Podcast: The Detail
There is a huge shortage of drywall – The detail see how the stock of such an important construction product has reached critically low levels
“A perfect storm.”
That’s how NZ Herald real estate editor Anne Gibson describes the continuing shortage of GIB drywall in New Zealand.
Since 2020, the GIB deficit has been a thorn in the construction industry.
Orders were postponed for months, houses sat unfinished, construction companies went under.
Setback was quick: Simplicity Living – which plans to build 10,000 homes over the next 10 years – has condemned the New Zealand plasterboard production system, saying the overwhelming market share enjoyed by GIB’s manufacturer, Winstone Wallboards (a subsidiary of Fletcher Building) . is dysfunctional and should not exist.
Last week, the government set up a task force to look into the issue, which led an ongoing Commerce Commission market study to the availability of residential building supplies.
Drywall is basically used to perform ceilings and walls, but it has many functions – some types are fire resistant, some are soundproof, some are moisture and mold resistant.
But Gibson says drywall is a crucial component in just about any modern construction project she can think of.
In New Zealand, 95 percent of all drywall used in construction is manufactured by one company: Winstone Wallboards.
Asked how the company has achieved this level of market dominance, Gibson says there are different views.
“If you’re Winstone Wallboards … you can say GIB dominates the New Zealand market because it’s so good. It’s renewed, it’s changed, it’s good service, great design, it has the qualities we want, it performs the functions we need, it’s a great price, we can get it from you through Miter 10 or Placemakers or Bunnings.
“If you’re a critic, like Sam Stubbs of Simplicity Living, he would say it’s a masterclass in corporate lobbying.
“His criticism is that GIB is actually specified in many territorial authorities’ building permit application documents.
“If you are going to use a product imported from Thailand, you have to cross out the word ‘GIB’ and put the Thai plasterboard name.
“What causes this is a slight variation to the application. In this large construction, which is very complex … when there are variations to the contract, it may cost more money and take more time.”
Gibson says the storm clouds for GIB started packing at the end of 2019.
Winstone Wallboards closed its two maintenance factories over Christmas, meaning they produced no GIB.
When the pandemic and level 4 lockout hit, they were not considered essential, so stocks began to decline.
At the same time, there was a construction boom, and more people wanted to renovate their homes.
The end result was much less supply, much more demand, and a market that was not used to replacement products.
Gibson says the dependence on GIB is understandable to a certain extent: it is a well-known quantity and locally produced by a company that employs many people. Maintaining control in New Zealand also reduces the chance of a recurrence of the leaking housing situation.
But a series of unfortunate events – including a stock scandal with Fletcher Living in the middle of it – intensified calls for a diversification of the drywall market.
Gibson, the task force looking at the GIB crisis, has not yet said that its mandates have been determined, but since its members include Tex Edwards, the founder of 2Degrees and MonopolyWatch, there could be discussions about the possibility of the Fletcher building is broken up.
“What we have is what they call in business a ‘vertically integrated model’.
“A subsidiary of Fletcher Building makes GIB board, and they sell it through their PlaceMakers national outlets.
“Having that control over the market is what worries people like Tex Edwards.”
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