Interview with Michael O'Malley

Michael O’Malley is a long established and highly respected timber harvesting contractor based near Castlebar in County Mayo. In this interview Irish Timber & Forestry talks to Michael about his contracting business and the future for timber harvesting in the West of Ireland. Before finding his vocation in forestry Michael was employed as a department manager in a multi national company in Castlebar.  "I left Baxter in 1984 and began a firewood supply business. In 1990, I became involved in the commercial side of forestry with the purchase an old Bruunette 578 forwarder."

New Lifestyle
"Yes, I found it a big change from the inside work I was used to, but the outside work has the advantage of being with nature. You take the rough with the smooth, the good days with the bad days and once you are out for a while, you begin to appreciate the lifestyle. In 1990 when I had the first machine, there were 24 chainsaw operators cutting and stacking timber, which I would extract.

"In 1992 it became uneconomical to sell timber to England because of the high exchange rates. Then with the introduction of the C2 tax system, which meant that all forestry workers must be registered for tax, the cutters just vanished like the morning dew!"

Machinery investment
"With the new tax system in place I had  to turn around and look at the possibility of getting into the harvesting side of the business. I first purchased a Tappio harvester. We progressed and bought a Lako head from Terry Mc Manus (Erne Forestry). In the late 90s, the mills were developing and expanding: we could see the increasing demand for timber in the West of Ireland; as a result we bought a new Timberjack 810 forwarder and a Samsung excavator base with a Lako head.

"It was a big investment at the time, the 810 forwarder was in the region of €150,000 and the harvester; the base unit and the head, cost a similar amount, so you are looking at about €300,000. Then in the late '90s early 2000 the demand for timber was still growing, so we to invested in a second piece of equipment and upgraded our existing machines. At present we have an timberjack 1110B forwarder which is 3 years old and two Samsung excavator base units with two Lako heads, both 24 ton machines."

Tendering process
"Unfortunately, because the OSB mill in particular wasn't taking in the volume of timber that it was previously taken from the Western seaboard, a lot of contractors found themselves in a situation where the volume of work needed to stay viable wasn't available. At the same time, Coillte introduced the tendering process. These two combined events caused the rates to drop from an average of about €17.50 to €18 per metre on the roadside all the way back to €14 and in some cases a little over €13. With the price of harvesting timber dropped by 20% and the cost base still remaining the same. The high price in buying the equipment, paying labour, diesel, running costs, oil, hoses and parts. Some contractors found that they just couldn't stick with it.  This time last year there were eleven forestry contractors operating in the Mayo and North Galway region.  Today, that has been reduced to six. Two have not stuck the pace and unfortunately went under.  Three more have gone abroad, two to Germany and one to Czchecoslovakia and this leaves six operating in this region at the moment."

Working Abroad
"I did give it some consideration, but due to family commitments, I decided to opt out.  As far as I understand, the rates are good. Our average rate for cutting rough pine in the west of Ireland with a 500 metre draw is around  €17 a metre.  The contractors that have gone abroad, are cutting two metre trees on good solid ground, with no need for brashing, or the need for making tracks or anything else, they are getting the same rates. We would be lucky to cut maybe 200-250 metres per machine per week, those who have gone abroad could cut up on 1500-2000m3.  The only difference is you must have a chainsaw man there to cut the first length off the tree because it’s just too big for the harvesting head.  

"Hopefully for the rest of this year and into the early half of next year there will be plenty of work available for the contractors at home and with Murray's expanding their mill and just about to go on-line combined with demand from the OSB Waterford and MDF Clonmel plants, it appears the demand for timber will grow."

Coillte
"I would be critical of Coillte in that they used the shortage of work to the contractor to force the rate down. Now the situation is totally reversed, in that they cannot get enough contractors for the available work. Unless Coillte can come up with a new system or a long term contract that would entice people to re-invest, there will be a shortage of harvesting contractors.  People are not prepared to invest a quarter to a third of a million on one single machine without some kind of contract work.  If you go out and work in construction or take on some kind of road contract, you’re looking at a contract that’s going to guarantee you a set volume of work for a number of years. Coillte expects you to go out and spend a huge sum on money with no contract whatsoever; other than the piece of work you have at the time, which may last two to three months. It doesn’t make sense. There has to be something done to help guarantee the long term viability of forestry contracting. Equipment needs to be kept up to date, otherwise it’s just going to fall behind and with all the health and safety and environment concerns, old equipment just isn't up to the game."

