The Australian Competition and Consumer Commission (ACCC) has instituted Federal Court proceedings against Techtronic Industries Australia Pty Limited (TTI), alleging it engaged in resale price maintenance in relation to the wholesale supply of Milwaukee brand power tools, hand tools and accessories, in breach of the Competition and Consumer Act.

Resale price maintenance (also known as RPM) occurs when a supplier engages in conduct which prevents, or attempts to prevent, resellers of their goods or services from advertising or selling the goods or services below a specified minimum price.

The ACCC alleges that, between 2015 and 2021, TTI engaged in RPM conduct, including by entering into 96 agreements with independent dealers (retailers) and buying groups which restricted the sale of Milwaukee products below a specified minimum price.

The ACCC also alleges that TTI enforced these agreements by issuing reminders, warnings and breach notices to dealers that advertised or sold Milwaukee products below the specified minimum price.

In addition, it is alleged that TTI withheld supply from two of the dealers to enforce the restrictions on price discounting below the specified minimum price. In a statement, ACCC Deputy Chair Mick Keogh said:

Requiring retailers to charge at or above a minimum price for products in the way that we allege Techtronic has done, stifles retailers' ability to compete on price, which ultimately hurts consumers. This is particularly so in industries where retailers would otherwise strongly compete on price, such as by offering price match guarantees to consumers.

We alleged that Techtronic's actions meant Milwaukee power tool dealers could not sell the products at a discount below the specified minimum price, depriving consumers of the chance to benefit from lower prices driven by competition.

The ACCC is seeking penalties, declarations, injunctions, a compliance program order, an order for corrective advertising and costs.

According to the ACCC, RPM occurs where a supplier:

RPM is strictly prohibited by the Competition and Consumer Act and is not subject to a substantially lessening competition test. More information about resale price maintenance can be found at the following link:

Companies can lodge a notification of RPM conduct or apply for authorisation of proposed RPM conduct, which will be permitted if the likely public benefit from the resale price maintenance conduct outweighs the likely detriment from the conduct.

In June 2020, the ACCC rejected a proposal by Stanley Black & Decker to set a minimum advertised price for DeWalt brand power tools and accessories, following a resale price maintenance notification it had lodged with the ACCC.

In September 2021, Nero Bathrooms admitted to likely resale price maintenance by withholding supply of its tapware products from a small independent retailer who declined to raise its advertised prices.

In early October, Big River Industries (Big River) announced that it had entered into an agreement to acquire the trading business and assets of United Building Products (United) located in Albion Park (NSW). The acquisition is now complete.

With annual revenue exceeding $20 million, United complements the company's existing site at Kiama (NSW), which services the South Coast and Southern Highlands areas. United has a strong presence in the Shellharbour and greater Wollongong markets in NSW. In its statement to the ASX, Big River said:

The purchase consideration of $9 million at completion, comprises $7 million of cash and $2 million in BRI (Big River) shares (to be issued at the 10-day weighted average trading price prior to the completion date). There is the potential for the vendors to receive an additional earn out payment of up to $1.5 million, payable over a two-year period, if certain profit growth targets are achieved. The acquisition is expected to be earnings per share accretive from year one and will be funded out of the Company's available debt facilities.

Big River CEO Jim Bindon, said in a statement:

Whilst the founders, Nick and Steve Grozdanov no longer have operational roles in the business, I am pleased they will become meaningful shareholders in BRI and maintain their connection to the business they developed for over 30 years...

There is a quality team already running United Building Products who will remain and continue to manage the business with Mark Hogan as Branch Manager. I look forward to their contribution right across the Big River business in the future.

About United Building Products

United's original building supply business opened at Fairy Meadow (NSW) in 1989 with two staff and $20,000 in stock. It grew to become a major supplier of doors, timber mouldings, locks and bathroom products to both trade and DIY customers.

In 2004, it opened in its current location in Albion Park (NSW). During its first year of operation, the store won the NSW Hardware Industry Store of the Year award and the Illawarra Business Chamber's 2004 Retail Business of the Year award.

In 2005, it opened a second outlet in Corrimal (NSW) - that is no longer part of the business. United is a joint venture of Mitre 10 and United Building Products.

United complements Big River's building products sites, supplying mainly into the residential and commercial construction markets and offering an enhanced service and product range for existing Big River clients.

About Big River Group

Big River has been operating for over 110 years, manufacturing and distributing timber and steel formwork products, timber flooring, building products, structural plywood and related timber products. It also distributes a broad range of other building products, including MaxiWall and MaxiFloor, primarily to the commercial, residential and infrastructure construction markets.

It owns and manages 23 sales and distribution outlets in Sydney, Gold Coast, Brisbane (2), Sunshine Coast, Townsville, Illawarra, Melbourne, Canberra, Geelong, Adelaide, Perth and New Zealand. The company also owns and operates manufacturing facilities in Grafton, Geelong, Perth and Auckland, New Zealand.

Earlier this year, Big River expanded its plywood and architectural panels offering with the acquisition of Timberwood Panels.

Timberwood is a manufacturer and distributor of a range of panel products including veneers, veneered and coloured boards, plywood, particleboard and MDF. It has operated in the market for 13 years and has three sites in Victoria and the ACT.

It also agreed to acquire Revolution Wood Panels in Brendale (QLD) for $8 million in August which is now finalised. Under the terms, $6 million will be paid in cash and $1 million will be paid in BRI common stock. Also, $1 million will be paid in additional earnout payments, payable over two years subject to certain profitability targets being met.

Revolution distributes a diverse range of plywood and specialised timber panel products and has been established for over 15 years.

During its full year results presentation, Big River reported revenue of $281 million, up 13% on the previous year. Mr Bindon said of its acquisition strategy:

Growing scale, obviously, a critical part of our overall strategy. We've already spoken about both Timberwood and Revolution. So we continue to expand our network there. And it is particularly pleasing that all of those businesses are in the highest margin category and the most specialised where there's distinct product differentiation, which is not the case in all market segments we're involved with...

In response to a question from Sean Kiriwan, vice-president - Australian Equities, Ma Moelis Australia Securities about future acquisitions, Mr Bindon said:

...[T]he last couple of acquisitions have been in this panel space, but that's not say that there's not still really good growth opportunity in building products and formwork material. We think there is, and we think that diversity is what's held us in such a good state in the last few years.

So we want to continue to make sure that we've got strong position in all three of those product categories. And hence, we're looking at acquisitions in all of those categories, Sean, and then also in all geographies, all four of our operating regions. So I think that's an important part of the acquisition strategy.

...[W]e're certainly continuing to look at more acquisitions, and we still see ... in terms of industry consolidation, aging business owners, they have a succession plan that absolutely holds true. And it might be only being enhanced with lots of people thinking about their future in this COVID environment, particularly aging business owners. So I think there are great opportunities to continue with that ... I think has worked well for us so far, and certainly, we can extend it much further than what we've already achieved.

Bathroom vanity manufacturer, Timberline Bathroom Products based in Armidale (NSW) has received $1.44 million in state government support to expand its operations. The company was established in 2006.

Northern Tablelands MP Adam Marshall announced the grant from the government's Regional Job Creation Fund. Mr Marshall said the grant would aid Scott Group Management, owner of Timberline Bathroom Products (and Uniplan Group) to build a new facility and buy the equipment needed to fulfil more national retail supply contracts. He said:

...Timberline's reputation for quality is growing at a rapid rate with national contracts. Scott Group will use these funds to build a bigger manufacturing facility with additional offices to accommodate its growth.

It will relocate machinery and make an initial investment in automation equipment and control systems for a future new manufacturing line, to help it meet increased demand for bathroom vanities.

The output which will result from this upgrade, through automated machinery and robotic handling systems, is eye watering as production ramps-up from 180 to about 350 bathroom vanity units per day.

The Scott Group forecasts it will increase its manufacturing capacity by 75% over three years, helping it secure new supply agreements with retailers. Mr Marshall said:

Timberline Bathroom Products is a real success story and Armidale should look forward to the benefits its success delivers the local economy, both in the form of employment opportunities and investment in the local community.

Deputy Premier and Minister for Regional NSW Paul Toole said the $130 million Regional Job Creation Fund aimed to create more than 6,500 new direct jobs in regional NSW by providing incentives to expand and keep operations in regional areas.

Innovation is the backbone of our economy and helping companies like the Scott Group expand its operations stimulates local and regional economies, boosts livelihoods and increases local employment opportunities.

Setting businesses up for success helps the local community grow and new jobs mean more people earning a wage and spending their pay packets in local stores, cafes, and restaurants and on local goods and services.

The Regional Job Creation Fund supports eligible businesses with grants to purchase new equipment, expand facilities, acquire technology, create new production lines or establish businesses in regional NSW. Round one of the Regional Job Creation Fund has now closed. A second round will open in early 2022.

Coates

The West Australian-based hire company owned by Seven Group has been performing well on the back of the mining and construction boom. Now there are suggestions that Seven may be contemplating whether to capitalise on its success by divesting it, according to Data Room in The Australian.

Seven bought full control of Coates back in 2017, paying private equity firm The Carlyle Group AUD517 million for the 53% it did not own. The Australian reports:

While there is no current confirmation it is on the block, what analysts believe is telling is a move by Coates to tap the US private placement market for USD900 million in recent weeks.

Coates has about AUD1.5 billion worth of loans outstanding to Seven, which offers debt at a cheaper rate than it normally would pay as a standalone business.

Analysts believe the bond market raising indicates something is afoot with Coates - which has been valued at AUD2.2 billion - with Seven probably creating a more palatable debt structure for a buyer or ahead of a move to vend it into Boral.

With an AUD8billion market value and about AUD4.5 billion of net debt, Seven is one of the most leveraged industrial companies on the ASX 100. Paying off loans remains a priority...

In June 2021, Coates Hire relaunched as Coates. The company said the re-brand represents its evolution into a leading end-to-end solutions and specialist services provider. Coates operates across a range of markets including engineering, mining and resources, infrastructure, manufacturing, construction, agriculture, and major events.

Related: In a research note, Macquarie identified that Seven's Coates subsidiary could have opportunity through Bunnings' rental shops.

A new $30 million manufacturing and logistics facility for BlueScope Steel is being constructed at the Adelaide Airport Business District, reports the Adelaide Advertiser. The site includes 17,000sqm of warehouse and office space on a 50,000sqm site. It will become the central hub for the BlueScope Building Components division in South Australia, which includes the Lysaght and Fielders brands.

Roofing, cladding and flooring products, as well as patios, sheds and other steel products will be manufactured at the site. It will replace BlueScope's existing factories at other South Australian locations in Keswick Terminal and Gillman. The company has signed a 12-year lease and will relocate about 200 staff to the new facility when it's completed at the end of next year. BlueScope Building Components state manager Brad Bairstow told the Adelaide Advertiser:

We believe the central location gives us a competitive edge because most of our competitors are located out in the northern corridor. The Adelaide Airport precinct suited us really well, and we were able to maintain that central location with really good access to transport routes and a good size site. It's 30% bigger than our current sites combined.

A lot of businesses have spent time consolidating their manufacturing, and servicing other states out of hub states like Victoria and NSW, but this is a show of our commitment to SA. We're committed to the state, and we're committed to manufacturing in Australia.

Mr Bairstow said the company would also invest about $20 million in state-of-the-art manufacturing technology and equipment.

It's about doing things differently - safer, more accurate, more efficient - to be able to service the market better and to keep our people safe.

Located on James Melrose Road, south of the airport terminal, the manufacturing centre will be built by Sagle Constructions, while Leyton Funds will retain long-term ownership of the property.

BlueScope's investment comes amid a boom in the construction sector, with demand for building materials surging in response to the HomeBuilder stimulus and strong commercial activity. Mr Bairstow believes the heightened level of demand was likely to continue well into next year. He said:

Residential, commercial and home improvement, which is sheds and patios, are all performing really well all over the state. I think there's a good 12 to 18 months, or two years, left in the pipeline of current work. The supply chain is a bit restricted, which is dragging it out. It's probably good for the industry otherwise you're left in that boom-bust environment.

Sustainability

In a move towards sustainability, Bluescope has an executive in charge of climate change whose job is to develop and maintain the company's climate strategy, including driving innovation and delivery of emissions reduction across the group, setting and monitoring progress towards emissions targets and engaging with staff and external stakeholders. In addition to her climate change role, Gretta Stephens is also chief executive of the steel maker's New Zealand business.

In late 2020, BlueScope managing director and CEO Mark Vassella tapped Ms Stephens to take on the additional role of executive in charge of climate change. Auckland-based Ms Stephens said "yes" immediately. She told the Australian Financial Review (AFR):

[The role] combines a number of things I am passionate about, that will combine to ensure the long-term sustainability of industry via technical development.

Bluescope released its first climate action report in September. The company has set itself a zero net emissions target by 2050, although the goal is "highly dependent" on external factors, such as "the availability of affordable and reliable renewable energy and hydrogen, availability of quality raw materials and appropriate public policy settings."

The company will allocate up to $150 million over the next five years to help it meet its 2030 target of reducing emissions intensity in the production of both steel and non-steel products.

Steel making accounts for about 7-8% of the world's carbon emissions, according to the Australian Financial Review. It is an industry that is under pressure to move faster to try to reduce carbon emissions.

BlueScope's biggest challenge - like its competitors - is that the majority of its steel is made in blast furnaces, where the chemical reductant is coal. Ms Stephens expects the technologies required to reduce the requirement for coal will be available sometime between 2035 and 2045. She concedes it's a big range.

BlueScope has signed up with mining behemoth Rio Tinto to explore the direct reduction of iron ore using hydrogen produced from renewable electricity. The direct reduced iron from this process would be melted in an electrical furnace, powered with renewable electricity, to produce iron suitable for steel making.

Australia's biggest steelmaker also announced it would pay USD240 million for MetalX, a scrap steel recycling business in the United States. MetalX is already one of the big suppliers of feedstock for the company's most profitable business, the North Star steel mill.

Mr Vassella said the acquisition of MetalX, which runs two scrap steel facilities in Indiana and Ohio, would ensure security of supply and add to the competitiveness of the North Star facility, currently in the final stages of a AUD1 billion expansion.

The acquisition will also go some way to improving BlueScope's "green" credentials.

James Hardie chief executive Jack Truong said renovators are increasingly the main driver of the company's strong financial performance, according to a report in the Australian Financial Review (AFR). He expects that as economies open up, renovators will continue to invest in upgrades of their biggest asset after a shift in mindset during the pandemic which has led them to view their homes as their "castle".

Dr Truong said by marketing directly to households through advertising on homemaker television shows and magazines, James Hardie was becoming more of a consumer brand. He said:

That creates a pull-through. Our approach is more about the pull and creating demand with the homeowners.

The Australian reports that this elevated demand had shown itself in key metrics for the group. In the six months ended September 30. it recorded 109% growth in its key brand metrics, an 81% lift in company website traffic and 61% increase in leads within its target markets.

Dr Truong said new exterior panelling in different colours was proving popular and achieving the right look was the main priority for households, with price a secondary consideration.

That is what the household makes their decisions on.

For the six months to September 30, net sales rose 28% to USD1.75 billion and net profit more than doubled to USD271.5 million. Net profit rose 182% to USD271.5 million in the six months, and global earnings before interest and tax (EBIT) lifted by 34% to USD386.2 million.

Dr Truong said a strong performance in the September quarter marked the fourth three-month period in a row where all its main regions of North America, Europe and the Asia-Pacific produced double-digit sales and EBIT growth. He said:

We continue to make excellent progress on our stated global strategy. Our strong execution on this strategy is reflected in second-quarter global price/mix growth of 9%.

Our growth momentum in accelerating high-value products penetration, which underpins price/mix, is the result of enabling our customers to make more money by selling more James Hardie products and marketing directly to the homeowners to create demand of our high-value products through our customers.

James Hardie plans to invest in new facilities including a greenfield manufacturing site in Victoria to help its Australian operations meet demand. The company closed a small plant on the Sunshine Coast in Queensland last year. Overseas, there is the expansion of an existing plant in Alabama (USA) and a fibre gypsum plant in Spain.

Expecting continued market growth, particularly in the US, James Hardie raised its guidance for the 2022 financial year. It has lifted its profit forecasts for the full year to between USD580 million to USD600 million, from a previous band of USD550 million to USD590 million.

Fine Texture Cladding

James Hardie recently launched its Hardie[tm] Fine Texture Cladding, a fibre cement wall panel embedded with a fine texture to create a contemporary aesthetic for houses.

The pre-textured fibre cement panels connect with shiplap joints, bringing subtle shadow lines, geometric precision and a gentle vertical rhythm to the façade. The ready-to-paint, pre-sealed surface has a textured finish of fine render which diffuses light and gives a matte finish.

For minimal joints and maximum coverage, Hardie Fine Texture Cladding comes in 120mm wide sheets in common wall heights of up to 3600mm. It is the ideal cladding choice for non-combustible construction with the added performance benefits of fibre cement such as long-term durability and low maintenance.

Neil Hipwell, builder and founding director of FutureFlip, said Hardie Fine Texture Cladding speeds up the building process with the render texture embedded in the fibre cement panel, minimising the number of trades required on site at any one time. (Mr Hipwell is a James Hardie ambassador.)

For builders, lightweight building material such as Hardie Fine Texture Cladding is an ideal choice for ground floor renovations and additions as well as optimising a home's usable floor space. For homeowners, it is durable, low maintenance and built for tough Australian conditions.

Hardie Fine Texture Cladding also offers architects and designers creative freedom to explore the possibilities of lightweight construction and considered joint detailing. Panels are supported by a range of corner and junction accessories, also produced by James Hardie. These combined systems streamline the installation process and deliver a consistent, quality finish whilst upholding the integrity of the design.

Related: James Hardie ambassador provides tips for social media.

There has been market speculation that Wesfarmers was looking to acquire West Australian building materials company, BGC (Buckeridge Group of Companies).

Now there is discussion that Wesfarmers may be finalising a deal to purchase BGC, according to Data Room in The Australian. It believes it may be an ideal time to sell with a strong residential construction market in Western Australia as a result of the mining boom.

BGC could make sense for Wesfarmers because it may create opportunities to attract more trade customers to its Bunnings hardware stores.

Parts of the BGC business have already been offloaded, including its contracting arm, which was purchased by NRW for $310 million including debt.

The business is now involved with producing construction and building materials and offering residential and commercial construction services, industrial maintenance and fabrication services, and property ownership and management. It owns quarries and a cement grinding plant.

It is thought that the group's divisions are all interrelated and are largely reliant on each other for profitability.

Related: BGC may be up for sale

Related: BGC's building materials division could be of interest for an acquirer after its contracting business has been sold off

Related: BGC offers property assets for sale

DuluxGroup-Jub

DuluxGroup's deal to buy Slovenia-based paint company JUB has been valued at EUR194.5 million. The company plans to turn JUB into a hub for Central and Eastern Europe, maintaining its existing brands, and make it part of Nippon Paint's R&D community. (DuluxGroup has been owned by Nippon Paint since 2019.) JUB said in a statement:

Under the auspices of DuluxGroup, JUB will enjoy autonomy and independent growth, while at the same time leveraging the advantages of access to a global market, technologies, capabilities and abundant capital resources of Nippon Paint Group.

Patrick Houlihan, chairman and CEO of DuluxGroup, said that with the support of the world's fourth largest paint producer, JUB would continue to build its leading position in the regional market, strengthening its innovation, portfolio and geographical reach. It could also play an important role in the group's expansion to Western Europe.

In a separate release for investors, Nippon Paint said JUB commanded market leading positions in several paint segments in Slovenia, Croatia, Serbia and Bosnia-Herzegovina, and the acquisition will allow it to better use its distribution network.

Nippon Paint said "the European paint market is the world's second-largest following the China market and has prospects for continuing steady growth".

JUB is a manufacturer of decorative paints, ETICS (External Thermal Insulation Composite System) and other paint-related products. It is one of the market leaders in interior paints in Slovenia, Croatia, and Bosnia and Herzegovina and in façade paints in Slovenia, Serbia, and Bosnia-Herzegovina.

It posted group sales of EUR111 million in 2020 and a profit of EUR4 million.

Related: Nippon Paint plans to acquire French paint maker Cromology.

Founded in 1875 by a Scottish immigrant as one of Queensland's first sawmills,

Finlayson's Timber & Hardware has been inducted into the Queensland Business Leaders Hall of Fame.

It has been recognised for its outstanding contributions to Queensland's timber and building industries and internationally recognised product innovation.

The company has a long, storied history in the state. After emigrating from Scotland in 1870, Charles Patterson and two brothers established the family's first sawmill in the Indooroopilly area in 1875.

Patterson Brothers, as it was then named, specialised in milling local timbers for structural and decorative use in the building of archetypal ''Queenslander'' houses, contributing greatly to the rapid expansion of Brisbane's suburbs.

By 1884, and under the sole control of Charles Patterson, the business relocated to Toowong where it was to be a landmark for nearly a century. The first of many fires and other natural disasters to confront the business, all but obliterated the Toowong mill in 1888.

With remarkable resilience that was to be demonstrated time and again over the next 130 years, most recently following 2011 floods, many damaged mills were immediately rebuilt and improved.

Mr Patterson through his business leadership, extensive community service including several terms as Mayor of Toowong, and his support for the Presbyterian Church, infused the business with a character that remains central to Finlayson's today.

In 1961, Malcolm Finlayson, a grandson of Charles Patterson and long-term employee of the business became a director before becoming managing director in 1979.

Together with his experienced fellow shareholders who had acquired the business, Mr Finlayson was able to convert a moderately successful family business into an industry leader. The business invested heavily in technology to underpin its manufacturing operations while leveraging its reputation and loyal customer base.

The Finlayson family took full control of the business in 1998 with Malcolm as managing director and sons Skene and Michael as co-directors. With its focus on milling and moulding sustainably sourced Queensland hoop pine, the company has developed a significant reputation for its colonial woodwork, mouldings, and joinery.

Now, in its fourth generation as a Queensland business, Finlayson's employs more than 300 staff in Queensland and New South Wales and is a significant timber exporter.

Co-director Michael Finlayson recently told The Courier-Mail it was an honour to receive the award on behalf of the family but he was saddened his late father - who died in 2018 - could not witness it.

Mr Finlayson also said Mitre 10 purchased the hardware operations of the business in 2020. But the family continues to own the two timber mills and manufacturing facilities.

Now in its 12th year, the Queensland Business Leaders Hall of Fame was established by the QUT Business School, State Library of Queensland and Queensland Library Foundation to recognise outstanding contributions made by business leaders and businesses to the state's economic and social development.

Inductees are assessed and selected by the Queensland Business Leaders Hall of Fame Governing Committee, who look at criteria including leadership, financial contributions, and pioneering achievements.

Timber Framing Collective

A number of timber companies have come together to form the Timber Framing Collective to market and promote the benefits of timber framing in Australia. The collective also has a full brand strategy, according to creative communications agency Engine Group.

The collective receives financial support from Australian sawmills, timber importers, industry associations and peak bodies, building products and treatment suppliers. They currently include Australian Forest Products Association (AFPA), AKD, Boral Timber, Hyne Timber, OneFortyOne, Timberlink Australia, Wespine, Australian Timber Importers Federation (ATIF), Forest & Wood Products Australia (FWPA), Frame & Truss Manufacturers Association (FTMA), Koppers, Lonza, MiTek, Multinail, Pryda, Responsible Wood, Stora Enso, TABMA, Timber Queensland and Vida Wood. Timber Framing Collective spokesperson Marita Pierce-Indugula said:

While competitor building materials may have deeper pockets than ours in terms of advertising media spend, what we have is a supply chain that is unrivalled in size.

Within that supply chain are people who are passionate about timber and are chomping at the bit to work with us to promote the many benefits of timber framing over other building materials.

Timber has no equal when it comes to its environmental credentials...

With a typical Australian home absorbing more than seven tonnes of carbon dioxide (CO2) from the air and storing almost three tonnes of carbon, it really makes timber framing the superior choice and the ultimate renewable.

Right now, demand is outstripping supply but this will level out in time so it's important that builders, consumers, decision makers and influencers understand the many benefits of timber framing through the efforts of the new Timber Framing Collective.

We're asking builders and consumers to continue being patient as supply catches up with unprecedented demand, in the knowledge that they are making a fantastic environmental decision to build with timber framing.

Nippon Paint plans to acquire French construction and decorative paint maker Cromology for EUR1.15 billion. It will purchase all Cromology shares during the first half of 2022.

The acquisition will be carried out through Nippon Paint's Australian paint subsidiary, DuluxGroup.

Cromology is the fourth-largest maker of decorative paints in Europe, and Nippon Paint expects to use the acquisition to expand its reach in France, Italy and other European countries.

Nippon Paint said Cromology has a high market share of construction paint in France, Italy, Spain and Portugal.

It believes Cromology will provide the right level of scale, volume and manufacturing capability for Nippon Paint to develop a decorative paint and coatings business in Europe, and provide a platform for other bolt on acquisitions.

Cromology's wholly owned network of 386 company operated stores across France, Portugal and Switzerland presents an opportunity to leverage DuluxGroup's operational capability in running trade centres. The acquisition also provides a way to use DuluxGroup's capabilities in selling to DIY consumers in retail channels including big box home improvement stores and independent hardware.

The acquisition presents an opportunity to launch other products in the DuluxGroup's portfolio, including in woodcare, texture coatings, sealants, adhesives and fillers.

Related: DuluxGroup after Nippon Paint acquisition.

Reliance plumbing

US-based appliance connector business EZ-FLO has been acquired by Australia's Reliance Worldwide for USD325 million, reports The Australian Financial Review (AFR).

Reliance chief executive, Heath Sharp told the AFR the main product sold by EZ-FLO is the Eastman brand of appliance connection products used by plumbers to connect washing machines, dishwashers, water heaters and fridge ice-makers to household water supplies.

Mr Sharp said the Eastman brand is the No. 1 business in its category and the acquisition enables Reliance to enter into a new segment of installing and servicing major appliances. The company believes there is enormous potential even as appliance sales boomed during the pandemic when people spent a lot on home improvements. He said:

We think there's a lot of runway here.

Established in 1980, EZ-FLO has a large manufacturing plant in the Ningbo Free Trade Zone in China which makes most of its products. It also uses other third-party manufacturers in China for supplies.

In the US, EZ-FLO operates seven distribution centres, including in California, Florida, New Jersey and Texas, which send products to about 5000 hardware and trade outlets.

Mr Sharp said Reliance had done extensive due diligence on EZ-FLO, which before COVID-19 had been generating sales growth of more than 10%, but has now jumped higher. He said was impressed by the way EZ-FLO had been able to make price increases stick as input costs and logistics disruptions increased.

The ability to move prices through the market - very strong. Their pricing power has really been evident as we moved through the details.

Reliance has been implementing price increases across most of its products. Mr Sharp said:

It's happening across the board, it's not just with us.

The cost of copper, steel, resins, packaging and freight have all been rising, while shipping delays have caused disruptions.

Reliance's sales for the three months ended September 30 were up 8% to USD246 million, while earnings before interest and tax were up 5% to USD56.2 million.

Briggs & Stratton's new Vanguard(r) Lithium-Ion 1.5kWh Swappable Battery Pack will join the lineup of the current Vanguard Commercial Lithium-Ion Battery Pack models at two events: The American Rental Association's annual trade show and convention in Las Vegas, Nevada, and GIE+EXPO in Louisville, Kentucky. Chris Davison, Briggs & Stratton's US-based senior marketing manager - commercial power, said:

Electrification is quickly revolutionising the power application industry and we're proud to play a significant role in that process ... [Our] current Lithium-Ion battery models, as well as our new swappable battery pack, continue to show the industry that Vanguard is leading the industry forward.

The Vanguard Lithium-Ion 1.5kWh Swappable Battery Pack is designed to provide users with an efficient, versatile and reliable battery power option. The battery has an exchangeable design, allowing users to easily remove and replace the battery as needed with minimal downtime. They can combine multiple swappable batteries in parallel to make sure larger power needs can be met.

The swappable battery is set up for optimised network communication with the product and the internet via an IoT (Internet of Things) device. The connectivity also means that users can monitor the battery remotely, control battery-powered products remotely and conduct fleet management. This battery is tested to ensure that it is able to withstand tough environments and is durable against abuse, debris and dirt.

Black+Decker

Stanley Black & Decker (SBD) announced that its Black+Decker brand will release a new product line of power tools that will use Eastman's Tritan Renew copolyester. With 50% certified recycled content in the enclosures, the Black+Decker reviva line is set to launch in early 2022.

Engineered in partnership with Eastman, the reviva power tools will be manufactured using Tritan Renew material produced through circular recycling, also known as molecular recycling. Molecular recycling transforms single-use waste plastic into basic building blocks that are then used to make durable, high-performance materials. This process reduces the use of fossil-based resources and lowers greenhouse gas emissions while reportedly providing the performance of virgin plastic materials and environmental benefits of 50% recycled content.

In addition to sustainably engineered material in this new product line, reviva packaging will be 100% recyclable. SBD is also creating and implementing programs for battery and end-of-life tool recycling. Steve Crawford, executive vice president, chief technology and sustainability officer for Eastman, said:

...Consumers trust their products because they know they will perform, so Eastman is excited to partner and leverage our molecular recycling technologies to provide Stanley Black & Decker more sustainable materials without any compromise on product performance.

This collaboration is a prime example of how value chain partners who share a vision for a sustainable future and a commitment to addressing both the climate and waste plastic issues can leverage material circularity to provide solutions with technologies we have today.

SBD aims to design products for circularity across material selection, use and end-of-life considerations, with a near-term goal of 100% reusable, recyclable or compostable packaging by 2025.

In 2018, Stanley Black & Decker joined with leading businesses and governments to sign the New Plastics Economy Global Commitment, an initiative of The Ellen MacArthur Foundation and United Nations Environment Programme. Eastman is also a signatory to the New Plastics Economy Global Commitment.

The new agreement between hardware retail wholesaler, True Value Company and GE Lighting means True Value will be able to provide its member stores with exclusive warehouse access to the growing CYNC[tm] family of whole-home automation products. CYNC is a premium, GE-branded line of smart home products formerly known as C by GE.

The partnership between True Value and GE Lighting becomes effective January 1, 2022. Jake Kalnitz, vice president of merchandising at True Value, said in a statement:

Providing our retailers exclusive access to this best-in-class line of smart home automation products, from one of the best-known light bulb manufacturers in the world, is a game changer for True Value.

This is a true differentiator for us that will allow our retailers to provide their customers with a next-level smart home experience.

GE Lighting is now part of Savant Systems, an established industry leader in the professional smart home space. CYNC products include an Indoor Smart Camera, Indoor and Outdoor Smart Plugs, LED Full Colour Light Strips, and a Wire-Free Smart Motion Detector. The new CYNC app, powered by Savant, provides intuitive and easy-to-use control for the entire CYNC ecosystem from anywhere.

Hillman

Hardware supplier, Hillman Solutions, has unveiled the completion of its state-of-the-art distribution centre in Jacksonville, Florida. Ben Wilcox, senior director of distribution at Hillman, said:

The original Hillman Jacksonville distribution centre is barely recognisable today after a multi-million-dollar investment to expand the footprint of 92,000 square feet to its current 190,000 square feet.

The expansion allowed Hillman to modernise its operations enabling more growth in the future. To increase productivity, Hillman uses an artificial intelligence automation system that maximises efficiencies. Mr Wilcox said:

We incorporated several automated vehicles to reduce the amount of manual labour needed to move inventory.

To ensure a safe working environment for its employees, Hillman incorporated significant design elements that improve ergonomics for associates. These elements included a raised floor in storage locations to minimise bending.

Founded in 1964 and headquartered in Cincinnati, Ohio, Hillman is a leading North American provider of complete hardware solutions to over 26,000 customers. The company designs product and merchandising solutions for "complex" categories that deliver an "outstanding customer experience" to home improvement centres, mass merchants, hardware stores, pet supply stores, and OEM & industrial customers. Leveraging an international distribution and sales network, Hillman aims to deliver a "small business" experience with "big business" efficiency.

Stanley Black & Decker Inc. (SBD) said it has agreed to buy Excel Industries, a maker of commercial and residential turf-care equipment, for USD375 million in cash. The acquisition is expected to boost its commercial outdoor equipment business.

Kansas-based Excel, which has about 600 employees, makes equipment under the brands Hustler Turf Equipment and BigDog Mower Co., and serves about 1,400 independent equipment retail outlets that stock, sell and service these products. It launched the first hydrostatic zero-turn mower in 1964.

According to analysts, the addition of Excel Industries' expertise in turf-care equipment and professional team will help strengthen the outdoor product offerings and innovation capabilities of SBD. Excel Industries' widespread dealer (retail) network along with its customer base should enable the company to enhance its footprint in the outdoor equipment market. SBD's CEO James M. Loree commented:

This is a strategically important bolt-on acquisition as we build an outdoor products leader. Excel brings a range of premier, commercial grade and prosumer turf-care equipment, an extensive dealer network, a talented team and a loyal customer base.

In January 2019, SBD acquired a 20% stake in MTD Holdings, a manufacturer of outdoor power equipment. By August 2021, the company announced its decision to buy the other 80% stake in MTD for USD1.6 billion in cash.

More recently, an analyst at BofA Securities said that SBD could face a potential risk in the medium term due to a legislative development in California.

