More on the Western Canada drywall tariff controversy

Appeals to fairness, Canadian law and the protection of Canadian jobs by CertainTeed Gypsum Canada are doing little to reduce anger from contractors now being hit by steep price increases for drywall in Western Canada.

The price increases stem from new tariffs on drywall imports into the West (including Yukon and NWT) ranging from 105 percent to 275 per cent, effective Sept. 6.

CertainTeed is feeling the heat from contractors – in the media and elsewhere – because they were the firm that successfully applied to the Canadian Border Services Agency (CBSA) for tariff protection. CertainTeed argued that U.S.-based sources were “dumping” drywall into Western Canada at well-below-market prices.

Many contractors in Western Canada have found themselves caught between a rock and a hard place, with quotes and estimates committed to, jobs underway, and contracts signed.

CertainTeed argued (see their most recent media release here) that the viability of their Western Canadian manufacturing operations were in jeopardy because of the “dumping.”

Drywall installers and contractors of all sizes are upset over new tariffs on imported gypsum wallboard.

What is dumping? What are tariffs?
‘Dumping’ is the trade term used when a foreign manufacturer sells product in another country at lower prices than what similar customers in their home market would be offered, possibly even lower than the actual cost of production. Tariffs are, in effect, import taxes added to the cost of a product crossing into Canada, and are collected by the Canadian government. Tariffs costs are ultimately passed through the distribution system to the final customer. In this case, the tariff is being applied to drywall that enters Canada through U.S. border locations west of Manitoba

Doug Skrepnek, CEO of WSB Titan, a large gypsum product supplier in Western Canada, claims immediate price hikes of 50 per cent have already gone into effect. Others foresee increases of 60 per cent.

CertainTeed acted in its own interest
In a press release, Matthew Walker, General Manager, CertainTeed Gypsum Canada, stated that the dumping of U.S. product is nothing new, and in fact had grown significantly from 1992 to the present. “Such dumping creates material injury to domestic manufacturers in the form of [market] share loss and price and margin suppression,” Walker said. “Faced with increasing injury from dumping, we had to terminate Western Canadian employees, reduce investment in our manufacturing plants, mine operations and business, and put in jeopardy the continued viability of our plants.”

CertainTeed Gypsum Canada is owned by BPB plc (British Plaster Board), which is owned Compagnie de Saint-Gobain SA of France.

Furthermore, CertainTeed argued in its original application for tariff protection dated April 18^th that Western Canada was particularly vulnerable to dumping, due to a forecast drop in drywall product demand.  “Western Canadian housing completions are predicted to see a total decline of approximately 13% between 2015 and 2017,” the firm said in its complaint. “CertainTeed therefore concludes that the western market cannot absorb high levels of U.S. product,” while naming three specific U.S. competitors they claimed were dumping product into western provinces.

CertainTeed an international firm
CertainTeed Gypsum Canada is owned by BPB plc (British Plaster Board), a British building materials business with operations in some 45 countries including the USA. BPB plc is in turn owned by Compagnie de Saint-Gobain SA of France, a global building materials conglomerate with over $58 billion in annual sales. According to a Government of Canada website, Certainteed’s  Canadian gypsum operations employ approximately 600 people in six locations across Canada and has annual sales of over $50 million.

Angry contractors
While Walker feels the dumping complaint was necessary to preserve the viability of his Canadian operation, many are not happy with CertainTeed’s explanation. Small and medium sized installers and contractors in many communities from Saskatchewan to British Columbia are angry, and have spoken out to local media.

Bob deWitt, CEO of the Greater Vancouver Home Builders’ Association told local media that he’s worried the new duties will not only drive suppliers and installers out of business, but make housing even less affordable – not only in Vancouver but in others areas of Western Canada as well. Fort McMurray in particular has been identified as one community which will be hard hit by the higher cost of drywall, given the city’s massive re-building programme following devastating fires this spring.

CertainTeed Gypsum Canada may face a boycott backlash from its own customers as a result of its tariff actions

Media and social media blow-back
Social media has weighed in, too. Comments on the Red Deer Area News Facebook page include calls for the boycott of CertainTeed products. “This is outrageous! I say call for a boycott of CertainTeed Gypsum Canada that complained. If they want us to buy their products, then they should get them to us at a cheaper price. Not complain to the government! This just strengthens the “us vs. them” mentality,” said one comment.

Such calls for boycotts and angry commentary have unsettled CertainTeed. “We are disappointed and surprised at the recent call for boycotts of our drywall products by some Canadian customers and certain Western Canadian Associations, and through commentary in the Canadian media,” Walker said in his press release.

Response from home builders

In a press release, the Canadian Home Builders’ Association (CHBA) says, “The scope of the anti-dumping investigation only considers the domestic market for drywall producers, not the impact on the rest of the industry and end-users.  There was not sufficient attention paid to the unintended downstream effects of this decision or the implications for the public interest,” said Kevin Lee, Chief Executive Officer of the CHBA.

Bob Finnigan, national president of the CHBA and a builder in Toronto, feels the issue is of national importance. In the same CHBA release, Finnigan said, “We are already seeing ripple effects on price and warnings of supply restrictions in Ontario as uncertainty about the supply of drywall grows and Ontario plants potentially start to have to supply the Western markets.  As we try to keep house prices contained in the GTA, increases in drywall prices and potential shortages will only make matters worse.”

The tariff ruling is expected to be appealed by several interested parties. A Public Hearing will be held on December 5, with the final decision issued January 4.

If you are an interested party and want to participate, you have to register by September 21.
CLICK HERE for information

Are you impacted by this new tariff?

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in a confidential email to jbleasby@canadiancontactor.ca

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