The entrance of a European building products giant into the Christchurch rebuild market will increase competition in the industry and potentially drive down prices for consumers, says Economic Development Minister Steven Joyce.
The Government has awarded Germany's Knauf Plasterboard and Fletcher Building-owned Winstone Wallboards procurement contracts on plasterboard systems estimated to be worth $40 million for the rebuilding.
"The introduction of Knauf into the New Zealand market will not only save the Government up to 6 per cent in plasterboard system costs for the residential rebuild, it also [has] the potential to provide benefits to New Zealanders over the longer term," Joyce said. "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."
Fletcher investor relations manager Philip King said locally owned Winstone Wallboards - which operates two manufacturing plants in New Zealand, including one in Christchurch that has been expanded to cope with rebuilding demand - had the capacity to supply all of the project's plasterboard needs.
But the company accepted the Government's decision, King said.
"The customer's always right."
First Union general secretary Robert Reid said he was concerned that a foreign manufacturer had been awarded a contract when local capacity existed.
With mass redundancies taking place in the manufacturing sector it was crucial that contracts for the rebuilding went to New Zealand firms, Reid said.
The Government said the contracts would cover plasterboard and associated fasteners, adhesives, and jointing compounds being used by the Earthquake Commission and Southern Response Earthquake Services for their reconstruction programmes.By Christopher Adams Email Christopher