The legislation reportedly signed by California Governor Gavin Newsom mandates that all newly sold small-motor equipment, primarily used for landscaping, to be zero-emission by 2024 or as soon as the California Air Resources Board determined is feasible

Analyst Ross Gilardi said the mower ban faces significant lobbying pushback from professional landscapers and gardeners who would be forced to upgrade and convert their fleets. About USD30 million has been set aside to help these groups make the transition, he noted.

There could perhaps be a pre-buy of gas-powered equipment into the deadline that incentivises California-based retailers to continue carrying gas-powered equipment, he said. Some of the retailers, however, could de-emphasise gas equipment at an accelerating pace to highlight their environmental consciousness.

Through its pending Excel Industries acquisition and remaining MTD stake, SBD could be exposed to the risk of the phasing out of gas-powered equipment, Mr Gilardi said.

However SBD would point to its strong battery technology in its legacy outdoor business and its intention to electrify the MTD lineup over the next few years. The California ban will put pressure on MTD to accelerate its electrification effort at a time of enormous supply chain challenges that are making battery cells harder to come by. The time crunch is also weighing on the legacy gas engine market which is experiencing acute shortages, Mr Gilard added.

If California is about to ban the product in the next few years, it is less likely that capacity is added in this market to alleviate the situation, he said.

Vulcan Steel

The steel distributor is understood to have already locked in $220 million of demand from early investors for its initial public offering, according to DataRoom in The Australian.

Stockbroker UBS estimates in a research note Vulcan has about 4% of the Australian steel distribution market. It puts a valuation of between $1 billion and $1.4 billion on Vulcan's equity value. Vulcan has $100 million in debt, giving an enterprise value of between $1.1 billion and $1.5 billion.

The company managed to achieve a price ($7.10 per share), that equates to 8.8 times its earnings before interest, tax, depreciation and amortisation and 13.2 times its net profit. This is more than the five times steel distributors' trade at in Europe and North America, but less than the Australian companies it is comparing itself to like plumbing and bathroom supplier GWA, which trades at about 12 times its EBITDA.

The float comes as steel prices remain high. However, some believe the share price is expensive and will fall when the steel price is expected to come down after it lists on November 10. Others say the selling point is its unique market position in New Zealand and dominance in the Australian market. New shareholders will own almost 39.8% of the company.

Chief executive Rhys Jones believes the company is poised to benefit as customers seek to reduce their dependence on China. In the Australian Financial Review (AFR), he said the COVID-19 pandemic was triggering some large structural shifts in sovereign capabilities among manufacturers, governments and policy makers which were likely to underpin extra demand for the group's steel products.

There is more focus on companies wanting to shift manufacturing to Australia and New Zealand, and be less reliant on China. Mr Jones told the AFR:

It's been so disruptive to so many businesses.

Mr Jones said in the 12 months ended June 30, Vulcan had delivered about 270,000 tonnes of steel products to customers. He said because of the nature of its business, where it was not actually making steel, it had a buffer against the volatility of the steel cycle. He said:

We don't go up and down with international steel prices like others.

Vulcan buys and distributes some of its steel products from BlueScope as part of its operations. But it is also a competitor to BlueScope in some segments. BlueScope recently announced the highest annual profit in 19 years.

Mr Jones said the group operated its own fleet of 92 delivery trucks which gave it an extra edge in "just-in-time" deliveries to customers across a broad range of industries including engineering, construction, water infrastructure, agriculture and wine.

Mr Jones said Vulcan, which has 12,000 customers and a workforce of 840, is on the front foot for expansion which is likely to involve acquisitions and organic growth. He said the group had doubled in size in the past seven years and was in a strong position to keep going.

The Auckland-based business is owned, founded and chaired by Peter Wells, Vulcan sells steel for manufacturing and construction across 29 sites, 16 of which are in Australia. About 60% of revenues come from the Australian operations, with 40% from its home market of New Zealand.

Vulcan chief financial officer Kar Yue Yeo said the total steel usage market in Australia was between 6 million to 6.3 million tonnes a year, and with a strong pipeline of infrastructure spending outlined by federal and state governments, experts expect that will grow by at least 2% a year.

Opening its first Western Australian plant at Welshpool in 1971, and its fifth factory in the country, Gyprock has continued its tradition of evolving its product range to meet the needs of the ever-changing construction and building industry.

Built at a cost of $1.4 million, or over $15 million in today's currency, the factory was officially opened by then-Premier J.T. Tonkin on 10th September 1971, after starting production in July of the same year.

In the proceeding 50 years, tens of millions of tonnes of plaster and compound has been produced.

Premier Tonkin said of the factory in his remarks, "It will employ Western Australian labour in processing a high-proportion of Western Australian raw materials" which remains true today as it did half a century ago. Welshpool still produces plasterboard using gypsum mined from Jurien Bay to the north of Perth.

This commitment to Western Australian building also extended beyond the factory. Gyprock faced strong opposition from established Plasterglass producers in Perth who referred to the relatively new board as "paper board". In response, Gyprock gave builders and installers guided tours of the new facility to bolster confidence in plasterboard. In addition, teams from NSW were brought over to train and educate installers who upon completing the course became known as "30-day wonders". CSR Gyprock soon became the bulk plasterboard supplier for many former Plasterglass customers.

Gyprock remains proudly (West) Australian Made, having just recently been certified by the Australian Made Campaign as part of an ongoing commitment to Australian manufacturing jobs. Brendon Cave, Gyprock regional general manager, said:

We are very proud to have manufactured more than 200 million square metres of Gyprock plasterboard at our Welshpool factory over the past 50 years, most of which would still be installed and doing its job in Western Australian homes, offices, hospitals, schools and the like.

Gyprock's Welshpool site now employs over 80 people and produces more than 5 million m2 of board on average every year, enough to cover the playing field of Perth's Optus Stadium nearly 300 times.

It actively supports plasterboard recycling both to help the environment by reducing waste going to landfill and because it is often a great way for builders to save on waste tipping fees and site clean-up costs as well as improve site safety with better resource management.

Related: Gyprock displays Australian Made on its products.

3RT is being recognised for its technology that can turn wood waste into timber that looks and performs like 100-year-old tropical hardwood.

Based in Adelaide and Melbourne, 3RT has spent over six years developing this technology in collaboration with the Flinders Centre for NanoScale Science & Technology (part of Flinders University in South Australia). It launched its first commercial product, Designer Hardwood in 2019 which is sold through some Bunnings outlets.

The technology uses a water-based "nano-glue" that is mixed with the waste wood to replicate the properties of mature natural hardwood. 3RT managing director Peter Torreele told The Lead in 2020 that the final product was comparable to the highest quality hardwood but was sustainable as it was made from waste timber residues that would otherwise be woodchipped. (The company name stands for the three Rs of sustainability - Reduce, Reuse and Recycle.)

This year, it is one of the finalists to win $10,000 as SA Innovative Team of the Year in the state government's Science Excellence and Innovation Awards, to be announced in December.

3RT manufactures its smartwood products at its innovation centre in Adelaide using robots. They are used for indoor furnishings such as tables, flooring, stairs, doors and panelling. Associate professor Jonathan Campbell from Flinders University said:

This project has led to internationally patented technology that can turn low value plantation timber into sustainable, high quality and affordable hardwood, with the first products made at 3RT's new Adelaide manufacturing plant now on sale at Bunnings.

Bosch deal

In 2020, the company announced it entered an agreement with Bosch that will allow it to boost its own capacity and license the units to companies overseas.

Mr Torreele said the licensing units would be ideally suited to Laminated Veneer Lumber (LVL) and plywood producers that used plantation resources and generated a lot of wood waste suitable for use in the units. He told The Lead:

The units are plug and play units that are very compact and agile with a small footprint so we can place them around the world very quickly in locations that we believe are suitable to give access to those local resources.

We already have one running in Adelaide and Bosch is adding Internet of Things capability, which means that if we have a unit somewhere else it is remotely connected to our innovation centre so we can track all the data, develop new products and undergo maintenance.

Mr Torreele said the relationship with Flinders University would continue to develop products and create specific recipes as new customers came on board.

For instance, if we find a resource in Canada, we first develop the specific recipe in Adelaide, Bosch builds the unit and once we put the unit in Canada we can straight away produce the product that we have already developed and tested at the innovation centre in Adelaide.

It's a very fast way of scaling up thanks to the relationships with Flinders University and Bosch.

We also have a very aggressive technology roadmap with Flinders University, which is around the product itself. The idea with that is everything you put on top of a piece of wood today we want to put inside the product so you don't have to maintain it anymore and it's done in a non-toxic way.

Most of the products used to make a product waterproof for instance are harmful ingredients so we want to work with Flinders University to create products with additional benefits of, for instance, termite, water or fire resistance.

Flinders University owns a share of 3RT as part of the research contract. Flinders University Professor and co-developer David Lewis is also a director of 3RT and said the sustainability of its Designer Hardwood product and a resurgence in the popularity of wooden products were attractive selling points. He told The Lead:

It really is an exciting development and the commitment from Bosch has been wonderful and is appreciated by the company and the university because it is a pathway to expansion.

Actually seeing real world results of the research we are doing is very satisfying for us as individuals but also for the university because we are having an impact in the world.

The Bosch Group's board of management member responsible for Asia Pacific, Peter Tyroller, has visited the Adelaide innovation centre and said 3RT's technology was a great example of Australian innovation.

3RT is addressing the significant environmental and supply challenges relating to old growth hardwood, applying Bosch technology and knowhow.

To read more about 3RT and Bosch, go to the following link:

The Australian Competition and Consumer Commission (ACCC) chairman, Rod Sims told the ABC's The Business program that the regulator is investigating if anti-competitive conduct has led to price rises in the container transport industry. He said:

We have a narrowly focused investigation as to whether there is a breach of competition laws in relation to containers. Is there a breach? Is there not a breach? And we'll get to the bottom of that.

Mr Sims said the wider issue of shipping and freight costs would be looked at in more detail in the ACCC's annual stevedoring monitoring report, which will be released in November. He told The Business:

We're going to look at to what extent this is a structural problem - due to the fact that you've got concentration in shipping, which has occurred a lot - or to what extent is it a short-term issue, due to the spikes in demand as people consume more goods and less services as COVID-19 interrupts the supply chain.

Importers and exporters have welcomed the regulator's inquiry into the dramatic price increases on the waterfront. However, Shipping Australia said high freight rates are caused by higher demand for products and port congestion.

Shipping fees have jumped amid a global supply chain squeeze caused by a rebound in demand for products after COVID-19 shutdowns, and pandemic outbreaks that have crippled the world's ports.

The cost of hiring a shipping container to transport imports and exports is now the highest on record. Recently the spot price for a 40-foot import container from Shanghai in China to Rotterdam in The Netherlands, the world's most expensive shipping route, soared to USD14,287 (AUD19,405) per container according to the Drewry World Container Index (a leading barometer of international shipping charges). That's a rise of 564% over the past year.

However, the body representing the local shipping industry, Shipping Australia, denied there was price gouging by global shipping lines. Shipping Australia boss Melwyn Noronha said the ACCC's investigation was a good move. He said:

We welcome the investigation as it will show that the current issues are caused by normal market mechanisms and by bottlenecks in the supply chain.

Shipping Australia also disputes that ocean shipping is a concentrated industry, telling the ABC in a statement that '"there are many shipping services to and from Australia." It also disputes that market concentration has led to high freight rates and said that surging demand helped "induce" the current freight rates.

Shipping Australia said that prior to COVID, freight rates were around USD1,200 to USD1,400 (AUD1,640 to AUD1,913) per container for a 40-foot shipping container.

Retail industry

Retailers and importers have told the ABC they have been forced to pass on price rises to customers. The Australian Retailers Association's chief executive, Paul Zahra, told the ABC the high cost of shipping products added to the challenges faced by retailers.

Shipping costs have quadrupled in the last year, during the course of the pandemic, and most Australian retailers who are doing their best not to pass these costs on to consumers in the short term are seeing their margins heavily squeezed.

This is happening at a time when most retailers have already been decimated by the lockdowns and additional COVID-safe cost imposts. This is clearly not sustainable and something needs to change.

Anthony Scali, CEO of furniture chain Nick Scali, told The Australian:

The problem is, there are two ways to buy freight: either you deal through a freight forwarder or you deal directly with shipping lines. We always deal with big forwarders and every time you dealt with shipping lines the price was higher than what I could get with a forwarder.

We know the shipping lines are not always providing the shipping containers when they should, unless you pay a premium price. I have had agreements in place (with freight forwarders) that have just been ripped up because they can't get to the container - the shipping line won't give it to them.

Mr Scali previously warned that the rocketing price of shipping would force him to ratchet up his prices, and he welcomed the ACCC investigation. He added:

Everyone (retailers) is raising prices already. In furniture, lounges are a big volume user so there have been cases where the freight costs are more than the price of the lounge. That's crazy at the cheaper end, and you have to pass prices on.

Wesfarmers CEO Rob Scott also recognised the explosive growth in shipping prices. He told The Australian:

The pandemic has caused significant disruption in global container shipping markets and we have seen this translate to higher costs as well as delays. We have made changes to our ordering processes to adapt to these disruptions and we are continuing to work with our suppliers.

Paul Zalai runs the Freight and Trade Alliance which represents importers and exporters. He also welcomed the ACCC investigations and said the Alliance had been working with the regulator on shipping competition reforms.

He said stevedore charges had gone up by around one fifth over the past year on "already high fees" and fees charged by the shipping companies were triple what importers had traditionally paid.

To watch the videos from ABC News, go to the following link:

Related: US home improvement retailer Home Depot reserved its own ship to deal with its supply chain problems.

China-based conglomerate Wanxiang Group Corp. is in talks to acquire hand tool manufacturer Apex Tool Group from global investment firm Bain Capital, according to a report in Bloomberg. Apex Tool brands include Gearwrench, Crescent, Wiss and Lufkin.

A potential deal could value Apex at about USD2 billion to USD2.5 billion, sources told Bloomberg. Talks are still ongoing and other bidders remain interested in the asset, said people familiar with the matter.

Wanxiang Group Corporation is mainly known for developing, producing, and distributing auto parts. Its website said the businesses ranges from auto parts manufacturing and clean energy to agriculture.

Apex Tool Group was formed in July 2010 as a joint venture between Danaher Corp. and Cooper Industries. They created Apex to take advantage of overlap in their product lines, manufacturing and sales forces. The companies valued the joint venture at about USD960 million when it was created.

Bain Capital acquired Apex in 2013 for about USD1.6 billion, and refinanced the company's debt in 2018.

Boral

Building materials company Boral has sold its Australian roof tiles business to private equity firm Lutum and three members of its former management, according to DataRoom in The Australian.

It is understood that Boral will retain the Sydney real estate sites of the business while divesting the remaining operation. The company has been in talks about a potential sale of its roof tiles business since at least 2017 as part of an exit out of building products in Australia and confirmed at its recent results briefing that it planned to sell the business.

There was an earlier expectation that the roof tiles business would be sold for tens of millions of dollars, and it is understood that the division was offloaded for less than $30 million.

Boral is now 70% owned by Seven Group Holdings.

Related stories:

Boral sold its US-based Meridian brick operation last year.

Boral has agreed to a sale of its Australian timber unit.

ASSA ABLOY

The Sweden-based company has signed an agreement to acquire the Hardware and Home Improvement (HHI) division of Spectrum Brands for USD4.3 billion in cash. In a statement, Nico Delvaux, president and CEO of ASSA ABLOY, said:

HHI is an excellent addition to the ASSA ABLOY Group and constitutes an important strategic step in developing our residential business in North America. This acquisition advances our strategy to strengthen our position by adding complementary products to the core business and it will further accelerate the transformation from mechanical to digital solutions.

The acquisition will bring together four of the five top brands in smart door locks category, according to CE Pro. Spectrum's brands include Kwikset and Baldwin, while ASSA ABLOY's brands include Yale and August amongst others.

ASSA ABLOY said it can bring technological innovation to consumers using HHI's access to retail channels, and HHI's large installed (professional end-user) base and strong consumer reputation provides an opportunity to grow its electromechanical and digital access solutions.

HHI has established relationships with large home improvement centres, wholesale distributors, homebuilders, online retail channels, and home automation providers. It is headquartered in Lake Forest, California with some 7,500 employees worldwide and has manufacturing facilities in the US, Mexico, Taiwan, China, and the Philippines. David M. Maura, executive chairman and CEO of Spectrum Brands, said:

After stewarding this asset for the past decade, the board of directors and I are confident that ASSA ABLOY is uniquely positioned to take our HHI business and team members to the next level of performance and achievement. I am personally excited to see the innovation and exciting new products that this transaction will unlock for future generations.

The deal will also allow Spectrum to sharpen its focus on its pet care, home and garden and personal care businesses.

The transaction is conditional upon regulatory approval and customary closing conditions and is expected to close during the fourth quarter of 2021. HHI will become part of ASSA ABLOY's Opening Solutions Americas Division.

The Australian Competition & Consumer Commission (ACCC) has made moves recently to increase its profile for Australian businesses in terms of competition compliance. This has included a move to acquire more power to prevent mergers that it deems anti-competitive.

The primary shift that is occurring worldwide is for competition provisions to move away from the past standard. This standard essentially meant that even large corporations were free to influence markets, as long as there was no net detriment to consumers. Previously, "net detriment" was reflected in terms of price - almost to the exclusion of all other factors.

More recently competition regulators - including the ACCC - have expanded the definition of net detriment to include market controls that effectively prevent or limit the development of new products and/or services. A good example of this type of behaviour is the acquisition by a large company of a small company, when this occurs to prevent the smaller company from developing as a competitive threat.

One way of seeing this position is that competition regulators have extended the definition of net detriment to deal with far-future events, which involve the development of the overall market. Built into this oversight is seemingly a guarantee that corporations offering a "be acquired or we will ruin the value of your business" ultimatum to smaller businesses will find themselves subject to anti-competitive oversight. One company widely regarded as having engaged in this behaviour is global online retail company Amazon.

A recent case involving Nero Bathrooms International Pty Ltd (trading as Nero Tapware), indicates that the ACCC may also be increasing its surveillance of, and reaction to practices it regards as approximating price fixing.

Nero is a national supplier of Nero branded bathroom products, supplying over 1000 independent chain stores across Australia.

It has admitted it was likely to have engaged in resale price maintenance by withholding supply of its products from a small independent building supplies retailer when that retailer failed to raise its advertised prices.

According to the ACCC, Nero admitted that in March 2020, it made statements to a retailer that the retailer's prices were too low, that it should not advertise Nero products at a price lower than 15% off the recommended retail price (RRP), and that it should raise its online advertised prices so those prices were not lower than 15% below the RRP. When the retailer did not raise its prices, Nero is said to have stopped supplying the company.

It is illegal for manufacturers and suppliers to attempt to stop retailers from discounting their prices below a specified price, such as the RRP. ACCC Deputy Chair Mick Keogh said:

Nero has acknowledged that it was likely to have breached the law prohibiting resale price maintenance when it communicated a 'minimum price' to a retailer.

Resale price maintenance conduct prevents retailers from competing on price, and this means consumers pay more than they should.

In this case, the conduct was limited to a single retailer, and there was no direct consumer harm because that retailer did not comply with Nero's pricing directions.

Nero has provided a court-enforceable undertaking to the ACCC, in which it has committed to advising all Nero retailers that they are free to set their own prices, and to ensure relevant Nero staff receive compliance training on their obligations under the Competition and Consumer Act, including the prohibition against resale price maintenance.

The ACCC also said Nero has been co-operative throughout its investigation.

Hardware retail industry

While these competition provisions have been "on the books" for some time, this could also be a monitory action directed at other companies in the hardware sector. In particular, it would be a simple matter to name at least one power tool manufacturer which has established a de facto policy that limits retailers from advertising discounted prices for their tools online.

It is readily apparent from the Nero case that this is not legal in the view of the ACCC. For example, simply denying a discount to a retailer that makes such product representations is likely to meet with the same disapproval as any other action which results in a form of price fixing.

Related: In 2020, Stanley Black & Decker Australia approached the ACCC with a request to make a minimum pricing requirement, but with a twist: retailers could sell DeWalt power tools below the RRP, but they could not advertise them below that price.

It's notable that DeWalt did this in a highly ethical manner, by submitting a request for a specific exception. The company was, in the end turned down. This kind of process, as expensive as it can be to suppliers, is very useful in determining the "rules" for the industry.

About resale price maintenance

Resale price maintenance is illegal and occurs where a supplier prevents, or attempts to prevent, independent retailers from advertising or selling products below a specified price.

Resale price maintenance occurs when manufacturers or suppliers:

Businesses proposing to engage in resale price maintenance must lodge a resale price notification with the ACCC. They can seek protection from action for resale price maintenance by the ACCC if the public benefit likely outweighs the public detriment.

More information about resale price maintenance can be found at the following link:

Weber sponsorship

Weber Barbecues has agreed to a deal with Cricket Australia (CA) to become the new naming rights partner of the Women's Big Bash League (WBBL).

Starting from the upcoming season, which gets underway in mid-October, the Twenty20 tournament will be known as the Weber WBBL.

The barbecue brand takes over the title sponsorship of the tournament from sports apparel company Rebel, which has been the competition's naming rights partner since its inaugural 2015/16 edition. Weber AUNZ's managing director, Mike McDonald, said:

Barbecuing and cricket have long been a part of the fabric of the Australian summer, so this partnership is a great, natural fit. We believe that getting involved in barbecuing, like playing cricket, should be inclusive of everyone and we are very proud to be able to support the growth of women's cricket in Australia.

The deal will also see Weber become a supplier of the men's tournament, known as the KFC Big Bash League. Alistair Dobson, CA's general manager of Big Bash Leagues, said:

Much like the league, Weber has harnessed an iconic element of Australian culture and applied its own touch. Now both occupy their own place in an Australian summer - the WBBL in its standalone October to November window, and a Weber in every backyard.

We thank Weber for their support of the league and look forward to seeing their brand adorn the broadcast, venues and club playing uniforms throughout Weber WBBL|07.

Weber is a long-term client of Publicis Groupe's Starcom Adelaide which enlisted Publicis Sport & Entertainment to broker the naming rights deal with the Women's Big Bash League. Publicis Groupe ANZ's executive director of Publicis Content and Publicis Sport & Entertainment, Bianca Wallis, said:

It's critical that women's sport get the same support and marketing from brands to level the playing field, and I'm excited for us to take this journey with Weber.

Japan-based power tool manufacturer Makita Corporation has released its results for the first quarter of its FY2021/22. The results show a substantial improvement over the previous corresponding period (pcp), which was the first quarter of FY2020/21.

Revenue for the quarter came in at JPY185,297 million, an increase of 45.9% over the pcp. Operating profit was JPY28,382 million, an increase of 82.3%. Overall profit was JPY21,612 million, up by 87.6% on the pcp.

In reporting these results, Makita outlined the main factors for each of its international markets. In the Oceania region (dominated by Australia), sales increased by 39.3% on the pcp to reach JPY12,056 million. The company stated that:

While stay-home demand dissipated, tool demand was strong at construction sites and sales of cordless outdoor power equipment were strong.

In Europe, which is the company's main market, sales increased by 51.7% to reach JPY91,397 million. Makita noted that while the DIY market had slowed, sales into the building and construction sector, as well as sales of outdoor power equipment, had surged. There were similar results in the North American market, with sales up by 44.1% to JPY28,618 million.

Across Asia, markets were very mixed, the company reported, but there were strong sales in both China and Taiwan, so that the region posted an overall gain of 13.6% to reach JPY10,225 million.

For Japan itself, sales continued to improve, but at a slower rate than for the company's main international markets, up by 18.7% to JPY30,053 million.

Looking ahead to forecast results for the current financial year, Makita has retained a cautious approach, estimating an increase in overall revenue of just 6.8%, and an increase in overall profit of just 1.9%. The company stated that:

The outlook for the future remains uncertain, however, due to a resurgence of new cases caused by COVID variants and the intensifying conflict between the US and China.

New products

Typical of the new products Makita has brought to market, helping to boost its sales, is the upcoming XGT line trimmer, the UR006G and UR007G. Both of these are based on Makita's new 40-volt (max) range of Lithium-ion (Li-ion) batteries.

The line trimmers are designed as "drop-in" replacements for existing petrol-powered line trimmers. They feature a strong motor, capable of 1kW output, which the company says is comparable to output from a 30cc two-stroke petrol motor. The motor is placed at the rear of the tool, close to the operator, which retains the familiar balance of the petrol motor units.

The UR006 comes with the U-shaped handles favoured for brush cutting and other heavy-duty jobs, while the UR007 has a more convenient loop handle. Both units also feature three-stage speed control, as well as automatic torque drive which increases torque under load, and active feedback, which will stop the motor when resistance increases beyond a set level, such as when the unit's cutting head jams.

They are also IPX4 rated, making it safe to use them in wet conditions, and feature a reverse mode, for unsnarling the cutting head. They accept standard nylon trimming line, as well as metal and plastic blades.

Analysis

Some of the accelerations in the global construction industry that caused by the COVID-19 pandemic would have contributed to Makita's growth. However, there is more going on here than just that. While putting the company's success down entirely to its new 40-volt platform would also be overstatement, this new product range seems to have reinvigorated sales.

The question for the industry is whether Makita has found a kind of "sweet spot" with this new range. DeWalt started the "voltage wars" with its FLEXvolt tools, which provided 54-volt/60-volt (max) in a platform which, by switching between serial and parallel battery cell configurations, could also work with existing 18-volt/20-volt (max) tools. Techtronic Industries' Milwaukee Tool brand maintained its existing 18-volt line, but then added the very heavy-duty MX line, which provides 72-volt/80-volt (max) power.

In a sense the pioneer in this area was Kobalt, the power tool brand sold through US big-box retailer Lowe's Companies, which differentiated its products by offering 24-volt tools, though Hilti had moved to 22-volt tools previously.

While increased voltage is typically thought to automatically provide more power, that's not necessarily the case. What it changes more than anything else are the design parameters involved in making an electric motor. For example, the "standard" voltage for motors in electric cars today is 400-volts, but more recent "performance" versions such as Porsche's Taycan run on 800-volts instead. That enables the motors to be smaller, and adds improvements to battery partial charge times as well.

So while there is definitely a move towards more power with Makita's shift to a 40-volt system, it's really about shifting around other design parameters as well. According to some power tool designers, it's evident that producing a more powerful tool would be less expensive when it is 40-volt as compared to 20-volt.

From that design perspective, as HNN has written previously, the advent of the 21700 battery cell, with its greater charge density and slightly large size, has made 40-volt more possible. But what is interesting to consider, is whether Makita sees a change in the market that has encouraged it to make these more powerful tools.

Given that Europe is the company's largest single market - though it certainly hopes to grow its North America market as well - it is likely Makita would respond first to pressures in that market. Deloitte in its report entitled, "European Construction Monitor 2017-2018: A looming new construction crisis?" (published in July 2018, which would have been the design period for today's Makita tools) had this comment to make:

When looking at the profit margins, we observe different trends throughout Europe. In the Northern European countries costs have increased, but due to high activity levels it is expected that overall profit margins will not be affected and will even increase in the coming years. In the western part of Europe, such as the UK, Belgium, the Netherlands and Ireland, operating margins are under pressure due to an increase in labor costs, which cannot be offset with higher activity levels or be passed down the supply chain.

The European construction industry is facing increased costs in part due to growing constraints. There have been improvements to health and safety (such as dust filtration and elimination) that have added costs and imposed some productivity losses - for a very good cause - as well. There are also costs related to moves to "decarbonise" the industry as much as possible, which often translates to less concrete and more (expensive) wood.

This is putting additional pressures on subcontractors and builders. They are being pushed to do more faster with less resources. One way out of that is to start using power tools that have more power, purely for the benefits of saved time and therefore higher efficiency.

A recent study from Denmark entitled, "Determining the Relationship between Direct Work and Construction Labor Productivity in North America" investigated why productivity has declined since the 1970s. The study's conclusion was that too much time was wasted on non-productive activities. The biggest barrier to improvement was simply a resistance to change.

Labor productivity in construction has fallen behind other industries. As reported widely, it has been declining continuously for decades, at least in most parts of the western world. To change this negative trend, the construction industry needs to know where to focus.

It was found that craftsmen efficiency is a crucial factor in changing the trend of stagnation and decline in construction labor productivity. The importance of craftsmen efficiency was found by comparing four decades of published direct work rates measured on activity and project levels, with construction labor productivity data measured on a national level.

The comparison showed that if all construction crafts in North America added just 36 seconds of additional direct work time to each working hour in 2010, 5.4 billion USD (2012 value) would be added to the yearly construction GDP.

While Australia, currently, has fewer constraints on the industry, there is still a push to improve productivity, as build times stretch longer and the industry remains mired - for the most part - in the less productive practices of the past. So there is definitely something of a "fit" for this shift in Makita's market strategy, though it is not as tight a fit as that for Europe and North America.

Related: The new 21700 battery cells - how will they influence the power tool market?

The family behind WA-based Richgro were featured in The West Australian and spoke to the newspaper about its recent changes and future plans.

Tim Richards has taken over as managing director from his father, Geoff, who started in that role in 1990.

The company dates back to Geoff's grandfather Arthur, who arrived in Fremantle in the early 1900s from the UK. He set up a store selling produce including oats, barley and chaff, after a brief time laying bricks at the Boans building in Perth. (Boans was a department store that operated in WA between 1895 and 1986.)

It wasn't long after starting at the store in the mid-1960s that Geoff, who also trained as an accountant, realised change was needed. He told The West Australian:

When I got into the company I decided not just to do what my dad did. The incoming things at the time were pet food and gardening products, which we sold in our produce store...

In 1969, we won a tender to pack bags of fertiliser for the nursery industry. Within three years we represented most of the major east coast companies.

We introduced bagged organics and potting mixes to WA. It grew quite quickly ... in 1979, we bought our first company in Adelaide, and then [added] outlets in every state. Mr Bunnings in 1984 came along and we piggybacked on that to get our products around.

Both father and son ascribe their success and longevity to their nimbleness and ability to stay on top of global trends. Geoff explains:

We were able to predict roughly what Bunnings would achieve by looking at Home Depot in the US and Homebase in the UK - that move really did not come as a surprise to us.

For Tim, the company's strong sustainability focus set it apart some time ago. The head office has been off-grid since 2015, instead using generators fuelled by recycled food waste, diverted from landfill to become methane - the excess returned to the grid. He said:

IIncreasingly we're turning to more electric machinery to use [generators] rather than burning diesel. Our wood grinder was previously diesel-powered, and is now fully electric. No emissions. Instead of using 1000 litres of diesel a day, we're running it off our own green power.

We want to reduce our footprint and produce more sustainable products for our industry ... We've been composting and recycling products since the 1970s. It wasn't so much in vogue and the done and said thing, but we certainly learnt to focus on that area.

The Richgro team - numbers around 100 people including casuals - is also well advanced with plans to open a new facility at North Bannister, about 90km south-east of Jandakot, which will be home what is believed to be the WA's largest licenced composting facility, with 200,000 tonnes expected per annum. Organic waste and feedstock will be recycled into products for agriculture and horticulture. Tim explains:

Some people have been with us more than 35 years. We like to create that family environment, not just as a business but we treat staff like family. You tend to get that back in spades from staff because we create an enjoyable workplace ... that's half the battle. If people enjoy what they do, they'll keep coming back.

We pride ourselves on being a family company without structure. We have the ability to react to market changes and market demands quickly.

And staying as a family business has also been part of the success to date. Geoff added:

We've always been able to outmanoeuvre corporates because they couldn't react as quickly as we could, but it's that ability to have the funds in your organisation to enable you to take on some reasonable- sized projects that set you apart.

It's always a juggle but when you only have one person to answer to at the end of the day and that's yourself ... You can achieve things a lot quicker.

Hong Kong based Techtronic Industries Group (TTI) has released its results for the first half of its FY2021, which is the six months ending on 30 June 2021. TTI is best known for its power tool sub-brands, Milwaukee Tool and Ryobi.

Overall results were revenue of USD6394 million, up by 52% on the previous corresponding period (pcp), which is the six months to 30 June 2020. Earnings before interest and taxation (EBIT) came in at USD572 million, up by 57.4% on the pcp. Overall profit was USD524 million, an increase of 57.9% on the pcp.

The company stated that:

Every one of our geographic regions and business units delivered impressive sales growth in the first half. North America grew 50.2%, Europe grew 62.3% and Rest-of-World (RoW) grew 50.0%.

Sales for its Milwaukee Tool division increased by 64.1%. This included an increase of 59.8% in North America, over 90% in Europe, and 58% for RoW.

Presentation

The company's well-known CEO, Joe Galli, made an ebullient presentation setting out the company's future plans and prospects. With the presentation made as a virtual event, this included a video of Mr Galli presenting, against a background of Milwaukee and Ryobi tools.

ESG

One theme that ran throughout the presentation was the importance of environmental, social and corporate governance (ESG) values to TTI. Mr Galli introduced this theme by stating:

As Teddy Roosevelt famously said, 'We must dare to be great'. And for TTI greatness means not only building a powerful company with outstanding financial results, but also a company that cares deeply about ESG. And you're going to see, in our highlights today, we are incredibly obsessed with and focused on doing the right things for our business, for our shareholders and for the planet.

Later, Mr Galli went into some more detail about TTI and ESG:

Okay, one of the things I mentioned up front is TTI is excited to embrace ESG as a corporate obsession, we you will see we are maniacally focused on being a global world class leader when it comes to ESG. We are we have many, many initiatives in the company that we've embarked on that will help us achieve and exceed world class standards in ESG.

