Gypsum industry news

Australia/New Zealand: The Australian and New Zealand chiefs of Knauf's wallboard operations have resigned. Additionally, the New Zealand business is under review, having posted a loss in its first nine months of operations.

The head of the New Zealand wallboard unit, John Russ, has confirmed to local media that he has resigned and will leave the company in two weeks. Meanwhile Mark Norris, managing director of Knauf Plasterboard in Australia, resigned with immediate effect on 6 November 2014.

Knauf has struggled to gain traction in the New Zealand building market, which is dominated by Fletcher Building and it took Knauf longer than expected to gain approval for its products from BRANZ, a local independent research and testing institute, before it could start to sell to consumers. Even then, the company said that it faced resistance getting its products into stores, which had established relationships with Fletcher.

New Zealand: Building supply merchants are reluctant to stock products of Winstone Wallboards' rivals and are squeezing alternative goods, claimed the chief of a competing business who supplied documents to New Zealand's Commerce Commission (CC).

Kevin van Hest, managing director of Elephant Plasterboard, which has only 3% of the market share in New Zealand, said that suppliers were shy about stocking or selling alternatives to Winstone's Gib because they had strong financial reasons not to. Van Hest claimed that the reasons include personal rewards like invitations to sporting and other events, overseas trips and financial payments.

The Commission announced in September 2013 that it was looking into the allegation, which remains to be concluded. Rick Osborne of Winestone Wallboard's parent company Fletcher Building said at the time that his business was advised that the CC intended to inquire into its wallboard supply arrangements with building supplies merchants. "The company will fully cooperate with the Commerce Commission and is confident that its supply arrangements comply with the Commerce Act," Osborne said.

A spokesman for Fletcher Building said that the system in operation actively rewards those building supply merchants who sold Winstone board, but there was nothing wrong with the deal. "Rebate structures are prevalent in most industries and in reality amount to price competition, with supply terms being based on volume and the duration of contractual relationships," he said. "Fletcher Building is confident that its arrangements are not anti-competitive and do not breach the Commerce Act. In that regard we aim to prevent any potential anti-competitive conduct through our internal compliance programmes," said Fletcher Building's spokesman.

David Thomas, Winstone's general manager, said that the business has a 94% market share because it manufactured and delivered the best product to customers. "People do have other options and they have for the last 20 years,'' Thomas said, citing Elephant wallboard and other products including Chinese board. But van Hest said that a combination of incentives and commercial pressure on merchants meant he couldn't get any more than 3% of the wallboard market, despite being in business since the 1980s.

Lack of competition and arrangements with merchants was one of the big factors forcing New Zealanders to pay 70% more for wallboard than Australians, which increases house-building costs by 40% compared to Australia. Big chains will sell Elephant wallboard, but not necessarily from their shop floors, van Hest said. Instead, if they sold it at all, they took a builder's order and arranged delivery from van Hest's Glendene warehouse to the construction site. Very few big chains would stock Elephant board. "Stores are reluctant to trade too much in Elephant wallboard because of the financial and other incentives," said van Hest.

New Zealand: Fletcher Building, which holds a 94% share of the New Zealand wallboard market, may be hurt by a Budget decision to remove tariffs on imported wallboard and duties on other building products, according to analysts. Building products provide about 20% of Fletcher's earnings.

The government said that it hoped to reduce the cost of a standard new home by US$3500, by temporarily dropping duties on 90% of the building materials used. The cost of building materials in New Zealand is around 30% higher than in Australia.

The Building Industry Federation's chief executive Bruce Kohn doubted the Government's claim that the move would save new-home builders US$3500 and said that similar moves in Australia saw that market 'flooded' with low-quality building materials.

Finance Minister Bill English said that reducing the tariffs would build on the government's previous reforms to deliver more competition to the building materials industry. However, Labour leader David Cunliffe said, "Average prices in Auckland rose by US$6208 in April 2014. The Government's levy changes will save just two to three weeks of Auckland house-price inflation."

The Budget announced that anti-dumping tariffs on wallboard, reinforcing steel bar and wire nails would be immediately suspended for three years and tariffs on other materials such as roofing, cladding, insulation and paint would be dropped from 1 July 2014, to be reviewed in five years.

New Zealand: The New Zealand government is considering cutting import duties on home building materials to help reduce rising house prices in the country.

"Building material costs are too high and can be as much as 30% more in New Zealand than in Australia according to the Productivity Commission. The industry needs a shake-up through increased competition and greater transparency to ensure kiwi families can get access to more fairly priced building materials and homes," said Housing Minister Nick Smith in a statement.

Smith and Commerce Minister Craig Foss released an options paper outlining possible measures to curb the cost of house construction. The paper said that 19% of the output of the home construction industry was made up of imported content. Tariffs notionally still applied to most items used in housing construction, such as wallboard, insulation, timber products, steel and aluminum joinery, particle board and roofing materials, but adjusted tariffs - the duty as a percentage of the value - were small and diminishing due to free trade agreements. Submissions to the options paper close on 18 December 2013.

New Zealand has imposed anti-dumping duties on imports of plasterboard from Thailand since 2011, wire nails from China since 2011 and reinforcing steel bar and coil from Thailand since 2004.

New Zealand: Canterbury Earthquake Recovery Minister Gerry Brownlee has officially opened a distribution centre for Knauf Plasterboard in Christchurch. Kanuf's distribution centres in Christchurch and Auckland consists of a 5000m² warehouse, showrooms and offices.

"Knauf Plasterboard is a competitive supplier to be reckoned with having significant scale and resource to enter a dominated market. An impressive worldwide operation, with two manufacturing facilities on Australia's eastern seaboard and superior technical expertise, puts Knauf Plasterboard in a strong position to service the growing needs of New Zealand's housing and commercial market," said Mark Norris, Managing Director, Knauf Plasterboard, Australia & New Zealand.

Norris also revealed that Knauf's rollout plans will include a network of independently-owned PlastaLink Trade Centres to sell Knauf products across New Zealand. The company was selected as a partner for the New Zealand government to rebuild Christchurch in January 2013 following the earthquake in 2011.

New Zealand: A US$34m New Zealand government procurement deal to supply wallboard for the rebuilding of Christchurch has been split between New Zealand's only wallboard manufacturer, Winstone Wallboards, and multinational manufacturer Knauf. Home affordability and a lack of competition for building supplies in the country were cited by a Productivity Commission report as key issues in making the decision.

"Having Knauf set up shop in New Zealand will see increased industry competition that will provide consumers with more choice and could potentially drive down prices," said Economic Development Minister Steven Joyce. The government expects to save around 6% on wallboard costs.

Knauf, the world's second-largest wallboard manufacturer and one of only seven firms that dominate four-fifths of global production, already has a New Zealand operation, selling wool-based insulation material. The contracts will cover wallboard and associated fasteners, adhesives and jointing compounds being used in the Earthquake Commission and Southern Response Earthquake Services Limited reconstruction programmes. The contracts were let after a competitive tender that attracted nine bids.