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After my response (1) to forestry professional Mark Poynter’s (MP) article (2) I was accused by him of being ‘one sided’ (i.e. I only put the case for the community) along with a number of other adverse comments that varied from falsehoods to derogatory comments about those who objected to forestry’s actions.

Rather than chewing up time explaining to MP the concerns of the community again (e.g. why tree plantations’ water use is different to food crops like wheat or carrots), I thought it would be more useful to focus on how the statements made by forestry and government officials indicate some of the core reasons for forestry’s commercial failures and the growing conflict with communities and other groups.

Organisations need to be flexible

In management and marketing studies, students are alerted to the need to look and plan ahead to spot problems and opportunities, and to remain flexible to be able to change to meet changing circumstances.

With increased population and ‘globalisation’, change is occurring at an ever increasing rate. For example think of the computers and mobile phones of 1990 versus modern models. Look at the incredible impacts that are forcing us to rethink our strategies and beliefs from 9/11 to BP’s Deepwater Horizon; from Katrina to climate change.

Only 10 years ago the US was highly regarded and seen as a centre of free thought, economic power and democracy. Today a growing number question whether the US has ever been democratic, whether its economy might collapse, while many suspect that the world is secretly controlled by covert powerbrokers (5).

When change is occurring, predetermined responses can often be misguided; indeed denial of future possibilities probably led to the Gulf Oil disaster.

One of the greatest ‘sins’ in change management work, is to believe your own marketing to the extent that you deny the messages presented from external sources. This appears to have led to Rudd’s downfall as well as the recent collapse of much of our forestry industry.

Cultures

An organisational culture (3) results from the collective beliefs and stories that group members hold and use to explain their situation, which consequently affects the behaviours and attitudes of the members. Cultures can be flexible or rigid, they can embrace change or reject it.

Modern and successful organisations seek to develop a culture that is responsive to change and that concerns itself with creating positive customer and consumer perceptions that are conducive to trust and reliability (4) which leads to income and profits. Such an outcome requires careful attention to staff training and attitudes as well as consistent and supportive public messages.

Customer and other outside complaints can be seen as warnings of problems that have not been noticed by the organisation. The growth of protest organisations antithetical to forestry could therefore be seen as early indicators of community and other attitudes to the actions of the industry. Such clues could have inspired change and renewal that would help the industry to prosper in more complex times.

Such indicators can be valuable early warnings (canaries) of severe problems ahead that astute managers and executives actively seek out to alert them to the need for change before severe problems develop.

To respond or deny

In the case of Tasmanian forestry, those problems have already developed and are past maturity. Great Southern Plantations, TimberCorp, Forest Enterprises Australia have all become bankrupt in the last year. Gunns posted a frightening profit drop and is struggling to escape from its $600m debt by selling assets.

An active business would have conducted many analyses of the situation and changed their approach a long time ago. Not so Tasmanian forestry nor the governments that support it.

A normal company would have gone bankrupt much earlier but the forestry industry has been cushioned from market realities by generous subsidies and legal and political favours from governments.

In his original article MP said…
“Where once “saving” old growth forests was de rigueur, now all aspects of Tasmanian forestry are under attack, including plantations which were once unanimously regarded as the way of the future”.

How does MP interpret this situation? What does he learn from it?

“Sadly, an initiative which could have given rational voice to real concerns has to a large extent been hijacked by a tribal green-left collective overtly focused on forestry issues. On this topic, their discussion is generally angry and littered with untruths, half-truths, irrational pseudo-science and conspiracy theories”.

From an organizational perspective, it makes no sense to try to change the majority – it is easier and more viable to change what the organization is doing to match the values of the majority, whether we agree with them or not.

If one were to move to a community where wearing red was seen as treasonous and worthy of death, it makes no sense to wear red and tell the community it has it wrong. Yet that is the approach used by forestry.

When I pointed out that communities don’t need to be foresters to understand the impacts of forestry on them MP said…

“Undoubtedly, there are some legitimate concerns about forestry, but the reality is that many of those being publicly promoted are either hugely exaggerated, simply not real, or stem primarily from an ideological opposition to the cutting down of trees”.

In other words, the community has it wrong. We aren’t supposed to object to cutting trees.

From an investment point of view I’d have thought that the following points were reasonably clear.

1) ‘Industrial forestry’ isn’t working in Tasmania, requiring major public subsidies to keep it in operation. The result has been corporate losses & bankruptcies with severe disruption of forestry operations.
2) The supply chain for ‘industrial forestry’ (plantation or forest) requires operation at very low margins because of the characteristics of the global fibre markets (prices non-negotiable and trending down (1)). The result is pressure on forest contractors, small investors, banks, financiers and taxpayers, many making losses and/or suffering detrimental impacts.
3) Resistance to ‘Industrial forestry’ has strengthened opponents (e.g the Greens) and increased financial support for environmental and conservation groups. That resistance is creating more pain for forestry, even those parts valued by communities such as timber production.
4) Community antipathy to ‘industrial forestry’ is starting to affect other political groups and accelerate resistance for ‘industrial forestry’ plans.
5) ‘Industrial forestry’ projects have not been able to get funding in Tasmania, probably due to some combination of the foregoing factors.

