'Unsustainable': Shareholders ask Fletcher to explain Gib crisis

Monday, 13 June 2022

KiwiSaver provider Simplicity and the NZ Shareholders Association will meet with Fletcher Building this Friday, to ask for answers to the Gib supply crisis.

Last week, Simplicity Living, the housing development arm of the company, cancelled all contracts to purchase Gib from Fletcher and instead imported foreign plasterboard because, it said, it was cheaper and quicker.

Simplicity offered to share details on how to import Gib substitutes with other businesses and said it had received more than 60 requests for information from both small and large developers.

Simplicity managing director Sam Stubbs​ said the number of inquiries confirmed the lack of Gib was a nationwide crisis.

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“In three days we have fielded calls from over 60 companies. These are not just 60 mum-and-dad builders, but some of the biggest developers in the country. When some of the biggest developers are crying out for help you know you have a serious problem,” Stubbs​ said.

Simplicity ordered two containers of plasterboard from Thailand, and has put in orders for two more containers a month for the next two years.

If it had not found an alternate source of plasterboard, the company would have needed to temporarily close its four Auckland building sites, potentially laying off workers, Stubbs said.

Simplicity owns $35 million dollars of Fletcher Building shares on behalf of its members, representing 0.8% of issued shares.

Stubbs​ said, at the meeting on Friday, he would ask the board chair and chief executive to explain whether its business model was sustainable.

“If you have 94% market share, annoyed customers and can’t supply a basic building material, that is not a sustainable business model,” Stubbs said.

“This is the company that built the Sky Tower and the harbour bridge. If they can’t get a piece of Gib down the road, there is something very wrong here.”

NZ Shareholders Association chief executive Oliver Mander said he was concerned by the “political and reputational” effects of thesupply issue on the sustainability of shareholder returns.

Residential architect Judi Keith-Brown​ said, while Simplicity had the ability to import its own plasterboard, smaller business were being left behind.

“Simplicity are building hundreds of houses and so have a lot of grunt. But the builders I work with might build two or three houses a year, so they haven’t got the same pull power to find a new supplier, and they can’t afford to have these delays,” Keith-Brown​ said.

Winstone Wallboards, the subsidiary of Fletcher Building that manufactures GIB and own 94% market share of plasterboard production, should have seen this crisis a mile away, she said.

To avoid the current crisis, Fletcher Building should have seen the number of building application approvals from council and ordered more plasterboard from overseas, she said.

“It’s appalling.They are responsible to these builders that have supported them and bought their product for years, and they are not living up to that responsibility.”

The Gib shortage was not just affecting builders but also subcontractors and architects who relied on Gib for their work, she said.

“The elephant in the room is that there is a huge monopoly here. If we don’t sort it out builders are going to go bankrupt, architects will be drawing stuff that won’t be built and house after house won’t be finished.”

The long-term solution was for the Commerce Commission to propose serious changes to the industry in its report into competition in the building supply sector, set to be released next month, she said.

Until that time, Fletcher Building and its subsidiary Winstone Wallboards needed to support smaller operators, and help bring more plasterboard supply into the country, she said.