Plasterboard supply comes unstuck

As well as bringing illness and death, the Covid-19 pandemic has highlighted some of the flaws in the ways our system works, or does not work, and it has not been pretty.

Pre-Covid-19, among the myriad issues we knew about were staff shortages in the health system, the questionable sustainability of propping up various parts of the economy with cheap workers from overseas, and the urgent need for many more houses.

With all these chickens, or more likely old broilers, noisily coming home to roost during the pandemic, there seems to be constant clamour for the current Government to do something.

The idea that there must be some quick government fix for situations which have been years in the making is magical thinking, particularly when New Zealand is not alone in grappling with some of these questions, such as health worker shortages.

Supply chain issues are affecting the building industry, and in recent months there has been increasing concern about the shortage of plasterboard and the impact that is having and is likely to have.

For years the market has been dominated by Fletcher Building’s products, so ubiquitous nobody talks about plasterboard but the trade name Gib.

With an estimated 95% share of the market, Fletcher’s failure to keep up with the demand in a house building boom is a big deal.

So much so, there is a scramble to get Gib alternatives imported, and last week Building and Construction Minister Megan Woods set up a task force with the aim of increasing productivity as quickly as possible and to remove unnecessary barriers, including around certification, to facilitate the use of different types of plasterboard. (One small environmental silver lining in the current shortage is that many Gib offcuts are being snapped up and used rather than going to landfill.)

But did it need to come to this? Could Gib’s dominance, and the risks that come with that, have been addressed earlier?

In 2013 the Commerce Commission investigated complaints Winstone Wallboards Limited (part of the Fletcher Building Group) had acted anti-competitively in the manufacture and supply of plasterboard.

In 2014 it found no breach of the Commerce Act and took no further action.

What the report of the investigation did point out, however, was that two market entrants had struggled with some councils’ reluctance to give consent to building works using non-Gib plasterboard, even when that product had a Building Research Association of New Zealand (BRANZ) or other compliant form of appraisal.

Investigators were told that some councils and individuals treated Winstone’s technical installation manual as part of the Building Code, rather than what it was, a technical manual. Gib was often specifically named on projects, creating issues if anyone wanted to switch to alternatives. (Unlike other countries, plasterboard is used for bracing in New Zealand building designs.)

The Commerce Commission found that as well as market entrants not making sufficiently attractive offers to merchants to induce them to stock their product or for builders to request supply, "it appears that Building Code compliance, combined with the preferences of those involved in designing, consenting and building houses, contribute to Winstone’s continued high market share".

It was outside the commission’s functions and powers to inquire into such market features.

Have building designers/builders been part of the problem, too keen to always take the easy option of using Gib because the calculations are at their fingertips in the Gib manual?

Could more have been done in the last eight years to ensure it was easier to use alternatives, and the status of Gib was not overblown by councils?

Those afflicted by high prices will be keenly anticipating the Commerce Commission’s report, due at the end of the year, on its market study into whether competition is working in the residential building supplies market.

However, if problems are revealed, expecting quick solutions may be unrealistic.

 

 

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