Manufacturer disputes BGC’s ‘sensationalist’ claims

Fletcher Building says the mass failure of plumbing pipes it manufactured are confined to the Perth market and asserted the problem lies with defective installation.

The ASX company has also dismissed BGC Australia’s estimate the issue could cost up to $700 million as misleading and sensationalist.

Fletcher said the cost could be in the order of $50 million to $100 million.

The competing claims from the two companies come after about 2,000 homes in Perth suffered damage after the bursting of pipes manufactured by Fletcher subsidiary Iplex Australia.

BGC said this week the root cause of the problem was resin used in the pipes.

State government regulator Building and Energy has also previously suggested the problems stemmed from defective products.

Fletcher has insisted that is not the case after analysing where the failures have occurred and commissioning multiple independent tests.

It found that BGC and two plumbing groups accounted for 94 per cent of the leaks.

Fletcher said about 32,000 homes across Australia had been built with its Pro-Fit pipes between 2017 and 2022.

Of the 17,500 built in Western Australia, about 10.9 per cent had leaked.

This included about 50 per cent of homes built in the first quarter of 2020.

But of the 15,000 built on the east coast, only 0.19 per cent had leaked.

“No abnormal leak rates have occurred elsewhere in Australia, contrary to claims made by BGC,” Fletcher said today.

Fletcher CEO Ross Taylor accused BGC of attempting to shift the blame and said its allegations were unfounded.

“Our independent expert advice is that the methodology and hypothesis BGC used is gravely flawed and their findings unsupported,” Mr Taylor said.

“Notably the various tests completed by BGC weren’t done to replicate compatible real-life conditions whereas our testing is doing just that.”

Fletcher suggested poor regulation may be partly to blame, referring to WA’s “plumbing self-certification system, combined with extremely low levels of compliance assessments”.

“Iplex is aware that other states may have more robust certification policies in place,” it stated.

Fletcher said it has completed tests on about 900 pipes and concluded the problems lay with installation failures that breached Australian standards and its own guidelines.

This included excess bending of the pipes, rather than using elbow joints, and rigid installation that did not allow for thermal movement of the pipes.

“Against this backdrop, a product recall is not justified and would create needless disruption to unaffected homeowners with perfectly good pipe and pipe installation,” it said.

BGC chief executive Daniel Cooper said Fletcher’s claims were as expected.

“Fletcher has chosen to blame a poor regulatory environment in WA and a deterioration in plumbing installation standards in the state for failures in its pipes,” he said.   

“BGC respects the regulatory authority and expertise of Building and Energy in regard to this matter.

“Preliminary results from the regulator’s investigation indicated that installation work practices and workmanship were not contributing factors to these incidents, which collaborates the findings of BGC's own independent expert investigation and report.

“We refuse to accept that one day in 2017, all plumbers in WA woke up and forgot how to plumb – at the very same time Iplex changed to using the TYPLEX resin in the manufacturing process for its pipes.”

Mr Cooper said it was disappointing Fletcher was deflecting from a product safety recall as the only thorough and expedited resolution.

Fletcher said it has set aside $15 million to deal with the issue and was working with 29 builders and plumbers, but notably not with BGC.

It was in the process of agreeing on a joint home inspection protocol with Building and Energy.

It has also proposed multiple solutions, including the use of leak detectors and will pipe mapping.

Fletcher said BGC’s estimate of a $700 million repair bill was based on full-house repiping, which it insisted was not justified.

The company said it had already funded repairs to 383 homes, at a cost of about $1 million.

The costs ranged from about $1,000 for leak repairs to $6,000 for a full ceiling pipe repair.

Fletcher said the total repair bill across the industry would reach $100 million if 50 per cent of the homes in Perth containing its pipes had leaks, and they each cost $10,000 to repair.