Supply halt shows sector ‘under stress’

The timing of Carter Holt Harvey’s halt on supplying wood products to major retailers could not have been more problematic for the Government, a building expert says.

The timber company, which is part-owned by New Zealand’s richest person, Graeme Hart, has stopped supplying to Mitre 10 and ITM. Mitre 10 said on Saturday that Carter Holt Harvey Woodproducts could not supply it with structural timber for the foreseeable future.

A decision to keep supplying large customers including its Carters subsidiary and Fletcher Building-owned PlaceMakers has drawn the attention of the Commerce Commission.

Yesterday afternoon, Carter Holt Harvey chief executive Prafull Kesha said there had been some ‘‘short-term industry-wide supply issues’’. Carter Holt, New Zealand’s largest producer of structural timber, had been expanding its capacity since 2018.

‘‘CHH is continuing to meet its contractual obligations. The curtailment of supply relates to around 10 per cent of CHH’s structural timber volume,’’ Kesha said in a statement.

Professor John Tookey, a construction management academic at AUT University, said the timing could not have been more problematic for the Government after its recent announcements about the housing market.

Last week, the Government said it would spend billions of dollars attempting to accelerate housing supply as part of a package of policies aimed at increasing housing affordability.

‘‘We’re dealing with a system under stress, and if it wasn’t this coming out of the woodwork in terms of the timber processing then it would be about skills, and if it wasn’t about skills then it would be about consenting processes,’’ Tookey said.

The current supply issue was a short-term one, exacerbated by Covid-19 disruption, and was likely to be solved within months.

However, the relatively unattractive margins in the industry would not attract any other players into the market. ‘‘This is not going to be a watershed moment for the industry.’’

Housing consents were at a record high – up 5.8 per cent for the year to January 2021 at 39,881 – but still short of demand. ‘‘The issue of note is simply the fact that it’s taken us 11, 12 years to rebuild the industry after the global financial crisis . . . and we’re still well short,’’ Tookey said.

The New Zealand timber industry was trying to play catchup to the big investments that other countries had made in wood processing, he said.