Heyfield's Australian Sustainable Hardwood's 250 workers were told last Thursday they will be out of a job come September.
The ramifications for Heyfield, Wellington Shire and beyond are extremely concerning, and could spell the demise of another sector of Victoria's manufacturing sector.
ASH does not simply cut timber, it value adds in significantly advanced ways, creating structural laminates, stair and window components, that are otherwise imported from Asia and Europe, supporting thousands of Australian jobs.
At the centre of the employment crisis facing Heyfield and the wider Gippsland timber industry is the government's decision to fail to ratify the contract ASH signed with the government's commercial timber entity VicForests, guaranteeing supply of timber until 2034.
Instead, following the government's decision to implement a series of closures of harvestable 1939 regrowth state forest, and refusal to discuss new contracts with timber mills, the sustainable native timber industry across Gippsland is in crisis.
ASH contends it needs a minimum of 150,000 cubic metres of sawlog each year to remain viable.
However VicForest, as a result of new assessments of its remaining logging coupes, is only able to offer ASH 80,000 cubic metres next year and 60,000 cubic metres for the following two years.
Such a reduction in supply has led to the owners of ASH, the Hermal Group, to begin planning for the shut down of the mill when existing saw log stocks are exhausted in September, an irreversible process that will begin in April unless a supply solution can be found.
ASH has indicated it plans a transition to commercial plantation timber supply in coming years, but the inability of that industry to supply suitable timber for at least another two decades puts the entire industry in jeopardy.
Hermal Group's manager of special projects, James Lantry, said the offer of 80,000 cubic metres is too far short of a viable operating level for the mill, and planning had begun for mill closure.
He has dismissed Agriculture Minister Jaala Pulford's comments that the reduction in timber supply was the result of the 2009 fires.
"Keep in mind that in 2014, five years after the 2009 fires and just two and a half years ago, we signed along with VicForests a contract at the current timber supply level out to 2034, where clearly VicForests could only have signed that contract if it had the supply," he stated in a submission to the minister.
Ms Pulford had stated in a radio interview on Thursday ASH had two years supply of timber in hand and defended her refusal to discuss the issue with the firm because of court action involving ASH and VicForests, which she stated was resolved a few days before Christmas.
Mr Lantry has refuted those claims, pointing out the mill had only 50,000 cubic metres supply at its green mill, and the legal action had been resolved on November 17, 2016.
"The following day your office and you were sent an urgent request for meeting, which was followed up with a call. There was no response," Mr Lantry emailed the minister.
He points to a similar refusal by the government to negotiate with other mills.
The minister has similarly refused to discuss supply with AusWest at Bairnsdale, presumably because the government's long-running taskforce into the future of the timber industry has still not concluded its deliberations.
Ms Pulford also alluded to other environmental factors affecting supply in her interview.
Mr Lantry expects the minister was referring to the Leadbeater's Possum, which had been assumed to be close to extinction from habitat destruction in the 2009 fires.
"There are now over 300 sightings," he said.
"There was to be a review of the area lock-out policy after 200 sightings, however this review has not occurred and new areas continue to be locked out of use due to the failure to undertake this review," Mr Lantry said.
In a statement issued yesterday, a spokesperson for Ms Pulford said she planned to meet with ASH representatives soon.
"VicForests continues to engage with ASH around a future sales agreement beyond June 2017," the spokesperson said.
VicForests currently only harvests sustainable regrowth wood from less than six per cent of Victoria's eucalyptus forest areas, with the other 94 per cent of these forests already protected.