An insurance nightmare is looming for thousands of New Zealand property owners who’ve invested in buildings with reinforced concrete slabs built since 2012.

There may also be serious repercussions for property prices in Auckland, and other areas with grossly over inflated values, if buildings become uninsurable because of the presence of sub-standard steel reinforcing.

The reinforcing steel mesh is used in multi-storey buildings and concrete slabs to make them more resilient in an earthquake. It’s supposed to stretch by at least 10%.

The standard was raised from 2% after the Christchurch earthquake. Lack of ductility was the reason why the CTV building collapsed, killing 115 people.

In more bad news today, the public was told private insurers will take over Kaikoura earthquake claims from the Earthquake Commission.

The agreement lists the following insurers as agents for EQC claims: AA Insurance, Farmers’ Mutual Group & FMG Insurance, IAG New Zealand (State, AMI, Lumley, NZI and Lantern brands), Medical Insurance Society Limited (MAS brand) QBE Insurance (Australia), Tower New Zealand, Vero Insurance New Zealand, and Youi NZ. source

NZ government, criticized. Substandard Chinese steel failed strength tests

The substandard steel first came to light in early June 2016 when steel from China and supplied by Steel & Tube Holdings, used in concrete road bridges, failed strength tests.

An international steel trader said

Playing down the threat of substandard steel that made it past controls and into New Zealand roads, bridges and buildings is reckless of the government

Fulton Hogan and HEB Construction chose a cheap bid by Steel and Tube to import 1600 tonnes for new bridges on the Huntly Bypass, and ended up with Chinese test certificates that proved worthless.

Ian Jacob – who has been sourcing steel from China for two decades, said the contractors knew the risks in a glutted world steel market. Mr Jacob is a shareholder in Mill-Pro Hong Kong, a business that has supplied fabricated structural steel to companies in Australasia for 10 years. He told RNZ News the contractors had been “wilfully blind”.

Fulton Hogan and HEB, who are among the biggest New Zealand road builders, used the substandard steel after running out of time on the Huntly project. The steel was strengthened with extra concrete, using hurriedly revamped designs…. read on

“If this is what they’re doing on a State Highway project, you can imagine what’s going on in the private sector,” said Mr Jacob.

On 2 June 2016 Transport Minister, the aptly named Simon Bridges ruled out any government investigation, saying it was a small batch of steel from China and it was very unlikely to happen again.

But Mr Jacob said he did not know how the Minister could make such a statement. “Frankly, that’s quite reckless honestly to say that, because how does he know anything about the steel industry whatsoever and where’s that information coming from?

Damage Caused by Kaikoura Earthquake 14 November 2016

Sixteen blocks in Wellington were damaged by the recent Kaikoura earthquake. Alarmingly, some of them were new buildings, or renovated to meet modern day EQ code.

Note, buildings which are likely to have been built with the substandard steel mesh may include many of the new structures recently erected in Christchurch. Some of those damaged in and around Kaikoura, and some of the properties in the 16 damaged blocks in Wellington may also be affected.

An estimated 11% of Wellington CBD’s office space has been closed: that’s nearly 17 hectares of floor area, half of it in prime building stock. source

Coincidentally, John Key announced his resignation the same day the Commerce Commission said they were taking 3 prosecutions relating to grade 500E seismic steel mesh (used to strengthen concrete slabs and driveways) and Fletcher Steel were “issued with a warning for engaging in conduct that was likely to breach the act for retesting its product in a non-standard manner”.

Class Action

Before the Kaikoura earthquake happened, Auckland lawyer Adina Thorn’s announced she was likely to be taking a class-action against manufacturers of faulty steel mesh. She has the financial backing of Harbour Litigation Funding, the UK’s largest litigation funder.

Harbour Litigation also funded the NZ$250M class action against the James Hardie group of companies.

The action claims James Hardie was negligent in its design, manufacture and supply of the Harditex and Titanboard cladding systems.

The first Harditex claim was brought by Tracey Cridge and Mark Unwin, who claim their Wellington home suffered widespread internal water damage – estimated to cost more than $300,000 to fix. Another Wellington couple, Katrina Fowler and Scott Woodhead, have also claimed over their 2000 duplex.

Basically Thorn reckons everyone who has had a house built with a concrete slab in the last 5 years should register as they may have a claim.

