Questions remain after Gib board crisis meeting
Critics yesterday met three Fletcher Building bosses to talk about the Gib board crisis, but one attendee said the results were mixed.
Oliver Mander, chief executive of the Shareholders’ Association, said there were some positives from the one-hour meeting but he still has concerns and questions and was concerned about Fletcher’s lack of humility — or any apology.
The meeting at fund manager Simplicity’s Takapuna office was between six people: Fletcher chairman Bruce Hassall, chief executive Ross Taylor and investor relations head Aleida White met Simplicity’s Sam Stubbs, Mander and developer Shane Brealey.
“We appreciated the opportunity to meet for an open and frank discussion,” Mander said afterwards. “We heard some aspects we felt were positive for shareholders and customers but other elements like the lack of humility which gives us cause for concern.”
He remains concerned about the company from a corporate governance perspective because it has been unable to supply enough Gib to the market and customers such as Brealey said he was being forced to wait a year.
Fletcher sells 94 per cent of New Zealand’s plasterboard supplies and its trade name Gib has become so popular that it is a synonym for the product in this country.
The association and Simplicity together hold more than 1 per cent of Fletcher shares: Mander said the association had proxies to vote 0.4 per cent of shares at Fletcher’s last AGM while Simplicity owns 0.8 per cent of the company, worth around $35 million.
Mander said it was clear from the meeting that Fletcher’s Winstone Wallboards had tried to plan to keep the market supplied “but they didn’t identify the sudden increase in demand, nor the impacts of the pandemic. Whatever plans they had, they didn’t fulfil the supply requirements of the market”.
But the Fletcher chiefs made it clear to their critics that they felt they were being hit by what Mander called “a perfect storm” — Covid-19 and an unexpected rise in demand for building products such as Gib.
“We look at the structure and would suggest they know that market better than anyone. They’re in the best position to understand the market and how it was shaping up for the future,” Mander said.
“I’m not sure we heard what we needed to hear, that the risks Fletcher faced were understood or managed.
“We heard some promising next steps both in terms of how the market may evolve in the next few months and steps Fletcher can take of its own accord to reduce the reputation impacts to improve services to customers,” he said.
“All of that is helpful to underpin long-term sustainability for shareholders. But we didn’t hear the humility we expected to hear. There was no apology forthcoming.
“From a shareholder perspective, that is a concern. It’s about recognising the reputational impact.
“By not showing that humility or apologising, that’s sort of a question mark about the future sustainability,” Mander said.
He will take the weekend to think about what next steps were appropriate.
Earlier yesterday, Finance Minister Grant Robertson talked to Mike Hosking on the Mike Hosking Breakfast radio show.
Robertson indicated he was not happy with councils consenting on a brand basis.
“It is certainly a problem we are facing both in terms of supply for the housing we build but also our desire to help fix it. We have the housing sector accord talking regularly to suppliers.
“There is a lot more supply coming on board. The issue I have particularly got though is that we have got ourselves tied into Gib within resource consents. Many of our local government consenting operations consent on the basis of a brand. That doesn’t happen in many other parts of the world,” Robertson told Hosking.
Auckland Council had started switching some of its resource consents to other products and that was good, he noted.
“There is more manufacturing capacity. Winstone is building a new plant but unfortunately, when demand exceeded supply we didn’t have access to other substitute products — that is what we have been working on in that sector,” Robertson said.
Winstone Wallboards this week announced that it would be increasing production and resuming imports to supply an extra one million square metres of plasterboard in the next three months.
Winstone, headed by general manager David Thomas, has announced that it is upgrading its Penrose mill to make more Gib and is also buying more plasterboard from overseas.
Winstone told customers of a series of measures “many of which have been in train for months”.
“Additional product will be available to distribute from July. This equates to an additional one million square metres of plasterboard in the market through the July to September period and a 7 per cent to 8 per cent increase of various types of plasterboard,” the company said.
The increases will be possible thanks to changes over the past three months to the configuration of its Penrose mill, it said.
“We have also been able to secure and will import additional board from an Australian manufacturer that we can feed into our supply chain,” the company said.
Fletcher was importing plasterboard from Australia for six months last year when it ran out here because of extremely high demand.
I’m not sure we heard what we needed to hear, that the risks Fletcher faced were understood or managed. Oliver Mander (above)