The profitless boom: Builders say Auckland materials drought has crippled them

Auckland’s extended lockdown is hitting the Bay’s building sector with some sites grinding to a standstill as materials dry up.

GIB, steel framing, roofing, timber, wall linings and fixings are in short supply and by Friday those products are expected to run out completely.

One builder says the lack of materials has left the Bay of Plenty with a “profitless boom” that could prove fatal for some businesses. Another believes the Government has “crippled” the sector by stopping the supply chain out of Auckland.

The New Zealand Building Industry Federation is lobbying the Ministry of Business Innovation and Employment for exemptions to Auckland manufacturers who supply 90 per cent of the products needed in the regions.

Bay of Plenty builders spoken to by NZME said some sites were at a standstill and home buyers would end up bearing the brunt of delays and material costs.

Fletchers said it had already exhausted its Pink Batts outside of Auckland and there was ongoing demand for insulation, wallboards, roofing and wood mid-floor products. The company anticipated it would take a few months to clear backlogs and replenish stocks to more sustainable levels.

The ministry acknowledged potential supply chain issues and confirmed it was in talks with the Building Industry Federation.

However, the ministry said alert level 4 business could not produce non-essential products for delivery to alert level 3 regions, even if it was already manufacturing essential products.

Registered Master Builders vice-president Johnny Calley, of Calley Homes in Tauranga, said every building company in New Zealand was affected and “large quantities of materials had already run out and if they haven’t run out yet they will by the end of the week”.

The exemptions would be critical to any further production.

“We have projects that are directly affected by the shortages which are at a standstill.”

Calley said his company was still working on other sites in a limited capacity but “the consequences are severe and that is going to impact the consumers quite badly because builders will be passing on material costs through their contracts”.

That coupled with delays was going to add a lot of financial pressure to building projects across the Bay of Plenty and the country.

The scenario could be “fatal” to businesses that could not absorb the costs and other issues like the skilled labour shortage, which meant the industry was in a “profitless boom”, he said.

Venture Developments director Mark Fraser-Jones said it was hugely frustrating “that this Government will, on one hand, open the regions up for business but cripple it with another hand in not providing a supply chain”.

Major components including GIB, insulation, roofing iron were now in critical supply.

“All communication from our suppliers suggests that MBIE are not willing to give answers around supply which makes planning next to impossible. This supply chain issue and the apparent unwillingness of MBIE to provide solutions around it will severelynegatively affect everyone in and around the industry.

Surely with the never-ending rhetoric around our housing supply shortage, MBIE would be prioritising the construction sector, not crippling it.”

Registered Master Builders Tauranga president Rik Flowerday said build programmes were getting “stuffed up”.

“Demand was already exceeding supply…and now we can’t get GIB and Pink Batts so you can only move a house so far along. We have houses that are also at a standstill.”

Meanwhile, Classic Builders director Peter Cooney agreed the impacts would have a severe effect if Auckland’s businesses did not get back up and running.

New Zealand Building Industry Federation chief executive Julien Leys said Auckland was the manufacturing and distributing hub and it handled about 90 per cent of materials.

“Most have had to shut under level 4… so roofing, iron, cladding, windows, the metal plates that reinforce framing and timber framing has stopped.”

That had prompted the federation to lobby MBIE for exemptions.

“We have been compiling a list which is now just under 200 companies in the building supply chain to advocate for exemptions.”

Leys said there was a “cascading domino effect” that would be a “huge hit” to builders.

Master Plumbers, Gasfitters and Drainlayers NZ chief executive Greg Wallace said the plumbing industry would run out of basic items like PVC fittings by the end of this week.

“We are currently bleeding through about $1.4 million of stock per day across the country. Because we can’t replenish that stock we will get desperate soon.”

Wallace was also advocating for exemptions for 60 suppliers in Auckland and said if the Government didn’t act “I think some of them will just open anyway”.

A Fletcher Building spokeswoman said its manufacturing in Auckland had stopped and materials could only be supplied to the industry if there was manufactured stock in existence.

“We understand builders are seeking a wide variety of materials. From Fletchers specifically, there is an ongoing demand for insulation, wallboards, roofing and wood mid-floor products. For example, we have confirmed we have exhausted our supplies of Pink Batts outside of Auckland.

“Once Fletchers manufacturing operations can begin again, we anticipate it will take a few months to clear backlogs and replenish stocks to more sustainable levels.”

An MBIE spokeswoman said the alert level 4 rules are about reducing the risk of further transmission in the community.

“Having too many businesses operating during alert level 4 increases the odds of transmission with workers moving in and out of their home bubbles, connecting bubbles, and increasing the potential chain of infection.”

Alert level 4 businesses should have systems and processes in place, to the extent reasonably available, to ensure the manufacture of products are for essential purposes only, she said.

“Beyond this, we are aware of potential supply chain issues that arise from alert level 4 restrictions on building product manufacture. This is currently being worked through. MBIE is in discussions with the NZ Building Federation about possible exemptions.”

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