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4. Material Injury


Non-Confidential Final Report

Tariff and Trade Rules Group
[ Last Updated 26 September 2006 ]


Within this section …

257. The basis for considering material injury is set out in section 8 of the Act:

8 (1) In determining for the purposes of this Act whether or not any material injury to an industry has been or is being caused or is threatened…by means of the dumping…of goods imported or intended to be imported into New Zealand from another country, the [Chief Executive] shall examine-

(a) The volume of imports of the dumped or subsidised goods; and

(b) The effect of the dumped or subsidised goods on prices in New Zealand for like goods; and

(c) The consequent impact of the dumped or subsidised goods on the relevant New Zealand industry.

8 (2) Without limiting the generality of subsection (1) of this section, and without limiting the matters that the [Chief Executive] may consider the [Chief Executive] shall have regard to the following matters:

(a) The extent to which there has been or is likely to be a significant increase in the volume of dumped… goods either in absolute terms or relative to production or consumption in New Zealand;

(b) The extent to which the prices of dumped… goods represent significant price undercutting in relation to prices in New Zealand (at the relevant level of trade) for like goods of New Zealand producers;

(c) The extent to which the effect of the dumped…goods is or is likely significantly to depress prices for like goods of New Zealand producers or significantly to prevent price increases for those goods that otherwise would have been likely to have occurred;

(d) The economic impact of the dumped…goods on the industry, including-

(i) Actual and potential decline in output, sales, market share, profits, productivity, return on investments, and utilisation of production capacity; and

(ii) Factors affecting domestic prices; and

(iii) The magnitude of the margin of dumping; and

(iv) Actual and potential effects on cash flow, inventories, employment, wages, growth, ability to raise capital, and investments;

(e) Factors other than the dumping…goods that have injured, or are injuring the industry, including-

(i) The volumes and prices of goods that are not sold at dumped prices…;

(ii) Contraction in demand or changes in the patterns of consumption; and

(iii) Restrictive trade practices of, and competition between overseas and New Zealand producers; and

(iv) Developments in technology; and

(v) The export performance and productivity of the New Zealand producers:

(f) The nature and extent of importations of dumped…goods by the New Zealand producers of like goods, including the value, quantity, frequency, and purpose of any such importations.

4.1 Winstone's Application

258. Winstone is not claiming that it has been injured by any dumped imports of plasterboard from Thailand at present and stated that its application for review is based on the likelihood of dumping and injury recurring.

259. As previously noted, following an application for judicial review by Winstone the Ministry entered into a Settlement Agreement with Winstone in August 1997. While not legally required to do so, the Ministry has regard to the principles set out in the Settlement Agreement when considering injury but does not consider the principles place any additional onus on the Ministry above the requirements of the Act.

4.2 Import Volumes

260. Table 4.1 shows import volumes for standard plasterboard for years ending 30 June for the period 2001 to 2005. All figures are in square metres.

261. The import volumes of standard plasterboard from Thailand were taken from the importer's invoices over the period of review and compared with the Customs import data over the same period to calculate the proportion of total plasterboard imports that standard plasterboard represents. This calculated proportion has been applied to total plasterboard import volumes from all sources for each year in Table 4.1 to estimate the import volumes of standard plasterboard.

262. The volume of dumped imports over the period of review was compared with the volume of standard plasterboard imports from Thailand over the same period to calculate the proportion that dumped imports represent of standard plasterboard imports. This proportion has been applied to the volume of standard plasterboard imports from Thailand for each of the years in Table 4.1 below to estimate the volume of dumped imports.

Table 4.1: Import Volumes (square metres)

  2001 2002 2003 2004 2005
Dumped Goods xxxx xxxx xxxx xxxx xxxx
Non-Dumped xxxx xxxx xxxx xxxx xxxx
Total Thailand xxxx xxxx xxxx xxxx xxxx
Other Sources xxxx xxxx xxxx xxxx xxxx
Total xxxx xxxx xxxx xxxx xxxx
Winstone's production xxxx xxxx xxxx xxxx xxxx
Total New Zealand Market xxxx xxxx xxxx xxxx xxxx
Dumped Goods as % of:
Winstone's production xxxx% xxxx% xxxx% xxxx% xxxx%
New Zealand Market xxxx% xxxx% xxxx% xxxx% xxxx%

263. Table 4.1 shows that the volume of dumped imports from Thailand has increased in absolute terms by xxxx percent over the period from 2001 to 2005. Relative to New Zealand production and consumption dumped imports have fluctuated very slightly over the period, but in 2005 were [text deleted due to confidentiality] than in 2001 in relation to Winstone's production and [text deleted due to confidentiality] in relation to the total market. The level of dumped imports is insignificant in relation to both New Zealand production by Winstone and consumption of the market as a whole.

4.3 Price Effects

Price Depression

264. Price depression occurs when prices are lower than those in a previous period.

265. Table 4.2illustrates Winstone's revenue per square metre for standard plasterboard has [text deleted due to confidentiality] from NZDxxxx to NZDxxxx over the period from 2001 to 2005, that is, by xxxx percent.

