Three-pronged attack attempts to solve New Zealand’s drastic Gib plasterboard shortage

The business that controls around 94 per cent of Gib board in New Zealand is trying to solve the supply crisis.

Winstone Wallboards is attempting to deal with the drastic plasterboard shortage via a three-pronged attack, its owner Fletcher Building says.

Increasing production, controlling supply and building a vast new factory is the three-step plan on which the national business is pinning its hopes.

After extraordinary stories were revealed lately about prices and people’s actions to try to get their hands on Gib, Fletcher outlined steps being taken to cope with unprecedented demand.

“We recognise it’s tough for people who haven’t secured their plasterboard order ahead of needing it on a build and are doing as much as we can to increase volume to the market,” it said.

Step 1: Upping production

First, it is operating its Penrose and Christchurch wallboard manufacturing plants at rates never seen before – full capacity.

The factories are running 24 hours a day, seven days a week.

“Those plants are dispatching enough plasterboard for installation in 1000 new average-sized New Zealand homes per week. Despite producing plasterboard at record levels, industry demand is still outstripping production capacity,” Fletcher said.

Step 2: Limiting sales

The next measure, announced in February, makes one think that of Eastern Europe before the wall came down or London during WWII.

Back then it was sugar, tea and butter. Now, Gib board is being rationed to try to manage extraordinary demand.

“With production at capacity, we’ve sought to find an alternative solution to managing supply. After discussions with our merchants, we have decided the best short-term solution is to alter the order model, to an on-allocation system. This means we will allocate plasterboard to our merchant customers based on their previous ordering level history. Merchants will then be able to work directly with their customers to allocate plasterboard in an equitable way,” a Fletcher spokesperson said.

The on-allocation model it was running was an attempt to give merchants the ability to distribute the volume of the board they receive, across their customer base, based on their customer’s real-time needs.

The aim is to get more plasterboard to building sites.

Fletcher’s own PlaceMakers along with Mitre 10, Carters, ITM and others sell Gib and other plasterboard products.

Step 3: Building a new factory

But the third step is set to top all these: the new $400m plasterboard manufacturing plant being built at Tauranga’s Tauriko, a gigantic 63,000sq m factory the size of about seven rugby fields.

Trouble is, it won’t open till around the middle of 2023.

So it’s just getting through this critical phase right now that is causing all the issues.

Fletcher has pointed out that around 47,000 homes are being consented annually right now, an all-time record.

New Zealand usually only builds around 20,000 houses a year.

The strongest message come through if you want Gib? Order early and hope for the best.

Is stockpiling a problem?

Paul Bull, chief executive of one of New Zealand’s largest house builders Signature Homes, said in February people over-ordering were making the supply of wall lining materials short.

“The biggest part of this issue is the toilet paper syndrome where many builders have panic bought and even placed the same order two to three times through different building merchants in the hope they receive it quicker,” Bull said today.

“This obviously creates a false demand, so I agree with their stance of temporarily freezing orders to enable the genuine orders to be fulfilled correctly and as quickly as possible. We’re being proactive with our orders via our building merchant, forecasting volumes by region and providing transparency so our demand can be met.”

Fletcher’s 94 per cent market dominance share has been defended previously.

Commerce Commission role

That historical market dominance can’t be unwound. But the Commerce Commission is now investigating building material prices in an attempt to ascertain if prices in this country are high.

Fletcher and Carter Holt Harvey have defended themselves before the state entity.

“Us? You’ve got to be kidding.”

That was the tone of building duopoly giants’ challenge to the Commerce Commission’s house cost probe.

The cost of building materials has been a talking point, even before the latest bout of inflation.

The Productivity Commission estimated people in New Zealand pay between 20 and 30 per cent more for building materials than those in Australia and 28 per cent product price rises are being clocked lately.

An Ebos survey out in December showed 16 per cent rises in the latter three months of last year.

But participants forecast a further 12 per cent rise in the next half-year, resulting in a compound 28 per cent.

Ross Taylor, Fletcher’s chief executive, told the commission materials were but a small portion of overall house price costs and it wasn’t looking in the right direction if it wanted to uncover why house prices were high.

Carter Holt said there were “numerous other competitors” in the sector. Rebates or loyalty payments by its Carter’s national retail chain to trade customers didn’t affect their buying decisions.

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