For Coillte chief executive Imelda Hurley, the challenges posed over the last year by Covid and Brexit pale in comparison to a crisis the State forestry company faced that threatened the core of its business. The Department of Agriculture, Food and the Marine's growing inability to keep up with mounting forestry licence applications and appeals came to a head in 2020, creating a shortage of timber in the Republic, which actually grows enough trees to meet its own needs and export healthy quantities of timber.
“We’ll remember Covid but we’ll talk about the licensing crisis,” Hurley remarks grimly. All forestry activity: tree planting, felling and building roads to transport logs; requires a licence under the Republic’s laws, which allow broad grounds for appeal. However, the department’s forestry division, which handles permit applications, and the committee that deals with any challenges, did not have the staff to cope with the volume of work.
At one point, sawmills, which buy around 75 per cent of their supplies from Coillte, estimated that the backlog had delayed the production of 1.1 million cubic metres of wood, enough to build 50,000 homes. Simultaneously, just 2,000 hectares of new forest were planted in 2020, against a Government target of 8,000.
Hurley says she cannot say how many houses did not get built as a consequence. “What we saw in the latter part of 2020 was that the construction industry was at times unable to source some of the timber needed for house building. We were unable to supply our customers with what they needed. That created a shortage, and some sawmills very understandably went about importing timber from abroad in order that they were in a position to meet market requirements.”
Coillte itself had to cancel scheduled auctions at which it would have agreed supply contracts with its customers for the year ahead. Added to that, construction shut for periods in the Republic and UK, its biggest markets. As a result, Hurley predicts that its accounts for 2020 will show a “double-digit reduction in profitability” – from €63 million in 2019 – when Coillte publishes them next month or in May.
Its problems did not stop on December 31st. “In order to stay operational at the end of last year, we ran our stocks to very low levels,” Hurley says. “So we entered 2021 with very low stocks.” Similarly, Coillte would normally begin a year with all the licences it needs. It had just 50 per cent by the end of January, but that had reached 60 per cent at the beginning of this month.
To be blunt about it, we're in the second year of a crisis. We have moved forward, but it will take all of 2021 to get our business back to normal operations
“We are at 60 per cent of what we would call licensed and available. There is a consistent volume of tree felling licences from the department, and that allows us to plan our business much better. But roads are now my biggest concern.”
Coillte owns 7 per cent of the Republic’s land. It needs an extensive road network so workers can navigate its plantations and logs can be transported. “There is a backlog of road permits due to us and that is putting us in a situation where we have volume that’s licensed but we simply cannot access it,” Hurley explains.
“That’s what I mean when I say we are 60 per cent licensed and available. We quickly need to get to a point where we are 100 per cent licensed and available and we are in daily contact with the department particularly on roads just now.
“So as I look at 2021, to be blunt about it, we’re in the second year of a crisis. We have moved forward and it’s not as acute as it was, but it will take all of 2021 to get our business back to normal operations. I would look to 2022 as the year when we’ll be building back up and really getting on with the business that we run on a daily basis.”
There is progress on another front also, auctions. Coillte holds these regularly so sawmills can bid for supplies. Normally it would have begun 2021's auctions last autumn. Instead it had to cancel them. Now Hurley hopes the company could hold its first annual contract auction in April. It is six months late, but she argues it is a significant step.
Those advances are down to several changes. The Oireachtas passed emergency legislation, the Forestry (Miscellaneous Provisions) Act, 2020, that among other things sped up the appeals process by allowing the committee that hears them to sit in divisions. At the same time, the department began recruiting more staff to deal with licence applications.
Covid-19 and the delay in forming a Government following last year’s election meant the law was passed later than ideal, but Hurley acknowledges that it still prevented the industry from closing down altogether. The now regular flow of felling licences is important, as without them, Coillte cannot cut trees.
The crisis reverberated through an industry that employs 12,000 people, mainly in rural Ireland. "There were points last year where sawmills simply didn't have volume to process and were closed and were on short time until logs were in the log yard," Hurley observes.
“There were contractors with machines parked up because they didn’t have work. There were nurseries who had saplings available to plant, but the question was, where could they be planted? Everybody was really impacted and all of those impacts will carry in different ways into 2021. It will take a year to work through many of those challenges and get the whole industry back to normal.”
While this happens, Government is renewing its interest in forestry. Senator Pippa Hackett, Minister of State at the Department of Agriculture, has just published Project Woodland, a new strategy aimed at pulling all forestry's strands together: timber production, its potential to boost biodiversity and its contribution to tackling climate change. The strategy has four elements, tackling licensing backlogs, streamlining the permitting process itself, developing a vision for forestry and devising an organisational structure to manage it all.
