Warning a fat payday unlikely

TAMLYN STEWART
Last updated 05:00 05/06/2012

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Rebuilding Christchurch

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Any local manufacturers or building supplies companies waiting for an inflated rebuild payday are wasting their time, those in the industry say.

Insurers and the major contracting companies they hire know down to the last cent what they should be spending on materials, and won't be fooled by inflated margins.

Christchurch windows and aluminium joinery business NuLook Enterprise managing director Matthew Jones said gradual rebuilding was slowly starting to bolster order books, but the local market was the most competitive he had ever seen.

A lot of people in the construction industry were waiting for the rebuild, Jones said. "That's a waste of time. Insurers are not dumb. That's why they put big players like Hawkins, Arrow and Fletchers in charge of their rebuild programmes."

Insurance company buyers were "very savvy", he said.

They know down to the cent what the price of inputs are, he said.

The big contractors would simply source from the many "really hungry suppliers" just outside the region if local suppliers tried to inflate margins too far, Jones said.

NuLook had got itself in line with some of the bigger players involved in the rebuild, he said, and that would generate strong volumes of work, but it would not be high-margin jobs.

The business' order book was looking healthy, but there was room for more work. Some smaller players are just hoping for a bite of the rebuild pie.

Owner-operator of the Christchurch Plumb'In franchise, James Stewart, said smaller independent building materials suppliers in his industry expected to capture about 30 per cent of the work available at best, while Fletchers' own suppliers would capture the rest.

Blair Quane, of furniture manufacturer Southern Creations, said he was not banking on a big payday from the rebuild, but he thought Christchurch businesses should support other Christchurch businesses.

The Bromley manufacturer was not yet seeing any boost from the rebuild and the market was quieter now than it had been in the last two years.

"The longer things take to get sorted out the further away that potential is because furniture is really one of the last items people will look at," Quane said. "The pace of the rebuild is almost like a snail going backwards ... it's that slow, it's just painfully slow."

With last month's sales 40 per cent lower than average, the manufacturer was also looking for the chance to do joinery work like hardwood kitchen benchtops.

"But again it's one of those things that really relies on who the builders are getting supplies from, and a lot of the time it's the bigger crowds from up north ... that are supplying those sorts of products.

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"It's going to be a difficult one to tap into for a Christchurch business," Quane said.

Southern Creations was trying to work in with other joiners and smaller Christchurch commercial manufacturers so they could "tag along" with some commercial work they were doing, Quane said.

"But a lot of the time I think it's about Christchurch businesses supporting Christchurch businesses because if they go to traditional supply lines, [of] which a lot come from up north, then yes, us smaller players definitely get cut out of the mix."

"We are trying to take advantage of it [the rebuild] but it's kind of limited."

Christchurch pipe and storage maker Frank PKS general manager Bryan Wilson said there would be opportunities for local businesses that would not have arisen were it not for the rebuild, but he did not think there would be room to inflate margins.

But there were good rebuild-related opportunities for local companies.

"But it is certainly not a gravy train, it is not about easy money, and it shouldn't be."

- BusinessDay.co.nz

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