Summary
• Coillte supplies 80% of the wood fibre to Irish mills.
• The Irish government is considering whether to sell Coillte or some of its assets.
• Coillte is proposing taking over the harvesting and haulage of timber.

Ask any Irish sawmiller to name the sector’s biggest challenges and the chances are the answers will be overcapacity and log shortages.

Eighty per cent of supply comes from Coillte and there is a palpable sense of fear within the sector – and it’s the fear of the unknown.

The Irish government has agreed with the European Central Bank, the EU and the International Monetary Fund a target of generating €3bn from the sales of state assets. As a consequence, it is considering whether to sell Coillte or some of its assets, including forests (it has ruled out selling the land owned by Coillte – 7% of Ireland).

The possible privatisation of Coillte is a prospect that fills Ireland’s processors with horror.

“The worst-case scenario is a private trust or pension fund taking over,” said Niall Grainger, managing director at Grainger Sawmills. “They could time their entry into the market when the log prices were at their highest and wouldn’t sell when they were at their lowest and that’s not much good to me when I have a mill that needs feeding all the time. Peaks and troughs in both supply and price are an absolute killer for a manufacturing facility.”

Mike Glennon, joint managing director of Glennon Brothers, is in full agreement. “The sawmills survive on [Coillte’s] fortnightly log auctions,” he said. “Any disruption to the regular supply of material from these auctions would be disastrous for the industry.”

Coillte, however, is staying calm. “No decision has been made on what, if any, part of Coillte will be sold and the minister for agriculture, food and the marine has made it clear that the government will take its time – there won’t be a ‘fire sale’,” said Gerry Britchfield, managing director of Coillte Panel Products, adding that until a decision is made it was very much business as usual.

A more pressing concern for some timber processors, however, is the proposal that, over a two-year period, Coillte moves its point of sale from the forest to the sawmill gate, offering a full product mill gate service.

“Most of our customers have substantial UK export markets which demand longer-term arrangements,” said Richard Lowe, head of sales and marketing at Coillte Forest. “They have indicated to us that they would like more stability around supply and price so that they know what they need to do to price material into the market. We want to make sure the forest is managed to meet our customers’ requirements and that they get the right products, of the right quality at the right time. We believe the new model can offer more flexibility.”

However, some mills, which have controlled their own harvesting and haulage operations for decades, vehemently believe the opposite will be true.

“Irish mills now produce carcassing timber for five distinct markets, as well as a range of specialist value-added products,” said Mike Glennon. “This is a highly complex undertaking requiring flexibility and adaptability from all parts of the business, but especially the harvesting and haulage infrastructure.

“A loss of this flexibility will impact negatively on our ability to supply export markets,” he continued. “The potential loss to the entire industry is incalculable.”

It’s a view shared by Graingers. “At the moment we have a multitude of different hauliers and contractors, so if something happens to one of them it’s not life-threatening for us,” said finance director Pat Twomey.“But if we have one supplier and there was an industrial dispute, for example, it could shut down every sawmill in Ireland.”

Coillte says it understands the sawmillers’ concerns, as outlined through a series of individual customer workshops, and takes them very seriously. “We understand that we need to demonstrate that we can deliver what we say we will,” said Mr Lowe.