My investor’s dictionary defines “risk management” as “The process of analyzing exposure to risk and determining how to best handle such exposure”. It’s a basic pillar of any business operation, large or small. Logging giant, Gunns, and the timber industry it has propped up, ignored the risks and are paying the price. Now some want compensation. How ironic.
Let’s look at the facts. Until fairly recently, Gunns was a market darling. Its share price was heading upwards faster than a Paulownia on speed. Reports of dodgy environmental practices, poor treatment of local residents and the poisoning of local wildlife were laughed of by the investors who saw only dollars piling on more dollars.
Green groups didn’t join the party. About six years ago, their campaign against the company shifted overseas, especially to Japan, to highlight the environmental concerns to the major buyers of Tasmanian timber and pulp.
Now, it appears the Greenies’ campaign has begun to bite. Reports have emerged of up to 40 per cent of some contracts being cut. And given as the reason is buyers pulling out. Some 170 timber contractors and 3,500 workers are looking at an uncertain future. Gunns denies there is any problem, arguing it’s a cyclical industry. “**** happens”, they are telling their contractors.
There is much irony here. In October 2004 there were remarkable scenes in Launceston and elsewhere in the Apple Isle as John Howard launched his old growth-logging package. The policy was a continuation of planned old-growth logging levels, which Green groups had criticised as unsustainable. While Labor promised to lock up 240,000 hectares, pending a review, the Coalition was prepared only to preserve 17,000 hectares in a business-as-usual approach.
The policy was roundly applauded by the timber workers union in Tasmania, the CFMEU, much to the chagrin of its usual sugar daddy, the ALP, as well as CFMEU branches on the mainland.
The wash-up of the 2004 federal election revealed that Howard’s successful Tasmania ploy was a significant factor in him winning the election.
At the time Mr Howard said, "Many Australians would like to see an end to old-growth logging. I would too, but that should not occur at the expense of jobs and not at the expense of individual regional communities."
However, the end may be nigh anyway and jobs are indeed under threat. The only thing stopping a crowing sense of schadenfreude is that there’s nothing satisfying about people’s livelihoods and family security being undermined.
But, it’s hard not to see the government’s role (both state and federal), and that of the Tasmanian unions, the timber industry and of Gunns as being irresponsible. The risks were clear some years ago. For indicators, Tasmanian timber workers might have looked to Indonesian timber giant Asia Pulp and Paper.
APP had long been the bane of environmentalists who decried its logging practices around the Asian region. In 2004, a heralded partnership with conservation group WWF broke down acrimoniously. Following that split, pressure was renewed on the company via its buyers, mainly big retailers in Europe and the US. Some baled on the company leaving it under increased pressure as it sought to renegotiate a debt of some $US14 billion.
The company has survived so far, but many smaller ones would not have made it.
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