Gypsum industry news

New Zealand: Fletcher Building has appointed Michele Kernahan as Chief Executive Building Products. His former position of Chief Executive Construction will be taken by Peter Reidy, currently Chief Executive KiwiRail. Both appointments are effective from early November 2018. David Thomas, currently serving as the Interim Chief Executive Building Products, will return to his role as General Manager Winstone Wallboards once the appointments are effective.

New Zealand: Fletcher Building’s subsidiary Winstone Wallboards plans to build a US$181m gypsum wallboard plant in Auckland. The new unit is expected to create around 200 new jobs, according to the New Zealand Herald newspaper. Negotiations at the Drury site have not yet been concluded yet. The company hopes that the new plant will be operational in 2021 or 2022. The new development is planned to meet local demands and upgrade the existing capacity at Winstone Wallboards’ Penrose plant in Auckland.

New Zealand: The Commerce Commission has completed its investigation into allegations that Winstone Wallboards Limited, a subsidiary of Fletcher Building, acted anti-competitively to maintain its market position in the manufacture and supply of wallboard. Based on the evidence gathered during the investigation, the Commission does not believe that Winstone has breached the Commerce Act 1986 and it will not be taking any further action.

"We have completed a thorough investigation and there is no evidence to suggest that Winstone has breached the Commerce Act in any of these areas," said Commission Chairman Mark Berry.

The Commission's investigation was centred on three areas: Winstone's alleged exclusive agreements with merchants, the rebates Winstone pays to merchants and Winstone's alleged practice of undercutting other wallboard suppliers on jobs. The initial investigation was completed in April 2014 and followed by additional interviews and further investigation.

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.