You will see many examples as I go through this update in terms of the products, the disruptive products we're introducing that will allow us to help save this planet and put the society in a better place. But let me give you a big example. So we are going to be the global leader in battery powered lithium mowers, whether it's riding mowers or push mowers. We decided to build our battery laminar factory in the United States, so that we wouldn't have the ocean freight issues that that are a very, very bad thing for sustainability.

And, we also think just building our product close to market is the right thing to do. This is a real life ESG example. And we have dozens and dozens and dozens of examples that we'll share with you as time goes on here as we roll out our ESG initiatives.

Competitive statements

Another recurrent theme in the presentation was a degree of "push-back" against some claims that Mr Galli stated had been made by TTI's major competitor, which is widely regarded to be Stanley Black & Decker (SBD). In his initial introductory remarks, Mr Galli made this statement:

There's been some misinformation that was introduced by our large competitor in the US. And it's now in the public domain. I intend to correct some of this misinformation today. For example, our largest competitor actually said that TTI is really good at North America and Australia. But the rest of the world, not so much.

Just so our investors understand, our European Theatre of Operations is flourishing. In fact, I think Europe may be the biggest opportunity we have in this company, and Europe was up 71% when you compare versus 2019. 71%, of course, rest-of-world is also growing nicely. So you need to look at TTI not as a US or North American company, but as a global company that is growing like crazy, beyond the shores of the USA.

Mr Galli's second reference to this competitor came in his introduction to recent developments at TTI's very popular DIY brand, Ryobi. He stated:

Our largest competitor did suggest two weeks ago, they stated that they have a DIY brand, that's a better brand than Ryobi. This is of course absurd. Ryobi is three times the size of this brand that our competitors are referring to, and you know Ryobi is a global brand.

It is widely believed that this is reference to the SBD brand Craftsman.

On Milwaukee

As he has in the past, Mr Galli outlined the core strategy at Milwaukee as being focused on helping workers in building, construction and maintenance trades to move to lithium battery cordless tools.

Milwaukee is pursuing, aggressively pursuing a disruptive strategy of converting legacy power sources to clean lithium battery powered tools. And you know, the three areas of attack here are all areas that really were created in World War Two, these are World War Two era technologies that we are now attacking. And we intend to launch this global revolution away from these traditional power sources, which are not good for the environment and into battery powered lithium.

One example he offered of the types of products Milwaukee is developing was a cordless "chop" saw, which is basically a high-powered drop saw for metal.

Mr Galli described the potential for this type of market:

So the first power source that we're going after is the corded tool. Yes, the corded plug in the wall AC tool is still, in the professional arena, is still a massive part of the market. In fact, this is an example, this chop saw, 99% of all these chop saws around the world are still corded - 99%. And there's so much opportunity in front of us to convert just the corded power tool to battery powered tools. And we are on the vanguard of this revolution. We intend to be very aggressive about it, liberating people from these dangerous cords where there's electrocution risk and all kinds of other factors that inhibit productivity on job sites and we intend to move people to clean lithium powered products.

This chop saw is an amazing product. This will cut with the same power, speed, torque as a corded version, and the life is actually longer on our cordless, on our battery powered chop saw than the traditional [corded] unit. So this is yet another example of the many different corded products that exist on job sites today that we intend to make cordless.

The second type of tool which he suggested was open to this type of conversion is the nail gun (or "nailer" in American parlance).

In 1944, Howard Hughes actually hired an engineer to help him build his Spruce Goose wooden aircraft. And this engineer came up with the idea of a pneumatic nailer instead of a manual version. And so we're talking about technology, it's 75 years old, it's still present everywhere on job sites. And when you have a pneumatic nailer it's not ... you don't just have a nailer, you have to have a nailer that attaches to a hose, where you have the compressed air to fire the nail, the hose which is long unwieldy and heavy connects to a gas powered compressor.

On outdoor power equipment

Mr Galli was very optimistic about the prospects of Milwaukee - and TTI in general - in the outdoor power equipment (OPE) market. He highlighted one product in particular: a new lawnmower.

Now we have in the Milwaukee family, we have a roadmap of a number of high performance, battery powered lithium battery products. Next year, in fact, we will launch a lawnmower, a Milwaukee branded lawnmower. It's battery powered. This lawnmower not only will blow away any of the battery mowers that are on the market today, but it will actually outperform the gas mowers. The best ones we've tested all over the planet, we will roll out this year. And I think we intend to see Milwaukee as a vanguard of this once in a generation revolution. It's a stampede away from the filthy gas polluting power sources to clean cordless.

The automotive market

One theme that Mr Galli pushed vigorously was the growing potential in the automotive market, both for the "pro" (tradie) user and the DIY user. He went into some detail to describe how this market has recently developed:

We think the automotive aftermarket, the whole transportation arena is massive. Right now it's very difficult to buy a used car most any country, you can't rent cars, you can't buy used cars. Cars are scarce. And so people are repairing cars at record levels. This is a big opportunity for DIY and pro.

In a very TTI move, Mr Galli then described a product, that instead of being all about power and drive, is just simple good design: a light for working on vehicles.

One of the many products we have for this transportation arena is this really cool, underbody work light. So this device actually has two magnets. One magnet here is what you attach to the bottom of a car or truck or whatever the work surface is.

The other magnet is on the side. And so as you remove a lug bat or a bolt, instead of it dropping on the floor into a greasy bucket, you just stick it right here with the magnet, and you can control this work activity. So as we showed users this sample, they didn't want to give it back. The auto mechanics just fell in love with the idea.

Personal protective equipment

Mr Galli also highlighted TTI's move deeper into the personal protective equipment (PPE) market. One of its main developments at Milwaukee has been to reconceive of the standard jobsite helmet as a platform for a range of accessories.

So we have pioneered a unique range of hard hats that we actually make in the USA. These hard hats are loaded with features you can customise based on your application. And these hard hats will be the cornerstone of a full range of personal protective equipment that we will roll out under the Milwaukee brand. We have begun launching some of these products, and the reaction in the market has been incredible. And this will be yet a another multi-billion dollar platform in our company as time goes on.

The helmets enable a range of lights to be attached, as well as hearing protection.

Ryobi

Mr Galli does not see the DIY market as being disappointing in 2021 or the future, unlike other power tool companies. As he describes it:

Make no mistake Ryboi is the strongest DIY brand in our industry by far. Ryboi is a brand that has an overarching cordless platform between power tools and outdoor equipment and floor care and cleaning products and many, many other subsets. And we intend to build on that global strength with Ryboi.

The other misinformation that came out a couple of weeks ago is that this this whole idea that the DIY market is now flattened out, while the pro market is the only market is growing. This is of course, highly inaccurate. The DIY market has massive opportunity in cordless. Of course the gas DIY market is shrinking, the AC market is down. And so is pneumatic but the cordless DIY market we think has all kinds of potential.

Just as TTI sees the automotive area as a rich source of future growth, it also believes that there is a growing DIY market as well. Mr Galli highlighted tools such as a die grinder, an impact wrench, and an extended reach ratchet as typical tools for home mechanics.

Analysis

While the advent of successful vaccines has changed the way the world sees its post COVID-19 future (for those nations who have secured adequate supplies), there is little doubt that the world we will emerge into possibly some time in 2023 will be somewhat different from the one we left in early 2020.

One of the unexpected - too many - "boons" of the pandemic period is that overall productivity in the US has increased sharply. According to an article in the New York Times:

Since the second quarter of 2020, labor productivity - the amount of output per hour of work - has risen at a 3.8 percent annual rate, compared with 1.4 percent from 2005 to 2019. New data published Tuesday showed the trend persisted this spring, with a 2.3 annual rate of productivity growth in the second quarter.

To those of us who work in the tech industry, there is little if any surprise to this at all. While the message taught from the late 1950s all the way to the early 2000s was that productivity paved the pathway to prosperity, businesses discovered around post 2003 that there was another route.

Technology was acceptable when it took existing practices and then "automated" parts of them - a spreadsheet replaced a ledger, a word-processor replaced a typewriter. It was less acceptable when it created entire new paradigms - a word-processor, for example, that had no provision for printing, and relied on keeping source versions on GitHub. Individual workers in businesses, and businesses themselves, discovered they could simply say "no" to technological advances. That way they retained their apparent relevance, and by acting en bloc stopped disruptive change.

The pandemic has reversed that to some extent, simply through necessity. Not only was the photocopier finally rendered utterly redundant, but so was the printer. The virtual world was no longer ruled by the analogue world, but instead referenced only itself.

The one glaring exception to these productivity improvements, in the US and elsewhere in the world, is the building and construction industry. We've had a developed version of building information modelling (BIM), for example, for over 30 years. Yet its influence on the industry is minimal. Similarly, we've had distributed manufacturing through 3D printing in a very usable format for six or seven years, yet its impact on the industry is close to non-existent.

There is a sense, though, that this is about to come to an end, in the current decade. Take, for example, the decades-old fad of using shipping containers as a kind of personal modular construction - even though, in the end, this seldom saves much in the way of expense, and creates its own problems. But what is attractive to people in shipping container construction is that those problems are different, changed, to something which many people find easier to relate to.

In this context, there is much to be said about TTI's "mission" to lift power tools up out of the context of the third industrial revolution, and put it more in the fourth industrial revolution. TTI, of course, has investors, makes use of their capital, and must - to simply be ethical - strive to produce a return on that capital for them. It is trapped to some extent by its context.

That said, there is probably no other power tool company currently - including, actually Bosch - that is better equipped to consider what power tools fully emerged into the fifth industrial revolution might look like.

A good example, of course, are the tools in both the Milwaukee and the Ryobi ranges that are aimed at professional and amateur car mechanics. By 2030, the likelihood is that there will be more electric cars sold than those using an internal combustion engine. That means far less maintenance of any sort - but most likely maintenance that is even easier for the amateur to perform.

What if we consider that it's quite possible that building and construction will evolve in a similar pattern over the next 20 years. What kind of power tool company will meet that new set of needs, as it emerges? One way of getting to an answer is to go beyond the typewriter to word-processor transformation of, for example, nail guns, and to think instead of what the end product should look like, and work backwards.

In rather blunt terms, it seems likely that TTI is simply too good a company to limit its future as much as it has currently.

Joe Galli, the CEO of Techtronic Industries Group (TTI) has had broad experience across industries. He began his career at Stanley Black & Decker, where he was critical in the launch of the DeWalt brand. Denied an adequate promotional path, he left and held a range of other positions, including a period at Amazon. He joined the TTI in 2006 as the head of Techtronic Appliances and was appointed as chief executive officer and executive director of TTI on February 1, 2008.

As perhaps the power tool industry's best CEO, his biannual presentations of results are dynamic and far-reaching, dipping into everything from technical details, to the formation of new markets and longer-term strategies.

The following is a transcript of his presentation for the first half results for TTI in its FY2021. It has been edited for clarity and conciseness.

Introduction

Hi, I'm Joe Galli. And I am beyond excited to share with you the results of TTI's first half 2021, along with some highlights that you can expect from us, in the months and years to come. People continue to ask us what we think is going to happen near term, long term based on the virus, other issues that we face in the world today. And, you know, our response is very simple here, we believe that the best way to predict the future is to control it, to create it. As Lincoln said, and this is exactly what we intend to do. We are building the company here that will flourish in good times, and bad, whatever the overall overarching circumstances are. And that's exactly what we have done in 2021. And we will continue to do.

Now, greatness is an elusive quality among companies. And it takes a lot of courage to be great. As Teddy Roosevelt famously said, ‘We must dare to be great’. And for TTI, greatness means not only building a powerful company with outstanding financial results, but also a company that cares deeply about ESG. And you're going see, in our highlights today that we are we are incredibly obsessed with and focused on doing the right things for our business, for our shareholders and for the planet. And I'm excited to share that with you as we go.

Results summary

Okay, first half, can you imagine a power tool company growing 52%! We were up a cool 2.188 billion in sales in the first half of 2021. In the Milwaukee business, which is our flagship, high margin, professional business was up 64%. Now, what makes these numbers even more extraordinary is, when you look back at our performance versus 2019 you'll see even more incredible numbers. In fact, versus 2019, we grew the company 71%, and in Milwaukee 84%. This is meaningful because many of our competitors saw their sales collapse last year in the first half while we grew. So we think it's very important that you look at a two year track record here in terms of sales results. And I think up 71% for the company and up 84% from Milwaukee is pretty darn good.

Unsubstantiated claims

There's been some misinformation that was introduced by our large competitor in the US. And it's now in the public domain. And, and I intend to correct some of this misinformation today. For example, our largest competitor said that TTI is really good at North America and Australia. But the rest of the world, not so much. Just so our investors understand, our European Theatre of Operations is flourishing. In fact, I think Europe may be the biggest opportunity we have in this company, and Europe was up 71% when you compare versus 2019. Rest-of-world also grew nicely. So you need to look at TTI not as a US or North American company, but as a global company that is growing like crazy, beyond the shores of the USA.

Floorcare results

I am delighted to report that our floorcare business contributed nicely to our first half this year. Floorcare was up 25.3%. That's global floorcare. It's a direct result of a lot of hard work and a lot of new products we've launched in the fiercely competitive floorcare market. But you know, when you take floorcare out, you have to remember that power equipment, our tool business, grew even more impressively, actually up 55%.

Further results

All in all, it's pretty astounding to look at what this company was able to deliver in the first half of 2021. When you look at our P&L, you see not only sales exploded up 52%, but gross margin improved yet another 58 basis points. We invest in some of that gross margin as our strategy is, as we've stated consistently. We've invested some of that back in strategic SG&A (selling, general and administrative).

Our profit grew at a faster rate than sales. On the EBIT line, we read 57.4% and net profit up a cool 57.9% in the first half of 2021. One of the things that we obsess over in this company is our gross margin improvement. We believe it's critical that we outgrow the market on the top line while we continue to improve gross margin at a pace of roughly 50 basis points a year. And we exceeded that target in the first half, growing gross margin 58 basis points while we grew.

What this tells you is that the marketshare we're capturing – and believe me we're capturing a lot – is not a result of us cutting price and denigrating the quality of our brands or our products in the minds of the consumer. We are growing at premium prices and growing like crazy because our products are demonstrably superior to our competitors. We have technological advantages that that no one else has. And you can clearly see that in a company that's growing at this rate with gross margins consistently improving.

And in fact, talk about consistently improving, we have now improved gross margin in the first half, for 13 consecutive years, we've gone up on average 50 basis points a year, in terms of gross margin. This is essential for our strategy, because we take some of that gross margin improvement and we invest it right back into what we call strategic SG&A. So make no mistake, we are ruthless about squeezing non-strategic SG&A, unnecessary overhead administrative overhead. And we did again, in the first half, where [the SG&A was] down eight basis points. But in the strategic SG&A area, we invest it into new products, new geographic expansion opportunities, more sales coverage, marketing, and user conversion.

When we identify strategic areas of investment, we take some of that gross margin improvement and we invest it right back into our future. And this bodes well for TTI over the back half of this year, over the next five years, over the next decade, because these investments are going to pay off in the months and years to come.

If you look at our working capital in the first half, you clearly see a very different strategy than many of our competitors. We actually have weaponised inventory, we believe strongly in our ability to grow this company as we go forward. And that's why we have built high levels of inventory so that we position TTI to grow, continue to outgrow the market in the back half of 2021, and on into 2022 and beyond. So yes, we added 34 days of inventory, we had 136 days of inventory finishing up in the half. And that's exactly what we planned so that we would be in a position to take more market share and serve our customers around the world.

At the same time, our marketing and sales companies globally have been incredibly disciplined in managing receivables. That's why we have virtually no bad debt in this company. Our days [outstanding] for receivables actually went down from 65 last year in the first half down to 56 days this year. And one of the reasons is we just we don't go into countries where there's high risk, bad debt risk. We are very, very careful and disciplined about this. Because anybody can book a sale. But if you don't collect the money, it really is not a sale and it shows up later. So our team's doing a great job with this.

And when you look at payables, our payables performance shows you that we were up from 109 to 125 days payable, so we're paying our suppliers in 125 days. And this shows you that our suppliers are working very closely with us to enable us to build the inventory we need to continue to capture market share and grow this company well above the market.

And we're very grateful for our supplier partners, we work very closely with them. We've grown with our suppliers for years and years now, in a way that bodes well for both TTI and a supplier base. So working capital as a percent of sales still finished under our goal of 20%. And we did it the right way. We don't cut inventory off in the middle of June so that we can impress Wall Street and investors with a lower days of inventory. We are building this company to win in the market. And we still had 20% of working capital as a percent of sales.

Environmental, social and corporate governance

One of the things I mentioned up front is TTI is excited to embrace ESG [environmental, social and corporate governance] as a corporate obsession. You will see we are maniacally focused on being a global world class leader when it comes to ESG. We are we have many, many initiatives in the company that we've embarked on that will help us achieve and exceed world class standards in ESG.

You will see many examples as I go through this update in terms of the products, the disruptive products we're introducing that will allow us to help save this planet and put the society in a better place. But let me give you a big example. We are going to be the global leader in battery powered lithium mowers, whether it's riding mowers or push mowers. We decided to build our battery laminar factory in the United States, so that we wouldn't have the ocean freight issues that that are a very, very bad thing for sustainability. And we also think building our product close to market is the right thing to do.

This is it a real life ESG example. And we have dozens and dozens of examples that we'll share with you as time goes on here as we roll out our ESG initiative. But you should feel free to ask questions and follow up with us. Many of you want to discuss ESG and we would love to share with you why we are so far ahead of our competitors that this will be yet another advantage TTI has versus the market competitors that we go up against.

Milwaukee Tool

Let's shift gears to talk about Milwaukee. It's hard not to be impressed with our global Milwaukee team here at TTI. Milwaukee grew 64.1% in the first half. And contrary to what our largest competitor suggested, we're doing a great job in North America, that part our competitors got right. But Europe was up 90% in the first half this year in Milwaukee; 90%, which ought to dispel this notion that we're not strong outside the US and Canada. And of course, rest of the world was up 58%, which is not bad. We're very proud of the global build out our Milwaukee team has put in place, and we intend to aggressively take market share in the pro market around the world, not just in the back half, but for many, many years to come.

Core strategy

Milwaukee is pursuing, aggressively pursuing a disruptive strategy of converting legacy power sources to clean lithium battery powered tools. The three areas of attack here are all areas that were created in World War Two. These are World War Two era technologies that we are now attacking. And we intend to launch this global revolution away from these traditional power sources, which are not good for the environment and into battery powered lithium.

The first power source that we're going after is the corded tool. Yes, the corded plug in the wall AC tool is still, in the professional arena, is still a massive part of the market. In fact, this is an example, this chop saw. Ninety-nine per cent of all these chop saws around the world are still corded – 99%. And there's so much opportunity in front of us to convert just the corded power tool to battery powered tools. We are on the vanguard of this revolution. And we intend to be very aggressive about it, liberating people from these dangerous cords where there's electrocution risk and all kinds of other factors that inhibit productivity on job sites and we intend to move people to clean lithium powered products.

Examples

This chop saw is an amazing product. This will cut with the same power, speed, torque as a corded version, and the life is actually longer on our cordless, battery powered chop saw than the traditional [corded] unit. So this is yet another example of the many different corded products that exist on job sites today that we intend to make cordless.

This is a more striking example of how much opportunity there is in front of us. The residential construction arena globally has grown nicely and we believe that RESCON will continue to grow here over the next three to five years.

So if you are a residential construction contractor, you need a device called a nailer. The nailers are used to fire a nail through two pieces of wood to attach them together to frame a house. The technology that's ubiquitous today on job sites all over the world is the pneumatic air nailer. And I want you to think about this. In 1944, Howard Hughes hired an engineer to help him build his Spruce Goose wooden aircraft. And this engineer came up with the idea of a pneumatic nailer instead of a manual version. So we're talking about technology that’s 75 years old, it's still present everywhere on job sites. And when you have a pneumatic nailer ... you don't just have a nailer, you have to have a nailer that attaches to a hose, where you have the compressed air to fire the nail, the hose which is long unwieldy and heavy connects to a gas powered compressor.

So you have to pull the cord on a gas compressor, which generates electricity, which compresses air in with a pump device and a compressor and then fires the air through that nail. And you need your trusty gas can because those trips to the Exxon station are a requirement all throughout the day as you're framing houses. So can you imagine this technology is World War Two vintage, the noise level of this technology is deafening. We have literally noise ordinances that are trying to control this stuff. The fumes and the maintenance required, and just the sheer weight of driving these things around is madness.

So we are leading this revolution to cordless nailers. Our latest introduction is a framing nailer, it's selling like crazy. And we intend to be the global leader in non-compressor powered, non-pneumatic nailers. These are lithium battery powered nailers, there's no gas cartridge. They're just ultra-quiet nailers that will revolutionise the way contractors build houses. So we're going after the AC market, we're going after their pneumatic market. And of course, we're going after the petrol or the gas market.

Milwaukee outdoor power equipment

Milwaukee will be our brand that targets the professional landscaper. And this is a massive opportunity because this market is largely gas and petrol. In Milwaukee, we won't make the mistake of having any gas products under this brand. Milwaukee will be pure lithium battery powered cordless.

You have products here, like a chainsaw where historically, if you're using a chainsaw and you're doing any kind of trim work, you literally have the gas engine in your face, and you fire these things up. And you have the fumes coming at you along with all the other debris. So every time we develop a cordless version to eradicate this gas nightmare, it enhances productivity. It's great for sustainability. And it's really cool to use. This is a one handed chainsaw that will out cut a gas equivalent. And for the pro landscaper, this is a real breakthrough.

In the Milwaukee family, we have a roadmap of a number of high performance, battery powered lithium battery products. Next year, we will launch a lawnmower, a Milwaukee branded lawnmower. It's battery powered. This lawnmower not only will blow away any of the battery mowers that are on the market today, but it will outperform the gas mowers. We will roll us out this year. We intend to see Milwaukee as a vanguard of this once in a generation revolution. It's a stampede away from the filthy gas polluting power sources to clean cordless.

Milwaukee range

Today, we are the global leader in full size, cordless, pro cordless, with Milwaukee M18, our full-size cordless system. In three years, you will see double the amount of cordless products. We will have to shrink the tools down to a smaller size. We have so many new products in the pipeline. The idea here is to get people away from the cord, the pneumatic hose, the petrol, the hydraulic products that are still in use and to liberate the professional user into something that makes sense for not only for their productivity, but for ESG, for sustainability.

Milwaukee is already the global leader in subcompact cordless. Subcompact is critical, because in full-sized cordless, you have power and runtime concerns, but in many cases, because our technology and electronics is so advanced, we're able to miniaturise or to shrink up a product and make it much lighter and smaller and easier to use, less unwieldy. And this is creating a massive opportunity for us with the professional user.

Let me give you the latest example in our brand new revolutionary subcompact blower. This little device is a super powerful blower for job site cleanup in tight places, in high places, etc. The end user reaction to this is unbelievable. People can't believe the power and the convenience of a blower that's literally one-handed and super compact. We think subcompact is a vast opportunity. And this is a complementary range to full size. So many end users, many pros will buy a whole fleet of full size cordless products, but they complement it with a subcompact line. And we have a lot these subcompact products that will end up in their fleets.

Here's another really cool product. We think the automotive aftermarket, the whole transportation arena is massive. Right now it's very difficult to buy a used car most any country, you can't rent cars, you can't buy used cars. Cars are scarce. So people are repairing cars at record levels. This is a big opportunity for DIY and pro. One of the many products we have for this transportation arena is an underbody work light. This device actually has two magnets. One magnet is what you attach to the bottom of a car or truck or whatever the work surface is. And then the other magnet is on the side.

As you remove a lug bat or a bolt, instead of it dropping on the floor into a greasy bucket, you just stick it right here with the magnet, and you can control this work activity. As we showed users this sample, they didn't want to give it back. The auto mechanics just fell in love with the idea. Remember, it's the same battery we have in all our other subcompact products.

Let's just say we think the subcompact family of Milwaukee has vast opportunity for growth. By shrinking down traditional power tools into these smaller sizes, you make tools safer, you make them less unwieldy. You enhance productivity in many ways. And it expands the market because many users are saying now they want a full size product and a subcompact product for those applications where size and weight matter.

Milwaukee MX

Our MX cordless equipment series is flourishing around the world today. We are launching a brand new backpack vibrator. This is for the commercial contractor, the concrete masonry market so that you're able to pour super smooth concrete surfaces, whether it's for roads bridges, what have you. With the infrastructure boom that we're about to see globally, this product is just in time and it's exactly what the user is looking for. So this vibrator will give us an expanded fleet of MX equipment products.

You have to remember most of these equipment products today are powered by gas, which is terrible for a job site and try to use gas indoors to do masonry work. It's madness because of the fumes and the noise. The noise is deafening so we have a more quiet, much cleaner range e of equipment. We expect this to be a multi-billion dollar platform for the company long term. And we're enormously excited about the reaction we're getting from the end users, as we share with them the MX field series.

Milwaukee accessories

Our Milwaukee accessory business is flourishing, we are rapidly expanding our Milwaukee accessory line with one new breakthrough product after another. This will be a billion dollar platform on its way to USD2 billion long term. We are incredibly excited about the management team we've assembled and the new product ideas and accessories. It's just another great way to enhance the performance of cordless products because if you design the right accessory, these accessories will allow the tool to actually have longer runtime and extended battery life.

The obsession in our company is to try and make the cordless experience better every year and far better than AC or pneumatic or gas. We also find that the mechanics, hand tool market globally, is vast and full of vulnerable competitors. We intend to attack this market aggressively.

Mechanic’s hand tools are used in two main areas. One is the transportation arena, whether you're repairing a submarine, a plane, a boat, a car, a motorcycle, a dump truck, a bulldozer. Or, in the construction side where you're assembling buildings and or factories. We can see hand tools are pervasive in these applications. We have a mechanic's tool line many professionals prefer over the incumbent lines today, and we're going to expand this range aggressively here as we go forward in the second half this year and on into the next three years.

Milwaukee Packout

Our Packout storage system has created a cult-like following. People today view Packout as a superior solution for mobile storage, also for stationary storage. And in terms of vehicular storage, in your van or your pickup truck. The Packout system is a perfect way to store your tools, accessories and fasteners and other things you would need on a job site.

In order to propagate the system even further, we're launching a series of new Packout products this year. This rolling chest is a super cool way to store large, heavier cordless power tools. We have these deep organisers we're launching now. So whatever materials or tools you have that require more depth, this will provide that opportunity. And there are dozens of additional Packout storage solutions that we're adding to the system. All these Packout products interconnect, so an end user can configure his or her ideal storage solution, whether it's mobile, vehicular or stationary storage, and we expect Packout to be another billion dollar, long term opportunity for Milwaukee and for TTI.

Milwaukee PPE

Jobsite safety is growing in terms of popularity and government support and requirements. The Occupational Safety and Health Associations around the world that police jobsite safety are insisting on better Personal Protective Equipment (PPE) products, and this has nothing to do with the virus. This is a trend that will continue. This trend is growing in Europe in North America, and throughout Asia, you're seeing more focus on jobsite safety.

So we have pioneered a unique range of hard hats that we actually make in the USA. These hard hats are loaded with features you can customise based on your application. And these hard hats will be the cornerstone of a full range of PPE that we will roll out under the Milwaukee brand. We have begun launching some of these products, and the reaction in the market has been incredible. We think there's so much room to improve jobsite safety, which is the right thing to do.

Ryobi

There are a couple of comments about Ryobi that I have to clear up. Our largest competitor stated that they have a DIY brand, that's a better brand than Ryboi. This is of course absurd. Ryobi is three times the size of this brand that our competitors are referring to, and you know Ryobi is a global brand, a competitive brand. And our people that run Ryobi around the world were quite upset about this misinformation.

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We are very fortunate. We have an outstanding team of Ryobi product managers, sales executives, logistics people, etc around the world. And make no mistake Ryobi is the strongest DIY brand in our industry by far. Ryobi is a brand that has an overarching cordless platform between power tools and outdoor equipment and floor care and cleaning products and many other subsets. And we intend to build on that global strength with Ryobi.

DIY market

The other misinformation that came out is this idea that the DIY market is now flattened out, while the pro market is the only market is growing. This is of course, highly inaccurate. The DIY market has massive opportunity in cordless. Of course the gas DIY market is shrinking, the AC market is down. And so is pneumatic but the cordless DIY market we think has all kinds of potential.

One of the things that we work on at TTI is creating the newly minted DIYer. So many people are first time homeowners, they're finally graduating from university or they're moving into the workforce. And these newly minted homeowners can become newly minted DIYers if you show them the right opportunities and the right ideas and that's exactly what we're doing.

Ryobi automotive

As I mentioned earlier, the automotive aftermarket right now is growing like crazy because there's such a dearth of used cars, new cars, etc and people have rediscovered the notion of repairing a car. In the old days, we used to call these people shade tree mechanics. But make no mistake, the DIYer is spending a lot of time and money repairing cars trucks, etc. and Ryobi is uniquely positioned to serve this DIYer in the automotive aftermarket.

For example, this is an extended reach ratchet, which these automotive enthusiasts love. Here's an impact wrench for high torque applications in the automotive aftermarket arena. Here's a die grinder which is ideally designed for many automotive applications. In fact, we have an incredibly exciting line of DIY automotive aftermarket products.

One of my favourites is a super lightweight polisher if you want a wax or polish the car, the camper, the glamper, the motorcycle, boat, trailer, you name it, this is perfect. And of course, the battery pops out of this device and works in all the other DIY automotive products. So we see the automotive aftermarket alone as an enormous opportunity that we intend to capitalise on.

But the DIY market is also flourishing when it comes to nailers. If you're a newly minted DIYer, if you're a homeowner and you want to do any kind of work around the house, in the old days, you would have to get that gas powered compressor and the hose. And all that noise comes from a gas-powered device versus buying a Ryboi. We call this the Airstrike cordless nailer, that's super quiet and super powerful. This is another example where we think we can drive more DIY adoption here in the months and years to come.

We have now introduced 22 new high performance, Ryobi DIY brushless products, we call these HP high performance brushless. Why? Because we think this is a way for us to catalyze the activity. We could show a DIYer that instead of having to hire a contractor or instead of procrastinating not doing a project, you can go to Home Depot or Bunnings or one of our other global customers and you can buy the right product for the job and attack these DIY projects in your home. We do not think that the DIY market in any way is mature. In fact, there's an old saying that there's no such thing as mature markets, there are only mature managers, and we don't have those here so we expect to grow this space in the future.

Ryobi outdoor power equipment

Let's now turn to outdoor which is something we're very excited about. We think the outdoor arena around the world for the DIYer or a landscaper is a massive opportunity to really achieve greatness in sustainability, convenience and productivity and value. There's just there's so many advantages to battery powered outdoor power equipment versus gas and petrol. There's so much upside here. In first half of this year, we grew 57.8% in battery powered outdoor equipment.

This is just the beginning. Let's remember what's going on around the world today. Take the US. In the US, California has already introduced legislation, proposing that all gas powered outdoor equipment be outlawed in 2024. Can you imagine? Yeah, it means gas lawnmowers, string trimmers, hedge trimmers, snow blowers, blower vacuums, chainsaws and all the other gas products that the gas, outdoor companies have propagated. They'll be outlawed in California. Once California goes, it is our view that many states will follow suit and try and do their part in this green movement in trying to save the planet. Illinois has legislation similar to what California proposed.

One of the fastest growing trends we see with municipalities is that they are increasingly sick and tired of the hideous noise you get from a gas blower vac or a gas lawnmower. You get up in Saturday morning, and your neighbour starts firing away with that gas blower and you want to go nuts. So you have municipalities outlawing the use of gas blowers and other gas outdoor power equipment in the US.

This is going on all over the world, this trend is going to be a stampede. And we are going to accelerate the pace in which this happens. We are going to be the disruptors in this in this space. So we have pioneered a concept called the "Whisper Series". These Whisper products led by a blower vacuum, these are super quiet. It's not just the fume pollution but noise pollution is an issue and these blowers, you turn them on you don't even know they're on.

They're super powerful. Our acoustical engineers have really achieved breakthrough level advancements when it comes to controlling noise, not only the decibel level, but also the tonality of these things. The tone of some of these traditional devices is so bad, it hurts your ears, you want to buy earmuffs. So we are launching a whole line of Whisper series outdoor power equipment all powered by battery, lithium battery, no petrol, no gas. And we think this will contribute to the literally the once in a generation revolution that we want to ignite from polluting noisy gas products to clean lithium battery products. This is an incredibly exciting, unique development here at TTI.

Ryobi lawnmowers

Additionally, we have established our company as the global leader when it comes to battery powered lithium lawnmowers, whether the mowers are push mowers or riding mowers, we intend to continue to be on the vanguard here in this space, and we will lead the global charge away from gas and corded to lithium battery powered units. What's mind boggling to us is that our largest competitor is literally buying a company now that has over 150 different gas mowers. Our competitor is going to have 150 lawnmowers powered by a gas or petrol engine with all those fumes, all that noise. And we want to be the Tesla of this space, we are going after the battery powered versions of these things. The reaction with our end user and with our retail partners has been phenomenal. And for good reason. It's about time that we eradicate the pollution that comes from these gas lawnmowers all over the world. It's about time.