Table 4.2: Price Depression (NZD)

  2001 2002 2003 2004 2005
Revenue per square metre xxxx xxxx xxxx xxxx xxxx
Change in revenue per square metre   xxxx% xxxx% xxxx% xxxx%

266. In response to the Interim Report Winstone stated while there had not been any "significant overall price depression" during the period of review, it has incurred "several instances of price depression" with both BML and Elephant on standard plasterboard.

267. The Investigating Team notes that the average revenue per square metre has [text deleted due to confidentiality] over the five year period by [text deleted due to confidentiality] percent and while there may be individual instances of price depression these have either not been significant, or sustained, enough to have affected the average price and for price depression to have occurred.

268. The Investigating Team concludes that there is no evidence of price depression based on Winstone's net average prices.

Price Suppression

269. Price suppression occurs when cost increases have not been recovered in prices. Cost increases not recovered in prices will result in declines in gross profit and EBIT. When offsetting cost savings have been made, the lack of any price increase will not normally be regarded as price suppression.

270. Table 4.3 illustrates Winstone's EBIT as a percentage of net revenue per square metre, which has [text deleted due to confidentiality] from xxxx to xxxx percent over the period 2001 to 2005.

Table 4.3: Price Suppression (NZD)

  2001 2002 2003 2004 2005
Sales Revenue xxxx xxxx xxxx xxxx xxxx
Cost of Goods Sold xxxx xxxx xxxx xxxx xxxx
Selling & Administration Costs xxxx xxxx xxxx xxxx xxxx
EBIT xxxx xxxx xxxx xxxx xxxx
EBIT as % of Sales Revenue xxxx% xxxx% xxxx% xxxx% xxxx%

271. In response to the Interim Report Winstone noted it considers "that price suppression is not limited to when cost increases have occurred. Dumping may suppress prices in other circumstances too, and it is not necessarily appropriate to offset cost savings when determining the key question - namely whether Winstone's price would be higher in the absence of the dumping."

272. The Investigating Team considers, given Winstone has not claimed that it has been materially injured by dumped imports due to the current anti-dumping duties being (largely) effective, prices in the New Zealand market in the absence of dumped goods would be very close, if not identical, to the current prices in the market. In addition the lowest average plasterboard import prices in the New Zealand market appear to be those from China at NZDxxxx per square metre, being xxxx percent below the lowest import price of Elephant. Even though the quantities of imports from China are not large, these imports would have put downward pressure on the prices of plasterboard in the New Zealand domestic market and therefore the impact of low cost imports must be assessed when considering what is the hypothetical price that Winstone could achieve in the absence of any dumped goods.

273. The Investigating Team concludes that there is no evidence of price suppression.

Price Undercutting

Level of Trade

274. When assessing the existence of any price undercutting the Ministry compares prices at the point at which the imported and domestic goods first compete on the New Zealand market. This often results in the comparison of prices at ex-factory and ex-importer's store, although the Ministry assesses if this is the appropriate level of trade in each case. Comparing prices at this level ensures that the impact of dumping is not distorted by distribution costs but includes relevant selling and administration costs, and profit margin which are also included in the New Zealand manufacturer's ex-factory price.

275. The Ministry normally considers the first point of competition to be the point at which the potential buyer in the New Zealand market is faced with the economic choice of purchasing either the imported goods or the goods produced in New Zealand.

276. The correct level of trade at which to compare prices for the purpose of assessing the existence, or lack thereof, of price undercutting (and the corresponding use of this in setting duty rates at an amount less than the full margin of dumping) has previously been a highly contentious issue and is specifically referred to in the Settlement Agreement.

277. Winstone stated that it felt it had reached a common understanding with the Ministry on the approach to be taken in determining the relevant level of trade at which to compare its prices with those of the importers for the purpose of assessing price undercutting. When asked by the Investigating Team what it thought this correct level of trade was, Winstone did not identify any particular level of trade but referred to three matters it thought should be considered: whether break bulk sales are offered, the risk associated with stock holding, and the type of customer each importer sells to.

278. In previous cases the Ministry has established, and it has been accepted by all parties, that for the New Zealand industry, its selling price to its distributors is clearly the point of entry at which its product first enters the New Zealand market. This price is taken at the ex-factory level. The Investigating Team considers that this remains the first point at which Winstone's plasterboard enters the New Zealand market and faces competition from imported product.

279. In the 2002 reassessment, the relevant level of trade for Elephant was established as being ex-store and for BML (then CTS Direct Ltd) as ex-wharf.

280. Winstone stated in response to the Interim Report that it reserves its position on the correct level of trade for comparing its prices with those of Elephant. A similar statement was not made in relation to BML.

281. The Investigating Team notes that while all interested parties were aware that a reassessment was to follow this review, the extent to which parties can delay taking a position on matters, is limited to those matters that are to be considered in the reassessment. That is, what is the correct level of duty (to remove the likelihood of recurrence of material injury caused by dumping)? The question of the correct level at which to compare prices, is essential in assessing any current material injury or the likelihood of the recurrence of any such material injury and therefore properly a matter for a review rather than a reassessment.

