Solve the Gib crisis by involving the workforce

Robert Reid is president of the First Union.

OPINION: Yoplait isn’t French for yogurt, Glad Wrap is a brand of cling film, and I imagine manufacturers across the country are now coming to terms with the fact that while Fletcher-owned Gib is 94% of the market, it’s still just a brand of drywall.

Kiwisaver supplier Simplicity recently made headlines after importing Thai Elephant plasterboard for 20% less than Gib, and having it reach New Zealand construction sites months faster than Gib, although whether Gib is made in Onehunga or Opawa.

From 1989, the government – ​​under pressure from manufacturer Gib Winstone Wallboards – argued that Thai plasterboard was being sold below production price and was subject to anti-dumping duties (reassessed in 2006 and 2012).

Despite lifting these rights in 2014 to compete in the building materials market fueling Christchurch’s reconstruction, Fletchers’ market dominance remains virtually absolute.

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A meeting this week between Fletcher Building, Simplicity and the Shareholders’ Association made no progress, and Simplicity and the Shareholders’ Association are now calling for Fletchers’ heads to roll, suggesting that after two years of record building consents and rising house prices, maybe they should have seen this coming.

On the back of that, the Department of Building and Construction has now set up a working group, and they are developing the terms of reference right now.

Provided

Fletcher Building has apologized after a Canterbury builder captured video evidence of Gib being stored at a Fletcher Living building site in Lincoln.

It is unfortunate that worker representatives have been excluded from this space, as workers’ interests are at the heart of this discussion, especially as construction activity turns red.

More than 18% of business bankruptcies in 2022 came from the construction sector.

The Newsroom reports that for most construction companies in liquidation that have already reported their creditors, Fletchers subsidiaries like Placemakers and other Gib suppliers are on the list. The plasterboard crisis is a key factor in construction company bankruptcies.

Workers also pay a heavy price when a construction company collapses.

Many workers in the construction industry are incorrectly classified as independent contractors and therefore do not enjoy the benefits of layoff protection.

Unlike employees, they are not considered protected creditors under insolvency law and therefore it may take months, if ever, for them to receive unpaid wages.

Does importing plasterboard from Thailand overcome this problem? Far from there.

Although Gib, owned by Fletcher, accounts for 94% of the market, it is still just one brand of plasterboard.

Sungmi Kim / Stuff

Although Gib, owned by Fletcher, accounts for 94% of the market, it is still just one brand of plasterboard.

Simplicity noted that Thai plasterboard can be purchased for 20% less than Gib, although more than half of that cost is shipping. In other words, the purchase price of the commodity is less than a third of the cost of Gib.

Labor cost is the biggest variable here, and Thai labor is unquestionably cheaper.

Elephantboard is produced in a factory in Saraburi, an area notorious for the large number of migrant workers who usually fall victim to various forms of exploitation including passport retention, contract substitution and dangerous overwork.

Importing these alternatives could solve the immediate shortage, but we must ensure that workers’ rights are not violated in the process.

Fortunately, First Union has decades of experience working alongside trade unions in Thailand, including those organizing workers at Graham Hart’s SIG factory and Fisher and Paykel’s white goods factory when it first moved from New Zealand to Thailand.

This week we reached out to unions and workers at major plasterboard manufacturers in Thailand to make sure working conditions are good, and the solution to NZ plasterboard supply is not based on the exploitation of workers in Thailand.

These are finely balanced situations, and without a seat at the table, workers are going to be left behind in any proposed solutions.

The choppy nature of today’s construction industry compromises worker training and skills development, forcing employers to recruit from overseas. Again, concerns about the exploitation of migrant workers remain lingering across the industry.

For a material like plasterboard, the government should take an even more hands-on approach.

Marc Morrison

For a material like plasterboard, the government should take an even more hands-on approach.

Workers need to see some coherence in the sector to ensure that decent work is at the heart of it.

In October last year, First Union released a report proposing the creation of a Department of Green Works, so instead of always contracting out the government’s massive construction program to the private sector – a $150 billion needed to update our struggling water infrastructure to the huge demand for public housing – let this work be handled by the ministry itself, thereby building public sector capacity.

Looking at the residential construction sector alone, economic modeling has suggested that removing markups from the equation could reduce costs by 7-12%.

Since then, we have proposed a materials strategy to support the ministry’s operation. ‘

As things stand, the government currently leaves the procurement of construction materials to the companies carrying out the construction work.

However, by consolidating the supply of construction materials across all the various government construction works, it could achieve significant savings.

First Union president Robert Reid said the union had worked to ensure workers did not bear the brunt of Gib's crisis.

LAURENT SMITH

First Union president Robert Reid said the union had worked to ensure workers did not bear the brunt of Gib’s crisis.

These savings could then be reinvested in buying stock in major building materials suppliers, expanding capacity and better matching supply and demand.

For a material like plasterboard, where there has been a clear market failure, the government should take an even more hands-on approach.

The steady demand for plasterboard from government projects in the coming decades should be enough for the government to start looking for suitable sources of funding – such as the NZ Superfund or the future revenue insurance scheme – to build its own plasterboard factory, which can both increase market competition and set decent employment standards across the industry.

The government must learn the lesson from the failure of Kiwibuild. Market forces can only be used for good if they are regulated to do so.

With average house prices still 40% higher than before the pandemic and a huge waiting list for social housing, workers cannot simply wait for Gib’s crisis to resolve itself.

Michael A. Bynum