Chair and Chief Executive overview

Forests as powerhouses of our future

As leaders of Scion our role is to keep the institute’s vision “Prosperity from trees” front of mind. We believe in our people’s passion, dedication and capabilities to get us there. Importantly too, we believe in trees. Indeed, we see the power of trees as a renewable resource that can meet the market needs of a low-carbon bio-based economy.

Our long legacy of delivering science impact gives us the confidence to think boldly about the future. Our achievements and those of our predecessors reaching back to the 1920s have built Scion’s reputation as a world-leader in forest industry research and technology development. We recognise too that increasingly Māori are playing an important role in shaping the future New Zealand forest industry, and our partnerships with Māori are a valued strategic priority.

Last November our annual strategic review confirmed the increasing demand for wood and wood products driven by the global move to renewable circular economies. Global demand for forest biomass is projected to grow by at least 300 per cent by 2050 as supply chains decarbonise and more wood is used in buildings and other construction.

We are excited by Scion’s unique contribution to shaping a truly sustainable future for New Zealand. In this report, we are proud to present some of the past year’s achievements that are stepping us towards our vision as we help ‘unleash the power of forestry’ to deliver prosperity from trees.

A highlight demonstrating this effect was the opening of the Ngāti Whare nursery in Minginui. We worked with Ngāti Whare to support their ambition to build an indigenous commercial nursery, including partnering with them to co-develop our novel propagation technology. This initiative will provide local employment and planting stock to support the 10-year Te Pua O Whirinaki Regeneration Plan. Our partnership aims to licence the propagation technology to other nurseries.  

"Our role is to keep our vision “Prosperity from trees” front of mind ... we believe in trees. Indeed, we see the power of trees as a renewable resource that can meet the market needs of a low-carbon biobased economy."

We are now seeing the significant progress the Growing Confidence in Forestry’s Future programme has made in better understanding the key drivers of forest productivity, with development of management interventions to increase productivity and profitability. The programme has demonstrated that increasing site utilisation by increasing final crop stocking can substantially lift productivity, and many companies are altering their silvicultural regimes to reflect this.

Responding to the forest industry’s goal to increase the value of forestry as a land use option, we developed a forest investment framework to assess forest ecosystem services (such as carbon storage, erosion control, water quality, biodiversity and recreation). We are further developing the framework so that we can undertake a national analysis of the full value of New Zealand planted forests, both existing and potential, enabling better representation of the wider benefits provided by forests in land use management, policy and decision making.

An inland container terminal at Kawerau, with a rail link to the Port of Tauranga, is a very likely prospect after a feasibility study we led confirmed such a terminal would be viable, offering considerable benefits to the eastern Bay of Plenty. Establishment of the container terminal is now out for tender.

Ensuring that New Zealand forests are resilient to current and future natural threats is vital for our economy, our environment and our way of life. Media headlines this year warned of the devastating consequences of fire and biosecurity threats. Our forest protection teams have responded swiftly to such threats as they have arisen.

The fire-fighting response to Christchurch’s Port Hills fire in February was boosted with our rural fire team mobilised to assist the incident management team to develop fire attack strategies, determine resource needs and ensure fire-fighter and public safety. Post event, the TVNZ One News weather programme used Scion’s rural fire risk tool to provide summer fire forecasts. Ironically, February 2017 marked the 25th anniversary of rural fire research in New Zealand, centred at our institute.

Collaborative responses to kauri dieback and myrtle rust have pooled talent from multiple organisations. Scion botanists and pathologists, in the laboratory and field, have played an important part in the overall incursion response, which is ongoing. Our continued investigations into the radiata pine red needle cast disease provided key clues to the disease and its pathway to New Zealand.

This year our bioplastics innovations have reached the hands of thousands. The biospife, a novel bioplastic based spoon-knife, was officially launched by Zespri at Fieldays 2017, with more than 300,000 produced by Scion and Alto for the global market. For another primary producer, we developed biodegradable bioplastic vineyard net clips containing red grape pomace. The opportunities ahead for bioplastics in the horticulture sector are vast.

Our bioenergy work has sparked the interest of businesses who are invested in their future energy supply. Highly engaged attendance at our 2035 Biofuels Roadmap workshops ensured that the key insights from the work, due to be delivered within the next six months, will be highly relevant to influencers and decision makers.

Deriving value from waste using green technologies is another focus area, and one of our projects has the power to transform lives in developing nations. After successfully completing the first phase of the Bill and Melinda Gates Foundation “Reinvent the toilet challenge” to prove the concept that wet oxidation could treat human waste, we received close to $3 million over two years for phase two, to develop a prototype, simple eco-friendly toilet unit.

Recognition for our clever technologies is highly rewarding. Our environmentally-friendly Ligate™ bioadhesives technology received many accolades in the year. Being named NZBIO Biotechnology of the Year was a welcome surprise and honour, with NZBIO describing the technology as “a game changer for wood panel manufacturers”.

Ensuring our people can continue to deliver outstanding work requires an investment in infrastructure and the work environment. In May our Christchurch staff relocated to the NIWA campus from their long-standing home at the University of Canterbury following a very low seismic rating of the building they occupied.

Financially 2016-17 has also been a good year. Revenue has grown 4.6 per cent to $51.9 million (budget $50.3 million) providing a net profit after tax of $2.3 million (budget $1.6 million).

Our main campus in Rotorua also was the matter of serious consideration. In October the Minister of Science and Innovation approved a business case for enhanced science and office facilities and design of an Innovation Hub. Our plans to redevelop 1950s vintage laboratories, co-location opportunities and creation of an Innovation Hub have been well received by industry and other local stakeholders. Including some public access to our science will add an exciting dimension to the project and broaden stakeholder awareness of the important work we do. Starting next year, the three-year development, the largest at Scion for many years, will cost an estimated $18 million.

Financially 2016-17 has also been a good year. Revenue has grown 4.6 per cent to $51.9 million (budget $50.3 million) providing a net profit after tax of $2.3 million (budget $1.6 million). Our cash reserves have increased to $15.5 million (budget $7.3 million) supported by an $8.4 million net cash surplus from operating activities. This positions us well for reinvesting back into the organisation such as through the construction of the Innovation Hub and other significant science and building infrastructure planned over the coming five years.

We thank everyone on staff and all our customers and partners who have contributed to our successful year.

We would like to especially acknowledge the contribution of Dr Warren Parker, who retired from Scion during this past year. Under Warren’s leadership Scion transformed its strategy, and relationships with the sector, key stakeholders and major international science organisations were considerably strengthened. We thank Warren for his very personal contribution to Scion and the New Zealand forest industry.

We also acknowledge and thank retiring Directors Judith Stanway and Sheldon Drummond for their services to the Board and for their strong contribution to making Scion the best it can be.

This year we marked our 70th anniversary by launching a series of events through to the end of 2017 to celebrate our science and our people. Now we are poised to look far into the future in our upcoming strategy refresh. We are very excited by the significant opportunity that forestry and manufactured products from forestry have for all New Zealand, regional economies and the Maori economy.  We look forward to realising Scion’s role in enabling that potential, starting with the year ahead.

Tony Nowell CNZM

Julian Elder
Chief Executive