Ryobi snowblowers

So let me tell you another exciting area that that none of our competitors ever really admit and talk about. And this is the category of the snowblower. I grew up in Pittsburgh where it snows a lot and so I'm very familiar with how dreadfully bad and hideously smelling that snowblower products are today. They are largely gas powered. In fact, our largest competitor has over 40 yes snowblower products. Let me tell you what happens with the gas snowblower, with a gas unit because the mufflers are always located on the top of these products. The fumes come right out at eye level. The fumes mixed with the snow, that's why when you use a gas snowblower, the snow goes from white to black. That black is that is that is the emissions to pollution it comes out of a gas snowblower.

And believe it or not, snow blowers are like the least regulated gas powered equipment product you can find. There are no regulations so the gas manufacturers have gotten away with murder here for a long time. And if you use one of these, you smell like you just left the coal mine. The pollution combined with the moisture in the air and the snow, you're blowing and the ice, it all mixes up and it's just a hideous, toxic mix. So you end up after you clean up the driveway, you go into the house, and your family kicks you back out because of the smell.

So we have developed a range of battery powered lithium snowblowers This is our two stage unit. Our high end unit will throw snow over 50 feet as good as any gas unit. It's much more quiet, there's no cord to pull, and you don't have to keep filling that up with gas. And your neighbours will thank you because the noise level on these things is so much better.

Ryobi' part in ESG

This is all part of our ESG movement. We could sell gas snowblowers, we could sell them like all the other competitors do. But we're going to be Tesla here, we are going to pioneer the battery side of this market so we have six snow removal products we're rolling out this year. We will be on the vanguard of battery powered snowblowers on into the future. This is yet another example of our obsession with ESG and with moving people from gas to battery.

Ryobi posthole digger

Let me let me give you another example with a posthole digger. This is a giant auger that's used if you're installing a fence around your farm or garden, you use a posthole digger to dig large diameter holes in the ground so that you can install the fence. The problem is most posthole diggers that are sold virtually all of them today are gas and the engine is right at eye level. So when you turn these things on, the fumes would come right into your face.

Can you imagine using one of these things all day? You need three levels of hazmat suits to protect you from the fumes. So we have a cordless series of these augers these posthole diggers and these things are super powerful. They're just as fast as gas. They last just as long as gas, they make one half the noise or less, there's no maintenance required. Would you really want those fumes in your face if you're a professional landscaper installing a fence or if you're a DIYer, and you're doing any work in the yard that requires posthole digging, then you would love to have this so there's a lot of opportunity for us to eradicate gas.

Ryobi pressure washer

Another example are pressure washers which are terrific products for cleaning in and around the house, car etc. They are powered either by gas engine or by a cord or AC. Both power sources of course, should be eliminated. The gas pressure washer especially, but even a corded pressure washer, you have all this water with an electric cord. It's unwieldy. It's hard to use. So we are pioneering pressurised power cleaners. We haven't got to the psi levels of a pressure washer yet, but we will get there. We are working on technology to get rid of the gas engine in the pressure washer or the cord. This 40-volt power cleaner is a great example. It works terrific and you will see us continue to push the envelope you're in technology when it comes to using lithium battery.

Range expansion

So just let's put this in perspective. For 2022, we will launch 73 new battery powered outdoor products. We are not out buying a gas lawnmower company. We are pioneering, organically developing lithium powered outdoor equipment that we think will help eradicate this dreadful, polluting issue of gas, outdoor power equipment. And let me assure you that this is just the start. Between Ryboi and Milwaukee, our attack on gas outdoor power equipment is just beginning. We intend to be global leaders in the pro landscaping arena and in the DIY side with these products that we're launching.

Floorcare products

Finally, I want to acknowledge our floorcare team for delivering an impressive first half of 2021. I know many of you have been frustrated with our inability to turn floorcare into a contributing business. Well, you can be assured that we now have an excellent team globally, we have a great product road in front of us. And we have results. In fact, 25% growth in the first half is excellent. And okay, the profit levels are still too low. But we did almost double the profit in the first half this year. And we are really excited about what we have in our future in floorcare.

Our carpet washing and formula business is particularly exciting. We are taking market share here, we are developing products that outperform what's on the market today. And we're going to enhance this program with our brand new spot cleaner series. But this spot cleaner element of this carpet washing business is significant. We have participated poorly here at best over the years. So we now have a leadership product, we have more on the way. And this bodes well for our floorcare business because carpet washing is a significant part of the business. And the formula aftermarket here is a compelling financial contributor to the company.

Cordless floorcare

We also are continuing to push the envelope once again on lithium cordless powered cleaning and floor care products. Whether it's the Hoover brand, the Vax brand, or one of our other brands of floorcare, we really think that we can get people away from using a cord when it comes to a cleaning product and into cordless. And this is yet another example of that over overarching theme in the company where we just we really believe this whole this whole clean tech notion, this whole ESG notion should pervade every part of our company. And floorcare is no exception.

Conclusion

The important takeaway here is that our future has never been brighter at TTI. No matter what the economy does around the world, no matter how long it takes to eradicate this terrible virus that we've all have to deal with.

No matter what the geopolitical issues are that we face, we feel like we as Lincoln said, the best way to predict the future is to create it. And that's exactly what we're doing. And you know, remember Teddy Roosevelt said, one must dare to be great. You have to have the courage to pursue greatness, because greatness is elusive. And if you see how hard our team is working around the world, if you saw the talent level of our engineers, our product development people, our logistics team that performed heroically in the first half and really over the last 18 months, you would see why I'm so enthusiastic about our future.

We are going to have a good second half this year. We will outgrow the market, for sure we will outgrow the market in 2022. We will launch more new products than all of our competitors combined. And we will not fall into this trap of trying to dress up our financial results by adding gas power equipment that's got a short-term future and it really all it's doing is harming our planet. Like I said up front, we think greatness in TTI will be a function of outstanding, continually improving financial results, while we achieve greatness in ESG and try to help society and this planet, get to the right place. So thank you so much.

Stanley Black & Decker (SBD) recently announced it has agreed to purchase the remaining 80% ownership stake in MTD Holdings for USD1.6 billion.

The acquisition is expected to close in 2021, and is subject to "regulatory approvals and customary closing conditions".

SBD said its buyout of MTD Holdings will boost its opportunities in the outdoor products market. In a statement, Stanley Black & Decker's CEO James M. Loree, said:

We have worked directly with MTD over the last three years and have been impressed with the quality of the management team, their talented employees and MTD's relentless dedication to innovation in the outdoor space. The combination of businesses will create a global leader in the USD25 billion and growing outdoor category, with strong brands and growth opportunities that align with two market trends driving our business - the consumer reconnection with the home and garden and electrification.

We have clearly identified multiple levers to drive growth and margin expansion and are looking forward to welcoming MTD's 7,500 employees to our Stanley Black & Decker family.

SBD anticipates MTD Holdings to boost its adjusted earnings by 50 cents per share in 2022. The contribution is expected to increase to USD1.00 per share by 2025. The company also expects the transaction to result in cumulative annual cost synergies of approximately USD100 million by 2025. Regarding charges, SBD predicts incurring non-cash charges of USD125-USD150 million and restructuring, integration and other costs of USD175-USD200 million upon the completion of the transaction and subsequent three years.

MTD's trailing 12 months' revenues total USD2.5 billion and its products are sold under the WOLF-Garten, Cub Cadet, Robomow, Troy-Bilt and Rover brands. The privately held company is headquartered in Ohio (USA) and operates facilities in Europe and North America. MTD's chairman, CEO and president Robert T. Moll said:

My grandfather founded MTD nearly 90 years ago, and I'm as proud of our history as I am excited about our future with Stanley Black & Decker. Both companies are proven leaders in our respective industries with iconic brands, world class capabilities and a passion for bringing new and innovative products to our consumers. I know we are partnering with an organisation that will continue to deliver on our purpose of inspiring people to care for and enjoy the outdoors.

Together SBD and MTD believe they have a "compelling pathway to introduce new and innovative products for professional and residential outdoor equipment customers". Donald Allan Jr., SBD's president and CFO, commented in a statement:

The acquisition of MTD creates a multi-year roadmap for organic revenue, profitability and cashflow growth. We expect to generate significant revenue synergies as we capitalise on the two companies' collective technology investments, strong brands and global customer relationships.

We have significant balance sheet flexibility supported by strong free cash flow generation to fund the MTD acquisition and to consider other capital deployment opportunities...

Related: The MTD acquisition was part of Stanley Black and Decker's 2020 results presentation.

Related: Stanley Black & Decker's US-based CFO has spoken about partnerships.

Business for Weber has been significantly boosted in the wake of the coronavirus pandemic because of the enormous demand for products for personal home use. Seeking to tap into the stay-at-home trend that has dictated much of the stock market's performance in the past 15 months, the company launched an initial public offering (IPO).

According to the Wall Street Journal, Weber shares rose on their first day of trading after it priced its IPO below expectations and slashed the number of shares being sold.

The company's stock initially rose 18% above its IPO price to close at USD16.50. The previous night, it sold 18 million shares at USD14 apiece in its initial public offering, compared with the 47 million the company and its selling shareholders were planning to sell in a range of USD15 to USD17 each. (It currently sits at around USD15.71.)

In its filing for an IPO, Weber said sales for the six-month period that ended March 31 rose about 60% from a year earlier to approximately USD960 million.

However, the Asia News Monitor reports that the current huge demand could soon be coming to an end for grill manufacturers such as Weber. The market is saturated, and the industry is mature, according to the market research company Ibis World.

And the industry could be slow for years. Ibis World analyst Nick Masters writes:

This phase is characterised by slowing growth rates and low technological innovation.

By 2025, sales are only expected to increase at an annual rate of 1.4%. Another reason why there are hardly any new entrants to the market.

But driven by the pandemic-induced sales, other grill/BBQ manufacturers are going public this year. Traeger, a manufacturer that specialises in wood-pellet grills, was able to raise USD423 million with its stock market debut at the end of July. Since then, the shares are up 20%.

Yet the lack of raw materials and faltering supply chains call into question how sustainable such growth is. Because Traeger now manufactures almost exclusively in China, and Weber is at least partially dependent on products from Asia, slow deliveries are hampering business. Weber's stock exchange prospectus notes:

Furthermore, even if growth in demand continues, we may not be able to meet that demand due to production and capacity challenges.

At the same time, when more people can go out to restaurants in the US and enjoy other leisure activities again, the need for barbecues is likely to decrease significantly.

Meanwhile, Weber can hope to benefit from a strong brand name in the future. Years of growth at the top of the industry have given the company a loyal and wealthy clientele. The prospectus said:

The Weber name and premium brand image are integral to the growth of our business.

Weber's greatest strength may also be its greatest weakness. If its image suffers, the company will be in trouble. According to the prospectus:

We have spent decades building brand affinity and awareness by teaching people how to grill the 'Weber Way'. Any harm to our brand could result in a significant reduction in such demand which could materially adversely affect our results of operations.

The company generates 58% percent of its sales in the US and the brand is considered the undisputed industry leader. But Weber only has a market share of 23% in its home country, where competition is particularly strong, as noted in its stock market prospectus.

In the US, companies such as Coleman, Char-Broil, Middleby and Broil King have recently taken increasing market share from the company.

Today Weber is a multi-national company selling grills in 78 countries in Europe, Middle East and Africa (35%) and Asia-Pacific with 7%, a market with strong potential for the brand.

The iconic Weber charcoal kettle grill was first introduced in 1952, after sheet-metal shop owner George Stephen invented the first closable, wind-resistant BBQ. Consistent innovations followed, including the introduction of a line of gas, electric, wood-pellet grills, smokers and in 2020 a technology-enabled smart grill. The company, then called Weber Stephen Products, was family-owned until 2010 when a majority stake was sold to BDT Capital Partners.

Related: A new BBQ from Weber released earlier this year has similar specifications to a smartphone.

Plumbing and bathroom company Reece has purchased Pipeline Supplies Australia (PSA), a mechanical services and fire protection products manufacturer and supplier.

The Data Room column in The Australian reports that Reece is moving into a new market segment with this acquisition. PSA is based in Melbourne (VIC) and designs and distributes plumbing supplies across heating, ventilation and air conditioning (HVAC), fire and mechanical services. It is known as one of few providers of prefabricated HVAC modules in Australia.

PSA supplies its products and services mostly to major companies in the building, construction and civil tunnelling sectors.

It is believed that the business was sold for a price of less than $100 million. Reece has a market value of $15.6 billion.

Related: Reece Group posted record net profit at the end of 2020.

James Hardie

Building materials supplier James Hardie recently revealed that a building boom and stronger markets across Europe and Australia has pushed the company to raise its fiscal 2022 net profit guidance range to USD550 million to USD590 million, up from initial guidance of USD 520 million to USD 570 million.

A direct pitch to its customers through social media and influencer campaigns helped James Hardie deliver profitable organic growth, according to The Australian.

The direct marketing to homeowners of its building products was a critical strategy for James Hardie and it believes it has helped it accelerate the creation of demand. It was able to achieve growth in existing and new segments.

James Hardie said that it has delivered record quarterly net sales growth of 35% to USD843.3 million for the three months to June 30 as adjusted net profit rose 50% to USD134.2 million. Earnings before interest and tax rose 45% to USD180.5 million for the quarter. James Hardie chief executive Jack Truong said:

We are making good progress on our stated global strategy. Globally, we continue to enable our customers to make more money by selling more James Hardie products. Our high value product mix provides homeowners with products that combine long-lasting beauty and endless design possibilities, with trusted protection and low maintenance.

Dr Truong said he was pleased the first quarter marked its ninth consecutive quarter of delivering growth above market and strong returns.

In our investor day at the end of May, we described our three critical initiatives for fiscal year 2022 through fiscal year 2024: market directly to homeowners to accelerate demand creation, penetrate and drive profitable growth in existing and new segments, and commercialise global innovations by expanding into new categories.

Related: James Hardie Australian-based ambassador Neil Hipwell offers tips for builders on how to enhance their social media presence.

Iccons Fasteners has established a branch in Townsville to service the growing North Queensland market, according to the Townsville Bulletin. The Melbourne-headquartered company has taken a long-term lease on a warehouse in Corporate Crescent, Garbutt (QLD).

Ray White Commercial agent Peter McCann said the 704sqm warehouse includes a 65sqm office on a 1378sqm site.

Iccons North Queensland manager, Nick Rose said the business was expanding into North Queensland to supply its customers and help the industry adapt to requirements for compliant fastenings, particularly for items such as post-installed anchors in concrete. He told the Townsville Bulletin:

Townsville is a great hub to service the wider North Queensland market from Mackay north. We have been in Brisbane but we are branching out to North Queensland to service our customers here.

Mr Rose explains that Iccons made a strategic decision to stock mostly approved fasteners that complied with new regulations under the national construction code. He said:

We saw an opportunity to focus on approved fixings. We are not just a merchant for products, we are educating the market on the correct fixings to be used.

Mr Rose's father, Philip Rose and Phil Digby previously operated a separate business, Powers Fasteners Australasia, for close to 30 years before its sale to Stanley Black & Decker.

The business has nine branches throughout Australia and in New Zealand and Thailand.

Related: Makita opens service centre in Townsville.

Brickworks

Australia's Brickworks Building Products, through its Glen-Gery subsidiary based in Pennsylvania (USA), recently announced the acquisition of several key businesses from Southfield Corporation. They include Illinois Brick, Indiana Brick, Rose Brick, Edgewood Landscape Supply, Lafayette Masonry Supply and Kokomo Masonry and Landscape Supply locations. The sale price has been quoted as USD51.1 million.

Announcing the deal in a presentation to shareholders, Brickworks managing director Lindsay Partridge elaborated on the strategic appeal of the US Midwest, specifically for bricks. He said:

Illinois and Indiana are two major states within our key target market in the Midwest, and both have a strong heritage of brick construction. We currently lack a direct distribution presence in these states and as such this acquisition is a logical strategic fit.

The outlook for the region is strong, with building activity expected to increase over the next five years, across both residential and non-residential segments. Recently announced government stimulus, including support for state and local infrastructure projects such as schools and universities, is also expected to boost construction activity in the region.

Although the pandemic has hit our US operations hard over the past year, with the vaccine program now well advanced, and the economy re-opening, we are seeing a strong recovery in demand. We continue to see the North American brick industry as a highly attractive long-term growth opportunity for Brickworks with a positive market outlook.

Southfield's family of companies is the biggest independently owned and operated brick and masonry supply companies in the US. It offers an extensive range of brick, natural and manufactured stone, hardscapes, masonry supplies and tools. The acquisition includes 17 supply centres.

Mark Ellenor, president of Brickworks North America, said the acquisition provides Brickworks with a larger presence in the Midwest and expanding its network of company-owned distribution locations from 10 to 27.

Southfield has been one of Glen-Gery's largest distributors for many years. We have long standing relationships with their sales and management teams and look forward to welcoming their talented people to the Brickworks family. Our two companies ... are focused on supporting the contemporary style needs of today's architects, designers and home builders...

These additional distribution outlets will give building and design customers access to a continuous supply of competitive brands, backed by Glen-Gery's brick making facilities. Brickworks can now expand its product offering to other company-owned supply centres.

Since entering the North American market in 2018 - through its purchase of Glen-Gery - Brickworks has acquired three major brick manufacturers and now one of the country's largest masonry supply companies.

Alan Oremus, chief executive officer at Southfield Corporation, sees the acquisition as a significant milestone in its 40-year history. He said:

The Brickworks and Glen-Gery culture are the perfect fit for Southfield. They are industry leaders with rich histories who share Southfield's customer-first service philosophy, its focus on the architectural and design community, and its passion for the brick industry. They offer unlimited potential to grow the business and increased opportunities for all employees...

Brickworks Building Products in Australia includes Austral Bricks, Austral Masonry, Austral Precast and Bristile Roofing.

Building materials group Boral recently announced that it has entered into an agreement to sell its hardwood and softwood timber business to Allied Natural Wood Exports (ANWE) - part of Pentarch Group - for $64.5 million. The sale comes after Boral wrote down the value of its timber assets following damage from the 2019-20 bushfires. In a statement, Boral's managing director Zlatko Todorcevski said:

In Australia, our focus is on our leading integrated construction materials business and maturing our adjacent growth strategies such as recycling, waste, supplementary cementitious materials and lower carbon products.

Mr Todorcevski also said the sale was in line with the strategy of concentrating on the core operations of Boral of cement, concrete, asphalt and quarrying products used for construction.

The sale of Boral's timber business represents another important milestone in focusing our portfolio and positioning for the future.

Boral said it would use the proceeds to "optimise" its net debt position and for any reinvestment needs and "any surplus is expected to be available for distribution to Boral's shareholders".

Boral has become a much smaller business with the sale of its US building products business to Westlake Chemical for USD2.15 billion in June, according to the Australian Financial Review. The building products group is now controlled by Kerry Stokes' Seven Group Holdings.

About Pentarch

Pentarch has different divisions and operates a forestry business that exports about 800,000 tonnes of plantation softwood and hardwood timber annually. The company's purchase of Boral's timber business includes nine sawmills in NSW which will make it the largest hardwood processor in NSW's $7 billion forest products industry, according to Timber Biz.

Earlier this year, Boral sold its US plasterboard business for USD1 billion and its Meridian Brick business for USD125 million.

Profits almost tripled for WD-40's Australian subsidiary, reports The Australian. In its latest 2020 financial accounts, directors for WD-40 Australia said:

At this stage, the impact on our business and results has been positive...we have found increased demand for our products and expect this to continue.

COVID-19 lockdowns and restrictions have boosted sales of WD-40 products sold through hardware retail stores. WD-40 president and chief operating officer, Steve Brass highlighted Australia to US investors and analysts in the company's recent third-quarter earnings update. He mentioned over 100% sales growth for one of its key products as the pandemic hit the country and consumers took up repair and renovation projects. Mr Brass said in the earnings briefing to the US-based analysts:

In Australia, net sales were USD6 million in the third quarter, up 22% compared to last year.

In local currency sales of maintenance products were up 9% in Australia, driven primarily by strong sales of 3-IN-ONE and WD-40 Specialist, which were up 114% and 24%, respectively, due to the isolation renovation phenomenon.

But there was a reversal in last year's sales boom of WD-40's range of home cleaning and sanitising products. Australians seemed to have stocked up on enough home cleaning and disinfectant supplies from last year when store shelves were stripped of soaps and sanitisers at the beginning of the pandemic.

WD-40 revealed its range of home cleaning products reported a sales decline for the third quarter in Australia compared to double-digit sales growth for its Solvol soaps and No Vac carpet sanitiser in early 2020 when the COVID-19 pandemic emerged in Australia and the first lockdowns began. The company said:

Partially offsetting these sales increases were lower sales of our homecare and cleaning products, which were down 9% in the quarter, as we have seen demand for these products return to more levels due to improvements in public health and safety restrictions related to the pandemic.

In its overall results for its third fiscal quarter, chairman and chief executive officer Garry Ridge, said in a statement:

The post-pandemic era is coming. We do not expect to see sales growth of this magnitude over the long-term, however, we believe that the new end users who have interacted with our products during the pandemic will become permanent users of our maintenance products."

Related: WD-40 rebranded its Specialist range for easier identification in late 2020.

Benalla-based Ryan and McNulty Sawmills in regional Victoria received $100,000 in funding from the Victorian Timber Innovation Fund. It will use plantation timber to produce pine beams for construction and housing markets. The business also has plans to assess how it could use pine logs to extend its production line.

State Member for Northern Victoria Jaclyn Symes said in a statement:

Ryan and McNulty have been a long-time major employer in Benalla and by taking up the Victorian Timber Industry Innovation funding they are able to investigate and make changes now so they can be in the best position to grow in years to come.

The funding is part of more than $2.4 million in grants distributed across the state to extend the use of plantation timbers to make new products in different ways.

General manager Greg McNulty said for almost 80 years Ryan and McNulty had been part of the Benalla manufacturing landscape, providing timber jobs for generations.

Established in the early 1940s, the sawmill currently employs about 50 staff, and was known for its quality kiln dried Victorian Ash and River Red Gum. Its timber is used for flooring, decking, skirtings, DAR boards, screening, architraves, lining boards, rough sawn furniture grade timbers, joinery timbers and by-product (woodchip and sawdust) which are supplied to wholesale and retail markets. In a statement, Mr McNulty said:

The Victorian Timber Innovation Fund allows us to explore how we can utilise plantation-based timbers to ensure the longevity of the business and secure local employment opportunities.

Through the Victorian Forestry Plan, Ryan and McNulty has previously received funding to develop a business transition plan to support the move to plantation-sourced timber.

Minister Mary-Anne Thomas said the Victorian Timber Innovation Fund offered the opportunity for the industry to embrace innovation and different ways of working for a future that had plantation timber playing a central role. She said:

The Victorian Timber Innovation Fund is supporting businesses to develop new ways of working with new sources of supply, and retaining local jobs while doing so.

The state government said it is working to transition the native forest industry to a range of opportunities by 2030 through the Victorian Forestry Plan, setting up a strong plantation-based sector.

Related: A number of investments have been made in sawmills and timber production in different states.

KSI Sawmills

A $4.5 million sawmill will be built by KSI Sawmills which operates a small mill at Nuriootpa (SA). It will be strategically located, allowing for expansion and offering improved transportation routes central to both local timber plantations and downstream markets.

The announcement of the new sawmill comes after an emergency summit at South Australian Parliament were informed that Australia's timber shortage was having a domino effect on builders and trades dependent on the construction industry.

Sharp increases in global demand during the COVID-19 crisis and the success of the federal government's HomeBuilder scheme has caused rises in the cost of building materials, including timber.

Minister for Primary Industries and Regional Development David Basham said the mill will help KSI Sawmills more than double their current production to approximately 60,000m3 annually and create nearly 30 jobs. In a statement, Minister Basham said:

The new local log processing program will inject over $12 million in direct value into South Australia's economy each year. I congratulate KSI Sawmills for making this significant investment in South Australia's timber industry which will increase supply and create local jobs. This investment has been made possible thanks to a new 10-year log supply agreement between Forestry SA and KSI Sawmills.

KSI will predominantly consume lower grade log from ForestrySA's plantations in the Adelaide Hills. The majority of timber products will be consumed by the local packaging industry.

Some higher-grade products will meet structural grade and be consumed by the local building and construction industry, while residue materials will support Adelaide Hills based agriculture.

This will lead to improved product utilisation and better environmental outcomes with less waste, and better estate management for ForestrySA."

Minister Basham said a recent tender process for log supply from ForestrySA has resulted in new long-term supply agreements, helping to secure the future of the domestic processing industry including KSI Sawmills. He said:

New arrangements will allow for all log of sawmill quality to be provided to the processing industry for increased value-adding, predominantly in South Australia. ForestrySA's direct contribution to the economy in regional South Australia has increased by more than 50 per cent as a result.

KSI Sawmills Director Victor Kyriakou said the new mill is an exciting development for South Australia.

KSI has been working constructively with ForestrySA for more than 12 years now. We are so lucky to have a forest estate owned by the South Australian Government. We are really looking forward to the next stage of expanding our business and encouraging local manufacturing in South Australia.

The deal by Protective Industrial Products (PIP) to acquire Perth-based Paramount Safety Products closed recently but financial terms were not disclosed. It marks the first acquisition for PIP since it was taken over by private equity firm Odyssey Investment Partners in late 2020. Joe Milot, PIP president and CEO, said:

The addition of Paramount is key to PIP's objective of servicing customers around the globe and to provide them with more opportunities for growth. We saw great similarities in our business models and synergies with Paramount's products and brands and are very proud to have a company with such a rich legacy join us.

Paramount with merge with PIP Australia to serve customers across Australia, New Zealand and Oceania. Tim and Will Bird will continue leading the Paramount team in the Oceania region. Tim Bird, Paramount's CEO, said:

We are equally excited to join the PIP Global family. We had been looking for the right partner to continue the dream of our father, the late Rob Bird.

Will Bird, director of operations at Paramount, added:

We found that Joe Milot built PIP on similar principles and values that our father outlined when he started Paramount.

Founded in Perth (WA) in 1992, Paramount has over 100 employees across Australia, New Zealand, Latin America, the Middle East (Dubai) and Africa. It has developed safety products for use across a wide range of industries and applications including mining, oil and gas, construction, infrastructure, manufacturing, logistics and agriculture as well as home improvement and maintenance. Paramount's portfolio of brands includes Pro Choice Safety Gear, Linq Height Safety, Pratt Environmental & Site Safety Systems, Thorzt Hydration Products, MEDIQ First Aid, BISON Safety and Footwear and WORKIT Workwear.

PIP has over 20 locations around the world. Established in 1984, the company offers a broad suite of PPE products and brands including hand & arm protection, protective clothing, head protection, eye & hearing protection, and other safety protection.

It is headquartered in Latham, New York (USA), and the business has a diversified channel presence across distributors, retailers, and e-commerce platforms, and an end-to-end logistics platform.

The Lara-based horticultural nursery in regional Victoria is investing $4.25 million in a 10,300sqm glasshouse and associated production facilities in response to increased demand for its range of indoor and potted plants, according to a report in the Geelong Advertiser. The glasshouse will provide approximately an additional 25% growing area.

Second-generation company director Nick Jacometti said that, at times last year, sales of greenlife products, which include fern, foliage, succulent, edible and perennial flowering lines, surged as much as 25%. He told the Geelong Advertiser:

The long periods spent at home have encouraged people to be more active gardeners, whether it be starting a home vegie patch, improvements to newly established home offices or more indoor house plants to generally beautify the home.

The new growing facilities will incorporate high-performance glazing, cutting-edge environmental controls, grow-lights and stormwater harvesting, which should further enhance plant quality and consistency as well as improve production efficiency.

Mr Jacometti said investing in higher performance glazing and a variety of different shade screen types would facilitate the growing of Boomaroo's indoor plant range all year round, as well as introduce new product lines to its retail offering to nurseries and garden centres.

Depending on the growing profiles of each product, based on average numbers, we will be able grow up to a million additional units per year.

The co-located new production facilities will have four automated potting lines as well as a streamlined dispatch area, paving the way for increased product throughput.

The additional growing space will also free existing growing areas to pursue other opportunities within Boomaroo's wholesale vegetable seedling business, which involves growing up to 300 million seedlings annually for the fresh produce industry. Such opportunities include the recently launched Boomaroo Organics range of vegetable seedlings that commenced production last year.

Mr Jacometti said Boomaroo had collaborated closely with manufacturing innovators, including projects with Deakin University, facilitated by the Geelong Manufacturing Council's Regional Industry Collaboration Program.

We've been investigating ways to capture and visualise data to more closely monitor our growing environments and plant performance, so that we can use our inputs more efficiently.

Boomaroo is currently working with Deakin start-up Strut using sensors to measure a variety of environmental controls at plant level with a view to further improve plant health and growing efficiency. Mr Jacometti said he hoped the sensor pilot project would continue to be developed to ultimately integrate with all of Boomaroo's growing areas in the future.

Founded by the Jacometti brothers over 30 years ago, Boomaroo has been committed to investment in technology and innovation, reflected in its seedling operation in Southbrook (QLD) which utilises next generation, no-touch automation.

Related: In a recent survey commissioned by Bunnings, almost a third of respondents placed gardening at the top of their home "to do" lists.

Stanley Black & Decker's US-based chief financial officer Donald Allan Jr. recently gave an interview to the Wall Street Journal and said the company is spending more time and money trying to strike partnerships with battery and chip manufacturers to help ease the pressure on the tool maker's supply chain.

Stanley Black & Decker (SBD) is seeking electric battery and computer chip makers that would agree to supply components in return for an investment.

SBD already has small-scale partnerships with companies that build specific tooling and production lines for the company. It has a tentative partnership with a South Korean battery maker for a production line that would start manufacturing batteries in Malaysia next year, Mr Allan said.

The company is also talking to other businesses in Asia and the US about potential partnerships. Negotiating with suppliers has become "a more important part of my job" since the coronavirus pandemic disrupted international supply chains, Mr. Allan said. He has served as CFO of SBD since 2008 and was given the additional role of president earlier this year.

SBD, which has budgeted for roughly USD500 million in capital expenditures this year, plans to dedicate about 10% to 15% of that to supply-chain partnerships and other related initiatives. Before the pandemic, such spending would have made up less than 5% of the budget for capital expenditures, Mr. Allan explains.

We will co-invest. If it costs USD100 million to set up a line, we will put in USD50 million.

SBD, which needs batteries for its cordless power tools and uses computer chips across its portfolio, manufactures a significant portion of its products in the US and Europe. The company's preference would be to set up new production lines in those regions, Mr. Allan said, pointing to the challenges associated with sourcing from Asia, which results in longer wait times until components arrive at the factory. The company expects its demand for components such as batteries and chips will remain elevated for years to come.

Many of SBD's competitors, such as Japan-headquartered Makita and Hong Kong-based Techtronic Industries, manufacture a larger chunk of their products in Asia, potentially providing them with easier access to batteries and chips, according to Nigel Coe, a managing director at research company Wolfe Research. SBD has a longer and more complex supply chain than some of its rivals, Mr. Coe said.

The company, which sources from over 10,000 suppliers globally but spends 80% of its budget on fewer than 1,000 of them, has sought to deepen its relationship with core manufacturers since September 2020, Mr. Allan said.

SBD identified around 30 suppliers it considers critical and extended and prolonged contracts with many of them. It is now looking for contract lengths of about five years, up from one or two years prior to last year, he said.

Before the pandemic, many US companies, including SBD, would have put in a bid and "chosen the lowest price" whereas now, there has to be a broader relationship [with suppliers], Mr. Allan said.

Components make up the largest proportion of goods sold at SBD, which is why any increase in prices for batteries and chips can have a sizable impact on its finances, said Timothy Wojs, a senior research analyst at investment bank Robert W. Baird & Co. Higher costs for raw materials such as steel and resin, which is used to make plastic, also add to the bill, he said.

In late April, SBD said it expects cost increases of about USD235 million this year due to inflation, up USD160 million from its forecast at the beginning of the year, according to an earnings transcript. SBD aims to pass two-thirds of the increase on to customers and offset the rest by increasing efficiency and cost savings - what it calls its margin resiliency program - Mr. Allan said.

SBD began raising prices for some of its products this quarter and has more increases coming. It aims to execute "hundreds of millions of dollars of price increases this year," according to Mr. Allan.

The company expects to free up between USD100 million and USD150 million a year with its margin resiliency program, said Justin Bergner, a senior research analyst at G.research, a research and brokerage firm.

The company over time will likely need more batteries, as it looks to acquire the remaining 80% of MTD Products that it doesn't own yet. MTD makes mowers and other outdoor equipment and expects to move toward using more electric motors in the coming years. Mr. Allan said about the planned acquisition:

We see this as a big opportunity.

The Great Nailgun Debate has long posed questions that have severely tried the minds (and even souls) of carpenters, framers and builders everywhere.

On one side, there is the ongoing development of cordless nailguns, which have increasingly become more powerful, longer-lasting (per charge) and lighter. On the other side, there are the much lighter pneumatic nailguns (even when you take into account the weight of the hose hanging off the nailgun). Their internal mechanism is relatively simple, easy to maintain, and can last a decade or more.

However, pneumatic nailguns do require considerable infrastructure to operate. There is the external air compressor, plus hoses running to each nailgun, and the fittings on those hoses, all of which need to be carefully maintained. In a workshop that is not a problem, but it requires some strategic planning on a remote worksite.

In recent years we've seen a number of tool manufactures attempt to bridge the gap between the two by bringing out smaller compressors (often with a flat round compressed air reservoir, earning them the nickname of "pancake" compressors). These have had some success, as they enable the compressor to be very close to the work, making hoses shorter and more manageable. They are also small and light enough to be moved around with ease.

