Seeing the wood for the trees

When Coillte, the State forestry company, was started 12 years ago, the Government transferred all of the country's land and forests - as well as the sector's 2,500 staff - to the new body. "We found ourselves with an organisation launched as a commercial entity which had financial assets but a staff more in keeping with an outdated civil service structure," Mr Martin Lowery, the chief executive - who joined two weeks later - remembers.

The first step, he decided, had to be to create a business unit structure, so the nurseries, Christmas trees, engineering and other activities were separated. A commercial account structure had to be put in place on a regional and district basis. And people had to be redeployed and made redundant.

"The big job was in management of change. I don't think you manage change," he says. "Change management is an outdated concept. I think you create an environment where change can take place.

"I spent the first couple of months just talking to people, finding out what their views were. At the end, everybody knew change had to take place and sooner rather than later. The process we got involved in was workshops and involving people and saying: `what do you think should be done'. The first year was spent creating the climate where people could move away from the traditional way of thinking and accepting change could take place and wasn't going to hurt. We got agreement with the union and, within the first five years, we shed 1,500 [jobs]," he says. Mr Lowery had not come from one of those companies that specialise in takeovers - he had spent 17 years in the Industrial Development Authority, in healthcare and, for the last 10 years, in the high-tech area - years which were, by all accounts, very successful ones.

"You're exposed to a very wide range of senior management because you're dealing with companies coming into Europe and they were the growth sectors in North America," he says.

"You had pharmaceutical companies like Merck and Bausch and Lamb, and then there were the younger high tech companies, the Apples, the Microsofts of this world, people with novel ideas about how businesses should be managed. Structures didn't matter - they had a very egalitarian approach to work and labour. I came into the company with that much."

But there was much more than managing people to be done. For the first five years the company marked time on the profits front - which gave people the impression the new company was not a success - but then things turned around slowly and a few weeks ago it announced profits of €25.5 million (£20 million) for 2000, an increase of 20 per cent on the previous year.

Now Coillte is developing its enterprises on a process team based structure.

The 242 forests that were inherited from the old organisation will be restructured into separate businesses that will manage the process through from felling to replanting and sales.

"If you want to operate on a world-class basis, you have to have people who have the time and resources and focus to know what the best practices are in a narrow area rather than a little bit about everything, people who know as much about growing forests as well as the Canadians and Swedes," says Mr Lowery.

Now that many of the early planted forests are aged about 40 years, there will be a fairly rapid supply of logs. Output in 1999 was 1.4 million tonnes; the target for 2004 is 2.2 million tonnes. The €62-million investment by the privately owned saw and board mills over the past year has made the processing side of the industry competitive; before there was a reluctance to invest.

In 1998, Coillte tried to enter the processing sector, which Mr Lowery regards as a vital extension - by buying saw-miller Balcas - but was not allowed under competition law. "We still have an interest in the sawmilling sector," he insists. "We would have to overcome the objections on competition grounds and grounds of dominance. Our commercial success depends on what the processing industry does."

However, it has an interest in processing through its joint venture with Louisiana Pacific, which manufactures OSB (oriented strand board) in Waterford.

It made a reduced contribution to profits last year but Mr Lowery explains that this is due to a temporary over-supply of OSB on European markets that will correct itself in time.

He is very insistent, too, that Coillte is a company, not an agency. Coillte has ownership of the assets - 90 per cent of the productive forests of the State - and does not manage them for the Government. This is why he believes the European Union (EU) is wrong to deny Coillte the premiums that private forest farmers receive. A decision on Coillte's appeal to the European Court is expected before the end of this year.

After all, the EU is trying to encourage the Republic to grow more trees, he says. Only between 8 and 9 per cent of the State's land is planted with trees - on a purely economic basis, it should be 18 to 19 per cent. The European average is 25 per cent.

Mr Lowery is very conscious of the criticism of the conifers that have been grown in State forests to date. But he argues: "Without the commercial production, you wouldn't have any broadleafs. If we're commercially successful, we can do an awful lot more by way of diversity and an awful lot more of the things the environmentalists would like us to do. Broadleafs are unfortunately not commercial. . . I don't think anybody apologises for what happened 40 years ago."

There is a very strong case for increasing our forestry acreage, he says. Economically, it provides a lot of jobs and keeps people in areas where agriculture alone would not support a population.

Forty years on, there will be a range of new processing industries. Demand for forest products will continue to grow. Even environmentally, he adds, it will have a positive impact on climate change by reducing CO2 emissions. "We're totally out of line with our Kyoto commitments on CO2s," he points out.

He is personally interested in trees "to a point and in nature, hugely", but there are limitations if you live in Clontarf, which is only a couple of miles from Dublin city centre. Born in Galway, he studied civil engineering at UCG and a postgraduate degree in engineering hydrology. Forestry clearly fascinates Mr Lowery. "Foresters are very interesting people. They have a long-term view of the world. Foresters retiring will be thinking 40 years ahead when they won't be around themselves."

He realises that many farmers cannot have the same vision. But, he points out, a forest after 20 years is "very valuable" and after 40 years "extremely valuable".

About 300 farmers are involved in partnerships with Coillte and about 1,400 hectares are being added in this way each year. "But there is still a very big job to be done to get acceptance of forestry as a wealth-creation area by farmers," he says.

Looking to the not-too-distant future, he sees Coillte setting up companies that will innovate in the timber/horticulture area, with products like modular housing construction, landscaping, motorway landscaping and other infrastructural developments.