In September she said

“After the Christchurch earthquakes new standards on ductility were introduced so buildings don’t fall over. Some manufacturers didn’t comply and bought steel from China and Thailand that was not tested, so now the million dollar question is how much is that going to cost?” source: NBR

Insurance claims compromised, risk to life

“This is a problem because, in the advent of a natural disaster, the use of non-complying steel mesh could compromise insurance claims, pose a risk to life and cause widespread financial losses. Its existence could also affect the future and present market value of the buildings concerned.”

She said the issue emerged in March this year when it was revealed that hundreds of thousands of non-complying steel mesh sheets had been supplied to builders throughout New Zealand from mid-2012.

The Ministry then said it was investigating companies that had supplied steel reinforcing mesh to builders and construction firms that did not meet the grade 500E requirement, which relates to the ductility or flexibility of the steel concerned. source

If you’re likely to be affected and are interested in applying for compensation start here SteelClassAction.co.nz faqs

We say if you’ve buying a house in New Zealand, don’t buy one built since 2012 with any amount of steel reinforcement of the concrete slab.If you’ve got one you may like to consider selling now before the crash comes.

If you value your safety don’t work or stay in a multi-storey building built since then if it’s in an area known to experience earthquakes.

You may also be interested in

Chinese steel fails strength test (1 June 2016, Stuff)

Roading bosses are defending their quality control standards after 1600 tonnes of Chinese steel destined for a major Waikato project was found to be below standard.

The substandard steel piles were to be used on four bridges along the Huntly section of the Waikato Expressway.

The 15.2 kilometre-long section is being built by a Fulton Hogan HEB joint venture who purchased the steel from New Zealand company Steel & Tube Holdings…The batch of below-strength steel forced a design rethink for two bridges along the section.

“The solution we have implemented includes a redesign of the steel tube piles, which are now being used as reinforced concrete piles for two of the bridges due to time constraints,” Dickens said in a statement. The roading contractor has since asked Steel & Tube to find replacement steel piles for two other bridges… read on

 

Two insurers selected for NZ awards – for the wrong reasons (Insurance business online, 7 Dec)

Australian insurer IAG and South African insurer Youi have both been nominated for their negative impact on people, according to the awards’ organisers, the Campaign Against Foreign Control of Aotearoa (CAFCA).

IAG is actually the current title-holder after taking first place in the 2015 awards with judges citing its ‘callous’ Canterbury earthquake dealings which had caused ‘phenomenal and abhorrent’ suffering to the people of Christchurch.

The judges are a group of academics, trade unionists, business people and anti-foreign ownership activists who base their decision according to those who have the most negative impact in categories including people, environment, political interference and economic dominance… source

Claims and rebuttals as steel class action heads towards the furnace (NBR, 23 September 2016)

This article was published before the Kakoura earthquake, and before the Commerce Commission announced its decision to prosecute three companies, including Steel & Tube

The company says it is confident its steel mesh is compliant and therefore there can be no case, even though it has told shareholders in a letter it “inadvertently” used the testing house logo of a well-known engineering company (Holmes Solutions, of Holmes Consulting) which didn’t carry out any testing”… read on

Opportunist builders, dodgy steel and shonky standards create new building crisis ‘worse than leaky homes‘ (published by Stuff.co.nz, 2 weeks before the Kaikoura quake) :

Take a building inspector through the soon-to-be city of Flat Bush in Auckland’s south-east, and watch his hackles rise.

He shakes his head and laments the state of building in New Zealand today. He picks his way through Double Happiness cigarette boxes, jagged bricks sticking out of mud, broken bottles, twisted steel mesh to tut tut at wonky flashings. He – Gerard Ball from Babbage Consultants – notices walls are out of plumb and that polystyrene, plastic bags, and chip packets have drifted into nearby streams.

“Every single building on this street raises red flags for me,” Ball says. “If builders don’t give a damn about what’s visible to the eye, how can they be trusted to properly do things they know can be covered up?”…

…”It’s a self-destructive industry,” says Ball. “Why bother getting trained if you can leap into a job straight away? Why bother impressing the boss with your work ethic when you’re not dependant (sic) on him for your next job? Why bother making a decent job of things when stretched councils don’t have time to inspect thoroughly anyway?”….

A 10-week investigation has identified three key problems:
– Unqualified tradesmen who just can’t count: they under-quote to get the job, measure badly, and cut corners;
– Cheap, substandard steel mesh for reinforcing concrete slabs, much imported from China or Malaysia;
– Materials being bought on overseas websites like Ali Baba for a fraction of their price at New Zealand hardware wholesalers and retailers – and without any of the quality certification… read on