full customer solutions.

The recent changes by government in directing Crown Research Institute (CRI) funding and their core operating model presents a great opportunity for the private forestry sector to have a real say in what research is done and to make the most of that new knowledge. The opportunity is ripe now with the annual log harvest set to increase from 23 million to over 30 million m³/annum over the next few years.

Your representatives in Woodco, NZFOA and in the various subsector R&D groups SWI, FFR, RPBC, PMA and FFA are all currently engaged with Scion and the Ministry of Science and Innovation in ensuring that the Scion Statement of Corporate Intent reflects industry priorities.

Science and Innovation Plans have been prepared for both the Forest Growing and Processing subsectors that together present industry's view of the realistic Strategic Objectives and associated research projects that can make the most difference to our profitability and contribution to New Zealand's wealth. These priorities comprise a mix of early wins, as well as some breakthrough "game changing" scientific advances in both the forest growing and processing sectors. A renewed emphasis on knowledge transfer to the sector and other stakeholders (the public, regulators and government policy makers) is called for.

The forestry and sawmilling sectors are also calling for an increased focus on solid wood rather than residue-based biomaterials and bio-energy. Solid wood is where the New Zealand pine resource has a natural competitive advantage and where most of the return to the forest growing and sawmilling sector comes from.

Building on the labour productivity gains of the last decade, this increased focus on relevant R&D should cement forestry as a critical and long-term driver of the current government's economic growth agenda for New Zealand. Forest owners and wood processors are being encouraged to make the most of the new paradigm through participation in the various industry subsector R&D groups on offer. Much of the research will only be made available to those willing to share in the funding requirements set as a condition of government funding support.

[1] New Zealand Institute, NZahead Report Card, September 2010

[2] National Business Review, 25th March 2011