ForestOne scales back Benalla operations amid weak Victorian market conditions

Wood supplier ForestOne will close its dry sawmill and particleboard manufacturing operations at its Benalla facility, according to an ABC report on Saturday.

The company announced on Friday it would maintain its green sawmill manufacturing and lamination line but scale back other operations due to increased manufacturing costs and weak market demand. Managing director Ian Fankhanel said increased manufacturing and external costs had made particleboard and timber drying operations “unviable at the present time”.

Local media reported 140 job losses, though ForestOne told the ABC the number would be “much, much less than that”. The company declined to specify exact figures, citing confidentiality, but confirmed “significant” reductions among its 150-person workforce.

Fankhanel said 80 per cent of Benalla products were sold into Victoria due to high freight costs for interstate transport. “Victoria is by far the worst-performing state in the country with weak demand and, as a result, has the biggest impact on Benalla,” he said according to the ABC.

The Victorian Forest Products Association said the state's timber industry was experiencing effects from a depressed housing market, with build times extending from six months to 10 months.

Local businesses expressed concern about flow-on effects. Bakery manager Andrew Bertallis told the ABC the closure represented “huge dollars out of the community each week”.

Nationals Member for Euroa Annabelle Cleeland said the announcement was “heartbreaking” and blamed red tape and tax pressures on Victorian businesses. A Victorian government spokesperson said Regional Development Victoria was working with ForestOne and local council to support affected workers.

The company hopes to restore full operations if demand improves.

Picture: Facebook