NEW YORK Some wire mesh producers are fraudulently labeling welded wire reinforcement that does not meet industry standards as compliant, a practice that has come under increased scrutiny recently, market participants told AMM
The practice of labeling material as compliant with American Society for Testing and Materials (ASTM) specification when it is not has been deflating wire prices for years but it has gained increasing attention since August, when an industry association took note.
The Wire Reinforcement Institute (WRI), an association of wire mesh producers that promotes the use of mesh in construction, told its members in August that undersized product is being distributed.
"It has come to the attention of the WRI that undersized, improperly or untagged welded wire reinforcement, which does not meet ASTM International and/or applicable building code specifications or standards, has appeared in various locations within the North American marketplace," the WRI said in an Aug. 1 letter.
Producers who choose to abide by widely accepted ASTM specifications may label their product with an ASTM tag, giving it credibility when it is sold to brokers, building contractors and big box stores.
But certain producers that tag their wire mesh as ASTM-compliant actually produce wire with a smaller diameter and mesh sheets with a larger-spaced cross grid than permitted by ASTM standards, cutting costs and gaining an edge over competitors who label their products accurately, market participants told AMM.
Wire mesh producers said the fraud is widespread, and many customers regularly buy wire mesh that they know is undersized and mislabeled due to the lower cost and requirements from their end consumers to have ASTM labeled product.
Major retailers of home improvement supplies could be selling improperly labeled product as a result, "and it doesnt seem like they care, and certainly the distributors are concerned with remaining competitive in the market so that to many of them, compliance with specifications is of secondary importance," H.O. Woltz III, president and chief executive officer of Mount Airy, N.C.-based Insteel Industries Inc., a major wire mesh producer, said.
"There are people who knowingly sell underweight mesh, and it happens a lot. As a matter of fact, weve gone into big box stores and weve never found one coil that meets specs. Not one," said Greg Hall, vice president of strategic services at SSW Holding Co. Inc., an Elizabethtown, Ky.-based wire mesh producer. "Right now, everyone turns a blind eye."
Welded wire reinforcement producers that fraudulently mislabel undersized product save money and raw materials, market participants pointed out.
For example, ASTM International specifications require 10 gauge welded wire reinforcement to have a diameter of 0.134 inches, plus or minus 0.003 inches. Sources said wire reinforcement producers sell 10 gauge wire with a diameter as small as 0.124 inches and label the product ASTM compliant.
Skimping on wire diameter, along with expanding the spacing of the wire in the grill, allows producers to sell wire mesh that can be 10 percent underweight, saving $60 to $80 per ton, sources said.
"The money is big. Theres documented evidence of producers undercutting the specifications to the extent that they reduce the weight of the product by 10 to 12 percent, and thats big bucks. Youre talking about 60 to 80 dollars per ton of advantage that non-compliers gain over complying companies," Woltz told AMM.
"Its rampant. A coil has to weigh between 144.3 pounds and 157.8 pounds to meet specification. Weve found coils as light as 128 pounds," said Hall. "Its like you go to the store, and you buy a pound of hamburger and you only get 13 ounces."
Producers selling product lighter than ASTM specifications permit can charge lower prices than those who meet specifications, effectively lowering overall market prices, sources said.
Sources said there are several producers responsible for producing undersized wire mesh in Mexico and the United States.
"We have a formal data-gathering process under way with the objective of quantifying the impact of noncompliance with specifications," said Woltz. "There is certainly more than one company involved in this scheme. We suspect that there are at least three or four regular non-compliers, including imports from Mexico and domestic producers. ... It is a frustrating situation and were determined to ramp up pressure and end the cheating," he added.
One wire mesh producer in Texas blamed cost-cutting schemes on cutthroat competition in the U.S. market. He said it is common practice for companies to produce wire mesh rolls that are several feet short, and his company does so as well in order to stay competitive. The producer said, however, that he does not produce non-ASTM compliant wire mesh.
"In order to compete, we have to do our own short mesh," said the producer. "But we dont do wire too thin, because if someone picks up your rolls from the job site and tests it, its got to be up to spec. We cant screw around with that."
Bob Weil, legal counsel for the WRI, said that the WRI does not have any regulatory authority to stop producers from mislabeling wire mesh, though a condition of membership in the WRI is that companies comply with ASTM specifications.