Project Woodland sprang from a review for the Government by Jo O'Hara, former chief executive of Scottish Forestry, who in turn recommended implementing recommendations of an earlier report, by her country's former chief planner, James Mackinnon.
Hurley says that O'Hara "sets out very clearly the work that needs to be done". She thinks the clarity that brings is welcome and says that Coillte is looking forward to talking to the members of the Government's Forestry Policy Group.
Launching the strategy, Hackett declared that forestry is about more than timber. Plenty would argue that successive governments have ignored this, treating trees as one more commodity to be harvested. So, they say, we have hectares of non-native Sitka spruce and other species, grown for commercial use, that do not support biodiversity and are not particularly sustainable.
Hurley says that legislative reform is needed to move the industry in the right direction. She points out that many European countries are successfully implementing the EU’s Habitats’ Directive and the Birds Directive – meant to protect around 500 species native to the region – while maintaining timber production.
“We need to see what has worked well, what has absolutely delivered all the required regulation, but at the same time, what has delivered a vibrant timber sector in other countries and then look at what can be done to reform regulation in Ireland to put the industry on a firmer footing,” she says.
Native trees, alder, ash, birch, oak, are not generally suited to building, while imported evergreens are. Nevertheless, Hurley maintains that Coillte does not ignore the bigger picture, and wants to grow forests with multiple benefits, including improving the environment, aiding biodiversity and tackling climate change.
One vehicle for this is Coillte Nature, the company's not-for-profit venture that focuses on large-scale nature rehabilitation and regeneration. It is replacing commercial forest that the company is now harvesting in the Dublin Mountains with native species. It will take time to happen, but Hurley says "they won't be forests for timber any more".
Overall, Coillte planted a record 9,000 hectares with more than 20 million trees, but that was to replace felled timber. The licensing problem, meanwhile, held up the planting of new forest. Giving certainty on permits is the way to address this, she says.
After graduating from the University of Limerick with a business studies degree, Hurley trained as an accountant with Arthur Andersen, where she worked for seven years. She moved to convenience foods group, Greencore, rising to group finance director. In 2011, she joined PCH International, the contract manufacturer founded by Irishman Liam Casey, which is one of hi-tech giant Apple's leading assemblers, as chief financial officer and head of sustainability, giving her the chance to live in China and Hong Kong.
Following three years there Hurley returned to the Republic to become chief financial officer in agri-business specialist Origin Enterprises. In November 2019 she joined Coillte, lured by the potential it offered to help tackle climate change and to work in sustainability.
Along with its forests, the group has other businesses, Medite Smartply, which manufactures boards widely used in building, including floors and internal and external fittings. Like much of Coillte’s output, many of these are exported, particularly to the UK, one of the world’s biggest importers of timber.
People have asked me had I known how difficult things would be last year, would it have changed my mind?
While the group was prepared for Brexit long before 2020, and reviewed these plans again through the year, Hurley agrees that ensuring products move easily to Britain has been a challenge. It has thrown up other issues at the import side as well, as parts needed for harvesting equipment are sourced through our nearest neighbour. It has not seriously disrupted Coillte, but the group’s chief executive warns “we are not out of the woods in terms of Brexit yet”.
Coillte has big ambitions in renewable electricity. The company has agreed a €1 billion joint venture with fellow State enterprise ESB to build wind farms on its land with the capacity to generate up to 1,000 megawatts of power, enough to supply about half a million homes, over the next decade. Mergers watchdog, the Competition and Consumer Protection Commission, recently approved the deal, on condition that the pair put in safeguards to prevent them sharing competitively sensitive information with each other.
The next step is getting shareholder approval from the Government. “That’s being worked through at the moment, I’m hoping that that will get dealt with in the next number of weeks and then we get up and running,” Hurley says.
Coillte has already been successful in this field. It built the Galway Wind Park jointly with SSE Renewables, part of the same group that owns Airtricity, and in 2018, sold four wind farms to Dublin-listed Greencoat Renewables for €136 million.
For now, Hurley stresses that she must concentrate on getting the business back to the point where it can supply its customers and where all its contractors have work. After that, she wants to turn her attention to the longer term, developing the enterprise itself, using Coillte’s resources and expertise to aid the Republic’s contribution to tackling climate change, and working with the Government on its forestry strategy. These were part of her own plan when she joined the company, but the crisis intervened. Despite this, she says: “Every now and then, people have asked me had I known how difficult things would be last year, would it have changed my mind? The answer is absolutely not.”