It has been a natural step up from that development to add cordless capability, which frees them from either needing to be near a mains electricity source, or run by a small petrol motor, with the additional problems of both noise and carbon monoxide fumes.

Yet this solution has also brought compromises of its own to the field: weight, power/capability, noise and cost. It's not a surprise that what could be called the second generation of these compressors is now entering the market, bringing the two tool company arch-rivals, Stanley Black & Decker's DeWalt and Techtronic Industries' Milwaukee into a cordless compressor face-off in 2021.

The DeWalt unit has been in the market for some years, while the Milwaukee was launched in 2020, and will be available in Australia by June 2021. It's fascinating to see how the different strategies of the companies are illustrated by their approach to the design of these tools.

Dewalt

The latest DeWalt unit carries the designation DCC1054N-XJ 54V FlexVolt XR Li-ion Cordless Brushless 10L Air Compressor. It is part of the company's FlexVolt line, which means it requires the 54V battery. The compressed air tank size is 10 litres, and the unit weighs 11kg, can achieve 9 bar pressure, but operates at closer to 7 bar with air delivery of up to 31l/min. It is rated at 78dB in LpA (the position of the operator). It is 42cm tall, 30cm wide and 36cm long, and comes with one-year free service and three-year warranty periods. The street price is around $400.

Milwaukee

The Milwaukee unit is designated as the M18 FUEL Compact Quiet Compressor M18FAC-0. Unlike the DeWalt tool, this uses Milwaukee's standard 18V batteries, though the company recommends using its High Output batteries (which use the newer 21700 Lithium-ion cells). The unit has a smaller tank than the DeWalt, at 7.6l and weighs 14.2kg. It is 26.2cm tall, 47cm wide and 41.3cm long, making it vertically smaller than the DeWalt, but horizontally larger. It has the same 9 bar maximum pressure, with 7 bar continuous with air delivery of 31l/min. One of its major benefits, as stated by Milwaukee, is how quiet it is, with a 68dB rating at LpA. It has Milwaukee's standard three-year warranty. The street price is just over $600.

Comparison

On the face of it, it would seem that the DeWalt unit offers some real advantages. It has a larger tank capacity, is 10% smaller by volumetric measures, and weighs 3kg less. But the comparison is much more complex than that, in large part because the Milwaukee unit is designed to be much quieter than the DeWalt one. Numerically, the 10dB difference between the DeWalt's 78dB and the Milwaukee's 68dB doesn't seem all that much, but these numbers are on a logarithmic scale. In comparative terms, the DeWalt unit would produce sound at the level of a power vacuum cleaner, while the Milwaukee unit would be as loud as a normal conversation.

There are a number of reasons why that reduction in noise could be important. Working in an occupied dwelling, or a public space such as a school or hospital, a low noise level would be welcome - but it could also be just as important on a construction site, where being able to easily communicate with fellow workers could be important.

The second factor, of course, is the batteries. For a work crew that already has FlexVolt batteries, it's not going to matter that much - but FlexVolt is more a narrow niche product for high performance gear, rather than a general tradie choice. On the other side, the Milwaukee unit might work best with the 12Ah High Output battery (which is P3), but it will function just as well with the smaller and more common 8Ah High Output battery (which is P2).

The third factor is that the Milwaukee unit has been designed to integrate into Milwaukee's PackOut range of tool chests and trolleys. It might be heavier, but it comes with an easy way to connect to readily available wheeled transport.

That's not to say that, really, either cordless tool really "wins" over the other. What this does illustrate is the different vision for the construction market both tools mark out. The choice of the higher voltage motor on the DeWalt unit is difficult to understand in technical terms, as compressors are typically limited to lower revolutions of their pumps by thermal issues. Compressing air produces heat, and dissipating that from the compressor unit itself is quite a problem in such a compact unit.

That means the move to make use of FlexVolt 54V in the compressor is possibly more of a marketing choice than a technical one. One would suspect that DeWalt is segmenting the market into carpenters and others doing medium-heavy work, who would be nudged in the direction of the well-regarded range of DeWalt cordless nailguns, and builders on larger jobs, who probably have an air compressor onsite, but could use the cordless compressor in some areas.

That is backed up Stanley Black & Decker launching a second cordless compressor in its mid-range consumer brand, the Craftsman V20 Cordless Air Compressor. This seems, on the face of it, to be pretty much the same unit, but using the Craftsman 20V battery.

The split in the Milwaukee market is made at a different point. The company's 18V range, in particular its high-performance 18V FUEL range, is meant to be a comprehensive, versatile solution to just about any problem a house builder, construction company, or general tradie might face. Its MX FUEL - which is 72V nominal, 80V peak - is aimed at the heaviest handheld machinery, some of which relied on small petrol engines in the past.

The power tool market

It is interesting to note the approach the other tool companies are taking to the battery voltage situation. In general, most of them are adopting a version of the DeWalt approach to the market, though they are making a different split. Hikoki, for example, has its range of Multi Volt tools, which share a battery that can operate at either 18V or 36V. Makita has its 40V range, which cannot be interchanged back to its 18V range, but is doubled on some tools, providing 80V.

Bosch, meanwhile, is going much more down the Milwaukee path in its tool development, working to push its 18V tools just as far as they can go. At the high power end of those tools is the Bosch GBH 18V-45 C Professional rotary hammer drill, which produces a whopping 12.5 Joules of power, enough to drill a 45mm hole in concrete (though the optimal maximum width is 40mm). Bosch has dabbled in 36V tools and batteries as well (non-interchangeable), but it certainly seems to have shifted much of its development to 18V from 2020 onwards.

One suspects that the Bosch BiTurbo rotary hammer drill line is aimed at heavy construction industry favourite Hilti. Hilti's top cordless offering in this area seems to be the TE 60-A36 Cordless Rotary Hammer, which manages only 8.2 Joules. Hilti, which has long specialised mainly in simply being Hilti, has two battery sizes, 22V and 36V, which are not interchangeable in any way. Given the company's dedication to very reliable rugged tools, it seems likely that Hilti's solution to the need for more powerful rotary hammers is going to remain its highly regarded corded models.

Why more power?

While the answer might seem - superficially - to be evident, asking why the market has moved to expansion through offering more powerful tools is a good question to consider. Reframing that question, what really needs to be asked is: why are people in the construction industry willing to pay sometimes quite steep prices for more powerful tools?

One figure to point to is that the construction industry as a whole in Australia has trended to becoming less productive in recent years. According to the Productivity Commission in a 2020 study, during FY2018/19, the industry in Australia went backwards by 2.6% in terms of labour productivity, and 4.0% in terms of multi-factor productivity.

In fact, there is a steadily growing sense in Australia that the construction industry is getting increasingly out of control. For example, an academic paper from 2019 entitled "An examination of building defects in residential multi-owned properties", authored by Dr Nicole Johnson and Sacha Reid, interviewed a wide range of people involved in the construction and ownership of apartment blocks. The paper states:

Many of the interviewees suggested human error plays a significant part in building defects. Misuse of building products (due to lack of knowledge), poor workmanship, time pressures (cutting corners), poor supervision, lack of training, lack of licensing and trade accountability were common factors identified as contributing to defective building work.

A range of other causes were cited that also contributed to poor building work, including a private certification process that has to lead directly to either non-rigorous or even corrupt processes (builders will not re-hire certifiers who raise problems with their certifications), as well as a mal-distribution of responsibility between architects, engineers and builders. On top of that are regulatory processes that simply do not make any sense - such as Australian building standards being kept essentially "secret", in that they are not open source but require expensive fees to access.

In short, it is something of a mess. Trying to improve productivity through systemic changes is regarded as being an almost impossible task, so most workers directly involved in the Australian construction industry simply find ways to muddle through instead. The one part of the "muddle through" which they can influence is to invest more in power tools which will enable them to accomplish some tasks more swiftly.

Frustratingly, the end solution to this situation has been around since the 1970s, and was fully developed by 2007. That is, of course, Building Information Modelling (BIM). In 2019 its final stage of development was completed, with BIM receiving its own ISO number of 19650. Under BIM, information about a building's design, engineering, construction and maintenance is collected in a single database. Currently, however, there is a lack of determination on the part of the industry and regulators to make BIM mandatory rather than optional.

Conclusion

When Lithium-ion power tools first gained traction in the market, they brought with them a relatively new idea, which was that it was best to adopt a single brand of tools, as this enabled a more efficient use of shared resources such as batteries and chargers. What is emerging now, however, as a development of this, is a push to adopt not only a brand, but also an integrated set of sub-brands within that brand. DeWalt's cordless compressor requires the adoption of the FlexVolt system, while Milwaukee's cordless compressor works best when it is part of a more fully integrated system, including the PackOut storage and mobility system.

For retailers, this could mean that increasingly they will trend towards more product line specialisation. Keeping stock levels and the knowledge base up-to-date with the entire line of either DeWalt or Milwaukee products has become a full-time task. The market just might be at that inflection point where choosing to carry only one brand in-depth will result in stronger sales than carrying the most popular products from three or four brands.

There has been a combination of confusion and speculation about how the development of Lithium-ion (Li-ion) power tool batteries would be affected by the change in cell size.

Just to go over the basics, virtually all power tool batteries use a standard size of cylindrical cell in their batteries. Each of these cells produces a nominal voltage of 3.7V. These cells are combined in "layers" of five batteries connected serially in their layer to produce an output of around 18V.

To increase the storage capacity (represented as amp-hours - Ah), more than one layer can be added to a battery, and connected in parallel. A single layer battery is referred to as a P1 (for Parallel 1), a two-layer battery is P2, and so on.

Up until about 2017, there was only one common type of battery cylinder that was available, and this has the designation 18650. That relates to the dimensions of the battery, which is 18mm in diameter, and 65mm long. That size and shape was developed in the early 1990s, and essentially copied the overall look of the AA battery (which is about 14mm in diameter and 50mm long).

The electric car maker Tesla was one of the driving forces behind the development of the new alternative to the 18650 cell, which is the 21700 cell. This designation relates, as you would expect, to its dimensions, which are a 21mm diameter and a 70mm length. Those dimensions were the result of scientific analysis, which showed this was a more optimised configuration when it came to producing power.

The result of its increased size and optimised shape is that the 21700 battery cells can each produce between 3.0Ah and 4.0Ah of charge. This is an increase over the 18650 cell rating of between 2.3Ah to 3.6Ah. In general, in fact, the 18650 cells when used in batteries for power tools are usually limited to between 2.5Ah and 3.0Ah.

We can see how this has played out in the development of the sizes of power tool batteries. Most of us probably have at least one small 2.5Ah battery - that is a P1 battery with five 18650 cells rated at 2.5Ah each. The most popular size of battery today is the 5.0Ah unit, which is a P2 battery, two five-cell layers in parallel, also rated at 2.5Ah per cell.

With the 21700 battery the P1 configuration can provide between 3.0Ah and 4.0Ah. These newer style power tool batteries are a little bigger than the standard 2.5Ah battery, of course, at least 5mm wider, 3mm taller and 15mm longer - but they are lighter and less bulky than a two-row battery of the 18650 cells.

As an example, the latest Bosch ProCore 4.0Ah battery (21700) weighs 510g, and is 77mm wide by 47mm tall and 117mm long. The older DeWalt DCB182 18V XR 4.0Ah battery (18650) weighs 620g, is 72mm wide by 62mm tall and 110mm long. Photo 1 shows what the DeWalt battery looks like when it is opened up, and Photo 2 shows the new Bosch battery disassembled.

One thing that is evident is that the Bosch battery uses higher quality interior components. Much of this design is actually through necessity. The 21700 can generate more heat than the 18650, and most of these components are designed to help better dissipate that heat. Without this change, excess heat would tend to make these batteries wear out faster.

Company strategies

Looking across the five major global power tool manufacturers - Milwaukee Tool, Bosch Power Tools, Stanley Black & Decker/DeWalt, Makita and Hikoki - we can clearly see three different strategies for introducing and marketing the 21700 battery.

The two companies with the most similar strategies are Milwaukee and Bosch. Both have decided to market the new and improved batteries as a "premium" range. Bosch is the most direct about this, branding these batteries as "ProCore", and promoting their advanced features. Milwaukee has essentially added the batteries more subtly to its existing range, designating them as "high output", but also marketing them on a feature basis.

There are some similarities between the strategies of Makita and Hikoki. Makita at the moment does not produce any 18V batteries using the 21700 configuration, but it does make 21700 batteries for its 40V range.

Hikoki makes 21700 batteries for its Multi Volt range. This is a very interesting range of tools. The technology is similar to that used by DeWalt on its FlexVolt range. Where DeWalt switches between a parallel and serial configuration to produce either 18V or 54V, Hikoki does the same to switch between 18V and 36V. The company relies on the power density of the 21700 to make batteries that are still compact and lightweight, but can support the 36V output.

As for DeWalt, its strategy is difficult to follow. As far as HNN can tell, there really isn't a specific designation for 21700 cell based batteries. It appears, for example, that it is not using the newer cells in its FlexVolt range, but some 18V batteries, such as its 6.0Ah XR, do use the 21700.

Product development

How will the 21700 batteries affect the overall tool market? Up until 2020 there has a great deal of emphasis placed on "maximising" battery size and capacity. Since about 2014, tool manufacturers have proudly announced the growing capacity of their most recent batteries, from 8.0Ah up to (today) 15.0Ah. There has also been a steady increase in available battery voltages, which now run up to 80V.

However, there is a growing understanding in the trades that finding the biggest battery and whacking it on the end of your impact driver tends not to be that good an idea. Coupled with tools that are becoming more lightweight and more efficient in the use of current, tradies now understand that smaller batteries have both ergonomic and health advantages.

Because of that HNN thinks that we will start to see the P1 configuration 3.0Ah to 4.0Ah batteries begin the dominate at least half of the market by 2024. Coupling these with slightly smaller, compact 18V tools will produce a better user experience for many trades, including tilers, electricians and plumbers.

It will also be interesting to see what effect the newer cells have on the 12V tool market as well. As you need just three cells to make a P1 battery, that means you can have ultra-compact 4.0Ah batteries, which could help to lift the smaller tools into a more competitive position.

Japan-based Makita Corporation has released its global results for its 2020/21 financial year, ending 31 March 2021. In line with results from most other power tool manufacturers, the company showed a strong surge in growth.

Overall revenue was up by 23.5%. Domestic (Japan-based) revenue grew by 12.3%, but overseas revenue grew by 26.4%. Total revenue for the year was JPY608.3 billion ($7.2 billion). Overall sales volume increased by over 42%.

The Oceania region, dominated by the Australian market, showed strong growth. Revenue for the region increased from JPY28.4 billion to JPY42.3 billion ($337 million to $490 million), up by over 45% (42% on a local currency basis). This follows on two years of low single-digit declines in revenues for the region.

In local currency terms, Makita's revenues in Japan grew by 12.3%, and by over 30% in both Eastern Europe (Russia) and Western Europe. In North America, the company went up by 28.9%, while growth in Asia was lacklustre at 2.4%. Central and South America grew by 38.9%, and the Middle East/Africa increased by over 18%.

Contrasting the proportion of non-domestic revenues for Makita for 2020 and 2021, Oceania grew by 1%, Europe by 2%, and North America remained the same. The other regions lost some share proportionately.

Makita produced close to 40 million units for the financial year. It expanded its manufacturing capacity mostly in Asia (from 17.8 million to 24.9 million - nearly 40%), and in Europe (from 5.8 million to 9.1 million - around 57%).

Analysis

Five years ago Makita would have been seen by most analysts as pursuing a relatively conservative, middle-of-the-market approach to its business. It really is a testament to how the power tool market is developing that today, out of the big five manufacturers - including Stanley Black & Decker, Techtronic Industries (TTI), Bosch Power Tools and Hikoki - its strategies are no longer in alignment with the other companies - though they are not that far from those of its fellow Japanese company, Hikoki.

Specifically, the other manufacturers are pursuing both better integration of their tools with the internet of things (IoT) and seeking to diversify their product offerings. Techtronic Industries is steadily growing its consumer and commercial vacuum cleaner business, Bosch Power Tools is going to what we might call "sub-DIY" household market, and Stanley Black & Decker has long had a very wide net of products into both the consumer and commercial markets.

Makita has comparatively recently emulated the other main manufacturers and brought out a 40-volt line of power tools - though these do not compare to the heavier tools from both TTI and Stanley/DeWalt. Makita's major push at the moment is into 40-volt tools in the outdoor power equipment category. It has also attempted to introduce a vacuum cleaner, which does not, at the moment, impress - however Japanese companies have a long history of taking to market what other companies would consider prototypes, then coming out with second and third generation products that are competent.

There is little doubt that Makita tools are very successful in today's market, but if IoT - for example - becomes steadily more powerful into the future, to the stage where it is required for larger contracts, especially for government entities, the company would face a severely steep development curve to attain market parity.

It's tempting to wonder if we are about to see a repeat of the "Walkman syndrome" with Makita. This is a recognisable phenomenon where Japanese companies master a difficult hardware task, but then fail when portions of what were once hardware become digital. Introduced in the late 1970s, the Sony Walkman was a portable audio cassette player that dominated personal electronics in the 1980s, then adapted to CDs in the 1990s. However, the launch of Apple's iPod digital music players in the 2000s - which were as much about software as hardware - saw Sony lose control of that market, and exit it in early 2010.

The difficulty with all technological developments like this is that they do not encroach on markets in a gradual manner. Over the space of a year, or perhaps two years at most, an established way of doing things that might have been around for 50 or more years can rapidly become obsolete. One can only hope that there are some of those great engineers working at Makita to plot out a future for the company that differs from its recent past.

Seven Group Holdings has made a bid for Boral - valued at almost $8billion - as it aims to expand its foothold the company. The takeover bid is seen as an attempt to gain greater exposure to its building materials business across Australia and the US as the world emerges from COVID-19.

Boral has rejected the Seven offer, saying it was opportunistic and undervalued the company. Morgan Stanley analysts believe the bid would not be well supported by investors, according to a report in The Australian.

Seven Group's $6.50 per share takeover bid equates to 22 times forecasted 2022 net profit and eight times earnings before interest, tax, depreciation and amortisation, the analysts said. They said in a research note:

As it stands today, with the bid in line with the current share price, we expect limited take-up.

Seven conceded it would be content owning about 30% of Boral if existing investors do not want to sell their shares in the company. It said in a statement:

In making the offer, Seven is seeking to increase its interest in Boral and would be satisfied for the offer to result in it holding a total interest of around 30% of Boral. The offer provides Boral shareholders with the opportunity to sell their shares at a premium to recent trading performance.

A company cannot own more than 20% of a target without launching a takeover under Australian laws. However, under "creep" laws it can continue to boost its ownership by up to 3% every six months without embarking on a bid.

With more than 19.9% of Boral and having recently exhausted provisions allowing it to "creep" up the share register, the Seven Group is unable to buy more of Boral without launching a takeover offer.

Seven Group is controlled by billionaire Kerry Stokes and his conglomerate also owns Cat equipment provider, WesTrac, Coates Hire and petroleum company, Beach Energy.

CSR results

Building products supplier, CSR has been benefiting from the increased momentum in the Australian housing construction and renovation market as ultra-low interest rates and the Federal Government's HomeBuilder stimulus program fuel demand.

CSR chief executive Julie Coates said she expected the housing market to remain solid with the extension of HomeBuilder to 2022. Detached housing accounts for 54% of CSR's revenue. Most CSR products are used in the last half of a new home construction. She told the Australian Financial Review:

We've got a six-month lag in the build cycle.

Sales of building products in retail hardware outlets are also up 20%, according to a report in The Australian. She said the company had been able to push through a price rise of 4% for Gyprock products in April, which she described as largely a "catch-up" after steady pricing last year.

The group's building products business, which makes up around 70% of revenues, generated an 8% increase in earnings before interest and tax to $184.3 million for the 12 months ended March 31.

Revenue was down 4% to $2.1 billion after a softer beginning of the group's financial year, as a result of uncertainty in the early stages of the pandemic. It owns brands including Hebel, Monier roofing, Gyprock and Cemintel.

Shortages of tradespeople has emerged as an issue for the industry, while inflation is also on Ms Coates' watch list, according to The Australian. She said:

Shortages of bricklayers and roof tilers is a challenge for the industry, so we need to make sure we have enough of those trades coming through. We've not seen cost inflation yet in our business but we're anticipating as we go forward that's a potential impact that we're going to have to manage.

The CSR boss is also looking ahead to migration trends as a guide for the next few years. She said:

The extension of the HomeBuilder starts should provide demand through 2021 and 2022. The question is whether it's enough of a build to positive net overseas migration, which the government is expecting to come back in 2023. So how we build that bridge is important - I think we look to continue to work with government on that given the importance of the building industry.

I'd also say we're not through COVID-19 yet so the other assumption is we can have a vaccine rollout that's successful. So there are a whole range of factors required in terms of underpinning the economic growth we'd all like to see.

Private equity group Ares is selling upmarket British paint company, Farrow & Ball to Danish coatings manufacturer Hempel in a GBP500 million deal. Ares bought it in 2014 for GBP275 million.

The deal comes after a year in which protracted lockdowns and a shift to working from home have made some consumers more willing to spend on high-end interior design. Anthony Davey, chief executive of Farrow & Ball, said revenues had risen more than 30% in the year to March 2021. He told the Financial Times:

The home turned into a new frontier. It was a school, it was an office, it was a place where old hobbies were revisited and new hobbies began. As a consequence, people invested more time and more money [in their homes].

The company repaid more than GBP1 million in furlough money to the UK government when it realised "we were actually going to have a very, very strong year", Mr Davey said.

The deal values Farrow & Ball at almost GBP500 million, according to people familiar with the matter, although the companies declined to comment on the valuation.

Hempel, based in Lyngby, outside Copenhagen, produces paints and coatings for large container vessels, bridges and wind turbines. Decorative paints for homes, offices, schools, hospitals and public buildings made up a third of its revenue in 2020. The deal is part of its plan to double its revenue to EUR3 billion by 2025. Hempel's chief executive, Lars Petersson, said:

We believe there's an international scaling possibility here. We keep investing in the UK? ... but, of course, there are some limitations [on sales growth]. Outside of the UK, there are no limitations.

The company will continue to manufacture all of its paint in the UK because this was "a key part of the brand", Mr Petersson said.

The company has sought to attract younger consumers by hiring social media staff from fast-fashion companies "where online social inspiration is the lifeblood of that industry", said Mr Davey.

Not all Farrow & Ball consumers are sort of uber-affluent consumers - very far from it. Of course, affluence and price sensitivity play a role, but it is not the defining factor. It's their engagement and passion for interior design.

The company had gone through a "really painful process" to make sure it could continue to export its paints, which are manufactured at its factory in Wimborne, Dorset, to the EU after Brexit, he added.

Farrow & Ball is known for its eccentrically-named colours including "Dead Salmon" and "Broccoli Brown".

Related: Hempel also owns the Wattyl paint brand.

Next and Homebase tie-up

DIY chain Homebase will place mini garden centres in a number of Next fashion stores, according to The Guardian. The trial partnership between the two retailers will see Homebase garden centres open within the Next stores in Shoreham, Ipswich, Warrington, Camberley, Bristol and Sheffield.

Homebase said it aims to offer customers access to expert gardening advice, plants, pots and tools - alongside Next's range of clothing and homewares.

The new venture, which will be called Garden by Homebase at Next, raises the prospect of compost being walked through gleaming retail spaces containing expensive lingerie and dresses. Damian McGloughlin, chief executive of Homebase, said:

We're delighted to be joining forces with Next and bringing our garden products and expertise to its stores. It's all part of our wider commitment to make shopping with us easier and provide even more inspiration and expert advice.

We're a great nation of gardeners, with more and more people enjoying the benefits of gardening and being outside. The launch of these new garden centres means we're able to offer more gardeners, both experienced and those just starting out, Homebase products in more locations across the country.

In November 2020, after a period of strong sales, Hilco hired investment bankers at Lazard to sell Homebase. There have been reports that Hugh Osmond, the former owner of PizzaExpress and the founder of Punch Taverns, is preparing a GBP300 million bid for the DIY chain.

The ASX-listed, technology-driven company has optimised its shift from a one-time job payment business model to a subscription-based model that generates recurring (monthly) revenues, according to Hipages co-founder and chief executive Roby Sharon-Zipser.

The Australian Financial Review (AFR) reports that Hipages changed its business model in November 2019 from taking a cut of one-time jobs connected and completed through its online marketplace to encouraging nearly 30,000 tradies to get access to the leads generated through Hipages for a monthly fee.

It also announced it is launching accounting and job-tracking software for its tradie customers to help fuel the next phase of growth.

After researching the needs of the tradies who use Hipages, Mr Sharon-Zipser and his team found only 20% use some form of technology or software to manage and track their business. For the majority, old-school pen and paper still dominated. He told the AFR:

We were surprised. There is a lot of tech adoption that can still happen in this space - part of the reason they've been left behind is a lot of them operate as sole traders, whereas a lot of the focus in terms of this kind of software adoption has been on enterprise.

Offering this field-service software is all part of a trend we're seeing of the ongoing 'professionalisation' of tradies.

In a quarterly earnings update, Hipages said its total revenue was up 18% on the previous corresponding period, and its recurring revenue from subscriptions was up 26%.

Total revenue for the period was $13.9 million, with the quarter also marking a year since Hipages moved to a subscription-only model. Recurring revenue now accounts for 94% of total revenue, with Hipages forecasting total revenue growth of 15% for FY21 as a whole (with recurring revenue growth predicted to be 20%). Mr Sharon-Zipser said:

The business has performed ahead of expectations with 26% growth in recurring revenue in the December quarter due to a significant increase in ARPU (average revenue per user) and tradie subscriptions. A 31% lift in ARPU was driven by new subscribers joining the platform at a higher price point and existing subscribers upgrading to higher price tiers in order to claim more jobs.

Mr Sharon-Zipser also said Hipages wants eventually to offer tradies financial products, educational tools and even access to virtual assistants all within the Hipages ecosystem.

But rather than roll out products sporadically, he said incremental success and growth in software-as-a-service (SaaS) comes from understanding what the customer wants, needs and values.

Hipages successfully listed on the ASX in November 2020 after an IPO raised $100.4 million.

Related: In late 2020, Hipages was planning to raise about $100 million for its Initial Public Offering.

What would it take to convince many DIYers to re-purchase some of the familiar tools they use - such as levels, clamps and spanners - in the hope of gaining a key advantage? What's the biggest complaint about tools they make regularly, one which, so far, no one has really been able to solve?

The answer can be found if you look through the toolboxes of just about any DIYer. One thing you will notice quickly is the number of duplicate tools many of them own.

In most cases this isn't dedication to redundancy, or the need to equip multiple workers. No, the simple reason for duplicates is that DIYers tend to lose tools, and then find them again (typically the day after they've bought a replacement tool). It's an endless, really annoying problem, not just because it often results in the purchase of another tool, but because that follows typically an hour or more of searching, and feeling like something of an idiot.

It's not just that DIYers are careless, either. While professionals will sing the praises of their well-organised workbenches, and the multiple layers of storage they have engineered, most DIYers have storage limited to a corner of a garage, or even just a third of a hall closet somewhere.

These are subject to the ravages of life partners (who just needed to tighten the screw on the saucepan), children (amazing how many tools can double for spaceships), and pets (the soft chewy handles of modern tools are yummy, many puppies would agree). Not to mention the annual disaster of the "spring clean", which typically involves a seemingly random re-distribution of anything not deemed "important".

And, of course, let's also not forget, the DIYer him/herself. While being considered "careless" with tools carries a certain sting from many a childhood, there's nothing like having to duck inside for a Zoom meeting with your boss in the middle of fixing the backyard fence for ensuring you never will find that level again - or at least not until after you've purchased its replacement.

The Pro scene

When it comes to locating expensive power tools, some considerable progress has been made for professional and trade users. Milwaukee has led this development, with its breakthrough introduction of One-Key in mid-2015. One-Key helped to connect power tools, via the smartphone, to a smart backend which could monitor performance, adjust settings, and track location. (It also likely delivered Milwaukee a wealth of data to help it deliver future tools.) This led the way for both Bosch and Stanley Black & Decker's DeWalt brand to develop similar systems, offering both tracking and some degree of performance monitoring.

These systems have included increasingly sophisticated theft prevention technology, so that tools can be automatically disabled if they lose their connection to their owner's mobile phone, if they leave a specific geo-fenced location, or if the owner chooses to disable them manually.

These tracking systems have also become more general over time. Milwaukee now offers its "Tick" product, which is (basically) a Bluetooth beacon that can be attached to any tool or item that needs to be tracked, and integrates into One-Key. DeWalt has its Tool Connect Tag, and Bosch has its TrackTag, which operate in the same way.

These work by establishing networks of users. Each mobile phone that is running the tracking software from Milwaukee, DeWalt or Bosch can report location data for the tools/tags that belong to the specific network. That makes it likely they will be reported if they show up on any larger construction site.

However, as HNN pointed out at the time these systems were first developed, this location tracking has had some severe limitations. An important limitation is that the tracking is based on proximity and not location. For example, while Bosch promoted its tags as being a great way to ensure all a professional's tools were stored in his or her van, in fact the best its software could do was locate them as being within 30 metres of the smartphone.

That is because all of this technology is driven by long-standing Bluetooth beacon technology, which Apple popularised as iBeacon. Under the iBeacon protocol specification (and most other beacon protocols as well) these devices transmit two types of information: an identification number, and a general indication of how powerful the beacon is.

For a mobile phone that detects a beacon, it can absolutely identify the beacon, and it can, very roughly, work out how far away it may be. But the user will still usually end up with a search area of over 200 square metres, at best.

Some trackers, such as the Tile, which began as a Kickstarter project, offer similar networked location finding, but also feature a small speaker, which can be made to emit sounds when triggered by the matching app. That's helpful, but it depends on a quiet environment, and being within 10 metres or so of the lost object.

Air Tags

With the release on 20 April 2021 of Apple's latest new product, the Air Tag, many of the previous limitations have been removed. Where beacons make use only of Bluetooth, the Air Tag also makes use of ultra-wideband (UWB). This is done through one of Apple's own computer chips, the U1.

The two systems work together. Bluetooth typically has a transmission range of around 80 metres, and up to 100 metres in ideal conditions, while UWB works over ranges of around 30 metres (without obstacles). The system is designed to provide broad tracking using Bluetooth, and final location tracking through the U1 chip and UWB.

There is a U1 chip in every Air Tag, and Apple has been putting U1 chips in every iPhone since the iPhone XI (released in 2019). These UWB devices send out a pulse of data about once every two nanoseconds, which make them ideal for very close monitoring.

The UWB system is able to determine distance via the exchange of three signals. To do this, it uses time of flight (ToF) calculations, literally measuring the time taken to send and receive these radio signals, which are, of course, travelling at the speed of light. Light takes 10 nanoseconds, which is a hundred-millionth of a second, to travel over three metres.

As the Air Tag and the iPhone will not have clocks synchronised within a nanosecond, the devices record how long it takes to send and receive a response, minus the delay between receiving the signal and sending the response. This is done twice, once from the perspective of the iPhone, and once from the perspective of the Air Tag. These are added together, and the result divided by four. Accuracy in these mobile UWB systems (where the iPhone will be wobbling around) is typically 100mm to 200mm.

Exactly how the direction portion of the calculation is achieved is not clear, but it's likely that Apple uses two antennae at some separation from each other on the iPhone case. The difference in distance measurement between the two points would enable it to triangulate the location of the Air Tag, and provide a direction indication. A limitation on the use of the iPhone is that it must be held in portrait orientation, and the detection field is a cone projected from the back of the phone (where the main camera lenses are), roughly equivalent to the range of view of the phone's wide-angle camera lens.

In practice, when the iPhone user is within the range where the U1 chip can do its work, an arrow will appear on the iPhone screen indicating the general direction to the Air Tag. When the iPhone is within a metre or so of the Air Tag, the iPhone will vibrate with increasing intensity as it gets closer.

The Apple advantage

In terms of the general tracking tag marketplace, Apple has two key advantages. The first is its ability to fully integrate the necessary hardware and software to develop a highly customised solution. Competitors such as the original Tile have access to little more than the standard Bluetooth connectivity protocols, and those have a number of severe limitations.

While the competing smartphone system, Android (from Alphabet aka Google) has incorporated UWB into its core operating system, it doesn't seem this has been used for location tracking just yet. For example, the major Android competitor to Apple, Samsung, has added a tracking tag to its range, the SmartTag, but this seems to use only Bluetooth, and provides proximity but not relative direction capability.

Apple's second advantage has to do with the size of its potential tracking network. This is actually a little more complex than it seems at first. Firstly, competitors such as Tile might suggest they have a network of over a million - while Apple can count its network in the hundreds of millions.

More than that, however, the Tile network is only active when the Tile app is loaded (in both Apple and Android smartphones), though it will still work - usually - when it is running in the background. The Apple network has the capability to be always on, for every iPhone (unless the user specifically opts out).

Why is Apple doing this?

Apple at the moment is undergoing a subtle shift in its business model. Where much of its profits in the past have been driven by a rapid turnover in Apple iPhone sales, the company has begun to bump up against problems of market saturation. Not only are there fewer and fewer people who don't have an iPhone that want to buy one, but also the company is beginning to struggle when it comes to introducing significant advances to existing products at least once every two years.

This means the company is slowly turning from hardware sales to the sale of services to shore up its income and profits. This has multiple effects, as the need for services among its users can also drive hardware sales. To get the full benefit of Air Tags, for example, you need to own an iPhone XI, an iPhone XII or an iWatch Series 6.

