Timber offer an insult

Workers at Australian Sustainable Hardwood’s mill in Heyfield were informed of the mill’s closure in a meeting on Friday afternoon.

Workers at Australian Sustainable Hardwood’s mill in Heyfield were informed of the mill’s closure in a meeting on Friday afternoon.

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IN a statement released by ASH on Friday, management said the offer provided by the government on Tuesday had no recognition of the commercial reality that was facing the company, describing the offer as "so far from being a viable possibility as to be offensive".

ASH chief executive Vince Hurley said the proposed supply offer received from government on Tuesday was only for three years, and provided no tenure for the mill's long-term future.

"This is approximately half our annual operating level," Mr Hurley said.

"This would see the company make a substantial loss of $12 million over the three years.

"Over the past six weeks, we've worked with the government, we've shown them our financials, we've done modelling for them, to show that this is the case.

"The $4.7 million, we believe, was really a sweetener on the offer, knowing they've seen our modelling, and knowing they've seen we'd lose $12 million over the three years."

Mr Hurley confirmed the board first heard about the Andrews government's proposal to buy the mill on Friday morning, and therefore were not able to factor it into mill closure discussions.

"We haven't received an offer from the government to take over the mill, so we don't know how that would work," Mr Hurley said.

"If you look at the logistics of running an operation like this, when you're our size at 150,000 cubic metres which is our current operating level, you're able to carry the overheads to employ the 250 people we do. Once you get below about 80,000 cubic metres, the rule of thumb is you really need only one employee per 1000 cubic metres.

"So a mill operating at 60,000 cubic metres would employ 60 people, obviously a substantial decrease on today's employment."

Mr Hurley agreed the proposal to buy the mill from the Andrews' government was creating further uncertainty and a sense of false hope among the workers.

"They're really devastated, and the people in the town are devastated about the announcement this afternoon which was completely avoidable," he said.

"In order to be profitable at the level of 60,000 cubic metres, and have 60 employees per thousand cubic metres, there would have to be a considerable retooling of the business.

"Yes, you could be profitable, but you've got the case of purchasing it, retooling it, and a significant employee drop."

Mr Hurley said ASH management's counter-offer was intended as extending the olive branch.

"What we would hope is, during that time, the government would do a more detailed analysis, more informed about the data that's gone into their decision making, and therefore be able to make a more positive employment decision, and we'd be able to keep the 250 employees we currently have from March 2018 into the future," he said.

The owners of the mill, the Hermal Group, said it would look to repurpose the land the mill currently occupies, and plan to recommence discussions with the Tasmanian government around milling operations based on E.Nitens in Tasmania.

This may see parts of the Heyfield mill, specifically the manufacturing plant, relocated to Tasmania, meaning the government would not have a mill to buy in Heyfield.

Mr Hurley said the skills of the Heyfield workers would be appreciated in Tasmania, and said the company would offer Heyfield workers jobs in Tasmania.

"We've had discussions in Tasmania over the last 12 months, we believe there's a great opportunity there," he said.

Mr Hurley said ASH was now handing over discussions to the Committee for Gippsland and the Construction, Forestry, Mining and Energy Union, in the hopes that they could change the position of government.

"We have to try everything, we owe it to our workers and the Heyfield community and for the 10,000 people that depend on us who are employed in manufacturing in Melbourne we owe it to them to leave no stone unturned," he said.

ASH director Clinton Tilley said he was "appalled and disgusted at the disrespectful actions" of the Premier in releasing ASH's decisions before they informed staff.

"I used the explicit words to the Premier, that if he respects our staff, the town of Heyfield and the community of Heyfield, that he would wait until we've had time to announce it to the staff before advising anything in his own right to the media," he said.

"It shows a total lack of respect for the town of Heyfield, our workers, our community and the Latrobe (Valley) at large."

Mr Tilley said ASH bought the business for the long term, not to sell it in the short term.

"We're here to run a business that employs 250 people, not 60 people," he said.

"Sixty people is the offer that Daniel Andrews has put on the table; 60 people is simply not maintaining the community."

Gippsland Senior
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