Fletcher Building expects GIB supply 'equilibrium' by October

Source: Radio New Zealand

Fletcher Building expects the plasterboard market will come back into "equilibrium" by October, the company said, a day after a task force on the widespread shortage was announced.

Shareholders say Fletcher Building isn’t taking responsibility for the shortage of a key building product.

The company, which has a near monopoly on the plasterboard market, has come under increasing scrutiny from investors, the construction industry and the Government, due to widespread shortages of the building material.

Minister for Building and Construction Megan Woods has set up a ministerial task force to address the shortages, and one of its members, Naylor Love chief executive Rick Herd, is confident it will lead to more imported products becoming available.

In documents released ahead of its investor day, Fletcher Building said it had been adequately meeting market demand up until August 2021, when the Auckland lockdown hit.

"Following the Auckland lockdown, industry shortages across a range of key building supplies including timber, insulation, and plasterboard caused customers to bring forward their orders to ensure they had stock," it said.

Order volumes subsequently doubled through November 2021 to February 2022, which was approximately twice the industry's current capacity to build, Fletchers said.

"We were able to meet some extra demand through this period by drawing down on inventory below normal levels and by importing some additional volume out of Australia."

But this avenue of supply was paused in November 2021, due to high demand in Australia, it said.

The company was now expecting equilibrium to return to the market by October 2022, after announcing a range of moves which should lift supply by 10%.

This included reconfiguring its factory, increasing imports, and granting royalty-free trademark licenses to allow other companies to import plasterboard.

"In the interim PlaceMakers (and other merchant customers) will run an emergency allocation fund to alleviate smaller customer hardship issues."

Fletcher Building said its new plasterboard factory, which was being built near Tauranga, would open in May 2023 and should add an extra 30% of supply to the market.