That is also, partly, what is behind the company's moves to better enable users of its iOS 14 software to restrict access to personal data. If companies such as Facebook and Alphabet cannot access than information, Apple's own advertising business, which relies on direct contact with customers, will be strengthened.

What this means for tools

Apple has specifically stated that it will open up the UWB U1 chip and its code to use by third-party suppliers. Obviously, they will probably not give the go-ahead to a direct competitor to the Air Tag, but they would be open to the same technology being implanted directly in other objects.

There is a real potential here for tool makers - both hand tools and power tools - to introduce the first really useful location tracker for misplaced tools around the home - and for the occasionally forgetful tradie as well. HNN is quite certain that this kind of feature could help to drive tool repurchases at a relatively high rate. It's really a capability that DIYers have been waiting decades for.

What about retailers?

There is also the potential for the use of UWB combined with iBeacons to finally deliver on some of the location-aware applications that were first mooted back in 2013 - then fell to the wayside when the limitations of iBeacons became evident. Consider, for example, the Bunnings in-store app, which can help its customers find their way to products by telling them precisely in which aisle in their particular store they are located. With the addition of UWB, that app could guide them directly, with an arrow, to what they are looking for.

Tool and power equipment maker and distributor Techtronic Industries (TTI) - owner of the Milwaukee, Ryobi, AEG and Hoover brands - will lease a 73,920sqm distribution centre in The Yards industrial estate located in Western Sydney. The Australian Financial Review exclusively revealed the tool supplier is the first major tenant in the new $1 billion industrial estate.

TTI is consolidating two existing facilities in NSW with the new warehouse that will have an end value of $188 million.

Jack Moroney, a director at industrial property and supply chain specialist TMX, negotiated the transaction for TTI after his team designed a flexible supply chain solution that supported the company's future growth.

TTI has signed a 10-year lease. The distribution centre, which will include a goods-to-person automated mini shuttle system, is expected to become operational in July 2022. Grant Edhouse, chief financial officer and chief operating officer at TTI Australia & New Zealand, told the AFR:

We are continuing to expand rapidly and need a new facility to support our future growth. By consolidating our existing sites into this new state-of-the-art distribution centre, we will be able to meet our future needs, while optimising our supply chain to the benefit of our retail partners and end users of our products.

The deal marks the first pre-commitment at The Yards, and TTI is also the first major tenant to choose the location as its NSW distribution hub.

The rezoned precinct is set to become an 850-hectare warehousing hub as part of the Western Sydney Employment Area. The site offers 77 hectares of developable area and is due to house about 400,000sqm of industrial warehouse and corporate office space once completed. It is being jointly developed by Singapore's Frasers Property Industrial, Aware Super and Altis.

The developers are targeting a Green Building Council of Australia six-star Green Star rating.

Boral's fly ash business

Building materials supplier Boral said it is looking at a potential sale, or a joint venture, as part of a review of its North American fly ash business. The move comes as the company is looking to exit the United States, in a retreat from its global expansion strategy that led to a hefty writedown in 2020.

A sale for a high price could enable Boral to reinvest its proceeds back in Australia, where it could embark on acquisitions. According to the Data Room column in The Australian, some are suggesting that Queensland-based cement producer Wagners as a logical target, or the privately held West Australian building materials company BGC, subject to clearance from the Australian Competition & Consumer Commission.

Boral's acquisition of rival Headwaters in 2016 made the combined entity the largest supplier of fly ash in US markets. However, since then, it has led to an impairment charge and earnings downgrades amid a soft housing market and a push towards cleaner forms of energy generation. Zlatko Todorcevski, chief executive officer, said in a statement:

We... remain confident in the long term demand dynamics for the industry, including significant incremental demand growth potential from the US government's proposed new infrastructure program.

New opportunities for supply exist from harvesting landfills and imports, he added, which is expected to more than offset the decline in fresh fly ash supply as the US transitions away from coal fired power generation.

Boral said it has appointed advisors for the assessment and will provide an update at its full year results announcement in August, or earlier.

Boral also recently closed the sale of its half-share in its US plasterboard business to Gebr Knauf for AUD1.33 billion, announcing it would use the proceeds to pay debt and buy back up to 10% of its shares.

Related: In December, Boral offloaded its share of the North American Meridian Brick business for USD125 million to Austria-based giant Wienerberger. The sale of Meridian Brick ended Boral's involvement in the brick industry.

As is often the case after an acquisition, working out how well Australia's DuluxGroup has been doing since August 2019 is somewhat difficult - and has been made yet more difficult by the COVID-19 pandemic.

That is particularly the case because the company was acquired by Nippon Paint Holdings (for $3.8 billion in August 2019), which is both a sprawling worldwide company and based in Japan, where reporting and management structures differ substantially from Australia, the US and the European Union.

Western companies tend to set sales and cost projections, then adopt a range of strategies to meet those targets. Japanese companies tend to develop strategies which will result in their meeting some more widely specified targets. Western companies that fail to meet their targets are assumed to have adopted the wrong strategies. Japanese companies that do not do well are more often criticised for not applying their existing strategies in an effective manner.

Results

In overall terms, NPH performed well during FY2020, bringing in JPY781 billion ($9.2 billion) in sales, above its projection made in 2017 that it would reach JPY750 billion in sales. However, its profit was below the forecast JPY105 billion at JPY87 billion ($1 billion). The company put its underperforming operating margin down to problems from the COVID-19 pandemic. NPH's current medium-term goal is to achieve sales of JPY1100 billion by FY2023, along with JPY140 billion in profit.

Dulux

As the slide from NPH's results presentation indicates, the Dulux sales contribution is set at JPY148.3 billion ($1.76 billion), with an operating margin of 11.6%. (Dun & Bradstreet suggests the number is closer to $2.0 billion.) NPH estimates that in decorative paints, Dulux grew its market share from 48% in 2019 to 50% in 2020.

It's difficult to tell exactly what NPH is counting as "DuluxGroup" in its operations, but that result is broadly in line with the sales results for the company prior to its acquisition, allowing for currency fluctuations. In its Integrated Report for FY2019 (similar to an annual report, only substantially more complex), NPH lists the revenue for that year as being $1.8 billion, which included eight months prior to acquisition.

A more revealing look at how the NPH sees Dulux is revealed in the 2020 "Integrated Report" (IR2020), which covers results for 2019. This shows the following diagram for its worldwide operations:

This illustrates what NPH refers to as its "spiderweb" approach to international management, where subsidiaries are free to interact with each other (across the web), rather than having to direct all activity through a central hub (the "radial" plan) than then connects to all the subsidiaries. It's interesting that NPH sees Dulux as having a direct connection with NPH's other recent acquisition, the Turkish paint company Betek Boya (aka Betek Boya ve Kimya Sanayi).

The IR2020 also offers some insights from former managing director, Patrick Houlihan, who has continued in his management role, now as CEO and chairman. According to Mr Houlihan:

Becoming part of Nippon Paint Holdings is a new chapter in DuluxGroup's rich history, but its focus remains on maximising shareholder value by leveraging new opportunities as part of the Asia Pacific's number one paint and coatings company.

Specifically, this includes: 1. Building on the company's market-leading positions in Australia, New Zealand and Papua New Guinea; 2. Contributing to Nippon Paint's position in Asia through DuluxGroup's own capabilities and portfolio-for example, Selleys adhesives and sealants; and 3. Continuing to explore pathways for material growth in the UK, Europe, and beyond-for example, Craig & Rose in the UK and Maison Deco in France.

DuluxGroup's businesses are already benefiting from collaboration with other parts of Nippon Paint, and everyone at the company is excited by this new opportunity.

The IR2020 also supplies some familiar graphs of the makeup of the Dulux business:

Perhaps the most interesting direct reference to Dulux is in the space provided to Wee Siew Kim, deputy president and executive corporate officer, Nippon Paint Holdings Co, and group chief executive officer, NIPSEA Group:

Last year, NPHD acquired the DuluxGroup (DGL) in Australia and New Zealand, as well as Betek Boya in Turkey. Besides learning from these two great management teams, NIPSEA sees growth by tapping into DGL's Selleys range of sealants, adhesives and fillers as well as its geographical expansion in the region peripheral to Turkey.

Judging by the press releases this seems to be a process well underway:

Chen Lee Siong, General Manager of Group Trade User Business at Nippon Paint Malaysia said, "The expansion of our product offerings through Selleys will further enhance Nippon Paint's end-to-end home solutions, designed to meet the needs and demands of Malaysian consumers. This strategic integration paves way for both Nippon Paint and Selleys to further grow within the Malaysian market - creating an accessible and convenient shopping experience for consumers."

Analysis

What is of most interest to the Australian hardware retail industry is how the acquisition of DuluxGroup will shape its development over the next three years or so. While it's good to see Australian technology spreading through Asia, the question has to be asked why it takes an acquisition by a Japanese company for that to happen? Not that DuluxGroup is necessarily to blame, for the government policies that once promoted Australia as being more a part of Asia, rather than some awkward outpost of the Anglo-sphere, seemed to have vanished post-Paul Keating. Given the growth opportunities, that might be worth a revision.

But for the Australian industry, the question will be how much technology will flow into this market from overseas. There are some new developments announced by NPH that could be of real interest. For example, alongside the development of anti-bacterial and even anti-viral paints, the company is developing DIY paint that resists splattering when used with a roller. If the DIY paint market continues to grow, that could be more attractive even than paint longevity and wear resistance.

One area that it will be interesting to see possibly change at Dulux under its new Japan-based ownership, is its gender imbalance. According to the company's 2019/20 Workplace Gender Equality Report, overall there were 300 male managers to 140 female managers. Within that management group, at the senior level, it's the same story: 95 senior male managers to just 49 female managers. Of those, 10 female managers were part-time, and three male managers were part-time. Those imbalances were carried through to the ratio of promotions to manager as well.

It's an easy guess that by the start of 2022, issues such as these will receive considerably more attention across Australian industry.

On-demand delivery start-up Rendr that describes itself as the "Uber for plants, home and hardware" has received investment from a consortium led by former Cache Group managing director Sonney Roth. Mr Roth managed the Antler luggage business in Australia for 30 years before selling it to Strandbags owner Michael Lewis recently.

According to The Australian Financial Review (AFR), the consortium includes Latitude Financial Group chief executive Ahmed Fahour and Steven Lew, chief executive of homewares retailer Global Retail Brands, his chief operating officer Darron Kupshik and Hairhouse co-owner Emad Nayef.

Rendr was launched in 2019 by young entrepreneurs James Fisher and Greg Leibowitz. Through the app, users can order plants, power tools, paint, basins and everything in between and get it delivered to their home or job sites. It included features such as a paint estimator tool and bundle packages for convenience and ease. Not surprisingly, it has direct appeal for tradies and DIYers.

At the time, Rendr had a network of about 80 crowdsourced drivers who bought goods in stores and delivered them to homes and work sites. It thrived during the DIY boom triggered by the pandemic.

When Mr Roth, a family friend, was asked to help scale the start-up, he overhauled the business model, ditching crowd-sourced deliveries in favour of partnerships with professional transport and logistics businesses. He told the AFR:

...[T]he app was fine, but they were using crowdsourced drivers ... and I didn't think it was scalable.

Since its initial launch, Rendr released a new app, website and online marketplace which integrates with retailers' websites and e-commerce platforms. It is recruiting retailers and brands including Mr Lew's House chain, Mr Nayef's Hairhouse and Antler.

Rendr's technology matches merchants and consumers with the best possible delivery solution, using a network of delivery partners from bike couriers who can deliver small packages in two hours to line haul carriers who can deliver goods weighing up to 1000 kilograms from interstate. Mr Roth said:

We have 20,000 drivers from bikes to semis so we can do any delivery, which Uber Eats and DoorDash [which have crowdsourced delivery networks] can't do.

Rendr is also in talks to provide third-party logistics for small brands and retailers, business-to-business deliveries to help retailers distribute stock from warehouses to stores, and is considering a buy now, pay later product and overseas expansion.

Mr Roth wants to make Rendr a household name and is already planning a Series B or pre-initial public offering round.

Background

Greg Leibowitz and James Fisher started their career together by establishing a digital marketing agency straight out of school in 2017. They noticed a boom in the "on-demand delivery service" industry. The duo also discussions with their tradie mates about the struggle of delayed deliveries and inconvenience of having to leave job sites to collect supplies.

By dissecting the retail landscape, they found that there wasn't an all-in-one platform available for DIYers and trades that provided on-demand delivery of the supplies. They recognised the gap in the market and decided to create Rendr.

Related: Getter app for tradies raises money in capital raising.

Metcash's acquisition - and financing - of Australian trade tool franchise Total Tools Holdings (TTH) received significant attention at the company's Investor Day briefing for analysts, which has held on 16 March 2021. Despite this time and attention, however, Metcash did not really succeed, in HNN's opinion, in being very clear about what is going on.

That's not too surprising, as in recent years much of Metcash's presentation style has moved more towards what could be termed the "ornate" rather than the strictly factual. Some of that move has been driven by Mark Laidlaw, the former CEO of Metcash's hardware operations (including IHG, the Independent Hardware Group). Mr Laidlaw, has agreed to interrupt his retirement to return to Metcash in the role of the chairman of Total Tools - though for how long is not known.

Beyond the method of delivery, there are really two sources of a lack of clarity in the presentation of the Total Tools acquisition. One relates to the actual numbers that are being presented, and the other to the way in which this acquisition meshes with the overall strategy undertaken at Metcash.

Industry view

Before we get to that, however, we might focus on one slightly surprising statement that Mr Laidlaw made, which could have real consequences for independent hardware retailers. In answer to a question from analyst Simon Mawhinney of Allan Gray Australia about the planned expansion of TTH, and where the marketshare to support expansion would come from, Mr Laidlaw had this to say:

Phase two of this is the network opportunities sharing with Annette's [Welsh, CEO of IHG] business. So there'll be some regional towns, for example, that couldn't justify a Sydney Tools going there. Okay, population is too small, but there could be a Mitre 10 or a Home Timber and Hardware store. They could have a Total Tool store built next to it in some of those regional towns.

OK. Wait a minute. So in "phase 2", which comes after the TTH network had been built out to 200 stores or so, a Mitre 10 or HTH retailer in a small town could wake up one day to find that a TTH store was going to be built next door? With discounted prices on power tools, power tool accessories and hand tools?

Really?

If it's a corporate/joint venture store, it wouldn't matter, because it is all Metcash revenue. But if it's not? What happens then? This could end up being even a little worse than it seems at first. One response might be, for example, for the owner to sell that store - but it would have probably already lost some of its value. And, of course, IHG would have the right to buy the store with a matching offer, giving it a winning matched set in a small town.

HNN is very sure that this is in the category of "unintended consequences" - IHG really is not so devious. But you have to admit, that's a heck of an unintended consequence. And it goes to something deeper in all of this, which is that HNN just cannot help sensing that, for a $57 million investment, plus a further $95 million in CapEx to fuel growth from FY2022 to FY2044, there seem to be a lot of details that haven't really been thought out.

The numbers

To look at the numbers to begin with, the presentation slides from the Investor Day identify what Metcash terms "Network revenue June 2020" for TTH as being $658 million. According to the Australian Stock Exchange (ASX) announcement for 27 July 2020:

The retail store network generated sales of ~$555m for the 12 months ended 31 December 2019.

So, the assumption would be that the $658 million number refers for sales from 1 July 2019 to 30 June 2020. That would indicate that the first calendar half of 2020 outperformed the first calendar half of 2019 by $103 million.

Those numbers are not without meaning, as they reflect the overall market impact of TTH. But that revenue is not something that TTH - and now Metcash - fully participate in. As HNN mentioned in its initial coverage of the acquisition, Dun & Bradstreet estimated revenues for FY2019/20 as being around $98 million. Further:

Metcash has announced that in its two months of ownership prior to its first-half results, TTH declared $18.6 million in total revenue, and $4.8 million in total EBIT. Those numbers annualise out to $111.6 million and $28.8 million.

Metcash mentions in its ASX announcement of 1 September 2020, commenting on the completion of the acquisition:

The terms of the agreement, including the purchase price of ~$57m for the 70% stake, are consistent with those disclosed in Metcash's prior ASX announcements. The purchase price was determined based on a normalised annual EBITDA of $12.6m. Total Tools has however benefited from a change in consumer behaviour related to COVID-19 and is expected to report a significantly higher EBITDA for the year ended 30 June 2020.

If we presume that TTH can retain something close to its current numbers, and bearing in mind that Metcash only has a 70% ownership stake, that means the company will benefit to an amount around $20 million in earnings a year. This is far from being insignificant, but it is something of a step down from what the figure of $658 million in apparent revenues indicates.

Metcash hasn't made any misstatements, but providing more targeted revenue numbers and estimated EBIT would have better contextualised the acquisition.

Inside the acquisition

While better numbers might be helpful, the real problem in understanding this acquisition is that it requires an in-depth view of what is going on inside Metcash, how that interlocks with the external, macro environment in retail, and, finally, how all that plays out when it comes to the current state of the hardware retail industry itself.

HNN would suggest that what we're really seeing in the TTH acquisition is the final playing out of some less-than-successful strategies that have been at work over the past six to seven years in Metcash.

On a very high macro level, Metcash has tended to invest in short to medium term projects, and possibly has neglected a number of more long-term objectives. This is particularly the case as regards digital technologies. The CEO of Metcash, Jeff Adams, did call this out during the Investor Day. He indicated that the company would be making major investments through to FY2024 in replacing its internal systems, getting rid of what Mr Adams referred to as instances of "triple-handling" in some processes.

It is, however, a little bit less clear how Metcash's digital investment will play out when it comes to actual retail processes. Again, it is just very difficult to know when Metcash refers to some of its current digital assets as being "industry leading" whether that is simply a promotional attitude, or if the company actually believes this. As compared to, say, Amazon.com all of the Metcash digital assets seem evidently primitive. In hardware, they certainly don't have the functionality of the Bunnings website - though it, too, lags somewhat in international terms.

One clear indication that digital retail may not be everything it is made out to be is that the only performance indicators given are percentage increases over the previous corresponding period. And in the digital world, seeing numbers like a "150% increase" don't tend to indicate very high growth, but rather a very low starting base.

What still remains lacking at Metcash is the ability to conceive of digital as not just a secondary, cost cutting, market expanding business objective, but rather a primary objective, and one that is aimed at producing actual growth. We've seen, for example the parent company of big-box hardware retailer Bunnings, Wesfarmers, make a very large investment into data analytics. In a recent speech to a technology conference, the governor of the Reserve Bank of Australia (RBA), Philip Lowe, had this to say about the importance of data analytics to future growth in Australian businesses:

Looking across the economy, there are investment needs and opportunities in many areas. The one I would like to focus on today is investment in IT, digitisation and data science. Investment in these areas is critical to lifting our nation's productive capacity.

In many ways data is the new oil of the 21st century. Investing in data and our digital capability are critical to our future prosperity. These investments allow better decision making and a faster response to the changes in our economy and society. These investments are also crucial to organisations delivering the more personalised goods and services that many people are seeking.

There are opportunities for digital innovation in every sector of our economy. Almost every organisation needs a strong digital capability to perform well, to innovate and lift their productivity. Technology and data analysis also hold the keys to solving many of the great challenges of our times, including controlling the pandemic, dealing with climate change and responding to increasing cyber threats.

If a company has all but excluded itself from the primary driver of growth in the 21st Century, technology, it then has to look elsewhere for growth. The difficulty with this is that even those other growth opportunities are going to find themselves still altered by technology.

In 2018, HNN took a look at data analytics in the hardware/home improvement retail industry:

Food

For example, the difficulties that have beset Metcash's food business have been well-documented. It has lost some major wholesale partners such as 7-Eleven and Drakes, which pulled their contracts. Then there are the independent supermarket owners who built a smaller, competing supply cooperative. As described by Inside Retail:

Led by former Coca-Cola Amatil managing director Warwick White, through his independent grocery firm Stone Advisory, and with Ritchies Supa IGA boss Fred Harrison on the board, Co-Operative Supermarkets Australia [CSA] is expected to use its industry experience and contacts to collectively bargain with suppliers.

On its website, CSA states what was the inspiration for the move:

Following a trip by some leading retailers to Europe to see REWE and Leclerc, there was a new belief that grocery independent co-ops can beat the chains. The trip cemented the view that independents needed to control their own destiny.

Such a move would have been much less likely just ten years ago, but digital technology has made it possible for smaller cooperatives to manage order processing, fulfillment and delivery efficiently without the need for larger scale.

Hardware

The same forces that have been at work on the food business have appeared, more indirectly, in Metcash's hardware business. While Metcash has been broadly successful in agglomerating Mitre 10 with the retail assets of Danks, Home Timber & Hardware [HTH] as well as Thrifty-Link, it's an open secret that IHG has not succeeded to the degree it expected it would. While the company lost very few stores through the acquisition (far fewer than buying groups expected), IHG also did not gain as many additional independent stores as it had expected it would.

In large part that was because buying groups such as Hardware & Building Traders (HBT), led by Greg Benstead as CEO, innovated and made better use of digital technology along with other techniques to deliver solid results to its members. For example, IHG's Mitre 10 had long seen its printed mail catalogue as being a major part of successful marketing. HBT in 2020 introduced a system where individual members could digitally compose their own catalogue for their own areas, taking advantage of any HBT/supplier deals they chose. The catalogues could then be distributed in printed form, or accessed online.

In 2019 IHG made some belated efforts to approach buying groups with the suggestion that they could do better if they all joined forces. It was, however, a case for far too little far too late, and as far as HNN is aware no buying groups expressed interest in any kind of further integration with IHG.

What has been seen this year, as IHG has moved to close down its two minor brands, True Value and Thrifty-Link, and to increase the emphasis on its Mitre 10 brand over the HTH brand, is that Metcash no longer sees IHG as a real source of future growth through expansion. HNN would suggest the company will continue to be interested in getting larger stores from groups such as National Building Supplies (Natbuild) to join, but less avidly pursue smaller stores.

Finding growth

Given these contractions to growth, Metcash has been forced to explore new ways to achieve future growth. Like many companies that find themselves in such a position, one of the key changes it has made is to alter the risk profile of its investments.

Not that long ago, hardware at Metcash consisted almost entirely of its wholesale business, with only a small amount of full retail ownership - and much of that was purely defensive, preventing Bunnings from expanding by buying out Mitre 10 hardware stores. That began to change four to five years ago, and that change has accelerated to the extent that, according to data released at the Investor Day, where in 2018 some 40% of revenue came from joint stores, that has grown to 45% in 2021. While IHG was at pains to play down its future acquisition strategy, it's HNN's belief that JVs will come to make up over 50% of revenue for IHG by 2024.

Of course, this looks pretty smart. Selling only wholesale goods means that IHG misses out on the biggest slice of profit, which comes in the store to customer transaction. Why not buy into that, especially when it means taking over a store that not only has a good track record, but about which, as the main supplier, your company knows a great deal?

Unfortunately, as everyone knows, there is no such thing as free money. When a company moves from a wholesale to a retail operation, the risk profile undergoes a radical change. One advantage of the wholesale sales model is that, if the economy, or a sector of the economy undergoes a period of extended negative growth, the wholesaler is unlikely to be severely affected. Wholesale assets, and their attendant fixed costs, can usually be reallocated to different sectors, and the relatively less-skilled workforce can be laid off and later rehired without too much difficulty.

That's not the case with retail. In a down cycle, retail fixed operating costs can be deadly, and staff cannot simply be let go and rehired later. So when companies move from wholesale to retail they assume a great deal more operating risk. This is not always fully acknowledged.

The acquisition

There is one more factor to take into consideration about the TTH acquisition, and that is the effect of the COVID-19 pandemic. While there was a real effort made by Metcash to suggest that the pandemic will somehow result in fundamental structural change to its markets, that does not seem to really be the majority view. While current conditions might just stretch to November 2021, there is little doubt that once COVID-19 vaccinations are in place, Australians will return to their habits of eating out as much as they did in 2019, and grocery sales will slump. In terms of hardware, there may be a marginal increase in sales, but that will depend in large part on what the housing market does, which is far from certain.

This means that come the second half of FY2022, companies like Metcash will be running direct comparisons back to FY2019, and perhaps even then contemplating sliding results.

It is the culmination of all these factors - poor technology adoption in the past, sliding growth in the food business, a failure to fully capitalise on investments in the hardware sector, and the hangover from COVID-19 - that has made the investment in TTH "make sense" for Metcash. It makes sense, because the company is likely faced with just two choices: don't take the chance, and then pay the price for low growth, or take the chance and just possibly do better.

If Metcash is lucky, it might benefit from a new source of growth. Even if it isn't lucky, and TTH proves to provide more neutral than high growth, Metcash might buy itself "cover" for as much as the next two years, by which time, hopefully, some of its digital transformation benefits will kick in.

The core reality of that investment is perhaps best revealed by this question asked at the Investor Day by investment analyst Andrew McLennan of Goldman Sachs.

It looks though that this is going to be very much a space race. You've flagged how many stores you're looking to roll out, but you've got a competitor starting from way back, but having a huge amount of capital, obviously you've got different skillsets in terms of trade versus DIY, etc. Just wondering how confident you can be that allocating this capital and accelerating the growth profile can continue to enable you guys to run ahead of the Bunnings funded competitor.

This is, of course, the background to this acquisition: TTH is widely regarded as having backed out of a potential ASX listing and put the company on the market out of concern when Wesfarmers/Bunnings entered the trade tool specialist market with the purchase of Adelaide Tools.

Mr Laidlaw's response to the question partially affirms this supposition.

So you're absolutely right. I mean, what the franchisees of Total Tools were saying [was], "We've got a great business here. We've got great franchisees. We've got a good plan, but do we have the capital to compete with Bunnings?" That's a fact. So we bring that, but I'm very confident with the expertise that Paul [Dumbrell, CEO of TTH] has in his team that we will stay ahead of that competition. Adelaide Tools, just five stores. I'm not sure if the owner's staying around. So Bunnings have to acquire that expertise from somewhere. We've got it out there in 88 stores.

This does identify the extent of risk that Metcash is facing. Bunnings has plans to build out its network of tool retailers to around 30 stores over the next two to three years. However, perhaps characterising it as a general "space race" - the retailer with the most stores wins - is not quite accurate. It is a space race, maybe, for Metcash, but it really isn't for Bunnings.

One of the factors that was not mentioned at the Investor Day, and that perhaps has not been quite figured into the TTH acquisition, is the extent of the relationship Bunnings has with Techtronic Industries (TTI), the company behind the Milwaukee, AEG and Ryobi power tool brands. The volume of goods made by TTI sold through Bunnings would be substantial (Bunnings has exclusive rights in Australia for both Ryobi and AEG), and one would imagine that this, along with a very long and good relationship between the two major companies, could guarantee good supply agreements.

Every indication that is currently coming from Bunnings is that the company plans to take things slow, and make sure the retail offer is an appealing one. The real question for TTH, in this circumstance, isn't the competitive moves Bunnings may make, but how long it will take the bigger company to develop a performant, verifiable model. At that point, and only at that point, is Bunnings likely to increase its investment and start building out the store network.

Understanding Bunnings

What Mr Laidlaw's answer really does show is something of an ongoing problem that has persisted at Metcash, which is really not understanding Bunnings. That was evident in his opening remarks to the Investor Day presentation:

Annette [Welsh] and I have been fortunate enough to travel the world, looking at home improvement businesses, hardware businesses, looking for best practice and gone to many good places. And it's amazing when you come back to it, if you categorised the Big Box DIY best performers in the world, you look at B&Q, you look at Home Depot. Bunnings is the best in the world, in our opinion, at Big Box DIY. Very, very good. They've absolutely captured that weekend warrior. You only have to drive past car parks on the weekend to see how successful that is at capturing the heart and soul of the DIY customer. They're not so good at trade, but we'll talk about that as well.

We also looked at a lot of good individual businesses around the world. There were some great businesses in the US, entrepreneurial. There's a business called Orchard. Unfortunately, the big guys always then go and buy them out and you lose the entrepreneurialism. But the best at actually trade and DIY, not so humble, is absolutely Mitre 10 New Zealand, who are outstanding at it, and Mitre 10 Australia is becoming very, very good at it, and leading the way in many areas. Having those trade drive-throughs for the trader to get in and out, get on with it, is outstanding.

With all due respect to both Mr Laidlaw and Ms Welsh, Metcash is an Australian company with a market capitalisation of around $3.5 billion. At its peak, revenues from its hardware segment have been around $2.4 billion, and the majority of those revenues come from its wholesale operations, not retail.

Home Depot has a market cap of USD329 billion, and revenues of USD132 billion in FY2020. B&Q is owned by Kingfisher in the UK. Kingfisher has a market cap of GBP6.7 billion, and had FY2020/21 revenues of GBP12.34 billion.

Bunnings is owned by Wesfarmers, which has a market cap of $60 billion. It had sales of $31 billion for FY2019/20, of which $15 billion came from Bunnings. If we accept that 17% of that revenue was due to trade sales, that means Bunnings earned $2.6 billion in trade - about double the trade portion of the wholesale/retail revenue of IHG.

Of course, everyone in hardware has an opinion about every other retailer in hardware - and is entitled to that. It's difficult to see, however, what role such opinions really should play in evaluating CapEx investments of over $100 million in a franchise operation. Far better to plan based on a clear vision of a competitor, rather than working off of potentially erroneous assumptions.

Analysis

What effect will Metcash's investment in TTH have on the overall tool market in hardware retail? Most hardware retailers are going to be less concerned about how many Milwaukee drills TTH sells, and more concerned about the market in power tool accessories, such as bits, cutting disks and replacement batteries. As the franchise expands, will it see tradies go to TTH for their actual tools, but return to hardware stores for those accessories? What happens when both TTH and Bunnings are expanding their operations?

There is really no way to tell, and it's likely to be a store-by-store, customer-by-customer situation. Perhaps the real impact of the TTH investment is not so much directly about TTH itself as it is the signal that Metcash plans to deal with its hardware business in a different way. The industry will likely only understand the consequences of that once 2021 is over.

In general terms, however, what we are seeing play out at Metcash is similar to what we see at many other listed and unlisted Australian companies. Many of these companies have reported reasonable performance over the past five years, but this has been due, at least in part, to not realising how much they should have been investing in technology. As the 2020s roll by, we'll see more of these getting into trouble as their sources of growth dry up. Like Metcash, they will invest in riskier projects, in the hope of shoring up their share price and future outlook.

Some will eventually make the transition to technology, but more will likely fail, or find themselves in receivership, being scavenged for whatever assets they have left that will be of value. HNN would suggest that will happen more quickly than most would suspect, as soon as 2025. Let's hope Metcash - and IHG - evades that fate, but to do so it will need more significant action than has been envisioned so far.

Building materials supplier, Brickworks believes the outlook for housing is so strong and stretching well into next year that it has decided to restart a mothballed brick kiln in New South Wales.

Its flagship Australian building products business recorded a 60% gain in earnings to $16 million. The federal government's HomeBuilder program has been a major driver, but Mr Partridge said he was worried about what might occur from mid-2022 without immigration and international students because of border closures. Brickworks chief executive Lindsay Partridge told The Australian:

Demand was relatively subdued early in the period. However, as government stimulus packages were progressively introduced, consumer confidence improved and this translated into increased building activity and greater demand for our building products.

Our orders are running exceptionally strong ... Every builder in the country has a full order book, and it is going to run strong for the next 12 months, until I think what happens in the middle of next year which is the question. Does the economy continue to grow, how does housing stay strong with a lack of immigration?

People to regional towns would keep demand high for at least another year, according to Mr Partridge. In the pandemic, people were steering away from apartment living, in favour of detached houses, he said. The trends were delivering robust sales in the company's main brands, Austral Bricks, Austral Masonry and Bristile Roofing.

Mr Partridge said the short-term outlook was positive but warned lack of tradies could slow the pace of projects.

As demand grows, we anticipate sales volume will be limited by the availability of tradespeople such as brick layers and roof tilers, and this is likely to extend the existing pipeline of work, resulting in an elevated period of activity for at least a year.

Mr Partridge said a fall in bricklayer wages on the west coast had seen many professionals leave the industry, creating a shortage. Meanwhile roof tilers flocking to Queensland following hailstorms before Christmas had seen other states scrambling for available roof workers.

On the west coast we had a long downturn and wages dropped, tradies went off to do other things and that won't come back until wages go up. On the east coast we had the big hail storms in Brisbane before Christmas so all the roof tiling trades have been busy doing that.

Mr Partridge also said further brakes on sector growth could come from qualified tradies soon being engaged on repairs and rebuilding projects across flood-affected areas of NSW overseen by insurance companies willing to pay high prices.

We don't know what the demand for trades is going to be after the floods ... in Sydney, but of course there are going to be tradies demanded and insurance companies who want to get their clients back into houses are always going to pay top dollar to get the work done quickly.\

And while the slowdown in high-rise towers could free up workers for residential projects, there remains a danger strong order books will see residential construction projects potentially slowed and the pipeline stretched out to next year. Mr Partridge said:

On the east coast we need the tradies that are involved in high-rise construction to move across to residential housing.

The warning came as the company posted a 22% lift in first-half profit to $71 million. Its revenue fell 4% to $449 million and underlying profit was $90 million, down 10% from the prior period.

US business

Brickworks is one of the largest brickmakers in the US and is benefiting from the trillions of dollars in stimulus being pumped into the economy. It won the contract for the Walmart global headquarters in Arkansas, which will have 11 towers and require tens of millions of bricks.