282. Consequently, unless substantial new evidence was presented in a reassessment that was not available during a review, or circumstances had changed significantly, the issue of the correct level of trade at which to make price comparisons, for the purpose of assessing price undercutting, is not a matter for debate in a reassessment, including when considering whether a lesser duty should apply.

Elephant

283. In the 2002 reassessment the Ministry found that Elephant was selling to distributors/resellers and it had the sole rights to manage the import of SGI/SCT plasterboard into New Zealand. The Investigating Team therefore concluded the first potential purchaser of SGI/SCT plasterboard in the New Zealand market is a distributor/reseller which cannot purchase directly from SGI/SCT and is therefore faced with the economic choice of purchasing ex-store from Elephant or ex-factory from Winstone. The relevant level of trade for Elephant was at the ex-store level.

284. In the current review Elephant stated that it purchases directly from SGI/SCT (it still has the sole rights to import SGI/SCT plasterboard into New Zealand), [text deleted due to confidentiality] of its sales in New Zealand are on an ex-store basis to distributors, with no indent or retail sales. Elephant also stated that it sells a [text deleted due to confidentiality] board directly [text deleted due to confidentiality] but that it [text deleted due to confidentiality] through its [text deleted due to confidentiality] and does not [text deleted due to confidentiality] in the[text deleted due to confidentiality].

285. While [text deleted due to confidentiality] of Elephant's customers have a [text deleted due to confidentiality] it has [text deleted due to confidentiality] customer [text deleted due to confidentiality] and does not [text deleted due to confidentiality]. The Investigating Team notes that parallels can be drawn to this and a [text deleted due to confidentiality] sale, which all market participants are now offering and this should not automatically be assumed to be an [text deleted due to confidentiality] sale. The Investigating Team further notes that Elephant has sought to [text deleted due to confidentiality] sales [text deleted due to confidentiality] Winstone, something that [text deleted due to confidentiality] and [text deleted due to confidentiality] acknowledge.

286. At the distributor level to which both Winstone and Elephant make all of their substantive sales, the economic choice is to purchase either ex-factory from Winstone or ex-store from Elephant. The Investigating Team therefore concludes that the relevant level of trade for Elephant remains at the ex-store level.

NIP and NIFOB

287. Elephant made a lengthy comment in response to the Interim Report on its request for the non-injurious price (NIP) and non-injurious free-on-board price (NIFOB) that currently operate to be made available to it. Elephant argued that it does not want, or aim to, harm Winstone but cannot guarantee not doing so if it does not know what price is non-injurious to Winstone.

288. The Ministry reconsidered the release of the NIP and NIFOB to Elephant when Elephant requested such a release towards the beginning of the present review. Both amounts are confidential because they are based on information that was provided by and is confidential to Winstone. Elephant's submission incorrectly stated that the Ministry has refused to release the NIP because Winstone states it is commercially sensitive (and infers that this classification is without basis).

289. The submission also made arguments around the interpretation of "submitted to" within section 10(7) of the Act. Elephant argued that any amount which the Ministry calculates based on raw data presented to it by any interested parties cannot be deemed to have been "submitted to" it. Following this argument would mean that the export price calculated for exports by SCT to Elephant would be an amount that was calculated from information "submitted to" the Ministry and therefore not being an amount that has been "submitted to" the Ministry, should be released as non-confidential. The result, in the present example, would be that Elephant's purchase price would be released as non-confidential.

290. To interpret "submitted to" in section 10(7) as relating only directly to the information submitted to the Ministry and not extending to any calculations or analysis of that information would defeat the intent of the provision and result in an unjust application of the law. This result would be unfair to all parties involved and would likely leave the Ministry with very limited information upon which to base any conclusions and recommendations. In the absence of submissions from interested parties the Ministry would be left with only the best information available upon which to base it decisions, making the ultimate result more likely to be less accurate than one based on information provided by the relevant interested parties.

291. Elephant stated that releasing the NIP to it would not have a "significant adverse effect" on Winstone, because the release of the NIP would ensure that Elephant's sales prices did not cause any injury to Winstone. The Ministry believes that the release of the NIP, which was based on [text deleted due to confidentiality] over a certain period, would be of significant competitive advantage to Elephant and would also have to be released to other competitors in the market. This would mean the [text deleted due to confidentiality] participant would be freely available in the market, including to BML and also customers of both Winstone and Elephant. A result of this would be an indication of [text deleted due to confidentiality] of plasterboard, which has the potential to [text deleted due to confidentiality] arrangements that currently operate in the market. These possible effects following the release of the NIP are precisely the reasons that the Investigating Team has agreed not to release both Elephant's and Winstone's list prices during the current review and [text deleted due to confidentiality], albeit over a defined historic period, is even more sensitive than list prices. The Investigating Team notes that the provision of this information to Elephant would mean that it would also be released to parties other than Elephant and would have effects beyond Elephant pricing above the NIP.

