Funeral bells for the
rubber wood industry
By Chathuri Dissanayake
PADUKKA – The local rubber wood-based industry
has been struggling for while now as its main raw material –
timber - has been in short supply in recent years. The industry
has been complaining about the short supply and many blame it on
the presence of the Merbok MDF plant in the Horana Industrial Zone.
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Pondering the future |
The BOI-approved Malaysian-run factory uses rubber
wood as its main raw material to produce MDF boards out of which
90% is exported, and acquires most of the resources that were earlier
available to local firms sending up prices sharply. However this
is considered as a low value added product compared to the other
wood based products such as brush handles and furniture exported
by the local producers.
The most affected are the small and medium scale
wood-based manufacturers who find it extremely difficult to compete
with the increasing price of rubber logs.
“Hundreds of saw mills have closed. Many
workers have lost their livelihood. The wood based export industry
which encompasses both coir and rubber wood, a key export industry,
is badly affected so much so that they are forced to import rubber
wood to fulfill commitments to buyers,” Lakshman Thilakaratne,
Secretary of the Wood-based Industrialists Association explained
to The Sunday Times FT.
Industry officials say the price of one cubic metre
of rubber wood has increased drastically in the past few years.
In the 1990s a cubic foot was Rs.70 but by 2001 it rose to Rs.80
and today has more than doubled that rate at Rs.180.
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An almost idle Padukka saw mill |
Officials say about 500 small industries manufacturing
products such as brush blocks, wooden toys, pallets, furniture and
other similar products both for the local and export market and
about 150 saw mills have all closed down as a result.
At Padukka, Gallage Premaratne, factory manager
of Gamage Saw Mills, a small scale wood based producer of brush
handles for export, said about 75% of the saw mills in the area
have shut down. The small saw mill owners are very badly affected.
Subcontractors who supply logs have also gone out of business and
the labourers who were working for them don’t have jobs anymore.
The saw mills don’t have enough material
to work everyday or at full capacity when the machines are running.
Most often the mills work at half their capacity for about two or
three days at a time depending on the availability of the material.
The mills which used to churn out wood with such an uproar are now
sleeping giants lying undisturbed on the soft comfort of wood dust.
Even the workshop tables are all clean and tidy, a rather unusual
sight at any wood workshop. The few employees that remain at the
workshops either idle about or are kept busy oiling and cleaning
machines.
Some of the saw mill owners are running the mills
at a loss as they have no other option but to do so to keep their
earlier commitments to buyers or because they cannot lay off the
workers over night.
“We have about 80 workers in the factory
we haven’t fired anyone as yet, but we are not sure of what’s
going to happen next year. We have orders we have taken from foreign
buyers but we don’t have the raw material to produce the goods
so we are in a fix. We spend about Rs 800,000 rupees to pay wages
and as fixed costs every month. We work only one or two days a week,
when employees come we cannot ask them to leave, we have to employ
them,” said Premaratne speaking about the dilemma of the business.
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Gallage Premaratne |
The situation is not the same everywhere. At Waruna
Exports the company was compelled to lay off about 50 workers. “The
cost is too much, we can’t compete with the world market,”
said Rajitha Fernando, General Manager of Waruna Exporters (Pvt)
Ltd, which manufactures and export industrial and household brushes,
brooms and blocks.
Several weeks ago, The Sunday Times FT reported
on the extra ordinary concessions given to Merbok by the BOI when
it was first launched. The company has obtained a stay order from
the District Court against the BOI’s decision to terminate
basic services to the factory because Merbok has failed to settle
the dues owed to the BOI for services provided.
Some of the saw mill owners at Waskaduwa, a small
town between Panadura and Kalutara, have different reasons for not
giving up the loss making the business.
Waskaduwa is reputed for its many saw mills which
specializes in rubber wood based products. Many of the saw mills
in the town have come down from father to son. One such businessman,
A. Ravindra Priyantha who used to run a saw mill which was handed
down to him by his father told The Sunday Times FT that his mill
is inactive most of the month as he cannot buy the logs at a price
as high as 180 rupees (the price paid by Merbok).
“Some people do this while incurring losses
because they don’t tell people not to come to work. So they
pay salaries out of their own pockets. They are reluctant to close
down the mills because the businesses have been handed down from
father to son and they didn’t venture out into different fields
and now they are lost because the income has stopped,” said
Priyantha standing in his inactive workshop which once used to buzz
with activity not only during the day time but many a night before
the current crisis.
Of the 30-odd mills that used to run about three
to four years back, many remain closed.
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Rajitha Fernando |
“About 15 of them are closed because they
cannot get the fire wood and they are struggling to get into some
other business as their main source of income has been lost,”
said Sarathweera De Silva, Treasurer of the Rubber Plantation Protection
Society and Managing Director, Somachandra Saw Mills.
The industry is not only finding it difficult
to obtain raw material but also in retaining orders as the cost
of raw material is making it extremely hard to maintain competitive
prices with suppliers from other countries.
“We take orders from Japan, Belgium, and
France but we cannot sell our products if we pay more than Rs 180
per cubic metre. We cannot sell our brush handles for more than
even US$2 and we have to bargain so much as buyers can get cheaper
products from China or Malaysia,” said Premaratne.
Looking around hopelessly at a mill that is working
below capacity, Chandrasiri Gamage, Managing Director of Gamage
Saw Mills, says there are few options left. “If this continues
to happen we might have to go into the forests and cut trees just
to survive.”
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