Builders welcome call for more competition
‘‘These are big issues we need regulation to solve.’’ Josh Chapman Your Place Building director
Builders across the country have welcomed a Commerce Commission report that identified a lack of competition in the building supplies sector.
Chairperson Anna Rawlings said investigations had shown ‘‘tried and tested’’ products had become embedded in homebuilding practices in New Zealand.
To combat this, the building regulatory system should include competition as a ‘‘deliberate objective’’, she said.
Your Place Building director Josh Chapman said there was an appetite for change in the construction industry, but more needed to be done at the Government and council level to make it happen.
He said builders continuing to use Gib plasterboard, despite widespread frustration at the way supply issues were handled, was a prime example of the failure of competition in the industry.
‘‘Builders use Gib begrudgingly because it is the path of the least resistance. Yes, they are the big player bossing everyone around, but we need to go with them because there is no other options really,’’ Chapman said.
Gib was the only product on his merchant’s shelf, and the only product that the council would approve without resistance, which made it hard to avoid, he said.
‘‘It is like Coca-Cola muscling out smaller drinks companies, or Countdown and Pak’n Save not allowing a third player to enter the market. These are big issues we need regulation to solve, as it is hard to change at the level of the builder.’’
Pragmatic Building director Richard Smith said small builders would welcome more competition, especially in light of major products such as Gib, failing to supply the industry.
‘‘Winstone Wallboards is owned by Fletcher Building, no matter how you look at it, they are going to be helping themselves first. Fletcher Living was having their Gib delivered to houses when they hadn’t even got their roofs on,’’ Smith said.
The commission also recommended further informationsharing on the use of rebates by suppliers and merchants, to help create more competition.
The commission did not recommend new laws to restrict the use of rebates, but Rawlings said in some cases they could breach the Commerce Act, and that they were more likely to do so once already-legislated changes to the act came into effect next year.
Rawlings appeared to indicate that businesses that misrepresented the true cost of building supplies in their invoices to customers to disguise the impact of discounts they had received could be breaching the Fair Trading Act.
‘‘We would expect if customers were being told the price paid for a product, that should be the price,’’ she said.
But Smith pushed back on the criticisms of the rebate system.
‘‘I work with ITM. In any given month they give me a percentage of the money I spend with them back in points. But you should always be passing those savings on to clients.’’
Builders only accessed discounts on supplies due to money already spent at the merchant, so to pass on the cost paid directly to the client would mean losing money for a builder, he said.
‘‘For a big ticket item like timber framing, I buy it for less than half of the retail price, because I turn so much of it over. When I invoice the client I may add 10% to 15% to that price depending on my overheads, but the reality is I am still passing it on to the client for cheaper than they could buy it themselves.’’