292. The Investigating Team is satisfied that the information upon which the NIP is based is unquestionably commercially sensitive to Winstone and the tests for withholding commercially sensitive information within section 10(7) of the Act and also section 9(2)(b)(ii) of the Official Information Act 1982 are met. Elephant's submission also pointed to section 9(2)(ba)(i) of the Official Information Act 1982 as the fall back position if the test for confidentiality within the Act was not met, stating that release would be obliged under that provision. As discussed above, the Investigating Team is satisfied that the test for withholding the NIP is met under section 10(7) of the Act and is also confident that section 9(2)(b)(ii) of the Official Information Act 1982 is met, as may be 9(2)(ba)(i). Resultantly the Investigating Ministry is unable to release the NIP to Elephant.

293. Elephant made similar claims in relation to the release of the NIFOB and even stated in its submission that "the legal basis for disclosing the NIFOB is identical to that for disclosing the NIP". The Investigating Team agrees, as the NIFOB is based upon the NIP, and therefore the NIFOB also cannot be released.

294. Elephant also has requested that the method by which any new NIP is calculated be disclosed. The Investigating Team will seek to do so in the reassessment that is recommended to be initiated by this document.

BML

295. In the 2002 reassessment only a very limited amount of information was provided by BML's predecessor entities; either CTS Direct Ltd or several other related companies that were also involved in the import, distribution and sale of plasterboard.

296. The Investigating Team considered that it should treat these various related companies as effectively one entity that was importing and on-selling plasterboard that had the economic choice of purchasing either ex-factory from Winstone or from importing from BPB. The Investigating Team consequently concluded the relevant level of trade was ex-wharf.

297. In a submission for the current review BML identified the following ways in which it distributes and sells plasterboard in New Zealand (but did not provide any information on the proportion of its sales that are sold by each method) and how each arrangement competes with Winstone:

  • BML as the importer sells ex-wharf to its stockists. BML said it is not sure what the equivalent point of competition would be for Winstone but presumes it would be ex-factory in 20 tonne lots, if Winstone sell in that manner. BML noted that in Auckland it acts as its own stockist.
  • Each of its stockists (including BML in Auckland) sell ex-store to distributors in full pallet lots. BML said this would be the equivalent of Winstone selling to its distributors ex-warehouse.
  • Each of its stockists (including BML in Auckland) sell house lots ordered by distributors by delivering either to the distributor's store or direct to site, which Winstone also does.
  • Each of the stockists sell direct to major projects or developers where the volumes warrant it and negotiate special prices, and may deliver the product themselves. BML said Winstone handles such projects by negotiating special prices and then delivering through one of its distributors.

298. The Investigating Team is aware that BML operates primarily in the Auckland area, which is the largest part of the New Zealand plasterboard market. BML acts as its own stockist in Auckland and therefore it imports and on-sells primarily to end-users.

299. BML stated that it was the exclusive distributor in New Zealand for BPB plasterboard, which BPB confirmed, although BML stated that there was no written agreement covering this sole distributor relationship. In response to the Interim Report BPB stated that a written sole distributor agreement does exist between the two parties, which was put in place in xxxx prior to [text deleted due to confidentiality] the current review. BPB stated that the agreement is [text deleted due to confidentiality] BPB [text deleted due to confidentiality] companies.

300. Statements made by [text deleted due to confidentiality] during the review indicated that the majority of BML's sales are not done via a distributor and it sells "directly to the trade" and that these sales may be done on an indent basis.

301. The Investigating Team considers that the relevant level of trade for BML is ex-wharf, as the substantive portion of its sales appear to be direct to end-users that are faced with the choice of purchasing ex-store from a Winstone distributor or from BML, either ex-wharf or ex-store.

Non-Injurious Price

302. Associated with price undercutting is the establishment of a non-injurious price (NIP) being a price at which dumped imports would not be a cause of material injury to the New Zealand industry. A NIP is usually the New Zealand industry unsuppressed selling price and can also form the basis of a remedy at less than the full margin of dumping.

303. Winstone has commented throughout the course of this review that it has not faced price competition from the Thai imports of standard plasterboard. Therefore Winstone's NIP is its actual average selling price net of discounts and rebates.

Price Undercutting

304. Neither Elephant nor BML provided information on their average net selling prices into the New Zealand market, although Elephant did provide the Investigating Team with its price lists. The level of evidence that the Investigating Team has to assess price undercutting is therefore limited. [text deleted due to confidentiality] Elephant's prices are generally higher than its prices and [text deleted due to confidentiality] evidence of price undercutting given by Winstone during the review was in relation to [text deleted due to confidentiality]. While there may be some isolated incidents of price undercutting, through the use of [text deleted due to confidentiality], as previously noted, Winstone has stated it has not faced price competition from the Thai standard plasterboard.

305. Following the Interim Report Winstone clarified its position in relation to price effects, particularly price undercutting. Winstone stated that during the past few years with effective dumping remedies in place, it "had to drop its price on 10 mm standard board on a job by job basis to enable a merchant to secure a job against a competitive quote from BML or Elephant."

