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False Timber Grading – Carter Holt Harvey

False Timber Grading – Carter Holt Harvey

1. Carter Holt Harvey is not a member of the New Zealand Timber Industry Federation (NZTIF) and wasn’t at the time when the false grading occurred. In 2002 we became aware of wrongly graded timber in the market and of rumours that Carter Holt Harvey was deliberately misrepresenting the grade of its MGP10 Laserframe timber.

We commissioned independent tests of CHH Laserframe MGP10. These tests confirmed that the grade was in fact being substantially misrepresented.

After taking legal advice we felt it necessary to inform the Commerce Commission and also the Minister of Forests. We were also concerned for any damage to the reputation of timber generally and to our own Member sawmills, wood processors and customers.

We wish to assure the public that we believe that these practices have ceased. The public can have every confidence in our grading standards.

Carter Holt Harvey has new owners and managers who we are sure are committed to maintaining correct grading standards.

We also wish to reassure the public that we believe there are no safety issues. The wrongly graded MGP10 Laserframe supplied however will not meet the expected performance of the grade represented. A typical issue might be the sagging of lintels or floor joists (e.g. squeaky floors). The customer will have paid too much for that timber. A good analogy would be the supply of 91 octane petrol represented as 96 octane.

NZTIF will continue to be vigilant on grading standards to uphold the excellent reputation of timber. NZTIF supports an independent grading verification scheme, Verified Timber Ltd, which will give even greater assurance to customers.

With the guilty plea the way is now open for compensation claims by competitors and customers.

With Laserframe MGP10 sales of close to $200 million over the three years in question the claims can be expected to be very substantial.

Our Members will have suffered from unfair competition because we supplied the correct grade of timber our costs would have been higher. this would result in reduced sales, lower prices and lower margins.

At that time CHH also initiated an attack on visually graded timber – the traditional and proven method of grading used by almost all of our Members at that time.

CHH proposed changes to the grading standards to favour machine stress grading.

It had moved a large volume of its grading to machine stress grading and believed this would give them an advantage (as they had about 80% of the machine stress grading capacity).

Their deliberate decision to derive an even greater advantage by misrepresenting their machine stress grades clearly put anybody who was visually grading at an even bigger disadvantage.

ends

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