Fletcher Building

Last updated

Fletcher Building Limited
Company type Public
NZX: FBU
ASX:  FBU
Industry Construction
Founded2001
Headquarters
Auckland
,
New Zealand
Area served
New Zealand, Australia, Americas, Pacific Islands, Asia, Europe, Africa
Key people
Andrew Reding (CEO)
ProductsBuilding products
ServicesConstruction
RevenueNZ$9,004 million [FY2016] [1]
Number of employees
Approx 14,000 globally
Subsidiaries Fletcher Construction
PlaceMakers
Website fletcherbuilding.com

Fletcher Building Limited is one of the largest listed companies in New Zealand, with a market capitalisation of nearly NZ$4 billion. [2] The company was split from Fletcher Challenge in 2001, formerly New Zealand's largest business and multinational.

Contents

Structure and divisions

With around 14,000 employees globally and over 34 business units operating under the Fletcher Building banner, the company is Australasia's largest building materials supplier. Andrew Reding started as Group Chief Executive Officer and Managing Director in August 2024.

The company operates in six divisions: building products, distribution, concrete, residential and development, construction, and Australia. [3]

Distribution

Fletcher's retail operations date back to its first building supply site in Dunedin in 1910. [4]

PlaceMakers has been the main trading brand for Fletcher Distribution's retail stores around the country since 1954. [5] The chain has 62 stores in 2019, up from 52 in the late 1990s and early 2000s. [6] PlaceMakers has 11 stores in Auckland, with a head office in Penrose, Auckland. [7]

Fletcher operated the Building Depot retail chain until 2003. [6] It had 10 stores, including five in Auckland. [8] Fletcher sold the chain to entrepreneur Mark Taylor in 2003 and two of its Auckland stores were closed. [9] [10] Building Depot went into receivership in 2004. [10]

History

SkyCity Convention Centre Fire

The New Zealand International Convention Centre fire occurred on 22nd of October 2019 when cardboard below the roofing cap sheet began smoldering after being ignited by a worker's blowtorch. [11] The resulting fire engulfed much of central Auckland, closing the entire Sky City precinct including the Sky Tower, and left four people injured due to the fire and billowing smoke. The fire had a major impact on Fletcher Building which may ultimately be difficult to fully quantify with costs estimated in the hundreds of millions, and ultimately precipitated Fletcher Building discontinuing their 'verticals' arm of Fletcher Construction. [12]

COVID-19 pandemic

In April 2020, in response to the COVID-19 pandemic in New Zealand, Fletcher Building senior executives had their salaries cut by 30%. The cut was part of a pay-plan suggested by the company to deal with financial impacts. Under the plan, non-working staff would receive a 35% pay cut, which would increase to 50% in May and 70% in June. [13]

On 20 May, Fletcher Building announced its intention to lay off about 1000 staff in New Zealand, or approximately 10 percent of its workforce, as a result of the COVID-19 pandemic. [14]

On 11 August, it was reported that Fletcher Building was expecting a loss of NZ$196 million for the year to June 2020 as a result of the COVID-19 pandemic. [15]

2021–22 plasterboard shortage

In response to a nationwide shortage of plasterboards (gib), Fletcher began rationing plasterboard orders in February 2022. By that time, the company controlled 94% of New Zealand's gib market, which had earlier triggered a Commerce Commission probe in November 2021 into whether Fletcher was blocking competitors from entering the New Zealand market. [16] The Commerce Commission's investigation would also investigate the perceived lack of competition within the New Zealand residential building competition and whether the cost of building materials was too high. [17] By May 2022, the plasterboard shortage had caused significant delays to building projects across New Zealand. The shortage of building supplies and construction delays also forced at least 12 companies including Christchurch building firm Maxim towards insolvency. [18] The shortage had forced builders and retailers including Bunnings to explore alternative plasterboard sources from overseas including China as well as domestic competitor Elephant Plasterboard. [19]

In early June 2022, Fletcher Building after video footage emerged that its subsidiary Winstone Wallboards had given another subsidiary Fletcher Living preferential access to its gib-board supplies. This preferential treatment violated the company's own policy and occurred in the midst of a national plasterboard shortage. [20] On 10 June, social housing provider Simplicity Living cancelled its contract with Fletcher citing supply delays and opted to import plasterboard from Thailand. [21] [22] On 13 June, Simplicity Living and the Shareholders Association met with Fletcher Building to discuss the gib plasterboard shortage. In response, the company's CEO Ross Taylor confirmed that it would boost production at its existing factories, with plans being made to open a new factory in Tauranga in 2023. Rival plasterboard supplier Elephant Plasterboard criticised Fletcher Building's monopoly over the New Zealand building market. [23]

On 16 June, Taylor confirmed that Fletcher was also importing more plasterboard material from Australia with plans to produce 1 million square metres of plasterboard between June and September 2022; enough to supply 2,000 houses. [24] On 17 June, Fletcher shareholders including Simplicity Living met with the company's executives. Simplicity chief executive Sam Stubbs criticised Fletcher's leadership for their perceived lack of accountability, questioning their attribution for the plasterboard supply shortage to COVID-19 lockdown restrictions between 2020 and 2021. The Shareholders' Association also voiced concerns about the implications of the gib shortage for Fletcher's finances and reputation. [25] [26]