306. In support of this Winstone provided two invoices, one from, [text deleted due to confidentiality] 2005 and another from [text deleted due to confidentiality] 2006, both being outside of the period of review. The invoices displayed the list price as well as the net on-invoice selling price. Winstone stated that the invoices related to a distributor to which it had to discount its normal selling price to secure the sale, in response to competition from a [text deleted due to confidentiality] quote. No similar information was provided for competition from [text deleted due to confidentiality].

307. The invoices showed discounts of xxxx and xxxx percent. Winstone acknowledged that "this discounting is part of the normal competitive process and it does result in price undercutting…" although also stated "…it is accepted that if the product purchased by [text deleted due to confidentiality] has not been dumped, this injury has not been caused by dumping." Winstone stated that "with the current remedies in place such instances with 10 mm standard board have not been material to Winstone's profitability."

308. The Investigating Team notes that such isolated discounts would put a downward pressure on the average price that Winstone is able to achieve in the market. However, the prices shown on the invoices were net of rebates and discounts and not expressed as an ultimate net price and therefore it is very difficult to assess the real level of the discounts. In addition it is acknowledged by Winstone that these discounts were offered in response to competition from un-dumped goods.

309. On the basis of the information available to it, with no average net selling prices for BML and Elephant, the Investigating Team concludes there is no evidence of price undercutting of Winstone's standard plasterboard by the subject goods.

4.4 Economic Impact

Output and Sales

310. Movements in sales revenue reflect changes in volumes and prices of goods sold. Dumped imports can affect both of these factors through increased supply of goods to the market and through price competition.

311. Winstone has a manufacture to order policy, with [text deleted due to confidentiality] stock holding, meaning output and sales are fairly evenly matched.

Table 4.4: Winstone's Sales Volume and Revenue (NZD)

  2001 2002 2003 2004 2005
Sales Volume (square metres) xxxx xxxx xxxx xxxx xxxx
% Change   xxxx% xxxx% xxxx% xxxx%
Sales revenue xxxx xxxx xxxx xxxx xxxx
% Change   xxxx% xxxx% xxxx% xxxx%

312. Table 4.4 shows an increase of xxxx percent in sales volume over the period 2001 to 2005 and an increase of xxxx percent for sales revenue over the same period.

313. There is no evidence of injury in sales volume and revenue, although the xxxx figures do show a [text deleted due to confidentiality] from the xxxx levels.

Market Share

314. If a New Zealand industry choses not to compete on price with dumped imports it will often see a decrease in its market share. Decreases in market share can also appear even when a New Zealand industry competes on price, especially if it has not previously faced any substantive level of competition.

315. Changes in market share must take account of the net change in the market as a whole, in particular there is no "entitlement" to a particular market share by any market participant, including Winstone as local manufacturer. Therefore, a decline in the share of the market held by the domestic industry in a situation where the market as a whole is growing, will not necessarily indicate that injury is being caused to the domestic industry, particularly if the domestic industry's sales are also growing. Table 4.5 shows the movements in market share, in square metres, over the last five years.

316. In response to the above comments in the Interim Report, Winstone stated "the question in each case is whether the change in market share is affected by the dumping, and that a decline in market share even though the market is growing may or may not be caused by the dumping in a particular case." The Investigating Team considers that in the case of a growing market and declining market share by a domestic industry, regard should also be had to the absolute sales volumes, in addition to the relationship between any participant's decrease in market share and another's increase in market share.

Table 4.5: Market Share (Square Metres)

  2001 2002 2003 2004 2005
Winstone xxxx xxxx xxxx xxxx xxxx
Dumped Imports (Thai) xxxx xxxx xxxx xxxx xxxx
Non-dumped imports (Thai) xxxx xxxx xxxx xxxx xxxx
Other Imports xxxx xxxx xxxx xxxx xxxx
Total Market xxxx xxxx xxxx xxxx xxxx
% Market Share:
Winstone xxxx% xxxx% xxxx% xxxx% xxxx%
Dumped Imports xxxx% xxxx% xxxx% xxxx% xxxx%
Non-Dumped Imports xxxx% xxxx% xxxx% xxxx% xxxx%

317. The New Zealand market has grown by xxxx percent from 2001 to 2005. The scale of the market growth has meant the sales volumes for imports of plasterboard from all sources and that manufactured by Winstone have shown increases in the period from 2001 to 2005, although the total market [text deleted due to confidentiality] by xxxx percent from 2004 to 2005.

318. Table 4.5 shows since 2001 Winstone's share of the market has [text deleted due to confidentiality] by xxxx percent, the dumped imports market share is [text deleted due to confidentiality] 2001 at xxxx percent although it has [text deleted due to confidentiality] and the percentage of the market share held by un-dumped imports, both those from Thailand and from other sources, has increased by xxxx percent. Therefore the increase in the market share held by non-dumped imports has been at the [text deleted due to confidentiality] of [text deleted due to confidentiality].

