Editorial: Gib crisis under investigation from two sides

Editorial

EDITORIAL

These walls have been shaken before - but little has changed in 95 years.

Manufacturing of what is now known as Gib board started in Mt Eden in 1927, initially with a company called Builders Composite Materials.

Winstone, a separate company edging into the field, expressed interest and formed NZ Wallboards to become one of our major producers of plaster wallboard - then known as Gibraltar Board and since shortened and trademarked as the ubiquitous Gib.

Winstone Wallboards expanded to produce ceiling and wall linings for our houses, our airports, office blocks, and shops.

Iin 2014, the Commerce Commission probed allegations that Winstone acted anti-competitively to keep its plasterboard market dominance. The inquiry focused on exclusive agreements with merchants; rebates paid to merchants; and allegations of undercutting other plasterboard suppliers on jobs.

The commission found loyalty to Gib and its large market share was due to service levels, including technical product information and delivery support. The quality of products, comparative prices, regulatory barriers to entry and - until recently - import duties to deter imported plasterboard had all played a role.

As a result, nothing changed.

Then Covid hit. Gib production wasn't deemed an essential service, residential building consents hiked to 50,000-plus annually, demand spiked. Winstone, now part of the building products division of Fletcher Building and with a 94 per cent market share, couldn't meet customer needs.

Hoarders were blamed. A sheet usually retailing for around $35 was listed online for $184. Liquor was being traded for Gib. One builder complained of a year-long wait.

Having a sector employing at least 280,000 people slowed by a near-monopoly being unable to supply a crucial product is economically and politically unacceptable.

Developer and builder Simplicity announced it would import Thai plasterboard in four containers a month. Directors called for Fletcher chairman Bruce Hassall's resignation.

Fletcher has said it will resume importing Australian board in July and accelerate changes to its Penrose mill to increase production - already running 24/7, along with its other mill in Hillsborough, Christchurch.

Around the same time, Prime Minister Jacinda Ardern announced Cabinet changes, transferring the Building and Construction portfolio from Poto Williams to Housing Minister Megan Woods.

Woods wasted little time in expressing concern about the Gib situation and, on Tuesday, announced an industry-led investigative task force and insisted Fletcher refrain from enforcing colour Gib trademarks against importers.

All this time, the Commerce Commission has been quietly preparing a major investigation into the building sector along the same lines as petrol pricing and supermarkets.

Industry structure and the nature of competition and conditions of entry and expansion -such as whether regulatory and standards systems create impediments to competition and innovation - are in its brief. Its first report is due later next month.

Woods was walled in. She couldn't pre-empt the commission and its findings, nor was it palatable to sit schtum in a crisis. The task force looks like action, and stalls for time.

It remains to be seen whether a ministerial task force and a Commerce Commission inquiry can prise open a monopoly on wallboard production.