Not only has the community increased its resistance to ‘industrial forestry’ but the market has also signalled what a risky and low profit business it is with bankruptcies and failing to fund Gunns ‘world scale’ pulp mill.

The forestry industry has not only failed to see and interpret these signals, it has argued against the relevance of them. Here’s MP on the relevance of community objections…

That’s OK if they only outline their concerns. But once they actively campaign to force change that can affect the livelihoods of thousands of people, they assume a responsibility to act with integrity in arguing their case. This requires an understanding of forestry.

Would we accept that argument from Toyota when their computer systems caused cars to accelerate out of control? Or the nuclear industry – no safeties required except those specified by nuclear experts?

What’s going on?

Thinking about the changes that are going on in the world, for example the collapse of big US banks, losses in financial markets and superannuation funds, threats to the Euro and so on, would you think it would be best to lock your money up for 20 years in a term deposit, or keep your money in a more flexible form such as cash or shares?

In a global environment that hasn’t yet taxed carbon (but might), isn’t yet certain about how to respond to climate change, where technologies are replacing books, where massive economic collapses are very much on the cards (e.g. Italy, Spain, Ireland etc), the Tasmanian forestry industry is still trying to attract a 20+ year investment of over $2.5 billion to build a pulp mill upwind of a populated valley engaged in mixed sensitive industries (e.g. tourism, fine foods).

It’s that rigid mindset that indicates a culture that’s not only set in concrete, it’s reinforced with rebar as well! Sadly, we see the same rigid culture in our governments.

Perhaps it is that hubris and that rigidity indicates which make forestry and government such comfortable bedfellows.

We can only hope that the inclusion of the Greens in the State cabinet will open some eyes to the problems created by rigid approaches and the potential opportunities opened up by being flexible.

Meanwhile, we shouldn’t expect too much from forestry sources like MP (1)…

“Pushing for change by repetitively regurgitating arguments despite their flaws being frequently pointed out by forestry authorities is deceitful, and anyone involved will have blood on their hands if Tasmania’s economic and environmental situation worsens as a result”.

Oh dear oh dear.

Watch this space.

Mike Bolan

Mike is a complex systems consultant, change facilitator and executive/management coach.

Note. The author welcomes constructive criticism and new information that adds to our understanding of these matters.

1. (1)  http://www.onlineopinion.com.au/view.asp?article=10585 and comments thereto
2. (2)  http://tasmaniantimes.com/index.php?/weblog/article/peace-in-tasmanias-forests/
3. (3)  Bartol et al, 2008, Management: a Pacific Rim Focus; pp 91-97, McGraw Hill
4. (4)  Kotler et al, 2007, Marketing; p56-8, Prentice Hall
5. (5)  http://www.informationclearinghouse.info/article19016.htm

Premier in peace talks ...

Premier a party to forestry peace talks

Tasmania’s Premier has shed some light on the mostly secret peace talks between the forestry industry and environment groups.

The Premier’s budget estimates hearing began with Opposition questions about the presence of his Cabinet colleague, the Greens leader Nick McKim.

Mr McKim asked limited questions, and on several occasions helped the Premier with his answers.

Mr Bartlett outlined progress in the round table forestry peace talks he announced in early May.

“With respect, I don’t need Mr McKim’s help on this matter,” he said.

Mr Bartlett says forestry and conservation groups have met at least a dozen times, and he has been present at three meetings.

He dismissed Opposition suggestions that he can not take credit for the progress.

“What’s happening at the moment is exactly what I proposed,” he said.

Mr Bartlett says he is convinced the right people are at the table.

ABC Online HERE

Stock and Land ...

Gunns survives but questions persist
25 Jun, 2010 10:04 AM
GUNNS has made a narrow escape after recently confirming it will not be in breach of its debt covenants at the end of the month but analysts say the Tas­manian timber company is still on shaky ground until its debt is lowered and complex restructure is completed.

Two weeks ago it appeared Gunns was not going to be able to dodge a breach in its debt covenants at June 30 but, after gaining clarity about its earnings for managing Great Southern’s timber plantations, a breach seems to have been avoided.

Chief financial officer Wayne Chapman said the $8 million initially estimated related only to the fair value of receivables and standing timber it acquired under the transaction with the failed manage investment scheme operator but did not take into account projected income, The Australian Financial Review reports .

Gunns estimates it will receive $30 million in managed investment scheme earnings this year, allowing it to increase its earnings guidance, thereby avoiding breach of its debt covenants.

Story and links, HERE