319. There is evidence that Winstone has [text deleted due to confidentiality] percent market share from xxxx to xxxx However, of the xxxx percent [text deleted due to confidentiality] experienced by Winstone only xxxx percent of that was due to [text deleted due to confidentiality] in the market share held by dumped imports with the majority of [text deleted due to confidentiality] being due to [text deleted due to confidentiality] in un-dumped imports, including those from Thailand.

320. There is no evidence that the small volume of dumped imports has materially impacted on Winstone's share of the New Zealand market.

Profits

321. Changes in EBIT reflect changes in prices, sales volumes or costs. Dumped imports can impact on any or all of these. Normally, the extent of any decline in profit will be measured against the level achieved in the period immediately preceding the commencement of dumping. However, given the period of time that the current anti-dumping duties have been in place any comparison to figures from the late 1980's would not be considered a good comparison point, due to both the time that has elapsed since then and the extent to which the economy has changed in that time.

322. A better indicator for the purpose of this review would be to assess the profit levels following a reassessed rate of duty, as the period following a reassessment would be the one in which the duties should be contemporary enough that no injury is being suffered by the New Zealand industry. One factor to take into account when assessing this is the extent to which any profit levels had to recover from a level where the duties were no longer at a sufficient level to remove any injurious effects to Winstone. Given the complexity of factors that need to be taken into account when analysing what the effects on profits have been, it can often be difficult to assess the drivers of any impacts on profits. While the same holds true for all of the other factors that need to be considered in the assessment of injury, EBIT, being a higher level figure can make the effects more difficult to interpret.

Table 4.6: Winstone's EBIT (NZD)

  2001 2002 2003 2004 2005
Total EBIT xxxx xxxx xxxx xxxx xxxx
Sales Volume xxxx xxxx xxxx xxxx xxxx
% Change EBIT   xxxx% xxxx% xxxx% xxxx%
EBIT per square metre xxxx xxxx xxxx xxxx xxxx
% Change EBIT per square metre   xxxx% xxxx% xxxx% xxxx%

323. Table 4.6shows that Winstone's EBIT has [text deleted due to confidentiality] by NZDxxxx million over the period 2001 to 2005, that is, by xxxx percent. EBIT per unit has [text deleted due to confidentiality] by xxxx percent over the same period.

324. There is no evidence that Winstone's profitability has been affected by dumped imports.

Productivity

325. Productivity is the relationship between the output of goods and the inputs of resources used to produce them. Changes in productivity are affected by output levels and by the level of capacity utilisation. Winstone stated that it considers its productivity is primarily affected by two drivers, firstly the overall demand in the market and secondly its manufacturing process.

326. Currently Winstone budgets on plant uptime of xxxx percent, with downtime including [text deleted due to confidentiality]. Winstone estimated of the xxxx percent downtime, xxxx percent is [text deleted due to confidentiality], xxxx percent [text deleted due to confidentiality] and the remaining xxxx percent is [text deleted due to confidentiality].

327. Winstone stated that the Auckland plant is currently achieving xxxx percent [text deleted due to confidentiality] and it estimated [text deleted due to confidentiality] 2005 was between xxxx to [text deleted due to confidentiality].

328. The production schedule is designed to [text deleted due to confidentiality]. Winstone stated that the [text deleted due to confidentiality] ranges from xxxx minutes for the [text deleted due to confidentiality] to [text deleted due to confidentiality] 10 mm standard plasterboard.

329. There is no evidence that Winstone's productivity has been negatively impacted by the existence of dumped goods in the market place.

Return on Investments

330. A decline in return on investments will result from a decline in returns with or without a relative increase in the investment factor being used. Movements in the return on investments affect the ability of the industry to retain and attract investment.

331. Winstone provided its EBIT as a measure of the return on its shareholders funds and also provided its average shareholder funds for the total company. The figures provided for shareholders funds relate to Winstone's total operations, that is, the amount includes shareholders funds employed in the production of performance boards and the small remainder of other plaster and plasterboard systems products that Winstone produces. Therefore, any comparison between the EBIT amounts, which is only that relating to standard plasterboard, against the shareholders funds invested in the manufacture of a wider range of products should be treated as indicative only.

Table 4.7: Return on Shareholders Funds (NZD)

  2001 2002 2003 2004 2005
Average shareholders funds (total company) xxxx xxxx xxxx xxxx xxxx
EBIT xxxx xxxx xxxx xxxx xxxx
% Return xxxx% xxxx% xxxx% xxxx% xxxx%

332. There has been [text deleted due to confidentiality] over the period 2001 to 2005. Due to the differing bases for the EBIT and shareholders funds amounts the Investigating Team does not consider that there is any evidence that the returns on standard plasterboard have been negatively impacted by the existence of dumped goods.

Utilisation of Production Capacity

333. The utilisation of production capacity reflects changes in the level of production, although in some cases it will arise from an increase or decrease in production capacity. In either case, a decline in the utilisation of production capacity will lead to an increase in the unit cost of production, and a consequent loss of profit.

