New Zealand plumbers are about to be hit with a 25% price rise on pipes next month due to manufacturing problems affecting the supply of resins from petrochemicals to make the pipes because of the Iran conflict.
Dave Good, general manager of D L Good & Son Plumbers in Henderson, said Fletcher Building-owned Iplex had last month told merchants of a 25% price rise coming from May 1.
The Herald was subsequently sent information showing that on March 26, Marley told merchants of plastic pipe price rises of up to 25% too.
Good’s business, founded by his father, employs about 80 plumbers on large commercial sites.
Contracts already bid for would now be far less profitable for the company, he said.
The notification about imminent Iplex pipe price rises came to the plumbers via the merchants in March, Good said.
Marley NZ, whose products include PVC spouting, had also advised of a 3.5% price rise in April, Good said.
Those are also being anticipated, Good said.
A Fletcher spokeswoman said this morning the Iplex NZ supply chain had been impacted by PVC and PE resin supply disruptions, fuel price increases and freight impacts.
“Unfortunately, we’ve been unable to fully absorb cost increases while continuing to secure materials and service customer demand. As a result, there’s been a need to adjust our prices.
“Iplex NZ’s focus is on supporting customers through supply continuity, clarity and early visibility of these price changes.
Good said all plumbing merchants, including Plumbing World and Mico, had told plumbers of the price rises.
Pipes affected include PVC used in waste pipes, polyethylene, which is used for water mains, and high-density polyethylene, which is used for mains waste pipes.
The pipes and fittings are made in New Zealand from imported plastic resins.
Petrochemicals are the key ingredient and Master Plumbers has said all the products come through the Strait of Hormuz so the Iran war caused the price rises.
D L Good commercial manager Darrin Minifie said the price rises were of “crucial concern.
“The effect is that this means we must increase our prices to cover the cost of goods. We’ve fixed some pricing. We’ve already quoted on and won some jobs, so now we’ve got to try to absorb that extra 25%”.
Herald NOW has also reported on the resin supply squeeze pushing pipe prices higher.
D L Good is about to start work at Auckland Airport at the new domestic and international terminal for Hawkins.
It is also working on the new $250 million Fisher & Paykel Healthcare building in East Tāmaki.
The company employs about 80 plumbers, making it one of the largest in the commercial sector.
It does some of the largest commercial projects, including SkyCity Entertainment Group’s new $1b NZ International Convention Centre.
Good said: “On those jobs we’ve already won, we can’t increase our price because we tendered on a fixed lump sum. We can’t just put our price up 25%, so we have to pay.”
Jobs quoted on and either about to start or part-way through had now become far less profitable.
“That’s potentially our margin or even more. Hopefully, we will make a profit in other areas,” Good said, citing labour and other materials, including copper.
“A 25% increase minimum on the jobs we’ve won is hard for us.”
Plumbers had tried to bulk buy plastic pipe to try to stockpile, “but we’ve not been entirely successful. We’re getting it in dribs and drabs”.
Good said the company had also bid for work on Waikeria Prison.
With Fisher & Paykel, D L Good was well underway with the first fix, putting pipework behind walls, he said.
“The price rise effects are two-fold in large commercial: because we have many plumbers, we use a lot of material. Our requirements are much more than domestic.
“Unfortunately for us, it means if we’re not getting the supplies, it interrupts our workflow. That leads to out-of-sequence or less efficient work, which then costs us more money,” Good said.
Bidding on jobs as a lump-sum fixed-price, any major shocks such as this, “we just have to wear.”
BusinessDesk this month reported Master Plumbers CEO Greg Wallace describing a 30% plastic pipe price rise.
“So that’s for PVC, which is the number one core product that plumbers and drain layers use, but it’s also PE [pipe], which is used in water mains, particularly around large infrastructure projects, and PP.”
Last month, a Fletcher spokeswoman talked about the possible effects of the Middle East conflict of New Zealand materials.
Fletcher was monitoring the situation and regularly assessing impacts, she said.
That was for the products it manufactures and the materials it buys.
It was then too early to quantify the effect on our businesses, she said.
Pipe maker Hynds did not respond to Herald requests to comment on price rises. However, Hynds CEO Andrew Moss told BusinessDesk that the company had confidence in the continuity of supply of products for the coming months.
“Our current resin stocks and inventory levels will allow us to continue normal production for the foreseeable future, but we continue to monitor this situation carefully.”
- This story has subsequently been updated to show it was not just iPlex but also Marley that last month told merchants of the 25% price rises.
Anne Gibson has been the Herald’s property editor for 26 years, written books and covered property extensively here and overseas.
- Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter – your essential weekly round-up of all the business news you need.