Gib, with almost a monopoly, cannot supply builders fast enough. Photo / supplied
Gib, with almost a monopoly, cannot supply builders fast enough. Photo / supplied
The Commerce Commission's initial report on the factors affecting competition for key building materials and how that affects housing costs will be out next month, just as pressure on the sector mounts due to the Gib supply crisis.
One construction sector chief wants the Government to axe Fletcher Building's 94per cent hold on the plasterboard market, saying it was wrong that it ever got to that.
Shane Brealey, managing director of builder/developer Simplicity Living, said Winstone Wallboards should never have become so dominant.
It was now time for the Government to act, he said.
"There was a playing down of the crisis and how long it might last," he said after Friday's meeting between critics and Fletcher chiefs.
"I would love to think that they are right and that this will all blow over in two to three months' time but I just can't see it."
Winstone had under-estimated the amount of damage the crisis had caused, he said.
What New Zealand needed was a long-term solution where the country was not so beholden to Winstone, with 94 per cent of its plasterboard market, Brealey said.
"Hopefully, the Government can get some action around that so we're not so dependant on one source. They hadn't taken it as seriously as they should have. This has now got to go to the politicians," Brealey said.
Building and Construction Minister Megan Woods has also expressed concern: "The plasterboard shortage is a high Government priority, with ministers directing officials several weeks ago to look into what could be done to alleviate the impact on construction projects."
The new $400m Winstone Wallboards' factory at Tauriko. Photo / supplied
On December 17, the commission said it "expects to release a draft report for consultation around July 2022 and its final report by December 6."
A commission spokesman said today the draft report would be out later next month and everyone will get to see it, just as they have with other market studies lately including that into supermarkets.
High plasterboard costs were Highlighted by Simplicity Living's Shane Brealey, who said this month Thai imported plasterboard was much cheaper than Gib, even by the time all the shipping costs were included.
Thai board cost $11/sheet in shipping costs. But even then a standard Thai board sheet was only $19.50/sheet compared to Gib at $25/sheet, Brealey said.
"For standard board, [Thai] is 20 per cent cheaper and for moisture-resistant, it's around 40 per cent cheaper when we buy in the larger volumes we are," Brealey said of Bangkok plasterboard compared with Winstone Wallboards' product.
Gib's pricing has come under less attack than its shortage.
Will the commission cite Gib's supply shortage in its preliminary findings? Photo / supplied
"Gib will lose a hell of a lot of loyalty," predicted Naylor Love chief executive Rick Herd.
"Smaller companies who aren't as resourceful as Naylor Love will go under because of it. Absolutely they will. They won't be able to get Gib. Jobs will run late," he said.
The commission said that in July it will publish a draft report that sets out its preliminary findings about competition for residential building supplies.
"If we make preliminary findings that competition is not working well, we may develop some proposed options to improve competition."
Feedback will then be sought on the preliminary findings and any proposed changes to the industry.
Anna Rawlings, commission chairwoman, said house building was an important part of our building and construction industry and vital to ensuring housing supply can meet demand.
"Various reports on the industry have raised concerns at rising building costs and this study allows us to consider the industry's approach to key building supplies and how effectively competition is working within the industry, and where it may be able to be improved," Rawlings said.
Shane Brealey compares Gib with imported Thai board and finds the latter superior. Photo / supplied
"The broad terms of reference invite us to look up and down the supply chain and across product lines, at the industry structure and nature of competition for key building supplies, at pricing practices or acquisition requirements that may impact on competition, and anything that may be impeding new or innovative building supplies, such as 'green' building supplies or novel prefabricated products.
"We will be inviting views on the areas of focus for this study, in terms of both the 'key building supplies' to focus on and the issues to explore," Rawlings said.
Twenty-five submissions have been made to the commission from many different parties including companies and trade entities.
Fletcher Building, Bunnings, Carter Holt Harvey, Concrete NZ, Frame & Truss Manufacturers Association, Invercargill-headquartered HW Richardson Group, Infrastructure New Zealand, Master Plumbers, NZ Construction Council, Metal Roofing Manufacturers' Association, Property Council and Master Builders were some submitters.
Monopoly Watch took a swipe at Fletchers and Carters, saying the industry "has performed fabulously for investors who own vertically integrated supply chains but not so for consumers or tradesfolk.
"Monopoly Watch predicts submission after submission blaming councils, MBIE, Kāinga Ora, the weather - everyone and everything except a thoughtful review of industry structures precluded by vested interest lenses," that said.
Tex Edwards of Monopoly Watch said this week: "All eyes will be on that draft commission report. We recommend forced divestment of PlaceMakers from Fletcher and a split of the Gib board business."