Sustainable forest management
"This has brought a huge cost, especially to the West of Ireland where we have a lot of sensitive areas. We work on peat, raised bog around rivers and lakes where water pollution is a big concern. At present we have timber sales on hold due to the Merlin and the pearl mussel. This upsets contractors' plans where work has to be postphoned or deferred for a year of eighteen months.   That obviously has an economic cost as well.  The site we are working on at the moment is on a raised bog and part of the life site programme. Thus has to be treated very carefully in terms of  any potential run off or ground damage."

Diesel, Insurance and Labour costs
"Last year we were paying 45 cent per litre net for diesel and at the moment we are paying 52 cant; this cost has risen.  Insurance in reality hasn’t risen by any appreciable amount. Wages have increased by about 10% in the last year.  Regarding machine repayments: if you want to keep up to date, you are probably looking at five thousand a month, that’ s an on-going commitment per machine.

"The simple reality is that there are a lot easier and better paid jobs in terms of office work or even civil construction and infrastructure, laying pipes, laying suirs, putting in water systems, whatever. People can work in a cleaner environment with shorter working hours.  The average working hours in forestry contracting in the West of Ireland at the moment is probably 60 to 70 per week, whereas the average working hours in other industries may be as little as 35. Many forestry people are working two weeks in one.  Any contractor who is working less than 50 hours a week just can’t survive."

State's Responsibility
"Absolutely, the state has to take some responsibility.  The grants that came in for harvesting machines back in the 1990s encouraged a lot of contractors to get involved in the forestry sector. People spent large sums of money: not alone the banks' money but in a lot of cases, their own personal finances. Now that the work isn't there and now that the rates have been reduced,  in the West of Ireland a drop of 20% per metre on the roadside, somebody has got to take responsibility for that, be it Coillte or the Forest Service. As I said earlier, with the contractors' numbers in Mayo and North Galway reduced from 11 to 6, that is almost halved, obviously there is a lot people  in serious trouble."

Private forestry
"Private forests have been planted in the last 10 to 15 years for farmers, mainly by Greenbelt and Coillte.  Which is just coming on stream. The plots are small in the West and it just doesn't make sense to handle a small volume of timber.  The Forest Service or maybe the co-ops need to form a harvest plan where a contractor can basically go and harvest a group of forests in an area, in much the same way as a silage contractor would cover an area: he might cover say 25 to 30 properties on the loop. It could make economic sense to move a harvester two miles down the road, do a small plot there and move on to another three miles and so on. That could work."      

Bio Energy
"At the moment there is only a small market for stakes and small pallet wood. There isn't really any outlet for the pulp, but with bio-energy becoming more and more popular and no doubt in the next four or five years, the whole issue of wood-chip and pellet and that kind of product will come more to the fore.  So, I would see an opportunity over the next number of years to diversify into that area and meet some of the demand that will be created in that sector."

Family
"Without an understanding wife, forestry contracting would be out of the question.  The reality is you won't get home until 8 or 9 o clock at night. You have a half day off on Saturday, and maybe Sunday with your family and that’s basically it.  Without a family that are behind you, forestry contracting would be impossible. If you are working away, it’s virtually impossible to have a family life. I’m fortunate in that for nine to ten months of the year, I’ll be home. I only work within a 50 mile radius of my home base, so that does make life a little easier. For contractors that are working away full-time, it must be horrendous."

Machine Operators
"I have three very experienced machine operators with me at the moment: Martin Hoban, Sean Mac Meneman and Pat Brennan. There is 80 years plus experience between the four of us in the forestry industry."
 
Future of Forestry Contracting
"Longterm, there needs to be a co-ordinated approach between all of the key players, public and private. We need to be able to see a definate future in the forestry industry, such as supplying the mills as we do at the moment, Murrays, ECC, OSB Clonmel, Finsa, whoever.  If that can be linked to a market for the poorer quality material from thinnings and that, there is a future in forestry.  How that will play out in the next number of years remains to be seen."

I would like to thank Michael for going to great trouble to meet with me on a harvesting site in North West Mayo. My two hour visit reminded me of the soft, wet ground, bad weather, poor timber and hungry midges so common in the West. I think the next time I interview someone from forestry in that part of the country, I'll  arrange for them to travel to our offices in the midlands!