Announcements | Product
Plasterboard Demand and Supply Update
Monday, 20 June 2022
David Thomas provides an update on plasterboard demand pressures and supply.
There has been a lot of media coverage recently about the supply of plasterboard relative to demand in New Zealand and Winstone Wallboards role in that. I would like to give you our perspective about what’s causing the current situation and provide some clarity about the actions we are taking to alleviate it.
Firstly, there’s no doubt that the building and construction industry is facing challenging supply conditions and we empathise with all who are being impacted, especially those where a contributing cause is the availability of plasterboard.
Those supply challenges are being driven by several factors, the most fundamental of which is the record building activity we are seeing in the sector.
To supply the industry, we are operating both manufacturing plants 24 hours a day, seven days a week. Our plasterboard manufacturing is now at an all-time record level, seeing us produce c.700,000 sqm per week. To put that in context, this is enough plasterboard to line about 1000 average-sized New Zealand homes per week.
Up until the end of the 2021 calendar year we were managing the elevated levels of demand we were experiencing. However, during the December/January period our annualised order rate doubled, representing a market activity level in excess of 80,000 residential consents. As a direct result our lead times stretched out and in February we put a temporary hold on taking new orders, to allow time for the introduction of an allocation system with our customer base, the merchant channel. This system has been designed to provide more certainty around supply volumes and allow for a fairer distribution of plasterboard.
In April we advised our merchants of their allocation levels for the months of July, August and September. Those allocations were based on our existing throughput levels.
The allocation system requires the merchant to manage their monthly volume allocation within that month, so it is important for any builder that wants to change their delivery dates or requirements to advise their merchant as soon as possible. Communication, both ways, will be critical for us all to navigate our way through this challenging time.
Over the past three months the team has been working hard to safely increase our production levels through plant and process modifications. This work has been successful and an upgrade to the heat exchange system in our Auckland factory will take place in July to add further production capacity. In addition, last week we received confirmation from the Australian manufacturer who supplied us with plasterboard in the second half of calendar 2021 that they are able to resume supply to us in August.
As a result of these initiatives, we advised our merchants that collectively they will receive a further 1 million square metres of plasterboard above their initial allocation levels for the July-September quarter.
We also remain on track to open our new $400M state-of-the art production facility in Tauranga next year. The plant investment was signed off in 2019 and construction began in 2020. The new plant will increase our production output by 50% and will have the capacity to more than meet the demand levels we are seeing today.
We recognise the important role we play in the supply of plasterboard to the New Zealand market and are committed to fulfilling the responsibility that goes with that position. We have met that responsibility for many years and I know that the team is doing all it can practically do to meet that challenge.