Carter Holt Harvey’s decision to cut timber supplies for three hardware and building supplies chains is reportedly because of booming house construction. Photo / File
Builders are at risk of going under as Mitre 10, Bunnings, and ITM face a dire shortage of building timber after Carter Holt Harvey’s decision to cut its supplies to the three companies because of accelerated house construction.
Mitre 10 customer solutions chief Chris Peak confirmed the company had been informed by Carter Holt Harvey Woodproducts that it cannot supply Mitre 10 with structural timber for the foreseeable future.
Peak said the move posed an “industry-wide issue”, but committed to working with customers to ensure their timber needs were met.
Bunnings New Zealand merchandise head Cameron Rist also confirmed the decision but didn’t expect it would change product availability.
“[Carter Holt Harvey] isn’t a major supplier to Bunnings and customers can be assured we will continue to work with our suppliers to meet demand for timber across our store network,” he said.
According to BusinessDesk, Carter Holt Harvey is also unable to fulfill supply commitments to ITM, citing “critical supply issues” as demand for new houses spikes.
However, Carter Holt Harvey (CHH) had reportedly maintained its supply relationships with its biggest clients – Placemakers and Carter Building Supplies – industry insiders told BusinessDesk.
Through an internal memo to staff and shareholders published by BusinessDesk, ITM chief executive Darrin Hughes detailed CHH’s decision to no longer supply timber to its roughly 100 stores nationwide.
“This is a massive decision on CHH’s part and one that will have ramifications for years to come,” the memo said.
“We spend almost $34 million with CHH per annum so I know this will have a significant disruptive impact on many of your businesses.”
New Zealand Certified Builders Association chairperson Mike Craig said the move could see some builders go out of business.
“Some of the smaller builders who just do one house at a time and they can’t get product, what do they do with their workers?
“You could see that it’d have a real knock-on effect where workers have got no work, the builders haven’t got cash flow, and they could go under because they haven’t got enough capital.”
Craig said the companies’ ability to service builders’ requests was partly dependent on how much product they had in reserve. He believed timber supply companies had been stockpiling since November, with some branches hiring warehouses to store extra timber.
Craig saw CHH’s decision as emblematic of a global problem whereby increased demand was delaying supply shipments. He referenced the usual 12-14 week wait for windows from Europe had blown out to six months. Domestically, some builders were waiting up to three times longer for product.
“It’s a very, very big problem,” he said.
As a result, builders had been taking on more work which extended project deadlines, and were forced to use alternative products which heaped more work on local councils processing new resource consents.
Red Stag Group chief executive Marty Verry, whose company also supplied timber, echoed Craig’s concern for the viability of small-scale building businesses and the assessment of the problem as global.
Verry estimated there would be a framing timber shortage for the rest of 2021 which, put simply, would mean less houses built in a time of great demand.
While a new Red Stag factory set to open in May would ease the backlog, Verry said builders who have been loyal to their suppliers would be best placed to secure stock.
“It’s really going to be an environment going forward where loyalty is going to be repaid.”
Attempts to contact CHH and ITM had been unsuccessful.
It comes after the Government’s major housing sector shake-up was announced on Tuesday, aimed at levelling the playing field for first-home buyers and reeling in soaring house prices.
Among the changes were:
• Extending the bright-line test from five to 10 years, meaning those who sell a house other than their family home within a decade will have to pay tax on the capital gain.
• Axing a tax break that allowed investors to claim home-loan interest repayments as a business expense.
• Pouring $3.8 billion into a scheme to accelerate infrastructure supply, such as vacant land, for new homes.
• Allowing the Kāinga Ora housing agency to borrow a further $2b to buy land for housing.
• Lifting the First Home Grant caps from $85,000 to $95,000 for single buyers, and from $130,000 to $150,000 for two or more buyers.
• Raising the price threshold for eligible houses by up to $100,000 in some parts of the country.
Auckland’s median sales price soared to $1.1m in February, jumping almost 25 per cent year on year. National prices climbed 23 per cent to $780,000.