Over the past decade there has been a distinct increase in the number of anecdotal reports by business about the use of non-conforming products (NCPs) particularly across the building and construction sector.
To help get a better picture of the problem and to determine how widespread it is, Ai Group has conducted extensive research and interviews with more than 400 businesses across steel, electrical, glass and aluminium, engineered wood products, paint and plastic pipes industry sub-sectors.
The report “The quest for a level playing field: The non-conforming building products dilemma” is the first step in this process and with 92% of respondents reporting NCPs in their supply chain, it certainly raises important questions about quality and safety and it poses serious commercial challenges for the businesses that do play by the rules.
Local producers conforming to relevant standards and regulations can be at a competitive disadvantage when the price at which a competing product is sold reflects lower levels of attention to the quality that is required under Australia’s conformance framework.
Immediate business impacts of this uneven playing field are usually in the form of eroded margins and reduced revenues. According to this survey, that is happening to 45% of companies in this sector. Understanding the impact on the Australian economy and our generally competitiveness overall as a result of these NCPs was also part of this report and will be a key theme throughout the project.
The efficiency of the current regulatory system and conformance framework –the system we rely on to ensure that products are fit for purpose – was also examined in this research. Despite convincing evidence of NCPs in the market, 43% of respondents reported they had not lodged a complaint when encountering NCP. Of these, close to half indicated that: they did not know who to complain to; or how to lodge a complaint; or reported that complaints previously lodged did not achieve a result.
There appears to be confusion among stakeholders about who has responsibility and the arrangements for reporting and recourse when non-conforming product is found. In some cases the gaps and weaknesses in the building products conformance framework are giving rise to voluntary, industry led, third party product certification schemes and such arrangements can be effective.
The report suggests that building certifiers bear a disproportionate share of the burden for ensuring product conformance and that greater emphasis on conformance at point of sale and increased responsibility on product suppliers and builders may be required.
Clearly this is an area which requires action. Ai Group believes that to solve the problem of non-conforming product, stakeholders, in consultation with all tiers of Government, need to work together to examine how to best address the gaps and weaknesses in the building and construction sector conformance framework. As well, the building certification arrangements should be reviewed with a focus on clarifying the role of building certifiers and assessing the adequacy of existing arrangements in preventing the installation of non-conforming product. Clarity should be provided on how to report non-conforming product as well as promoting the role of regulatory bodies in the building and construction sector.
Additionally, further research would be beneficial to identify leading conformance models that are effective whilst keeping compliance costs to a minimum as well as give an indication of other industry sectors with similar problems.
The impact on product and building safety is of great concern and the uneven market created by non-conforming products risks a downward spiral of product standards and quality with the potential for significant harm to Australian manufacturers if not addressed.
Industry bodies, regulators and businesses interested in contributing to solve the issues raised or attend a workshop on this topic in March should contact firstname.lastname@example.org to register their interest.
A copy of the full report is available here