Drywall Support Program: Will it Be Enough?

May 31, 2017: That was the last day Western/Northern Canadian drywall contractors and builders could apply for their shares of approximately $12 million in the Drywall Support Program (DSP).

Announced by the federal government on May 1, the DSP was meant to offset the 30-to-55 per cent drywall price hikes suffered by the Western/Northern Canadian construction industry. They occurred after September 6, 2016, when hefty anti-dumping tariffs (as high as 276 per cent) were slapped on imported US drywall.

“The Government of Canada is committed to ensuring the competitiveness of our businesses and to supporting those impacted by natural disasters,” said Navdeep Bains, the federal Minister of Innovation, Science and Economic Development and Minister responsible for Western Economic Diversification Canada and the Canadian Northern Economic Development Agency. “The Drywall Support Program will help SMEs and middle-class families access the resources they need to create jobs and maintain a good standard of living.”

DSP funds are supposed to help contractors/builders working under fixed rate contracts agreed to before the tariffs were imposed; including those helping to rebuild the fire-ravaged community Regional Municipality of Wood Buffalo (RMWB), Alberta. Ironically, the $12 million in DSP aid comes from the anti-dumping tariffs that drove up Canadian drywall prices in the first place.

So is the $12 million DSP sufficient to rescue those drywall contractors and builders caught in fixed rate contracts? Although he encouraged BCWCA members to apply for DSP compensation, BCWCA executive director Jeff Triggs has his doubts.

“Only time will tell how effective the program is,” said Triggs. “As citizens of Fort McMurray rebuild their homes, they are being protected from the increase in the price of drywall from the tariffs, as are contractors with fixed rate contracts that bought post-tariff domestically manufactured drywall at an increased price. This is in addition to the contractors who bought the imported drywall with the tariff on it. But overall it appears that those that paid the duty will not be made whole.”

Neal Pollock, owner of Calgary’s TDL Drywall Inc. and a member of the Western Canada Alliance of Wall and Ceiling Contractors, agreed that $12 million may not be sufficient to cancel out the drywall price hikes caused by the tariffs. Pollock said the Alliance’s members, “had hoped for $20 million at least to offset the impact of the anti-dumping tariffs. Some in the drywall industry think $25 million is actually needed to achieve the DSP’s mission.”

Sufficient or not, the DSP’s $12 million ceiling isn’t the only restriction affecting applicants. To be eligible for DSP money, applicants must own a drywall contracting or building business with less than 500 employees, and be based in British Columbia, Alberta, Saskatchewan, Manitoba, Yukon, or the Northwest Territories.

They had to provide proof of fixed rate contracts entered into prior to September 6, 2016; proof of drywall purchased between September 6, 2016 and February 24, 2017; and, “Disclose the amount of the loss that was passed onto others,” said the May 1, 2017 DSP news release.

RMWB homeowners who applied for DSP money must have owned a home “severely damaged or destroyed by the May 2016 wildfires,” said the DSP news release. They must also “Have intentions to rebuild a home within the Regional Municipality of Wood Buffalo.” (The DSP news release does not clarify how such “intentions” are to be proven.)

Whether or not the DSP’s $12 million is enough, the money will start to go out during the summer, said Triggs. But one thing is certain: the anti-dumping tariffs that caused a 30-to-55 per cent jump in drywall prices have hit Western/ Northern Canadian drywall contractors and builders hard.

“The drywall tariffs have caused very serious problems for some of our members,” said Triggs. “The extent of the problem varies depending on a drywaller’s job location, the number of fixed rate contracts in place, and the willingness of general contractors and developers to work with the drywall contractors caught in the middle to accept some or all of the price increases.”

“My fear is that the anti-dumping tariffs will to drive some drywalling firms out of business,” said Pollock. “Those that are locked into fixed price contracts set before the tariffs occurred are in real danger, because they may be stuck with absorbing this substantial loss, even after receiving DSP compensation.”

Pollock added that the Alliance is grateful to the Canadian International Trade Tribunal (CITT), which ruled in favour of relief for contractors at anti-
dumping hearings in December, and for the Ministry of Finance expediting the review process.

“Unfortunately, Minister Mourneau has made it very difficult for the contractor by not approving the remission period that CITT noted in its submittals,” said Pollack. “By not implementing the remission period, Finance has placed the livelihood of many contractors in Western Canada in jeopardy of financial failure.

“I understand the wheels are already in motion on filing a similar notice in Eastern Canada on the dumping of gypsum board,” he added. “Further bad news for the industry as a whole as we already pay more for gypsum board than anywhere else in North America.”