Written Answers. - Sawmilling Industry.

Pat Gallagher

Question:

578 Mr. Gallagher (Laoighis-Offaly) asked the Minister for Enterprise and Employment the measures, if any, he will take to protect employment in the sawmilling industry, particularly in County Laois, in view of recent layoffs in other counties, and the problems being faced by the industry in view of sawlog prices and pricing structure, the deterioration of margins on finished products, the fall in price of residual products due to oversupply and exchange rates; and if he will make a statement on the matter. [16154/96]

: As I have indicated in response to recent representations I can assure the Deputy that I am concious this ia a difficult time for Irish timber processors. Expansion of production capacity over a number of years has resulted in an overcapacity situation in the sawmilling industry putting pressure on limited supplies of logs and forcing prices up.

The question of log supply and pricing has been the subject of discussions between all the parties concerned and a framework for a new timber sales regime has been drawn up to address the issue. This framework was agreed between Coillte and the Irish Timber Council in March 1996. Since then, various meetings have taken place to have the new system agreed by the end of 1996. I understand that satisfactory progress is being made in this regard.

The current weakness in the price of sawn timber is a real difficulty for the sawmilling sector throughout Europe. This has been caused by an over supply from Scandinavia and slack demand in the European construction industry resulting in increased competition in the marketplace and falling prices.

As announced by the Minister for Tourism and Trade in Dáil Éireann on 25 July 1996, Bord Tráchtála has established a sterling market task force to help companies with a substantial UK dependency. I have asked that the difficulties being experienced by the sawmilling sector be taken into account by the task force.

A decline in the price of sawmill residues has been provoked by a fall in the international market for paper pulp. This fall has resulted in a sympathetic decline in the market for sawmill residues, creating a problem for Irish producers who have traditionally exported their residues. I have, however, been advised by Forbairt that they anticipate there will be a significant improvement in residue prices in the medium term. The recently opened Louisiana Pacific Coillte oriented strand board plant at Bellview near Waterford is increasing its consumption of pulpwood and the Masonite door skin plant in County Leitrim will commence production next year. Both of these plants will create significant new markets for Irish pulpwood and sawmill residues.
Forbairt is also encouraging sawmilling companies to initiate new product development projects with a view to improving the prospects for the sector and to put the industry on a secure growth path into the next decade. Grant assistance is available for research and development projects and for feasibility studies to explore new product and new market opportunities. I have asked Forbairt to continue its efforts in this regard. The Deputies may be assured that I will keep developments in the industry under review.