Steel & Tube stands by its mesh products

Steel & Tube's building in Dunedin. Photo: ODT.
Steel & Tube's building in Dunedin. Photo: ODT.
Steel & Tube is standing behind its seismic mesh products, after the Commerce Commission filed 29 charges in court of allegedly making false representation of its steel mesh product SE62, which has been sold in tens of thousands of sheets.

Analysts are now speculating whether a class action could be initiated against Steel & Tube, which, according to its website, is New Zealand’s largest manufacturer of steel reinforcing mesh.

The charges stem from Steel & Tube having become embroiled in March 2016 over a product test certification issue of its Hurricane steel mesh, prompting a Commerce Commission investigation.

In the face of reports a law firm was proposing a class action in relation to mesh suitability, suggesting it  may not meet The New Zealand Standard, the The Structural Engineering Society was moved to tell homeowners last September they should not be unnecessarily concerned about the ductility of the steel mesh used in the concrete slabs of their houses.

Steel & Tube Hurricane certification for four years had incorrectly included the logo of accredited testing lab Christchurch-based Holmes Solutions, which had helped develop the original mesh testing programme.

However, Holmes Solutions did not subsequently run the testing programme, which was undertaken by Steel & Tube in-house, which was not independently accredited by national accreditation body IANZ.

In response to the charges, Steel & Tube said yesterday the charges were around compliance, relating to the application of testing methodology only, "and not the performance characteristics of the seismic mesh".

"Steel & Tube continues to stand behind its products, and since April 2016, all of the company’s seismic mesh has been tested externally by accredited laboratories," the company said.

Forsyth Barr broker Damian Foster said any liability was not likely to have a material effect on Steel & Tube’s performance, noting it could face a large fine, up to $600,000 per offence, but he understood it had statutory liability insurance coverage.

"However, the Commerce Commission decision [to lay charges] means the risk of a proposed class action against the non-compliant steel mesh manufacturers remains an uncertainty for Steel & Tube," Mr Foster said.

Steel & Tube shares were up almost 6% yesterday, to $2.49, and have gained 45% in value during the past year.

Mr Foster predicted the likelihood of a class action was "low" and it would be "a very long road" before any potential class action turned into a liability for Steel & Tube.

Charges were also filed earlier this year against Timber King and NZ Steel Distributor in relation to false and misleading representations about 500E steel mesh, BusinessDesk reported.

Those companies had entered guilty pleas and would be sentenced in August. The commission said it expects to lay charges against one other company, and investigations continue into another company.

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

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

A Commerce Commission spokeswoman told the ODT last year that a company making misleading representations, such as claiming a product was tested by a company that had not tested it, was prohibited under the Fair Trading Act in New Zealand.

Steel & Tube had been cooperating with the commission throughout the investigation and was working with the regulator to reach a resolution of the charges, the Lower Hutt-based company said in its statement to the stock exchange.

The regulator started its investigation in August 2015 after a complaint was laid about the steel mesh not meeting the standards required in New Zealand. The commission signed enforceable undertakings in late April 2016 with Steel & Tube that the company would only sell SE62 500E grade steel mesh that passed specific independent testing.

The undertakings were also imposed on other companies.

The commission said yesterday that the charges allege Steel & Tube made misleading representations on their batch tags, batch test certificates, advertising collateral and website that SE62 was 500E grade steel, when it was not, BusinessDesk reported. The charges also allege that false and misleading representations were made by Steel & Tube that SE62 steel mesh had been independently tested and certified, when it had not. This included using the logo of an independent testing laboratory on SE62 test certificates when the product had not been tested by the laboratory.

Steel & Tube had admitted selling "many thousands of sheets" of earthquake reinforcing mesh incorrectly labelled as being independently certified after it used Holmes Solutions logo on its steel mesh for four years, despite it not having carried out the tests.

— Additional reporting BusinessDesk

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