Fletcher Building is facing new threats from German, South African, Malaysian and other overseas businesses pouring cheaper products into here and Australia.
Fletcher, with a market capitalisation of $4.2 billion, is under attack from firms undercutting prices by up to a third and aiming at Christchurch's post-quake rebuild.
Stephen Hudson, Macquarie Equities Research analyst, said new import-based competition had emerged in cement products, insulation, wallboard, laminates and steel categories.
Fletcher chief executive Jonathan Ling said the company took the threats "very seriously" and that analysts had learned of the issues after a briefing from the company this month.
"They're attacking our market," Ling said of the rivals to Fletcher.
He blamed the high Australian and New Zealand dollars, saying some transtasman-made Fletcher products were under fire by goods from cheaper rival regions with weaker currencies, making them more attractive to buyers.
Fletcher's laminates and panels division made $141 million earnings before interest and tax in the June 2011 year. Building products made $114 million, steel $82 million and distribution $38 million.
Hudson said construction of a new third-player clinker grinding facility had begun in New Zealand and Ling said this Tauranga business was a challenge to Fletcher and the rival Holcim cement businesses.
"There's a group of ready-mix concrete businesses in Tauranga proposing to import clinker and grind it up to make cement but it's only about 50,000 tonnes out of a market of 1 million tonnes so it's just 5 per cent. But it's still a threat and competition. We have full cement works and Holcim has full cement works and we make clinker out of limestone," Ling said.
Fletcher's cement division holds Firth Industries, Golden Bay Cement, Humes Pipeline Systems, Winstone Aggregates and Concrete Industries.
Hudson said the rival clinker business would start up soon.
"The construction of a rival $50 million clinker grinding facility in the North Island has commenced and will be in production by year-end.
"The duopolistic cement market has therefore fractured into a three-player market with pricing likely to be more aligned to import parity," he said.
"We understand that the current pricing being offered is around 30 per cent cheaper than domestic priced volumes," Hudson said.
He then outlined how German-headquartered insulation manufacturer Knauf had entered Christchurch, providing goods directly to customers.
Ling said Knauf's Australian business was shipping across glass wool insulation but Hudson also mentioned wallboard.
"It's coming out of their West Coast United States plant and it's competition. At the moment, it's small," Ling said. "But we need to compete vigorously to keep our customers. Knauf doesn't have distributors but they're just landing container loads so they cherrypick certain customers.
"They don't have the ability to service the thousands of customers that we have," Ling said, referring to Fletcher's PlaceMakers and its other outlets for its product.
A rival builder, working in Christchurch, is understood to be using the Knauf product, bidding lower for work by using the cheaper materials.
Hudson said flat-pack laminates were being imported into Australia by Bunnings and melamine panel and joinery maker Borg Manufacturing.
These flat-pack products were used to make desks, wardrobes and other furniture and this was more of a threat to customers of Fletcher's Laminex.
"Flat-pack furniture made in Asia is cheaper and this is happening because of the high Australian dollar."
Hudson said Fletcher rivals were importing rebar from overseas.
"Fletcher warned ... .that steel importers are targeting Christchurch with opportunistic volumes although we have only been able to identify small volumes of imports from Malaysia and South Africa," he said.
Ling said this was a challenge to product from Fletcher's Pacific Steel. The rebar from Malaysia was not seismically strengthened but not all jobs required that product.
"We'd like to think we compete well and [rivals] stay as small players. They come and go," Ling said.
* Fletcher rivals are providing:
* Clinker used in cement.
* Insulation for walls, floors, roofs.
* Laminates for furniture making.
* Rebar used in construction.
Source: Macquarie Equities Research.