334. Winstone stated that both its plants operate [text deleted due to confidentiality] except for [text deleted due to confidentiality] for [text deleted due to confidentiality] each [text deleted due to confidentiality].

335. Auckland is currently running xxxx shifts, xxxx hours a day, xxxx days per week, which includes xxxx to [text deleted due to confidentiality] week. The Christchurch plant is running on xxxx shifts, xxxx hours per day, xxxx days per week.

336. Using the current shift structure Winstone believes that its capacity is around xxxx square metres per annum, with xxxx percent of this, or xxxx square metres being available for the manufacture of standard board with the remaining xxxx percent being used for the manufacture of performance plasterboards.

337. Over the 2004/2005 financial year Winstone produced xxxx square metres of plasterboard for sale in the domestic market and a further xxxx square metres for export. This was achieved on the above shift structure and represents a total capacity utilisation rate of [text deleted due to confidentiality] percent for the domestic market.

338. Winstone stated that it does have [text deleted due to confidentiality] its Christchurch plant [text deleted due to confidentiality] square metres per annum, [text deleted due to confidentiality] the[text deleted due to confidentiality] it operates. There is also [text deleted due to confidentiality] but as it is not [text deleted due to confidentiality] the [text deleted due to confidentiality] in [text deleted due to confidentiality] capacity utilisation. Winstone stated that there would [text deleted due to confidentiality] a[text deleted due to confidentiality] in the New Zealand market, at least [text deleted due to confidentiality], for increased [text deleted due to confidentiality] that it believes it [text deleted due to confidentiality] capacity [text deleted due to confidentiality].

339. Winstone stated that it had made a number of improvements since xxxx and that as a result of NZDxxxx investment [text deleted due to confidentiality] plant now [text deleted due to confidentiality] the speed it did in xxxx. Winstone stated that it was [text deleted due to confidentiality] in [text deleted due to confidentiality] the plant and produce [text deleted due to confidentiality]. It would need an increase of [text deleted due to confidentiality] board to [text deleted due to confidentiality] the [text deleted due to confidentiality] reduce [text deleted due to confidentiality].

Table 4.8: Utilisation of Production Capacity

  2001 2002 2003 2004 2005
Standard Board Production xxxx xxxx xxxx xxxx xxxx
Total Production Capacity xxxx xxxx xxxx xxxx xxxx
% Capacity utilisation xxxx% xxxx% xxxx% xxxx% xxxx%

340. Table 4.8 shows that the percentage of Winstone's total production capacity that is utilised by standard board production has increased xxxx percent over the period 2001 to 2005.

341. There is no evidence that Winstone's capacity utilisation has been negatively impacted by the existence of dumped imports in the New Zealand market.

Other Price Effects

342. Winstone did not raise any other price effects with the Investigating Team and is not claiming that it is currently injured by the dumped imports.

Magnitude of the Margin of Dumping

343. The magnitude of the margin of dumping can be a useful indicator of the extent to which injury can be attributed to dumping, particularly in assessing to what extent any injury displayed is due to dumped imports and what portion, if any, is due to other factors.

344. The review has found that the majority of the standard plasterboard imported from Thailand that covered by the subject goods description is entering New Zealand at un-dumped prices. Approximately xxxx percent of the total imports of subject goods were dumped. All of the positive dumping margins established were below 1 percent.

Other Adverse Effects

Cash Flow

345. Due to the use of the [text deleted due to confidentiality] system, whereby all [text deleted due to confidentiality] cash flow is [text deleted due to confidentiality] Winstone's [text deleted due to confidentiality] cash flow [text deleted due to confidentiality] of this [text deleted due to confidentiality].

346. Winstone stated that it provides positive cash flow [text deleted due to confidentiality] and that its cash flow has not been negatively impacted by the existence of dumped imports.

Inventories

347. As Winstone manufacture to order its inventory levels are managed by its production process. Winstone has not made any claims of injury in respect of its inventory levels.

Employment and Wages

348. Winstone did not make any claims that its ability to be an employer or the level of remuneration it is able to provide has been adversely affected. In fact it stated that there have been [text deleted due to confidentiality] wage levels and the number of staff employed over the last five years.

Growth

349. Winstone does not believe that its growth has been negatively impacted by the existence of dumped imports and in fact stated that its monthly sales of total plasterboard, that is both its standard and performance boards has grown from approximately [text deleted due to confidentiality] square metres per month to approximately [text deleted due to confidentiality] square metres per month.

Ability to Raise Capital and Investments

350. Winstone stated that its ability to raise capital and investments has not been negatively impacted by the existence of any dumped imports.

351. Winstone stated that its two plants are well established and [text deleted due to confidentiality] upgrades to [text deleted due to confidentiality]. Winstone also provided the Investigating Team with details of [text deleted due to confidentiality] upgrade to its [text deleted due to confidentiality].

352. The Investigating Team has not discovered any negative impact upon Winstone's ability to raise capital and investments due to the existence of imports from Thailand.

4.5 Other Causes of Injury

353. The items set out in paragraphs (e) and (f) of sub-section 8(2) of the Act seek to identify any possible alternate cause of any material injury faced by Winstone.

