Industry experts believe proposed drywall tariffs will eventually be passed onto homebuyers, adding about $1,000 to $2,000 to the price of a home.

Tearing down trade walls

Homebuilders hope recommendations to lower duties will lead to lower cost for industry, consumers

Recent recommendations by a federal trade tribunal have the homebuilding industry hopeful that high duties on U.S. drywall imports will soon come to an end.

The Canadian International Trade Tribunal issued its Statement of Reasons Jan. 19 outlining why it found drywall duties on U.S. imports are negatively impacting Western Canada’s housing industry. Yet it also found U.S. manufacturers were indeed dumping drywall into the Canadian market, an unfair advantage over domestic manufacturers.

Both homebuilders — including related industries — and the gypsum board manufacturing industry in Canada see the recommendations as potentially beneficial.

“Yes, the trade tribunal indicated there was injury to domestic producers with the dumping, but, on the other hand, it’s clear the wider economy can’t handle duties of 100 to 300 per cent depending on which company is doing the importing,” said Jason Burggraaf, government relations and policy adviser with the Canadian Home Builders’ Association.

Canadian Border Services Agency put the tariffs in place last September, ranging between 200 and 300 per cent of the cost of product coming from the U.S.

The move was aimed at ensuring fairness with domestic producers who are unable to produce drywall at as low a cost as their U.S. counterparts.

For the industry, the decision would save jobs — about 120 — otherwise at risk without the duties. But the homebuilding and wider construction industry in Western Canada lobbied the federal government to remove, or at least reduce, the duties. In response the federal government set up the tribunal to help guide its decision.

The tribunal has taken a middle-of-the-road approach, recommending duties be suspended for six months and reduced thereafter to about 43 per cent.

It also recommended duties already collected be used to offset increased costs for end users. As well, it suggests provisions be made to reduce costs for drywall used in the reconstruction of Fort McMurray.

The final decision is now in the hands of the federal Finance minister. The union representing drywall manufacturing workers in Western Canada remains optimistic the government will protect Canadian jobs in the industry.

“Our 120 members employed by CertainTeed can breathe a collective sigh of relief knowing that their jobs are secure,” says Kevin Sheptycki with the International Brotherhood of Boilermakers.

“A small cutback — one to five per cent — in terms of jobs is larger than the number of workers employed by domestic producers (of drywall).”

“It is imperative that the duties remain at a level that will entice Georgia Pacific to re-open its idled factories in Edmonton and Surrey where Canadians could gain another 100 full time jobs.”
CertainTeed Gypsum Canada — the lone manufacturer in Western Canada — remains concerned about long-term reduction or elimination altogether of duties on U.S. imports.

But those involved in the construction industry argue many more jobs are at risk if the duties remain high.

“We pay more for gypsum board in Western Canada than anywhere else in North America,” said Neal Pollock, president of Calgary-based contractor TDL Drywall and spokesman for the Western Canada Alliance of Wall and Ceiling Contractors. “We asked for zero duties, but I don’t think we’re going to get that.”

Burggraaf said the homebuilding industry employs about 400,000 people in Canada directly and indirectly, and the high duties put jobs at risk.

“A small cutback — one to five per cent — in terms of jobs is larger than the number of workers employed by domestic producers (of drywall).”

Moreover, the higher costs will eventually be passed onto homebuyers, adding about $1,000 to $2,000 to the price of a home.

“That could push some people out of the buyer pool.”

In addition, manufacturing capacity in Western Canada isn’t enough to meet demand, which is also increasing cost, he said.

While the numbers regarding the true impact are still being tallied, Burggraaf said the government needs to take a more even-handed approach.

“Right now, if domestic producers were arguing things were unfair for them, now with the duties, the pendulum has swung the opposite way.”

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