An international construction materials supplier that provided competition to dual-listed giant Fletcher Building has told customers it is shutting its operations in New Zealand because it can't succeed here.
Nick Youngman, country manager for the Auckland-headquartered operations of USG Boral, recently sent text messages and emails to customers, saying it was with great sadness the business was leaving.
The company will shut on November 15 and all 45 employees are "being supported with outplacement services", a statement said. It operated here for four years.
The offices are in Auckland, Wellington and Christchurch and its distribution centre is at 53 Tidal Rd, Māngere. It is a specialist building materials supplier, servicing construction industry professionals nationally.
The company imports and sells plasterboard, ceiling acoustic tiles and panels, suspended ceiling products, finishes used in joint compound, adhesives and plasters, cornice via Sheetrock Cove and decorative cornices and roofing board.
Fletcher Building's Winstone Wallboards has market dominance nationally via its Gib brand, manufactured at Penrose but shifting to a new $400m Tauranga plant in 2023.
Market participants said USG Boral only had a small market share but at least gave people choice.
Youngman wrote to customers: "USG Boral has been operating in the New Zealand plasterboard, light gauge metal and ceiling tile market for the last four years from sites in Auckland, Wellington and Christchurch.
"Despite the best efforts of USG Boral's New Zealand team, we have been unable to build a sustainable business and it is with great sadness that we announce that we will be exiting the New Zealand market."
The market here had presented "several significant challenges" to a new market entrant, "despite the capability that we bring".
He cited Christchurch Hospital, Westfield Newmarket, The Pacifica apartment tower, NZ Defence Force building, Waikeria Prison, G.J. Gardner and Mike Greer Homes as some of the "iconic projects" and customers it had supplied materials to.
"We have brought a range of innovative systems and building practices to the market," Youngman said.
"Over the coming weeks, we will be engaging with our customers to explain what this decision means for you. We will also be engaging with our suppliers to explain what this decision means for them," he said.
As of July 29, all outstanding quotes and requests to quote which had not formally been accepted as a purchase order were cancelled and no longer valid, he said.
"I would like to personally thank you as our customer for sharing this journey with us and supporting our business," Youngman concluded.
The global business operates in Asia, Australasia and the Middle East, in 12 countries, with around 3200 employees, 24 manufacturing plants and three gypsum mines, it says.
USG stands for United States Gypsum and that part of the business dates back to 1902.
Boral was formed much later, in 1946 and was partly owned by Caltex.
The conglomerate USG Boral was formed in 2014.
"Boral's gypsum division came together with USG in a 50/50 joint venture. With over 3500 employees, USG Boral is now a leading manufacturer and supplier of plasterboard-based wall, ceiling lining systems, and accessories in Asia, Australasia, and the Middle East," the company says on its New Zealand website.
The Productivity Commission has estimated New Zealanders pay between 20-30 per cent more for building materials here than Australians.
Kevin van Hest of Elephant Plasterboard in Auckland said he was sorry to see USG Boral leave this country.
"This now just leaves Elephant Plasterboard and Gib plasterboard in the New Zealand market," he said. "It is very sad, even though they were also a competitor of ours. New Zealand needs competition in the plasterboard market. Prices for Gib are already starting to skyrocket. It's the consumers that will ultimately suffer. If we go, then it will truly be a monopoly."
van Hest estimated Gib might have a 97 per cent market share after USG Boral's departure.
David Thomas, Winstone Wallboards' general manager, said the wall linings market in New Zealand was very competitive with a number of products still available in addition to Gib plasterboard.
"GIB is Kiwi-made, supported by great customer service, is a reliable quality product and provides best value for money, making it a very competitive product offering. Our focus has always been on providing the best value offering to our customers, in terms of product quality and customer service, at a price that reflects that value, just as we have done for more than 90 years," Thomas said today.
The latest consolidated statement of comprehensive income for USG Boral Building Products NZ showed it made a $4.5m loss in 2020, up from a $4.1m loss in 2019.
Its revenue fell from $15.7m to $15.1m, that statement showed.
The New Zealand arm had support from its parent via continuing financial backing to enable it to meet its financial obligations, its latest documents said.
Requests to Youngman for more information today went unanswered but staff in Wellington and at the call centre also confirmed the planned closure.