Non-Dumped Imports

354. Both the level and frequency of non-dumped imports can be a source of potential injury to a domestic industry. As Winstone stated in its application the vast majority of imported plasterboard that enters New Zealand is sourced from Thailand. Other sources of imports include the People's Republic of China and Australia.

355. Table 4.9 shows imports for the last 5 years broken down by country of origin. The proportion of standard plasterboard has been calculated as explained in paragraph 261.

Table 4.9: Non-Dumped Imports by Source

  2001 2002 2003 2004 2005
Thailand xxxx xxxx xxxx xxxx xxxx
Australia xxxx xxxx xxxx xxxx xxxx
China xxxx xxxx xxxx xxxx xxxx
Other xxxx xxxx xxxx xxxx xxxx
Total xxxx xxxx xxxx xxxx xxxx

356. Table 4.9 shows that the majority of standard plasterboard imports originate from Thailand. Countries included in the `Other' category are: New Zealand; Korea; Malaysia; the United States of America; Indonesia and the Special Administrative Region of Hong Kong (Hong Kong).

357. [Text deleted due to confidentiality] that it believed the increasing volumes of imports from both China and Australia were having a detrimental affect on prices in the New Zealand market and that it believed [text deleted due to confidentiality] market share to imports from these sources. [text deleted due to confidentiality] advised that Knauf branded plasterboard from China that is being sold on indent and marketed as "advanced plasterboard" directly to builders rather than being processed through merchants, is also affecting the sales of the current market participants.

358. The Investigating Team notes that imports from Australia currently represent xxxx percent of total non-dumped imports, and imports from China represent xxxx percent of non-dumped imports. Looking at the total Customs data for the review period, that is, the year ending 31 August 2005, imports from Australia had an average square metre price of NZDxxxx and those from China NZDxxxx per square metre. These prices include performance boards and therefore an average price per square metre for standard plasterboard can only be expected to be lower. These prices compare to a price of NZDxxxx for imports of all types of plasterboard from Thailand over the same period.

359. The Investigating Team considers that while the unit prices of some of the other countries from which imports have originated may be lower than those from Thailand it is worth noting that the imports of Chinese and Australian product over the period of review accounted for only xxxx percent of the un-dumped volumes being imported from Thailand. As Winstone are not claiming that they are currently being injured there is no need to assess the impact of these other imports upon the New Zealand market except to note that the primary competition faced by Winstone is from un-dumped imports from Thailand.

Changes in Demand

360. Submissions made by all parties to the review indicated that there have been some changes to the demand level for plasterboard in the New Zealand market.

361. The change identified was the increasing trend of a greater use of performance plasterboard in construction rather than using standard plasterboard. An example of this that was presented by both Elephant and Winstone, was the use of 13 mm plasterboard in residential ceilings when traditionally 9.5 mm or 10 mm standard plasterboard would have been used.

362. The Investigating Team asked Winstone and Elephant to comment on the impact of their performance plasterboard sales on their respective standard plasterboard sales. Both parties indicated that while their sales of performance plasterboards have increased, so have the sales volume of its standard plasterboards. However, Winstone provided data that indicated [text deleted due to confidentiality] the absolute volumes of its [text deleted due to confidentiality] plasterboard sales increased but also the [text deleted due to confidentiality] total sales [text deleted due to confidentiality] performance plasterboard has also [text deleted due to confidentiality].

363. While the market is growing and the total level of standard plasterboard demanded by the market is increasing and Winstone is not claiming that it is suffering injury, the extent to which this change in demand impacts the injury analysis is negligible. However, serious consideration would need to be given in a static or declining market, to the extent to which any decrease in the level of standard plasterboard sold is actually a reflection of a transfer of demand to the performance plasterboards rather than attributable to any dumping that may be occurring or threatened.

Restrictive Trade Practices

364. Information received during the review indicated that there was competition of an ordinary nature between Winstone, BML and Elephant in the New Zealand marked and also between SGI/CSM and BPB in the Thai market.

365. The Investigating Team has not identified, nor has it received any submissions on any restrictive trade practices of or between any of the manufacturers involved in this review, or any other manufacturer.

Developments in Technology

366. The Investigating Team has not identified, nor has it received any submissions on any recent developments in technology that could be a potential source of injury to Winstone.

367. Most interested parties to this investigation have stated that the manufacture of standard plasterboard is in fact a very simple manufacturing process that has been largely unaltered for many years.

Imports by the Industry

368. Winstone stated that it has not imported any standard plasterboard over the period of review and that the only imports it has made have been of items that are not considered subject goods, [text deleted due to confidentiality]. There are no imports of standard plasterboard by Winstone recorded in the Customs import data over the period of review.

4.6 Conclusions Relating to Injury

369. The Investigating Team has not found any evidence that Winstone is currently being injured, which is consistent with Winstone's own statements. The assessment of injury then becomes one of whether injury would be likely to reoccur if duties were removed, which is addressed in section 5 below.


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