However, its North American businesses' earnings were significantly impacted by the COVID-19 pandemic, exacerbated by uncertainty in the lead-up to the US presidential election in November and severe winter weather from December. Some US state authorities paused infrastructure and building projects because of battered finances. Lockdowns in some states also crimped demand in the north-east and Midwest. This resulted in a 33% decrease in earnings to $4 million. Mr Partridge said:

We have been hit harder by the pandemic in North America, with around 90 COVID-19 cases amongst employees, and more than half of all staff unable to work at varying times during the period. This has created significant workplace challenges, just to keep some of our plants operating.

Investments

In addition to its core building materials businesses, Brickworks' investments include a 39% stake in the ASX-listed Soul Pattinson which rose $720 million in value over the period to be currently valued at $2.9 billion. Its half-share of a property trust with warehousing specialist Goodman Group which is heavily exposed to industrial properties increased by a further $50 million to $777 million in the half.

HeidelbergCement

Dominik von Achten, chairman of Heidelberg­Cement, recently told investors and analysts during a fourth quarter update that he was more optimistic about Australia than many of the company's competitors, as COVID looked to have been beaten and the economy was benefiting from rising commodity prices.

The Australian reports that Dr von Achten said he was looking forward to an improved second half of 2021.

COVID is basically over ... OK, they cannot internationally travel, but the life is fully back to normal in Australia. So that's why we are pretty optimistic for, at least, the second half in Australia.

I know that our competitors in Australia, based on their communicated guidance, may have a little bit of a different view on this.

Australia was a little bit tough for the last one or two years. Started quite well into this year and from our perspective [with] solid expectations for the second half.

Dr von Achten highlighted the infrastructure projects that were banking up and would help drive sales and activity. He said:

From what we see ... on the back of good infrastructure pipelines ... there are significant infrastructure programs locally by state and nationally in place. We are optimistic for Australia.

Dr von Achten said Australia, for a long time, had been riding the commodity boom and that despite some impact from last year's worsening of the trade dispute with China, the recent rise in commodity prices should flow through to the economy and sentiment.

They were, for a long time, very much dependent on the commodity boom that has then come to a clear end in 2020.

They are a little bit of an insight in some of the commodities with China and also the Chinese not being able to travel to Australia and the slight decrease in the Chinese effect of the Australian economy may have had an impact on that. But in general, I have to say commodity prices are now up again, which then should also help in a commodity-driven nation like Australia and also sentiment in Australia.

HeidelbergCement bought British rival Hanson for GBP8 billion in 2007, giving it a foothold in Australia with Hanson's local operations. It also owns a 50% share in Cement Australia through Hanson, with its partner in the subsidiary LafargeHolcim.

Dr von Achten said Australia remains an important market to HeidelbergCement, with no changes to the Cement Australia partnership required at this point.

I think Australia is an important market for us, that we have a very strong business down there, highly vertically integrated and that includes Cement Australia.

From our perspective, that partnership works well and I think that, for us, there's no need to touch this at this point. If there is some change necessary from our partners' perspective, then we'll reconvene. But from our perspective right now, we are happy with the set-up.

All Gyprock products are now certified to display the Australian Made and Owned logo. Gyprock executive general manager, Paul Dalton, said the company takes great pride in its local manufacturing operations and is committed to protecting Australian jobs.

We are proud of our history as an Australian manufacturer. Not only do we take pride in supporting the continuation of local jobs, but there is also a satisfaction that comes with producing a nationally recognised Australian Made product.

The Australian Made logo is globally recognised and aligns perfectly with our mission statement - when you purchase Gyprock products, you are buying quality. It also demonstrates our commitment to local manufacturing and provides our customers with the peace of mind that comes from purchasing locally made products. We believe our commitment to local manufacturing has contributed to Gyprock's outstanding reputation for quality.

Gyprock is proud to have its products certified with the Australian Made logo. The logo also adds a lot of weight to our country-of-origin claims. Carrying the Australian Made logo and directing decision-makers to our products on the Australian Made website provides transparency. It clearly communicates our manufacturing processes beyond what we could independently.

Ben Lazzaro, Chief Executive of the Australian Made Campaign, said:

The Australian Made logo is the true mark of Aussie authenticity. It's exciting to see Gyprock's range of Australian Made product proudly carrying the iconic green and gold kangaroo.

Aussie products are made to some of the highest standards in the world. They are trusted, known for their safety and quality and increasingly preferred by builders and home renovators. When you buy Australian, you are also helping to pump money back into our economy, which helps to keep Aussie jobs, strengthen local industries and supports local communities.

A 2020 study from Roy Morgan Research found that Aussies favour Australian Made products, with 68% of Australians preferring to buy Australian-made building and renovation materials, and 58% preferring to buy Australian-made tools and hardware. The research also found that high quality, use of ethical labour, and supporting local jobs and employment are all attributes associated with the Australian Made logo.

Gyprock has developed a portfolio of leading design support resources for designers, engineers and architects, reducing uncertainty and risk, and allowing professionals to remain on top of the ever-changing codes and products. DesignLINK partners with clients to workshop complex design issues, provide value engineering, rationalise system specifications and deliver better building performance while maintaining buildability for both builders and contractors. The Red Book is the industry's respected fire and acoustic design guide and offers best-in-class performance detail and technical guidance for selecting fire, acoustic and thermal wall, ceiling, column and beam systems. Mr Dalton said:

Our Australian Made products have been designed with the expectations and needs of Australians in mind, providing appropriate market solutions that consider Australia's standards and regulations with no compromises...

It's more important than ever to support and grow the local manufacturing capability. A thriving manufacturing sector is critical to Australia's economic future and prosperity, and will help create jobs, strengthen local industries and support local communities...

Gyprock is part of CSR Limited.

US-based power tool, storage, industrial tool and security company Stanley Black & Decker (SBD) released its results for its 2020 financial year on 28 January 2021. While the results showed a strong uptick in sales revenues for the third and fourth quarters, the first quarter was lacklustre and the second quarter indicated quite a poor performance. Exactly how or why the early quarters of the year produced such poor results is not evident, with the first half 2020 sales down by over -11% on the first half 2019 sales.

As a result, the company reported earnings of USD14,535 million for FY2020, an increase of just 0.64% over the previous corresponding period (pcp), which was FY2019. The earnings numbers held better news. Earnings before income taxes and equity interest were USD1267 million, up by over 12% on the pcp. Net earnings increased to USD1245 million, up 30% on the pcp.

Looking specifically at the power tools segment, it recorded sales of USD10,330 million for 2020, up 2.64% on the pcp. Profit was USD1842, up by over 20% on the pcp. That was a considerable recovery from the second quarter of FY2020, which saw sales in power tools fell by over 16% to USD2197 million. Profit also fell for that quarter, down to USD345 million, a reduction of -12.5%.

Those results are in stark contrast to the efforts of other power tool companies, such as Techtronic Industries (TTI) and Bosch Power Tools, which posted gains through 2020. Bosch posted gains of 9% in sales for its FY2020/21, while TTI grew sales by 12.8% during the first half of 2020, and posted gains of 28% for the entire year. Makita posted an increase of 18.2% on sales for the nine months to 31 December 2020, which includes a lift in revenue for the equivalent of SBD's second quarter of 3.7%.

That said, certainly in the US press, the company has been portrayed as performing well in response to markets affected by the COVID-19 pandemic. A January 2021 Wall Street Journal article entitled, "Consumers open wallets, and factories can't keep up", portrayed SBD as a company that had initially cut production by April 2020, but then committed to increase production the next month. The article describes the situation:

Retailers slashed orders for Stanley Black & Decker Inc's power tools, wrenches, tape measures and utility knives by 40% a week last April from a year earlier. By May though, CEO James Loree said those retailers were selling about 30% more of the company's products than a year earlier, as homebound consumers tackled renovations and yard work.

Retailers weren't placing new orders with Stanley, though. They were drawing down inventory instead. Executives weighed their options: wait for retailers to place panic-size orders that Stanley might not be able to deliver on time, or raise production on the belief retailers would soon start restocking. If they didn't, Stanley would be stuck with six months of inventory.

SBD did everything it could to keep production ramped, including, according to the WSJ:

At a Stanley-operated power-tool plant in Reynosa, Mexico, the company challenged seven attempts by government officials to idle production as a way to control the pandemic. Mr. Loree said the company appealed to the U.S. ambassador to Mexico to intervene on its behalf.

The inside story

For the most part, the questions and answers from analysts at the SBD results announcement tend to be more about details than strategy. For strategy insights, it's best to turn to the investment analyst conferences where SBD makes regular and well-regarded appearances.

One of these is the Barclays Industrial Select Conference held in mid-February, where Donald Allan, SBD president and CFO answered some questions posed by Julian Mitchell, a research analyst with Barclays Bank.

Mr Mitchell's first question was about how analysts should view the immediate future of SBD, given the apparent volatility of the home improvement markets. Mr Allan responded:

So the profiling is really interesting. And I think when people focus on Tools & Storage and think about the back half, we put out [a forecast] externally that we think is balanced and reasonable, and it represents about 4% to 10% growth versus 2019 back half. But we also said two and a half weeks ago that there could be an opportunity that these markets stay strong. And so we have prepared our supply chain and our operation manufacturing footprint to meet a stronger market if it's there.

[W]e don't know exactly how this is going to play out. The virus may be around longer than we want it to be. We may be home much longer than we want to be. And so if that's the case, a lot of these trends could be really robust for a longer period of time. And we want to make sure we, as a company, are prepared for that.

Mr Mitchell then asked for some more detail around the way SBD sees the markets shaping up, especially as regards DIY and profession (trade) markets. Mr Allan provided this response:

I would say that in the back half, we're expecting the DIY tend to be good but not be as strong as it has been. But the pro performance continues to get better and better and stronger. We saw that really turn a bit in the third quarter but then it really turned to the positive in the fourth quarter of last year. We're seeing positive trends again here in the first quarter [of 2021]. And we think that, that pro trend is going to continue as - the activity around construction and new home purchases is really significant across not only in the United States but a lot of countries. And so that's really creating a lot of activity for the pro and the tradesmen, for that matter, depending on whether it's a renovation or remodel.

I think that trend is going to continue. I really think we're going to see - as these economies recover, you're going to see a strong professional recovery continue. And then right now, we're saying that DIY might kind of moderate a little bit in the back half. But like I said earlier, we don't really know for sure if that's how it's going to play out.

One of the more interesting responses - and one that can be seen across most of the power tool companies - was in answer to the question of how SBD sees ecommerce developing in the years ahead. The question was answered by Lee McChesney, chief finance officer of global tools & storage at SBD:

We're delighted with the e-commerce results from 2020. And I think they have their foundation in really a 10-year run-up to where we started the year. So we saw in excess of 40% growth in e-commerce in 2020, just coming shy of USD1.9 billion. Depending on the month of the quarter, it was almost 20% of our sales.

That's still the same mindset we have as we go into 2021 or 2022. And that number actually could creep up as we make additional investments in e-commerce. As you said earlier, I mean, it's working with the partners we have today. It's a top topic for them as well so we can bring something to table to help them accelerate. It resonates well. And then to your point, there's parts of the world where maybe Stanley Black & Decker doesn't have as strong a share. There's opportunities to partner with some new channels, and in some cases, even go direct. That's all part of this journey.

What's nice is no matter what part you step in, they really help complement each other here. So if we make an investment into content to even do more in multiple languages, it works with all channels, whether direct or whether through a partner or things like that. So one thing we did do last year as the POS recovered versus the early days of COVID is we've made an additional investment in e-commerce.

Ecommerce was something that was also picked up at another analyst conference, the Raymond James Institutional Investors Conference, where SBD put in an appearance, in March 2021. This was attended by James Loree, the CEO and director of SBD, as well as Mr McChesney. In his opening remarks, Mr Loree spoke about the growth prospects for ecommerce:

So we have this array of growth catalysts, like nothing I have ever seen in my 20-plus years here. The e-commerce business is a great example. Right now, it's about a $1.8 billion channel. It's growing at about a 40% rate. We have about a 3:1 relative share advantage over any other tool player that's in the tool business.

Mr Loree continued to outline the possibilities in the other SBD tool brands and products:

We have these great brands, the Craftsman brand, which we purchased a few years ago, and we've oriented that towards a very versatile kind of Tradesman level brand that attacks the DIY market as well as light trades and light industrial as well.

And then the incredibly strong DeWalt professional power tool and other tool brand, Stanley, Stanley FatMax and then some of the innovations that are coming out of the system now. Flexvolt, a couple of years ago, a really fantastic innovation, followed by the DeWalt Extreme and DeWalt Atomic. And now in more recent times, we have Power Detect.

And just the continued array of innovative – innovations coming out of our Tool business, which have continued to drive the growth.

He then went on to explain some of the rationale for the possible full acquisition of the Ohio-based outdoor power equipment brand MTD.

And then we have this company called MTD, which we have an option to acquire the remaining 80%. We own 20% today. We got into this a couple of years ago when we bought Craftsman. We looked at MTD and said, when we looked at the outdoor part of Craftsman and we said, we really need to be prime in outdoor. We found this company MTD that supplied Home Depot and Lowe's and so on, with their own brands like Cub Cadet [and Troy-Bilt].

But they didn't really have great brands like the Dewalt and Craftsman... So what we did was, we decided to partner up with them, work with them to get their profitability up to levels that would be exciting and interesting to us and then have this option to buy the remaining 80%, which becomes available in July of this year. And it's our intention at this point or at least our expectation that we will implement that option in the latter half of 2021 and expect to have revenue generating in that business as a prime manufacturer in our portfolio, selling the Dewalt brand to the professional market of Craftsman and then Troy-Bilt and Cub Cadet into the markets as well.

Make where you sell

One of the shifts in policy by SBD over the past three years is something it broadly labels as "make where we sell". Announced about a year into the Trump Administration, SBD describes this seemingly US-centric approach on its website:

With 30 manufacturing plants across the USA, employing approximately 16,000 employees, we are committed to investing in people, processes and performance in the U.S., to deliver ultimate value and quality in everything we make here, using materials from around the globe. That commitment is evident year over year. Since 2015, we increased our number of manufacturing jobs in the US by 40%.

As what some have seen as a side consequence of this approach SBD moved to close one of its China-based factories in 2020, with an announcement appearing in the South China Morning Post in early November. Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, Barcelona, and Beijing, made some interesting commentary on this development on its website blog, in an article entitled "What Stanley Black & Decker's Shenzhen Departure Tells Us". This was written by Fred Rocafort, a former diplomat who had a decade of international legal experience, primarily in China, Vietnam, and Thailand, before joining the firm.

Mr Rocafort points out that where at one time such a move might have outraged elements of the Chinese government, in this case it has been presented as an "old school" industrial firm moving out of Shenzhen, an area which is developing into what Mr Rocafort suggests is China's attempt to make a "Silicon Valley with Chinese characteristics".

However, Mr Rocafort believes the move more accurately reflects longstanding tensions in the Chinese economy as it is inflected by ideology. He quotes from his own interview with one of the workers leaving the former SBD plant:

According to a worker, "the Shenzhen factory focused on supplies to the US market, but in the past couple of years, we had been producing semi-finished products and shipping them to Vietnam's plant for assembly." There may be a variety of reasons for this shift, but it's hard to imagine the tariffs imposed on a broad range of Chinese products by the United States didn't play a role. Though a new Biden administration might provide some tariff relief, it's worth remembering there are also numerous antidumping and countervailing (AD/CVD) orders against certain Chinese products, some far predating Trump's trade war.

One other reason for the departure, Mr Rocafort suggests, may be that the lease on the factory land is set to expire, which would see its fate rendered into the hands of the local political cadre, which could, for example, choose to repurpose it for the construction of apartments.

Mr Rocafort concludes his article by noting:

A lot is surely changing in Shenzhen and China - but a lot isn't. Just as beyond the glitzy skyscrapers of Shenzhen's central business district there are large swathes of unlovely industrial areas, the fundamental China issues for foreign business remain beneath the hype.

Analysis

HNN has long held that SBD looks at innovation as having two main aspects: the development of new and innovative tools, and the development of the marketing that goes with them. While both are usually present in any strategic move the company makes, one is usually dominant over the other. For example, with FlexVolt and Power Detect (which enables tools to take advantage of the new, higher-output Lithium-ion batteries, while still using older models), actual product innovation dominates, though there is a good dose of marketing as well.

In other ventures, such as the acquisition of the Craftsman brand, marketing really takes the lead. The goal with Craftsman seems to HNN to be about introducing a mid-range brand which is pitched to be one notch above TTI's Ryobi brand, with the advantage of seeming to be more "American" to its particular market demographic.

That is quite a different approach to that of Bosch Power Tools, TTI and Makita. While those three do have their own particular skills at marketing, they also innovate in areas where they rely on individual discovery by users of product features. While its current model has worked very well for SBD in the past, as TTI constantly accelerates and could potentially equal SBD's power tool revenue by 2023, there is a question whether it remains the best path forward.

As with any company that has had a strong culture than contributed to its past growth, it seems likely that SBD would really struggle should it need to change its current culture to one more adapted to rapidly changing markets. HNN is reminded a little of the US car manufacturers in the 1980s and 1990s, which, despite constant calls for them to innovate, persisted in their "tried and true" ways - until it was simply too late to change, something to which the empty factories of Detroit still bear witness.

The question that remains is whether the apparent "glitch" in the first half of 2020 was just that, or is more significant, and a signal of further vulnerabilities to come.

German-based Bosch Power Tools, a division of Bosch Group, saw its sales for 2020 grow by 9% (adjusted for currency fluctuations) to reach EUR5.1 billion. While demand fell sharply during the northern hemisphere spring, demand returned during the summer and autumn.

Henk Becker, president of Bosch Power Tools puts the company's good performance down to having developed a more agile structure over time. Mr Becker stated:

We dealt with the subject of agility in a consistent manner at a very early stage. The principles upon which this is based, such as short-cycle iterative work in sprints, are experienced and improved by us daily.

A good example of that agility is Bosch's ongoing efforts to open up its battery ecosystem to other brands. Currently these brands include: Brennenstuhl, Sulzer, Klauke, Ledlenser, Lena Lighting, Sonlux and Wagner. The shared battery platform is used to power specialised products such as floodlights, caulking guns, cordless hydraulic cutting tools and paint spraying systems. According to Lennart de Vet, managing director of Robert Bosch Power Tools, and the person responsible for Bosch Professional Tools:

Opening up the Professional 18V System is the prelude of a worldwide partnership with strong expert brands. The common goal is to offer professional users the best 18 V system across many brands and countries ? thus giving them a further boost in efficiency.

Global reach

While the overall results were good, there was considerable variation across world markets. Growth was as follows:

The company states that overall market share was up, with addressable markets increasing in size by 5%.

One of the major growth drivers was ecommerce and online sales. These grew swiftly, and ended up representing around 25% of all sales. According to Mr Becker:

Since there has been a rapid change in the information and buying behaviour of our users, we expanded our digital information and interaction services as well as our cooperation with multi-channel and online retailers.

Product focused

While the company's management has made strides in improving processes, Bosch's success is largely down to its product development, with over 100 products launched during 2020, which included over 30 tools for professionals (tradies).

A good example of its product development is the release of Bosch's UniversalBrush. In a familiar, IXO-like shape, the brush has a rechargeable Lithium-ion battery built in and, like the IXO, is recharged via a common Micro-USB cable. The product is shipped with a range of accessories, including a standard brush, a detail brush, and a pad holder. The pad holder can accept a heavy-duty pad and a microfibre pad, both of which are included.

Bosch says the device can be used to clean a wide range of surfaces, from removing the scale from tiles, to taking the rust off of car wheel rims, not to mention barbecues, ovens and car seats. The UniversalBrush is priced at EUR50, and accessories cost EUR10 each.

Analysis

Bosch Group as a whole generated EUR71.6 billion during 2020, down from EUR77.7 billion in 2019. Its product range includes everything from IoT devices, to the complex systems that will eventually develop into fully autonomous cars.

The difficulty that Bosch has long faced in the consumer space is working out how to "gear down" some of its advanced scientific and technical expertise, so that it is able to disseminate what it develops to a wide range of consumers. Over the next five years, as these problems become progressively easier to solve, HNN expects Bosch, and Bosch Power Tools, to become progressively more important and essential to the ways in which personal technology is developed.

To some extent, then, the real task over the next two years for Bosch Power Tools is how to develop transitional technologies. At the moment it is doing this in part by pioneering a whole new class of tools, based on the improved and modernised IXO platform. What will be interesting to see, however, is whether it can also develop its professional "Bosch Blue" tools in a similar manner. While it is easy to see the mismatch between consumer needs and consumer tools (the market that really needs a 18-volt, brushless power drill with a five amp-hour battery is far smaller than most power tool makers realise), there is a similar mismatch in professional tools as well. The range of professionals (tradies) is far wider than commonly acknowledged, with widely varying skillsets - yet they are all forced to use broadly similar tools. There is an opportunity there, and it will not be surprising to see Bosch Power Tools as the first company to see that.

Hyne Timber is about to begin the $14.5m expansion of its Tuan Mill. CEO Jon Kleinschimdt told The Courier-Mail that its plans had been accelerated following the first stage of the project, the commissioning of the company's Glue Laminated Timber plant, which relied on the Tuan Mill for its feedstock.

The next stage of the expansion will involve the installation of a new continuous drying kiln at the mill which will address a timber supply bottleneck. Mr Kleinschimdt said:

It'll increase our capacity by 20%; that'll enable us to respond to the market by providing high-quality, sustainable, recyclable building products.

It's great confidence in the region we can make these investments. We look forward to working with all our suppliers and customers to grow their business, creating more jobs for the region and the increased, sustainable supply of softwood timber.

The project was funded through the Queensland Government's Jobs and Regional Growth Fund and Maryborough MP Bruce Saunders welcomed the next stage of the project. He said:

...Maryborough was the timber city of the state and we want to be known for our timber. We know between now and 2035 we are going to need another 800,000 dwellings in this country, and it'll be great if they're built out of timber from Hyne.

Hyne Timber also said recruitment is set to commence for 50 more jobs created as a result of the expansion project. Mr Kleinschimdt said:

...The supply of softwood pine plantation is sustained and expected to increase over coming years from supplier, HQ Plantations. We have also notified our other local suppliers of the increased production and flow on growth for their businesses including Richers Transport, Log Management Solutions, Altus Renewables, Bassett Barks and Laminex.

The Tuan Mill currently employs around 210 people and is one of Australia's largest suppliers of softwood framing, mainly supplying the housing construction sector. Production is expected to increase by 20% as a result of this investment by Hyne Timber.

Oreco Group

Bundaberg Today reports that Oreco managing director Paul Woosley was recently joined by the QLD state Treasurer and Minister for Investment, Cameron Dick and Bundaberg MP Tom Smith to inspect the completion of the company's manufacturing hub which has increased the size of its facility at Childers (QLD).

Oreco Group is Australia's largest producer of retail-ready garden products including sugar cane mulch for retailers such as Bunnings.

Mr Woosley said the manufacturing hub includes big baling machine, the first in Australia and third in the world.

The big baling is a new concept and we are making some serious in-roads into the export market and local market with that size bale for bedding or animal feed. From here, we supply Australia wide and we are just starting to send container load samples to Japan and the Philippines.

If you look at the potting mix and fertiliser products in there, about 15 million bags a year come out of that building.

We're looking into new, innovative product offerings, including a diverse range of garden care products, animal feeds and bedding, with a focus on premium mixes and blends.

Now that the manufacturing hub is complete, we've accelerated the development of our next phase by two years and are now nearing completion on an all-weather, multi-user regional freight centre.

The freight centre will act as a mass storage and transportation facility for Oreco to deliver and store product from around Australia, in a cheaper and more efficient way. Mr Woosley said:

The area is fantastic, we are back-loading a lot of trucks heading south on the highway that have been delivering into other industries and can't find loads going into the southern states. We do get a lot of percentage of trucks that come out of Brisbane empty.

When customers that want to send product to the area that may be a seasonal product, they are paying huge storage prices in Brisbane to store it and sending it up twice a year.

We are trying to get involved in that market where we can transport product on our trucks, store it and supply it to the markets when they need it...

Oreco started as a nursery supply business and takes the residual cane trash and turns it into mulch or an animal bedding for agricultural producers or garden lovers around the country. Mr Woosley said:

The rural industry and the cane farmers have come to rely on that income now and it's a a real value add for them. What they used to burn, we add value to, sell and make it a great return for those growers.

There is a massive need for this manufacturing hub upgrade. One of the drivers was Covid-19 and the amount of people staying at home, who have been looking for something different to do for their mental health like planning veggie gardens, flowers and different products around the home.

The increase of volume during that period, some products were up 500%. The market did accelerate quickly and we were lucky to take advantage of that with the new facilities through partnering with the Queensland Government.

Related:

Hong Kong based power tool, hand tool and floor care company Techtronic Industries (TTI) has released the results for its 2020 financial year. Revenue for the year came in at USD9812 million, up by 28% on the previous corresponding period (pcp), which was 2019. Earnings before interest and taxation (EBIT) grew strongly at 29%, reaching USD868 million. Gross profit margin improved by over 0.5%, to reach 38.3% - the 12th year in a row it has improved.

In his remarks at the product announcement, the company's well-known CEO, Joe Galli, suggested 2020 was a breakthrough year for the company when its strategies enabled it to greatly outperform competitors (which would include chiefly, HNN notes, Stanley Black & Decker). Mr Galli said:

2020 was a year where we seized control of the global tool market, in fact, our second half results demonstrate without question our leadership position our momentum and our potential in the massive global tool market that we pursue, we were able to grow last year in the second half 42%, which gave a cool 28% growth rate for the year.

He went on to expand on these remarks:

The momentum level in this company reflected by these growth levels is astounding, and we are incredibly excited about 2021 and beyond. Last year, as a result of our bold aggressive investments in market share gains and new product development, we were able to now break through and reach a level that I feel is reflective of our commanding leadership position in the global tool market.

So last year, for the first time, the Milwaukee brand became the number one professional tool brand in the world, and it's also the fastest growing professional tool brand. And the Ryobi brand, which has been for a decade, the largest DIY brand of tools in the world, solidified its leadership position and became even a more dominant number one in the global DIY tool market.

So think about TTI. We now have the largest and fastest growing professional tool brand in the world, and the largest and fastest growing DIY tool brand in the world, and we're just getting started because the new product we have on the way is going need to clearly amplify our leadership position in the two segments of tools.

Much of that growth, and the future growth of the company, comes down to TTI making a strategic investment in additional manufacturing capacity around the world, effectively inoculating the company from some political influences during a time of global industrial transition.

We, throughout 2020, we were implementing a very different approach to the global tool market than our competitors. We decided rather than shutting down investment through the virus and the challenges of 2020, we got very bold and very aggressive, and we built out a vast amount of additional manufacturing capacity, which really helped our amazing results in 2020, but more importantly, it sets TTI up for a long-term run to continue to control and be leaders in a global tool industry.

So in addition to our world class manufacturing complex in China, which is doing an amazing job today, and where we have averted the challenges of the virus and kept that factory humming beautifully throughout the year on into 2021, we have built out a fabulous manufacturing campus in Vietnam where we have achieved already outstanding quality levels and class levels, and this Vietnam facility really helps us feed the growth levels that we achieved last year and that we are going to achieve into the future.

And then importantly, we have built out a North American manufacturing system that will enable us to produce products for the large US market and for the Canadian market, that will allow us to produce products close to where the products are consumed, so we have a campus that we built and we're building out in Mexico, which is going great, and we have a whole series of existing and new facilities, manufacturing facilities in the US that we are investing in like crazy so that we can have more and more product for the US market built in the USA.

The second element that Mr Galli emphasised for the company was its strong participating in ecommerce.

There's a lot of misinformation in the investment community about the e-commerce situation in the power tool market, in the overall power tool market. Let me just clear this up. We are clearly a global leader in e-commerce in this tool industry, we are very strategic, very thoughtful and very focused in developing the right kind of e-commerce that will not cannibalise existing important customer and distribution channels, but rather enhance.

For example, last year, the largest e-commerce tool seller in the world is called Home Depot, and last year we were awarded the Home Depot omni-channel interconnected partner of the year award because of our partnership with Home Depot in overall e-commerce, which includes BOPIS, which is buy on line to pick up in the store, it includes straight e-commerce, and includes the activities at the store level that we engage in with Home Depot, where we help drive sales to the e-commerce platform where it makes sense.

We have hundreds of e-commerce partners around the world. We are very careful to select and cultivate e-commerce partners that enhance our strategy and support our long-term direction, and you need to be clear as an investment community that we are... Yes, leaders in e-commerce when it comes to selling tools around the planet.

Analysis

The construction industry in general, as well as many tool companies, have tended to be reluctant to innovate or take business risks. TTI has been the exception to that for the past decade, and it's evident that in 2020 - and likely on into 2021 - it is set to reap the rewards.

The business model the company has evolved, which involves global markets matched by global production facilities, with a strong emphasis on building an innovative culture, has become increasingly significant, but still does not receive the attention it deserves.

Sherwin-Williams' sale of Wattyl to Hempel is expected to close during the first quarter of calendar 2021, subject to customary closing conditions. Going forward, Hempel said Wattyl will still be managed by current managing director Matt Crossingham. In a statement, Matt Crossingham, said:

The entire team and I are pleased to join the Hempel family, and we are looking forward to contributing to Hempel's growth and development - not only in Australia and New Zealand - but throughout the South East Asia region. We will gain access to increased know-how, experience and innovation as well as a broader product portfolio, which will benefit our customers. With Hempel's ownership, I am certain that Wattyl will raise to the next level.

According to a report in South Australian independent newspaper, In Daily, the 50 workers at Wattyl's Kilburn paint manufacturing site will be able to keep their jobs after the company's sale to the Danish multinational.

Hempel Group said it has no immediate plans to close the site or reduce employment numbers at the Kilburn location in Adelaide's inner-north, which also includes a distribution centre and retail store.

In addition to Kilburn, Wattyl has another manufacturing site in the Melbourne suburb of Footscray. It has five distribution centres and almost 100 company-owned stores across both Australia and New Zealand.

Mr Crossingham said it was business as usual following the acquisition. He told In Daily:

We are still the same Wattyl, proudly made right here in Australia for Australian and New Zealand conditions. Our heritage of over 100 years of locally manufactured protection and innovation continues.

The Wattyl business became part of Sherwin-Williams through its 2017 acquisition of The Valspar Corporation. Valspar bought the previously ASX-listed Wattyl in 2010.

The move to acquire Wattyl is part of Hempel's bid to double revenue to EUR3 billion within five years and take on "leadership positions in selected segments and geographies". Hempel president and CEO, Lars Petersson, said:

Wattyl is a leading brand with a strong distribution set-up with its own store network, key Independent Trade Centres and strategic distribution partnerships servicing the DIY and trade consumers.

Hempel was founded in the same year as Wattyl, in 1915. It has over 6,000 employees and generates revenues of around EUR1.5 billion. Mr Petersson said:

Hempel and Wattyl working together, not only within decorative paints but also within protective coatings solutions, will put us in a great position to deliver our strategic ambition, particularly in our decorative, infrastructure and energy segments, through combined expertise, industry knowledge and quality products. Consequently, our expectations for Wattyl as part of our family are high, and together, Wattyl and Hempel will create a strong platform for continuous growth for our entire South and East Asia region.

Together with Matt Crossingham and his great team, we will focus on being the trusted partner to all our current and future customers throughout Australia and New Zealand. All of our strategic priorities are about ensuring a better end-to-end solution for our customers. Our customers will experience a continuing focus on sustainability, digitalisation and innovation.

From a branding perspective, Hempel said it recognises the strengths and attributes of the Wattyl brand. The company intends to invest in and further develop these attributes and use as part of its tagline, "A part of Hempel" in its future branding and communication.

Cleveland-based Sherwin-Williams is the world's largest paint and coatings company. John G. Morikis, Sherwin-Williams chairman and chief executive officer said in a statement:

[The] announcement of our intent to divest Wattyl aligns with our ongoing process to evaluate all aspects of our portfolio, including brands, product lines, customer programs and businesses, for their ability to meet our performance criteria and for their long-term strategic fit.

While we've driven significant improvement in the Wattyl business, we believe company resources can be better deployed to other opportunities offering greater growth, more meaningful scale, and higher returns and cash flow. We thank the employees of Wattyl for their contributions to Sherwin-Williams.

Related: In mid-2020, there were reports that Sherwin-Williams was reviewing its portfolio that included Wattyl.

PPG Industries

Hempel lost out to PPG Industries in its pursuit of Finnish paint company, Tikkurila Oyj. Mr Petersson told Bloomberg:

It's the name of the game that you win some, you lose some. We are happy to land this deal with Sherwin and we're looking at other opportunities too.

In December, PPG announced that it entered into a definitive agreement to acquire Tikkurila in an all-cash transaction that it is expected to close in the second quarter of 2021, subject to customary closing conditions. Michael McGarry, PPG chairman and chief executive officer, said in a statement:

The combination of PPG and Tikkurila is extremely complementary, both geographically and from a decorative brand perspective. We have long admired Tikkurila's rich history of establishing very strong decorative brands and product offerings in several northern and eastern European countries where PPG has minimal decorative presence.

We will be able to provide customers with even more paint and coatings options by bringing together Tikkurila's high-quality and environmentally friendly decorative products and distribution capabilities in these countries with PPG's well-respected industrial and protective coatings. In addition, the combination will provide new cross-selling opportunities, growth opportunities for employees, and product solutions for new segments and customers...

