Tuesday's Chorus: GIB crisis escalates
PM suggests action imminent as Fletcher Building shareholders revolt over GIB shortages and its Winstone Wallboards monopoly; Hospitals in crisis mode as winter flu overwhelms A&Es
TLDR: The GIB crisis in the construction sector is escalating into a political and regulatory crisis for Fletcher Building’s Winstone Wallboards, which has a 95% market share and is now rationing the building material in ways that have crippled small builders and new housing completions.
PM Jacinda Ardern told me at yesterday’s post-Cabinet conference that new Building and Construction Minister Megan Woods would make an announcement about the crisis later in the week. Paid subscribers can see more analysis and detail on the GIB crisis below the paywall fold.
Elsewhere in the news overnight here and overseas:
Wellington’s two DHBs have suspended non-urgent admissions as the winter flu season keeps overwhelming A&Es up and down the country - RNZ
ECB’s President says she’s determined to control inflation - ECB
Bitcoin steadies above $20k - YahooFinance
WSJ survey shows 44% of economists see US recession
ACCC launches price gouge probe into Australian power companies
Biden sees ‘gas’ tax cut news by end of week Reuters
An escalating GIB crisis
It’s remarkable that one particular brand and type of building material is now at the centre of a crisis enveloping a significant chunk of the economy.
GIB is crucial for getting the certificates of completion granted by Council building inspectors, who overwhelmingly prefer GIB’s plasterboard and structural bracing system used here in Aotearoa-NZ to build the sort of light timber frame homes we build (but used less overseas).
This increasing use of the GIB bracing system as a structural element in house building and its approval by industry-driven standard setter BRANZ and risk averse council inspectors has effectively locked out competitors, especially from overseas.
Simplicity Living is one of the few building firms able to dump Fletcher Building’s GIB because it builds its apartments from concrete and bricks, and uses plasterboard generically as an internal wall covering, rather than a structural element.
It dumped Fletcher last week and announced it was buying plasterboard from Thailand instead. Simplicity CEO Sam Stubbs and NZ Shareholders Association CEO Oliver met with Fletcher CEO Ross Taylor on Friday to air their criticisms. Yesterday, they called on Fletcher Chairman Bruce Hassall to resign, for the directors to put themselves up for re-election, and for Fletcher to order independent reviews into its culture and risk practices.
The pressure is building on Fletcher Building, which forced Winstone Wallboards to put out a statement explaining the shortages yesterday. It again blamed stockpiling.
Little action can proceed until the Commerce Commission has completed its ongoing markets study, but there are already calls for the sector to be broken up in ways similar to supermarkets, which the Government is actively considering.
Quotes of the day
The winter flu crisis
"The system is under unprecedented stress, it is not coping, it is chaotic and it's dangerous." College of Emergency Medicine deputy chair Dr Kate Allan via RNZ
Rabobank’s daily newsletter writer passing on an argument he’d heard for holding bitcoin.
“It’s worth holding in small amounts as a lottery ticket given the system is so rigged against the asset-poor young that there is no other way they can ever hope to retire with dignity.” Rabobank’s daily newsletter writer
Chart of the day
Australian workers are on the move
A Reserve Bank of Australia analysis published yesterday shows Australia’s labour force is on the move, with 440,000 people there changing jobs in the last three months, which is a one-decade high. That will create plenty of openings for New Zealanders.
Number of the day
China is still close to Russia, just not loud enough for secondary sanctions. Yet.
55% up - China’s imports of oil from Russia in May, from a year ago.
Ka kite ano
PS: Apologies for the shortness today. I had a speaking engagement with the Auckland Chamber of Commerce.