On 21 June, Building and Construction Minister Megan Woods established a ministerial taskforce to investigate ways of easing the national gib board shortage, including obtaining alternative plasterboard supplies. In addition, Woods asked Fletcher not to enforce some of its trademarks for at least 12 months. [27]

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References

  1. ↑ "Annual Report" (PDF). Fletcher Building. 2016. p. 11. Retrieved 27 December 2016.
  2. ↑ "Fletcher Building Limited Ordinary Shares". NZX. Retrieved 21 June 2022.
  3. ↑ "Our business". Fletcher Building. Retrieved 21 May 2020.
  4. ↑ Walrond, Carl (11 March 2010). "Building and construction industry". Te Ara - the Encyclopedia of New Zealand . Ministry for Culture and Heritage.
  5. ↑ "Fletcher Building: Divisions : Distribution". Fletcher Building. Archived from the original on 6 September 2009. Retrieved 23 March 2011.
  6. 1 2 "Then as Now". Marketplace Media. Hardware Journal. 18 December 2019.
  7. ↑ "PlaceMakers". placemakers.co.nz. Fletcher Building.
  8. ↑ "Building Depot Staff Face Uncertainty". sharechat.co.nz. NZPA. 15 November 2002.
  9. ↑ Bingham, Eugene (24 October 2003). "Retailers jostle for the DIY dollar". Wilson & Horton. New Zealand Herald.
  10. 1 2 "Building Depot in receivership but still trading". Wilson & Horton. NZPA. 9 September 2004.
  11. ↑ "Investigation finds massive SkyCity convention centre fire wasn't caused by inexperienced worker".
  12. ↑ "Fletcher Building full year net profit down 46%". Radio New Zealand . 16 August 2023.
  13. ↑ Nadkarni, Anuja (6 June 2020). "Fletcher Building executives double pay cuts to 30%". Stuff . Archived from the original on 4 June 2020. Retrieved 4 June 2020.
  14. ↑ Gibson, Anne (20 May 2020). "Fletcher to lay off 1000 Kiwis, 500 Australians as part of business reset". The New Zealand Herald . Archived from the original on 9 July 2020. Retrieved 21 May 2020.
  15. ↑ Nadkarni, Anuja (11 August 2020). "Fletcher Building expects $196m net loss because of Covid-19". Stuff . Archived from the original on 11 August 2020. Retrieved 11 August 2020.
  16. ↑ Milne, Jonathan (11 February 2022). "Building projects grind to a halt as dominant Fletcher freezes Gib orders". Stuff . Archived from the original on 11 June 2022. Retrieved 19 June 2022.
  17. ↑ Malpass, Luke (21 November 2021). "Government announces Commerce Commission probe into residential building supplies". Stuff . Archived from the original on 14 June 2022. Retrieved 19 June 2022.
  18. ↑ Milne, Jonathan (17 May 2022). "Builders forced to the wall as Gib shortage becomes critical". Newsroom . Archived from the original on 17 May 2022. Retrieved 19 June 2022.
  19. ↑ Killick, Jonathan (27 May 2022). "Unable to source Gib here, frustrated builders import plasterboard from China". Stuff . Archived from the original on 7 June 2022. Retrieved 19 June 2022.
  20. ↑ Killick, Jonathan (7 June 2022). "Fletcher Building apologises after Gib stockpiling video emerges". Stuff . Archived from the original on 15 June 2022. Retrieved 19 June 2022.
  21. ↑ "Social housing supplier turns to Thailand to import GIB alternative". Radio New Zealand . 10 June 2022. Archived from the original on 17 June 2022. Retrieved 19 June 2022.
  22. ↑ Smith, Daniel (10 June 2022). "Simplicity blasts Fletcher Building for lack of Gib". Stuff . Archived from the original on 16 June 2022. Retrieved 19 June 2022.
  23. ↑ "Fletcher Building meeting: Simplicity seeking answers to GIB board shortage". Radio New Zealand . 13 June 2022. Archived from the original on 17 June 2022. Retrieved 19 June 2022.
  24. ↑ "Fletcher Building to boost GIB supply". Radio New Zealand . 16 February 2022. Archived from the original on 17 June 2022. Retrieved 19 June 2022.
  25. ↑ Smith, Daniel (17 June 2022). "Shareholders 'disappointed' with Fletcher Building after Gib crisis meeting". Stuff . Archived from the original on 17 June 2022. Retrieved 19 June 2022.
  26. ↑ "Social housing backer left 'disappointed' after GIB supply meeting with Fletcher Building". Radio New Zealand . 17 June 2022. Archived from the original on 17 June 2022. Retrieved 19 June 2022.
  27. ↑ Ensor, Jamie (21 June 2022). "Plasterboard supply crisis: Government taking action on GIB, tells main supplier to not enforce trademark". Newshub . Archived from the original on 22 June 2022. Retrieved 23 June 2022.
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