Industry waits to see Gunns' new model

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GUNNS Ltd chief executive Greg L'Estrange has considered the future of hundreds of Gunns' employees caught up in his divestment of the company's infrastructure.

He is not expecting help to come from within the state - particularly not from the government or Forestry Tasmania - to pick up the slack as he slowly strips the Tasmanian timber giant back to the bare essentials to carry it successfully into the next decade.

To the man responsible for massaging the often image- troubled company back into a globally acceptable forest harvester and processor, the bare essentials mean softwood plantations and a pulp mill.

In the next six to 12 months, everything else will go.

That includes the company's once highly-prized Somerset veneer mill, the East Coast woodchip mill, at Triabunna, the last of the Scottsdale sawmills, everything that has nothing to do with softwood.

Mr L'Estrange says that he has carefully considered the future of the company's staff - still between 1600 and 1700 employees - as he goes about the business of building a new, green-tinged, sustainable Gunns.

"We have had a lot of people who have made outstanding contributions to the company and employees who have been with us for many years," he said.

Help will come for those employees and the Gunns operations that have provided their jobs in the way of investment from outside the state, probably the country, Mr L'Estrange says.

The timetable for Gunns divesting itself of unwanted infrastructure is tied up with the forest principles discussion taking place in the state, he says.

"We (Gunns) are now down to the working through the natural forest area and that's driven to a major degree around the forest principles (discussions)," he says

"We're hopeful that we can get the right framework and the right progress so that our employees, our contractors and our shareholders have some certainty about what that all means."

Mr L'Estrange stresses that the company is not negotiating the future of Gunns' Triabunna facility with anyone.

And while he will not publicly criticise the suggestion that Forestry Tasmania might step in and run the mill to keep the jobs and the resource, he diplomatically steers the options for the mill and other sites around the state that Gunns doesn't want, outside the Tasmanian square.

"If you look at future demand of products of this nature you would have to have China up there at the top of your list of people who would see this as a valuable resource," he says.

"But it's a global industry so I'm sure people see this as an opportunity."

Mr L'Estrange believes that those interested in the timber industry across the world know well what awaits investors in Tasmania and will be watching with interest as Gunns hangs its non-softwood activities out for sale.

The future of the Bell Bay and Burnie woodchip mills will come down to demand and the long-term structure of the state's timber industry, he says.

The decision to focus all of this company's future on softwood timber to feed a pulp mill was a strategic business one, Mr L'Estrange says.

"If you go back to 1980 the consumption in Australia for sawn hardwood was about three million cubic metres a year," he said.

"Last year, it was slightly over one million, next year it will be slightly under, in line with a reasonably consistent decline of around 2 per cent a year."

The decline mirrors the increasing use of softwood as a building material, Mr L'Estrange says.

Fashion trends have changed from 30 years ago - people no longer have solid wood kitchen cupboards, furniture is now a combination of timber, steel and glass.

The demand for woodchips is also declining as modern, new pulp mills have a requirement for a more consistent product with high pulp yields, achieved from plantation timber, he says

But Mr L'Estrange is still spending the bulk of his work day both at home and overseas on changing his company's image before seeking new business.

He knows that is his prime task in the next six months - even ahead of securing the long sought after finance for the controversial pulp mill.

"All of the conflict (in the forests) going on has not helped the brand," he says.

That is the biggest concern of those from, both within Australia and internationally, with whom Gunns is talking business, he says.

"The brand isn't about science - the science of the industry is compelling," he says.

He suggests that the image of the Tasmanian forest industry as a whole needs to change for the success of the pulp mill project.

"Brand Tasmania is how we are seen globally as a forest industry - the brand is the add-on bits that contribute to consumer preference," he says.

"This feedback comes from a whole range of our people that have looked at the project - that is the pulp mill project.

"They want to ensure that Gunns is separated from the other issues. "You can't have your partner in a pulp mill potentially impacting on your partner's global brand."

Even though the pulp mill has already been years in the making, Mr L'Estrange won't be drawn on when construction might actually start.

"It still has a way to go," he says.

He is comfortable with Gunns' ongoing talks with financiers for pulp mill money and he is adamant that it will still be built.