Dear Shareholder
I want to touch on the recent media around our seismic mesh and other steel quality issues, and reassure you that we are totally confident in our products.
I appreciate that ongoing media reports and attention may be concerning.
I want you to know that we have confidence in our robust procurement processes to ensure that all relevant quality standards are met.
Significant media attention is placed on Steel & Tube as the leading NZ steel supplier, but essentially there are only two quality issues that merit any consideration.
From Steel & Tube’s perspective, we have always been confident that our seismic steel mesh complies with New Zealand standards. However, as with many construction products ambiguity exists as to how the standards are to be interpreted and then applied in the relevant testing. We believe it is this ambiguity and interpretation that has given rise to the variability in the mesh test results. The Commerce Commission is investigating this and we are fully co-operating with them in this matter.
It was Steel & Tube who proactively called for a Government/industry review of the testing Standard, and the Government has worked with the industry on an updated Verification Standard and Acceptable Solution to give clarity around the testing requirements, which is expected to be finalised in early October. We are very confident that Steel & Tube’s seismic mesh will comply with this clarified standard.
In recent days, we have been disappointed by reports of an Auckland law firm inviting registrations of interest for a class action targeting the suppliers of seismic steel mesh, which they assume to be non-compliant. This action is reported to include Steel & Tube, although to date we have not received any formal notification.
The law firm has been reported as saying that unnamed insurers in London have said the use of Grade 500E reinforcing mesh that didn’t meet earthquake standards could compromise house insurance.
We believe that the potential action faces a number of significant hurdles to be successful, the first and probably most significant is that we believe Steel & Tube’s seismic mesh is compliant, and therefore there can be no claim.
In respect of home owners feeling uncertain of the status of their insurance, we have spoken to the Insurance Council of New Zealand, and also note comment issued in a statement on September 1 by the Council’s Chief Executive Tim Grafton, who says, “People with home and contents insurance in houses built with steel slabs using sub-standard steel mesh in the last four years should not be unduly concerned about their insurance coverage.”
The other matter in relation to seismic steel mesh is in respect of the inadvertent use of the testing house logo on Steel & Tube’s test certificates. This was an oversight by Steel & Tube, but is the matter of a Commerce Commission investigation. We are working with and voluntarily co-operating with the Commission in their investigations.
The second steel quality issue is the Huntly by-pass project pile casings. This was a specific project related issue, which Steel & Tube has resolved with the joint venture.
Steel & Tube has been reassuring customers directly that our steel mesh products are fully compliant with New Zealand standards. We categorically stand behind all our products, our in-house and independent testing programme and our processes, as we always have.
Kind regards
Dave Taylor
CEO
Steel & Tube Holdings Ltd