THE company that bought the former Gunns sawmill at Heyfield is gearing up to expand its presence in Victoria's residential and commercial construction market.
Australian Sustainable Hardwoods (ASH), which is owned by three private investors, aims to buy the latest technology to increase output and add a new manufacturing line.
ASH bought the mill this year for about $29 million from Gunns, which had paid Elders ITC $89 million in 2009 for the mill plus ITC's forestry assets in Tasmania. Before ITC, Heyfield had been owned for decades by the Neville Smith family.
The sawmill has emerged from a period of trauma when Gunns, concentrating on its Tasmanian pulp mill, made no investments. At one stage, Heyfield lost its timber supply because Gunns could not pay VicForests for the resource.
Heyfield can process 155,000 cubic metres of hardwood timber a year - well over one-third of Victoria's sustainable native hardwood production - and has a turnover of $55 million. The Victorian Ash timber is bought from VicForests and is certified by the international brand PEFC through the Australian Forestry Standard.
ASH produces a range of products for the building sector: various parts and components for manufacturers of staircases, furniture, windows and doors; cabinetry and shopfitting; and products for the merchant market - flooring, architraves, skirting boards, dressed-all-round timber, and long wide beams.
ASH chief executive Vince Hurley said safety was the No. 1 aim. ''The next goal is to maximise our high-grade outturn in the context of maximising our total recovery from each log,'' he said.
''There is no doubt with updated equipment, more investment in latest scanning and handling equipment from Europe, we will extract more value and more recovery out of each log we buy.''
ITC invested in equipment that can scan the insides of a log to find the best way to cut it, and laser beam scanners that cut to exact dimensions. ''That equipment is 10 years old. There have been leaps and bounds in that technology in the meantime,'' Mr Hurley said.
''We have short-term plans to invest in manufacturing equipment, and medium-term to invest in a new dry mill project. We do have reasonably long-term licences. The Victorian Government is putting in place steps to enable long-term contracts. We won't do anything substantial until the longer-term contracts are in place.''
Heyfield has four factories beyond the kiln-dried sawnwood stage. Mr Hurley said it was not just about creating economies of scale in the volume of output of sawn, kiln-dried boards.
''It's also the economies of scale of having manufacturing plants on site. Eighty per cent of our product is further value-added through those four plants,'' he said.
As with much Australian manufacturing, the high Australian dollar is making life tough. ''We're going well - we're not in dire straits - but you have to work really hard.''
Mr Hurley said once long-term contracts were available and new efficient equipment installed, ''that gives us the opportunity to expand the business, taking a lower grade of log, or even a different species''.