Steel mesh companies ordered to stop selling products pending investigation

Friday 4th March 2016

The Commerce Commission has ordered Euro Corporation and Brilliance Steel to stop selling some steel mesh products used in residential construction while it investigates whether they meet the required building standards.

Steel mesh is typically used as reinforcement in concrete floor slabs used during the construction of houses, garages and other buildings and can also be used in driveways and pathways.

The commission said initial testing of the steel mesh showed it didn’t meet the standard requirements, specifically in relation to elongation which are designed to ensure the steel stretches under pressure or movement such as during an earthquake.

Euro Corporation, which is owned by funds associated with Maui Capital and the McKenzie Business Trust and its trustees, has challenged the results. Brilliance Steel is owned by Donghui Wu and Guanghui Wu and has neither accepted nor disputed the tests.

Euro Corporation said it had asked the commission for further details as the product had already passed testing by a leading independent ISO accredited laboratory and is meeting the regulator on Monday to discuss the results.

The commission is undertaking further testing but in the interim has asked both companies to stop selling the affected products.

Neither of the Auckland companies are dominant suppliers of mesh in New Zealand. Euro Corporation sold about 380,000 sheets of the steel in New Zealand in the period under investigation which is from mid-2012 to now, while Brilliance has sold around 20,000 sheets.

“We take standards compliance very seriously,” said Euro Corporation managing director Randal McKenzie. “We are hopeful that this matter will be resolved and we will be in a position to resume sales of this product within a few days.”

The Ministry of Business, Innovation and Employment said it wasn’t concerned that the steel product under investigation poses a safety risk for newly built houses and is confident they will still comply with the Building Code.

Ductile steel reinforcing mesh is used to help control cracks on concrete floor slabs and after the Canterbury earthquake in 2011 the ductility level was increased to a minimum elongation of 10 percent from about 2 percent formerly.

“The test results of this product so far average around 8 percent,“ said MBIE’s general manager building system performance Derek Baxter. “These homes will still be more resilient than the many of thousands of houses built prior to 2011. This is an issue of standards, not safety.”

Still, both government departments advise the product shouldn’t be used in concrete slabs that have not yet been poured while they are under investigation.

And while it’s understood neither company’s product has been widely used in commercial or multi-storey buildings, if at all, MBIE is checking this further and case-by-case assessments of any of these type of buildings may need to be carried out.

Misrepresenting a product as complying with the standard when it doesn’t is a Fair Trading Act breach that can incur fines of up to $600,000 per offence.

BusinessDesk.co.nz

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