Steel & Tube shares hurt

Shares in Steel & Tube took a hit yesterday after it became embroiled in a product test certification issue over its Hurricane steel mesh.

The Commerce Commission confirmed yesterday it will investigate Steel & Tube's certification.

Aside from nationwide mesh sales through some of its 56 distribution outlets, use of Hurricane mesh in Christchurch's rebuild raises questions of suitability.

Its Hurricane certification for the past four years has incorrectly included the logo of accredited testing lab Christchurch-based Holmes Solutions, which had helped develop the original mesh testing programme, but did not subsequently run the programme, which was done in-house.

On opening yesterday, Steel & Tube shares were initially down more than 8%, at $2.18, but retraced some of those losses to close at $2.29.

Steel & Tube chief executive Dave Taylor admitted yesterday the use of Holmes' logo was an "oversight'' and "mistake'' and he had apologised to Holmes, but otherwise had "full confidence'' the mesh was "in full compliance with appropriate standards''.

Steel & Tube is New Zealand's largest manufacturer of steel reinforcing mesh, according to its website.

The use of mesh, usually supplied in sheets of 2.9m by 1.8m, ranges from in concrete paths and driveways through to house slabs and commercial buildings, and large infrastructure, the latter using mesh in conjunction with steel reinforcing bars.

Mr Taylor said Steel & Tube's "robust testing regime'' ensured the mesh was compliant and satisfied requirements of the seismic code.

He said the test certificates in question "are not misleading''; the certificate carried the names of two Steel & Tube employees, including the compliance tester, with the Holmes logo underneath.

"Steel & Tube in no way intended to mislead customers, and has acknowledged the error, and has removed the [Holmes] logo from the test certificate template,'' he said.

Holmes had helped Steel & Tube develop the testing programme four years ago and set up the original test certificate template, Mr Taylor said.

Steel & Tube was asked if Hurricane sales, featuring the Holmes logo, were in the hundreds of thousands of sheets over four years, but declined to reveal sales figures.

Steel & Tube's testing during the past four years has been done in-house by the steel supplier, but its lab is not accredited.

Craigs Investment Partners broker Peter McIntyre said there would be "a lot of sensitivity'' around certification given the extent of product sold and used in the Canterbury rebuild.

"It looks like Steel & Tube will be fighting a rearguard action. It's either a massive mistake or bordering on incompetency,'' he said.

Forsyth Barr broker Suzanne Kinnaird said other recent investigations by the Commerce Commission into potential false advertising from competitors prompted Steel & Tube to assess its own processes.

While it confirmed its product meets required standards, it highlighted the accreditation issue.

"We see minimal risk of compensation requirements for the accidental use of the accreditors' logo to either the independent tester or to customers. The key risk lies in how the Commerce Commission treats the false endorsement oversight,'' Mrs Kinnaird said.

The Commerce Commission was contacted by the ODT yesterday, a spokeswoman saying it was aware of the Steel & Tube issue and "we are looking into it''.

"Making misleading representations, such as claiming a product was tested by a company that has not tested it, is prohibited under the Fair Trading Act in New Zealand,'' she said.

However, she said while Steel & Tube had done their own in-house testing, that did not in itself raise concerns for the commission.

"In-house testing is commonplace in the industry and, provided it is done properly, is a valid way of complying with the relevant standard,'' she said.

The questions surrounding Steel & Tube's certification comes less than two weeks after the Commerce Commission issued a warning that steel mesh brands Brilliance and Euro Corporation might not comply with New Zealand building code standards.

Euro is challenging that finding.

The commission spokeswoman said yesterday it was investigating whether steel mesh supplied by a range of companies complied with the required standard.

"As part of that investigation, we will be looking at whether other products in the market comply with the standard,'' she said.

From March 4, Brilliance and Euro Corp had agreed to stop selling some of their steel mesh products.

● Steel & Tube's website yesterday displayed a Q&A section.

1. How can I be sure my mesh complies with the building code?

Hurricane wire reinforcing wires and welded mesh are tested to meet the standard AS/NZS4671:2001 and test certificates are available upon request.

simon.hartley@odt.co.nz

Add a Comment