Contractors see grief from drywall cost hike

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This article was published 15/09/2016 (3283 days ago), so information in it may no longer be current.

A government-imposed 50 per cent jump in the cost of drywall in Western Canada could wreak havoc with local construction projects and may even force some local drywall contractors out of business, one industry official said Wednesday.

Harry Loewen, owner of one of the city’s largest drywall contractors — Loewen Drywall Ltd. — said residential, commercial and public building projects are all affected by the unexpected jump in prices, which were caused by a massive increase in anti-dumping tariffs imposed on drywall imported from the United States for use in Western Canada. He said the owners and developers behind the projects have some tough decisions to make.

Their options include cancelling the project altogether because it’s now too expensive, scaling back the size of it to offset the increased costs, delaying it in hopes the price increase is temporary, or forcing their drywall contractors to absorb the cost increase if they have a fixed-price contract in which they agreed to supply and install it at a previously set price.

He noted if they don’t have a fixed-price contract, they also could opt to proceed and try to recoup their added costs by charging more for their finished product, whether it be a house, new office space or whatever.

“But when you’re in a competitive market, you may not be able to do that,” he added, “and that’s where the problem comes in.”

Loewen predicted if the owners force their drywall contractor to absorb most or all of the added costs, that could impact that firm’s future hiring or expansion plans and could even drive some smaller operators out of business.

He said his firm isn’t about to fail.

“But at the moment we have just over $400,000 in estimated tariff costs coming toward us,” he said. “And we’re just one contractor. There are dozens of others out there. So in just a small place like Winnipeg, you’re talking millions of dollars in (unexpected) costs being thrown at a relatively small group of people.

“It’s a tremendous punishment for having done nothing — just for being in business,” he added. “We’re just a consumer of the product. We’re not the dealer or the manufacturer. But somebody in Ottawa decided we’re the ones that are going to pay for this.”

Drywall prices have shot through the roof after the Canada Border Services Agency last week imposed preliminary anti-dumping tariffs of up to 276 per cent on gypsum board products imported from the United States for use in British Columbia, Alberta, Saskatchewan, Manitoba and the Yukon and Northwest Territories.

‘We’re just a consumer of the product. We’re not the dealer or the manufacturer. But somebody in Ottawa decided we’re the ones that are going to pay for this’

A CBSA statement said Canadian producers have legislated rights to seek protection from dumped imports by way of duties. It said it investigated a complaint from Mississauga, Ont.-based drywall supplier CertainTeed Gypsum Canada and made a preliminary determination U.S. drywall was being dumped into the Canadian market. So it was imposing the higher tariffs to offset the dumping.

— with files from The Canadian Press

murray.mcneill@freepress.mb.ca