Tikkurila was established in 1862, and is headquartered in Vantaa, Finland. The company has operations in 11 countries and more than 80% of its revenue comes from Finland, Sweden, Russia, Poland, and the Baltic states. Its premium brands include Tikkurila, ALCRO, and Beckers. Tikkurila's industrial paint business participates in the wood and protective coatings segments, among others. The company employs approximately 2,700 people globally and reported sales of approximately EUR564 million in 2019.

In addition to Tikkurila, PPG said it has completed the latest in a series of acquisitions to boost its coatings portfolio.

It recently closed on VersaFlex, a Kansas-based maker of coatings used in flooring, transportation, water infrastructure and industrial applications.

PPG bought the business from DalFort Capital Partners, a Dallas investment firm, for an undisclosed amount. VersaFlex, with 130 employees and annual revenues of about USD70 million, has manufacturing plants in Kansas, Oklahoma and Washington state.

PPG has purchased Ennis-Flint, a North Carolina company that makes coatings for the traffic and transportation markets, for USD1 billion purchase. It also has an agreement to buy Worwag, a German business that makes liquid and powder coatings for industrial and automotive applications.

Makita has opened a second Queensland factory service centre; bathroom and kitchenware supplier GWA Group has its profit impacted as costs continue in the face of lower business; and a number of investments have been made in sawmills and timber production in different states.

Makita Australia

Makita's new warehouse and showroom in Mount Louisa, a suburb in Townsville (QLD), is responsible for the service and repair of the company's products in the region and is a training facility for staff, resellers and users. It also provides a base for its North Queensland sales and business development teams.

Makita Australia national operations manager Nicholas Poulos said the service centre was open to all customers who had bought tools, spare parts or accessories through Makita Australia's authorised dealer network. He told the Townsville Bulletin:

With our existing Queensland site in Brisbane, the distance and time taken to facilitate service and repairs to our customers in northern Queensland was unacceptable. It is expected the new Townsville site will service the North Queensland, Far North Queensland and Central Queensland areas.

Makita Australia has always had a strong presence in North Queensland with our sales team but we felt the time was right to open a factory service centre to support our growing sales in the region.

In addition to two centres in Queensland, Makita Australia has factory service centres in NSW, Victoria, Western Australia and Tasmania.

GWA Group

Half-year net profit at GWA declined 17% from its pre-pandemic heights to $20 million. This was a far deeper fall than overall revenue at the group which only declined 4% to $197.2 million.

Revenue growth continued in the UK and New Zealand but was offset by a weaker Australian market.

The Australian market declined 6.2% through the first half of the financial year and accounts for 77% of overall business for GWA. This compares to New Zealand which takes in 14% of group's business and grew 3.1% for the first half of the financial year.

Despite the resilience of the home improvement and renovations retail sector, the decline in multi-residential and commercial projects had a negative impact. Multi-residential business declined by 20% across the group, while commercial new build also fell 17%.

However, managing director Tim Salt said HomeBuilder and other government housing incentives projects would buoy GWA's business in the market throughout the remainder of the calendar year.

Despite the recent trade tensions between Australia and China, GWA recently launched new Methven showerware ranges in that country as part of its growth strategy.

GWA acquired Methven in April 2019, with Mr Salt reporting it was "performing to expectations". It is pushing cost synergies from the acquisition with the aim to save $6 million in the financial year.

Timber sawmills

Victoria

Wangaratta-based Alpine MDF, Benalla firms D&R Henderson and Ryan & McNulty and XLam in Wodonga have shared more than a quarter of the $40 million national Forestry Recovery Development Fund - bushfire recovery funding - to build competitiveness, invest in new technologies and lower energy costs following the bushfires in early 2020.

The fund provides D&R Henderson with $3.294 million for a new heat plant that will use waste products as a fuel source to power kilns, saving energy costs and reducing the amount of waste to landfill.

Ryan & McNulty was awarded $1.188 million for new technology to process smaller, lower-grade sawlogs and produce a quality, value-added product suitable for structural beams and furniture manufacturing.

Alpine MDF Industries will use $4.379 million for remanufacturing, using new plant and equipment to innovate and increase capability for the production of primed mouldings and painted flat panels.

XLam has received $1.529 million to update equipment, reduce production costs and improve competitiveness.

Recipients are required to match 50% of the project costs, according to the article in Australasian Timber.

New South Wales

A Bathurst-based sawmill has received a $5.3 million investment from the Federal Government's Forestry Recovery Development Fund program. The government's $5.3 million investment will be matched by AAM Investment Group (AAM), which has its Allied Timber Products (ATP) sawmill at Bathurst.

Member for Calare Andrew Gee said the grant for AAM will be put towards a new production line at the sawmill, allow new technology to be introduced, and see logs processed much faster and more efficiently.

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Following a devastating firestorm in October 2019, O'Connor Sawmilling Rappville has lodged a development application for the construction of a large shed for air drying timber, with an enclosed section for moulding machines, and a prefabricated solar drying kiln.

Moulded timber is deemed a "high value commodity". The application states:

Moulding uses machines to cut a profile into sawn timber. This 'moulded' timber is used for tongue and groove flooring, architraves, skirting boards and other applications in the building industry.

It is expected to have the moulding capabilities operational by late this year or early next year.

South Australia

Timberlink announced it is building a $59 million Cross Laminated Timber (CLT) and Glue Laminated Timber (GLT) manufacturing facility at Tarpeena. It will begin construction of the plant alongside its recently upgraded softwood sawmill next year with completion due in 2023.

The company said the state-of-the-art facility will be Australia's second major softwood CLT plant and the first combined CLT and GLT manufacturing facility.

The location of the project is supported by the commitment of the South Australian State Government's $2 million grant from the Regional Growth Fund.

Tasmania

Neville Smith Forest Products recently announced its Huonville Southwood mill would significantly expand production by July. The company is set to establish a full second shift at the mill to enable the doubling of production to 80,000 cubic metres annually.

It comes after the mill was damaged during the Huon Valley bushfires in 2019, from which the company took about six months to recover.

Resources Minister Guy Barnett said the expansion was "a show of confidence in the state's renewable forest industry".

Sales for Boral dropped in Australia and North America for the six months to December 2020.

Revenue in Australia declined 8% to $1.61 billion because of lower volumes and pricing, especially in NSW and Queensland where major project work and multi-residential activity declined. Income at Boral's North America division also fell 3%, with strength in building products offset by a weaker September quarter and a lower contribution from its fly ash division.

Australian sales make up 53% of Boral revenue, while the US comprises 38%. Chief executive Zlatko Todorcevski said a decline in the building of units and commercial property in Australia affected results.

The company also said the outlook for its Australian business in the second fiscal half was uncertain, citing ongoing weakness in multi-residential and non-residential construction and a transition period for major projects. It also said existing projects have relatively low intensity of concrete and asphalt, and that new projects have been slow to progress.

While all forms of building approvals rose 10.9% in December, Boral said it was unclear whether this trend would continue or was a response to government stimulus. Mr Todorcevski said:

What we can't tell at the moment is, was that outcome driven by stimulus measures like JobKeeper and HomeBuilder or is there something fundamentally happening in the market.

Government schemes such as HomeBuilder have given financial incentives for building new homes during the pandemic.

The number of new high-rise apartments approved fell 14% nationally in the first half of 2021, with the biggest market in NSW hit by a 26% decline - even at a time of extremely low interest rates - amid a looming end to government stimulus and low immigration levels. Mr Todorcevski said:

From my perspective I don't see it rebounding in the near term ... Clearly there's a stock of multi-residential apartments that need to be worked through and we really need to see a rebound in immigration.

People moving out of cities into rural areas - sparked by COVID-19 - were also a factor, with September quarter statistics showing the largest migration levels on record. Mr Todorcevski said:

We're watching pretty closely the amount of migration in Australia out of capital cities.

While the outlook for demand in Australia was uncertain, Mr Todorcevski said strong demand in North America was expected to continue. The company's main assets in the US include roofing, stone and windows businesses.

Boral has confirmed the appointment of Bank of America to advise on a potential US deal. Mr Todorcevski said there had been robust interest from potential buyers in the company's United States operations after a formal sales process was started late last year. He said:

We haven't got to the point yet where we're assessing those in detail.

Mr Todorcevski remains open to a sale or keeping the unit in-house. He said:

The market is good at the moment but we want to make sure we position these businesses in as good a shape as we can...

Mr Todorcevski said the North American operations showed solid potential and there would be no fire sale. The company wanted to test potential price tags against the benefits of keeping ownership.

Boral plans to boost earnings by $300 million within an unspecified timeframe through running plants more efficiently, finding new sources of revenues and potential asset sales.

The group's net profit after tax rose 18.2% to $161.4 million, yet the company downplayed this figure as $46 million profit came from businesses which Boral has sold.

Related: Late last year, the company completed the sale of the Midland Brick business in Western Australia to BGC. Boral also announced it was selling its 50% stakes in USG Boral, and Meridian Brick joint ventures in Canada and the US.

James Hardie

A greater home improvement focus among consumers during the global pandemic has boosted demand for James Hardie's building products.

Chief executive Jack Truong said the company had again delivered "strong organic growth" in its major regions around the world, including the United States, Europe and Australia, in the three months ended December 31.

The US housing market in particular has been strong, while James Hardie has continued to win market share in Australia and New Zealand with its range of wall and board products, decking and floorboards.

Global net sales rose 20% in the quarter to USD738.6 million, delivering a 59% boost to its net operating profit after tax (NOPAT) at USD123.3 million. It was the seventh consecutive growth quarter for the company.

The Asia-Pacific region, which comprises Australia, New Zealand and the Philippines, lifted profit margins to 28.1% in the December quarter, from 22.9% a year earlier, with EBIT up 43% to USD33.5 million.

The North American market delivered the strongest sales gain, up 20%. Mr Truong said the business would launch a "direct to customer" campaign for homeowners in the US, targeting a significant market opportunity with more than 44 million homes more than 40 years old.

Mr Truong said the business had a clear strategy to drive profitable fiscal and organic growth with a focus on customer-centric marketing and product innovation.

The company lifted its net profit guidance for the full year to between USD440 million and USD450 million, from a previous range of USD380 million to USD420 million given in mid-October.

Master Lock will commemorate its 100th anniversary with year-long celebrations; plumbing supplies group Reliance Worldwide has rebounded after the business took a hit in the early stages of the COVID-19 pandemic; and BlueScope Steel is flagging its best Australia steel sales in a decade as a result of increased construction projects.

Master Lock

Global safety and security supplier Master Lock is celebrating 100 years in 2021 and is launching a 360-degree marketing campaign, and previewing new user-led innovation.

To pay tribute to 100 years, it debuted a commemorative logo that incorporates the brand's original "Master Lock Lion" symbol, which harkens back to the company's vintage trademark identity.

Featuring its commemorative 100-year logo and a black weather-resistant cover, Master Lock has introduced the 1921D Padlock - a limited-edition product that includes a vintage stamped key and keychain.

Founded in 1921 by travelling locksmith and Russian immigrant, Harry Soref, Master Lock's legacy is born in strength. What started as Mr Soref's mission to safeguard military equipment with the world's first laminated steel padlock has since evolved into Master Lock becoming a leading global manufacturer of padlocks and related security and safety products.

In 2021, Master Lock will reveal its most durable Bluetooth padlock yet, the ProSeries Bluetooth Padlock. This high-security padlock will allow commercial end users to leverage Bluetooth technology in the toughest work environments.

Master Lock will also release the Key Tether Lock Box which was developed in response to users needing to keep the key and lock box together at all times. By linking the key and lock box together with a tether, they can have peace of mind knowing the key will always be in the lock box when it is accessed.

Reliance Worldwide

Demand has improved for the plumbing products that Reliance Worldwide makes as enthusiasm for home improvement increased in markets across the world. Chief executive Heath Sharp said that all of the main geographic regions produced strong sales and profits in the six months ended December 31, with the US a standout because of rising demand in the repairs and renovations market.

The US accounts for about 50% of the plumbing supplier's overall business, with the group's flagship product there being the Sharkbite range of brass push-to-connect fittings.

A preliminary report showed that earnings before interest, tax, depreciation and amortisation (EBITDA) is forecast to be between $164 and $167 million, up at least 30% on the first half of FY2020.

Mr Sharp said Reliance Worldwide delivered interim sales growth of 13% and 17% on a constant currency basis. Overall, sales totalled $642 million. EBITDA margins increased because of operational leverage driven by higher volumes, and each region is expected to report bigger margins for the half, he added.

The first half of financial 2021 had "undoubtedly been a strong period" for Reliance Worldwide amid difficult conditions, the chief executive said, cautioning investors against extrapolating the first-half sales performance for the entire fiscal year. Copper cost increases would be a handbrake in the second half while currency fluctuations would also have an influence, Mr Sharp said.

Almost $1 billion was wiped from its market capitalisation last February after a profit downgrade triggered by the coronavirus.

Official first-half results will be released on February 22, 2021.

BlueScope Steel

BlueScope expects to book a half year profit, before interest and tax of $530 million - $55 million ahead of updated forecasts provided in November, and almost $200 million ahead of the $340 million it tipped in October.

The company's total underlying EBIT in the 2019-20 financial year was $564 million, as earnings crashed amid the coronavirus crisis.

BlueScope managing director and chief executive officer Mark Vassella said all of the company's operating segments performed well across the half, with strong volumes and better margins in its Australian steel making business, as well as in the US and Asia. He said:

Domestic construction and distribution segment demand has been strong, particularly for coated and painted products - leading to the strongest domestic mill sales volumes in a decade, at about 1,175,000 tonnes.

A number of Australian start-ups have developed apps or websites - Delivertrade, Rendr and Getter - to address the issue of tradies making unplanned trips to the hardware store or wholesalers in different ways. Industry research indicates these unplanned trips occur in one in every three jobs. The extra labour and vehicle costs add about $2 billion a year, according to a report in The Courier-Mail.

The Getter app recently attracted $1.4 million in a capital raising from about 15 investors. Its biggest investor is Darren Wallis, the Sunshine Coast-based chairman of GJ Gardner Homes. He told The Courier-Mail:

There's a gap in the market and this is an amazing opportunity. It could revolutionise how tradies get supplies delivered.

The potential efficiencies for Australia's $360 billion a year construction industry are substantial, with likely flow-on benefits for consumers in the form of lower prices, he said.

Getter launched in Sydney in March 2020 after boss Tom Burton and his fellow co-founders in the building sector repeatedly saw jobs run over time and over budget because of hold-ups accessing materials. He told The Courier-Mail:

At a macro level, the Australian construction industry has a longstanding problem with not being able to procure its trade materials efficiently, meaning tradies either visit wholesalers themselves, or worse, wait hours and sometimes days for their supplies to be delivered.

As tradies themselves, the Getter founders have seen first-hand the lost productivity that ensues when products or tools need replacing, whether that be on large-scale commercial tower building sites, project home sites or landscaping projects.

The business generates income through an Uber-style pick-up and delivery of goods. It also offers to source products, charging an additional fee based on the value of the material.

Mr Burton said Getter has already grown its registered users from 800 to about 3500. He is aiming to dramatically expand that to about 30,000 across Brisbane, Sydney and Melbourne in the next 12 months, with a revenue target of around $14 million.

Mr Wallis started at GJ Gardner as an accountant in 1994 and rose to spend just over 20 years as CEO. The group's franchising network operates across Australia, New Zealand and the US. He will be spreading the word to its franchisees nationwide. He said:

So far the feedback is fantastic. They love it.

Related: Drone delivery company Wing Aviation is considering expanding its services to take tools to tradies on jobs around Canberra.

For the financial analysts participating in the half-year 2020/21 results announcement for Australian wholesale/retail conglomerate Metcash, the company's pre-COVID-19 acquisition of the Total Tools Holdings (TTH) franchise must have seemed a rare glint of bright sunlight in an otherwise mostly gloomy retail sector.

Where Metcash's hardware operations, under the umbrella of its Independent Hardware Group (IHG) division, is commonly shunted somewhat towards the back of the queue of concerns, behind Metcash's food retail operations, and even its liquor retail operations, TTH and IHG came close to being the "star" of the results - even though, in terms of actual financial contribution hardware remains a minor player.

That is understandable, and even - to some extent - deserved. Metcash and IHG did pull off something of a minor coup. Not only did they pick up TTH for something substantially under its original asking price, they also bought the business right before sales surged as a result of the somewhat paradoxical boost that the building and construction industry has received during the 2020 pandemic months, from March onwards. It's the kind of "luck" that companies skilled in acquisitions, especially in retail, will sometimes encounter, that "X" factor that enables senior management to pick up on possibilities that other bidders for a business might not quite have understood. And timing, while it is certainly not "everything", can play a significant part as well.

Looking beyond the immediate - and somewhat circumstantial - positives of the acquisition, how does the TTH acquisition shape up in the longer term? How will it interact with the pre-existing IHG business, and what kind of future does Metcash envision for this business?

TTH as acquired

TTH was started in 1989 as a co-operative based group of 20 independent tool stores. That changed in November 2007, when TTH's Board of Directors put in place a Network Development Plan based on a franchising model. In line with this, TTH established its National Support Office to boost the franchise businesses.

While the co-operative model is somewhat in the past, there are evident signs of this lingering into its operations in 2018 and beyond. All of the original 20 stores have remained as shareholders in TTH. Two or three of these owners served on the company's board through to 2020.

According to a report in Inside Franchise Business from June 2018:

The retail chain is an unusual set-up, developed from a co-operative structure that has given it a strong sense of community, and put franchisees front and centre... [F]ranchisees are, literally, at the heart of the business. This is evident in the tenure of the franchisees as well. Agreement terms run up to 10 years with renewal options, and as yet no franchisee has sold on their business.

Quite the reverse, actually. The strength of the business model has seen franchisees embrace multi-unit ownership while maintaining a fair level of influence.

As acquired, TTH consisted of 84 independently-owned stores, and two company-owned stores. In its presentation for its FY2020/21 half-year, Metcash noted that:

Post the half year TTH acquired 4 independent stores with ownership interest of 60%. A further 8 independent stores expected to be acquired by end of CY20.

So during the second quarter of Metcash's FY2020/21, the company should end up with a majority interest in at least 14 TTH stores, along with 72 fully independent stores.

In addition to a circa $57 million acquisition price for 70% ownership (plus put/call options to guarantee full acquisition up until mid-2023), Metcash also provided a $40 million debt facility which, Metcash stated, "will be utilised to acquire an ownership interest in select stores", which means buying between 50% and 51% interest in those stores. These purchases include the option to obtain 100% ownership by 2024.

In terms of revenues and earnings, the figure of $555 million is frequently presented as a revenue figure for TTH in FY2019/20, but this is essentially the total sales of all the TTH stores. Dun & Bradstreet lists revenues for FY2019/20 as being around $98 million, and the figure of $25 million is often mentioned as being TTH's number for earnings before interest and taxation (EBIT).

Metcash has announced that in its two months of ownership prior to its first-half results, TTH declared $18.6 million in total revenue, and $4.8 million in total EBIT. Those numbers annualise out to $111.6 million and $28.8 million. That reflects a projected uplift of 13.9% for earnings, and 13.2% for EBIT. While the background hardware retail increase over that period is above 15%, this is nonetheless a good showing, given that TTH is focused on trade/construction business, and DIY/consumer showed stronger gains.

Dun & Bradstreet also lists TTH as employing around 122 people. The cited article from Inside Franchise Business identifies there being between 80 and 90 people in the TTH head office, and 26 people in its marketing team.

Metcash strategies for TTH

Speaking at the FY2020/21 half-year results presentation, Metcash chief financial officer Brad Soller had this to say about the overall strategy for TTH:

We expect operation and merchandise synergies to be delivered from the acquisition and for these to commence in the second half of the year. As Total Tools will not be fully integrated with Mitre 10 but rather operate separately and as the overlap of products range is not as significant as it was between Mitre 10 and HTH, the quantum and synergies to be delivered is not expected to be anywhere near the synergies delivered on the HTH acquisition.

HNN would not be surprised to see the team size at TTH reduced to between 49 and 59 people by the end of 2022 (though many of those employees may find new positions inside Metcash), which would reduce overheads, of course.

One reason for the relatively high head count for TTH is that its strategy has been primarily focused on growing the number of franchises it operates, with a goal of some 131 set some years ago. As Nicole Bemelmans, who is the general manager of TTH's merchandising team, mentioned in an interview, one of the company's major ongoing tasks has been "onboarding" new franchisees.

If we ask the critical question about this acquisition, which is "why did TTH decided to sell?", the answer (in HNN's opinion) is likely to be that this model of growing the number of franchisees did not show signs of becoming as profitable as hoped. This is a common problem for business networks that evolve from being on a co-operative basis to a franchise basis. Scale should bring additional cost efficiencies, but this type of organisation struggles with the choice between member services that are the most helpful, and those that are the most efficient.

It is also likely that concerns similar to this also held up the potential listing of TTH on the Australian Stock Exchange (ASX), which had been suggested as one path in 2017. Instead, TTH began to seek a buyout via an equity partner in late 2019. While Metcash was approached, the end buyer turned out to be Quadrant Private Equity, which, according to the Australian Financial Review's "Street Talk" column, "will look to shift Total Tools to a blended company owned model and buy back franchise sites". The same column suggested that Quadrant's approach would be to "target 200 Total Tools sites in Australia using the company-owned model".

Of course, the Quadrant deal fell through in early 2020, with the private equity firm citing the agreement's contingency clause, referencing the COVID-19 pandemic. This led Metcash to pick up the company at what some would regard as something of a "bargain" price. The outgoing former CEO of IHG, Mark Laidlaw, remains involved in its management, and TTH's CEO, Paul Dumbrell, will remain in place - the two of them having worked together in the past, with Mr Dumbrell managing Metcash's automotive division which fell within Mr Laidlaw's responsibilities.

At the moment, it seems fairly clear that the core strategy for Metcash will be to continue its acquisition of TTH stores for at least the next three years. At the same time, Metcash also sees room for growth in the number of stores as well. This was outlined in a response by Mr Soller to a question asked by Grant Saligari of Credit Suisse AG:

The key driver for growth in the future will be those - as we actually corporatise those stores, and we actually get the actual ownership interest in those independent stores. And the other thing we should actually - is they still got a fairly good runway on their ability to open new stores. So if you look at the new stores that they actually had, at the time of the acquisition, it was 82 stores they had in the portfolio. The number of stores have now gone up to 86. So they've actually opened four stores in a relatively short space of time. And Paul and the team over there believe that there's still a pretty good runway for them to actually open additional stores going forward.

There are some synergies that will actually come through, just actually lets you know that those synergies shouldn't - as I called out in my presentation, won't be anywhere near the quantum synergies we've got through - with the HTH acquisition.

At the same time the CEO of Metcash, Jeff Adams, made it clear in response to a question from Bryan Raymond of Citigroup that expansions in store numbers would likely be from new franchisees, not additional corporate-owned stores:

The plan would be most, the absolute majority of them would be franchisees. We've got a very strong network plan looking forward, and again, I think in March, we can share more of that.

Effects on IHG

The most serious question for members of the independent hardware retail community is what effect this will have on them - and that is a question of particular interest for current members of IHG, in Mitre 10, Home Timber & Hardware (HTH), Thrifty Link and True Value bannered stores.

In the initial release to the ASX outlining its bid for TTH, Metcash stated that the acquisition would:

Enhance Metcash's position in the Australian hardware market which will benefit independent retailers in both Total Tools and the Independent Hardware Group.

In its summary of the benefits of the acquisition in its half-year results, Metcash stated that there would be "Operational and merchandise synergies expected in 2H21".

The concern, of course, is that with the acquisition of TTH, Metcash has brought onboard a true competitor to the existing networks of independent stores in IHG. If corporate-owned stores in IHG suffer a loss of revenue as a result, that's going to be less important to Metcash, as those earnings are essentially fungible. But for independent stores, a cashed-up, expansionary TTH, with the additional corporate might of Metcash behind it, could be something of a real threat to their revenues and earnings.

It's interesting to note that, prior to the acquisition by Metcash, TTH did portray itself as a strong competitor to independent hardware retail stores. In a September 2018 article with Business Buy Invest, the website outlined this position:

While demand is high, smaller hardware retailers can find it harder to compete with the scope and diversity of an operation like a Total Tools Franchise. According to Fred [Pose, then franchise and leasing manager for TTH], "The average competitor to a Total Tools stocks about 40% of the total range of hardware products we have on offer". Popular items include building related products, including products required for bricklaying and concreting, as well as nails and nail guns. Power tools and power tool kits are also consistently popular.

Analysis

The reality is that while the market for power tools has itself not been a broad one for most smaller hardware retailers (largely due to strong category competition from Bunnings), the market for both power tool accessories and hand tools has remained a broad and relatively high margin one for most retailers. With all due respect to Metcash, it somewhat defies common sense to suggest that TTH will not have an ongoing impact on sales in these categories throughout Australia.

As HNN has suggested for some time, there is something of an inner-conflict in the business model that Metcash has brought to the hardware retail market in IHG. At one time there is an increasing drive to bring in more corporate-owned stores, which give IHG access to a larger share of the profits derived directly from sales revenues. At the same time, IHG is supporting independent hardware retailers, some of whom are in direct competition to those corporate-owned stores.

There are cases where a balance is achieved, and HNN would cite in particular the operations of Sunshine Mitre 10 in Queensland. While Sunshine has an interesting network of stores, they also try to provide support to other Mitre 10 operations in their area. Outside of that kind of regional area, in more competitive urban regions, where stores are geographically closer to each other, it's difficult to see the same relationships at work.

This sense of balance seems bound to come under stress with the addition of TTH stores to Metcash, stress that is likely set to grow as Metcash obtains control over more TTH stores, and welcomes additional franchisees to the TTH network.

It is possible that what we are seeing are the first stages of the hardware retail industry reaching an inflexion point where Metcash exerts more control over retail operations than it has in the past.

One reason why that seems somewhat likely is that the past business models Metcash have used in hardware retail have not worked out as well as expected. Far from "taking it to Bunnings" through the HTH acquisition, IHG has found itself under increasing pressure from the efforts by Bunnings to grow its trade sales. While the Wesfarmers-owned Bunnings has continued to grow its revenue and EBIT at above-market rates, IHG has, absent its HTH synergies, languished somewhat in the market.

And again, HNN must repeat our overall concern about the hardware market: history indicates that housing markets with high purchase rates and high prices ultimately begin to fall, and over the past 10 years have been repeatedly shored up through the Reserve Bank of Australia (RBA) lowering interest rates.

At the moment, the RBA has worked itself into a place where the interest rates are too low to be reduced further, and it has guaranteed that rate through to 2023. While direct fiscal stimulus as the housing market is possible, with about one-third of Australians no longer owning houses, it has the potential to be very divisive. HNN would suggest that it is really those numbers that in the end saw Quadrant pull out of the TTH deal, and Metcash has taken them on at its own peril.

Hardware supplier Hillman Group has struck a USD2.64 billion deal to merge with Landcadia Holdings III, a publicly traded special purpose acquisition company (SPAC). It operates as a blank cheque company and works to "effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganisation or similar business combination with one or more businesses". The company was founded on March 2018 and is headquartered in Houston, Texas (USA).

The joint statement from Hillman Group and Landcadia Holdings III that they have entered into a definitive merger agreement will result in Hillman becoming a publicly listed company. Hillman chairman, chief executive officer and president, Doug Cahill said in an interview:

We looked at our options and obviously, private equity was an option, and we felt that this SPAC route was also an option. That could get us to market quicker.

He also said the company was set to benefit from a shift in how people think of their residences, now that so many are working from home.

It's gone from a place where people would eat, sleep and watch TV - now it's school, it's an office, it's entertainment, it's recreation..

We've always been focused on repair and remodel. We think the trends are very positive as we think forward.

...

[The] announcement marks the beginning of the next chapter of Hillman's partnership with our winning retail customers in the large, non-cyclical and growing retail hardware market...

With our new capital structure, we expect to accelerate our growth across both existing products and channels, as well as pursue attractive opportunities in adjacent categories, both organically and through M&A.

Cincinnati-based Hillman makes fasteners and other home improvement products. It has relationships with more than 38,000 companies, including Lowe's and Home Depot. Private equity firm CCMP Captial bought the company in 2014 for USD1.5 billion and will remain its largest shareholder.

Upon the closing of the transaction, the combined company will be named Hillman Solutions Corp. and remain listed on Nasdaq under the new ticker symbol "HLMN".

Mr Cahill will continue to lead the combined company in his current roles and will be a significant equity participant in the new company.

Landcadia III's management team is led by Tilman J. Fertitta, chief executive officer and co-chairman of its board of directors, and Rich Handler, president and co-chairman. They said in a statement:

Doug and his team have established Hillman as an essential product and services provider in the hardware and home improvement industry, and given changes benefitting the residential housing markets, they have the wind at their back.

What makes this business combination unique is that Hillman operates in a market that is large, predictable, growing and non-cyclical. Consumers love their homes, but now they are living and working, entertaining, vacationing, educating and retiring in them, and home improvement spending is expected to remain strong...

Founded in 1964, Hillman distributes over 110,000 SKUs in categories including fasteners and hardware; work gear, gloves and other PPE; and robotics and digital solutions such as key and fob duplication. Hillman said its sales have grown in 55 of its 56-year history and are estimated to reach USD1.4 billion for the fiscal year ended on December 26, 2020.

Related: Hillman Group acquired Big Time Products, a provider of personal protection and work gear products in 2018.

The digital "Work smarter, not harder" campaign from tradie online platform Hipages highlights the new leads and steady stream of opportunities that can help tradies grow their businesses.

Created by media agency VCCP, the campaign is running across YouTube, Facebook, Instagram and Google with 15 and 6 second versions. A digital out-of-home display will also be running in Brisbane for three weeks.

Hipages head of brand communications, Guillaume Papillon, said the campaign is taking advantage in the surge in home improvement projects. He told the Mumbrella website:

Currently in Australia there are 1.1 million tradies working within 257,000 trade businesses which service the home improvement industry - worth $83 billion in 2020. On Hipages, a new job is posted on average every 23 seconds, with over 100,000 jobs posted each month offering a high volume of job lead opportunities which trade businesses of all sizes and locations can take advantage of to efficiently grow their business.

In trade businesses, the biggest inefficiencies lie in everything that needs to happen off the job and Hipages offers a way to reduce the pain-points that come with building and maintaining a business, helping tradies work smarter, not harder.

The campaign comes two months after the finale of The Block. As a sponsor of the Nine reality program, The Block is the basis for Hipages' major marketing activation throughout the year.

Related: Hipages was preparing for an IPO in 2020.

Boral, together with its joint-venture partner, an affiliate of private equity firm Lone Star Funds, have agreed to sell the North American-based Meridian Brick business to Austrian brick maker, Wienerberger for USD250 million.

This equates to USD125 million for Boral's 50% share and is expected to result in a small pre-tax accounting profit on a sale of approximately AUD10 million at closing. The transaction is subject to various closing conditions and regulatory approvals, with both parties targeting completion in the first half of 2021.

The divestment of Meridian Brick represents the final step in Boral's exit from brick operations globally. It is also part of the plan by Boral's chief executive officer and managing director, Zlatko Todorcevski to overhaul the building materials supplier. He said in a statement:

In recent years Boral have divested their interest in bricks in Australia, and since forming the bricks joint venture in the US with Lone Star in 2016, the plan was to ultimately prepare the business for sale.

As part of this process, Meridian's leadership was refreshed with the appointment of a new chief executive officer in December 2018, and a stronger focus on improving performance.

The divestment of Meridian is a further step in Boral's portfolio review works. It helps to streamline our US business and allows us to further focus on the improvement initiatives under way in the remaining businesses in Boral North America.

Based in the southern state of Georgia, Meridian Brick is the largest manufacturer of clay facade solutions by capacity in the US and has a leading position in Canada. With more than 1,000 employees operating in 20 manufacturing plants across the US and Canada, the company generated revenues in excess of USD400 million in the financial year to 30 June 2020.

Through the acquisition of Meridian Brick, Wienerberger will immediately double the revenue of their North America business to more than USD800 million.

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Industrial workwear company Co Gear has collaborated with BHP and Blackwoods to launch a redesign of its women's workwear to give mums to-be a comfortable option that will take them through their whole pregnancy.

Founder Kym O'Leary said for quite a while industries had been talking a good game about addressing inclusion and diversity initiatives in their workplaces but were slow to change. She told The Daily Mercury:

There is a growing number of women looking to pivot away from roles in metro areas and take on industrial and trade roles with some of the biggest mining and construction companies in Australia.

But they are holding themselves back because things like workwear are not always suited for women ... businesses need to go beyond creating committees and implementing policies, assuming the job is done.

They need to make broader strides and take immediate action where they can, even if it is bucking the one size fits all mentality around workwear.

The Co Gear designs were tested across the Bowen Basin (QLD) and Pilbara (WA) mining regions to ensure they withstood the practical challenges women face every day on site. Ms O'Leary said:

We also had an exciting opportunity to collaborate with a number of women from varying industrial and trade backgrounds over a 12-month period on our maternity wear range, which went through endless rounds of design changes to ensure it provides comfort, functionality and a flattering fit at all stages of pregnancy.

Ms O'Leary said the real-world application of the Co Gear range had been important.

When we started working on the redesigns for our range of women's workwear, we knew that collaboration was going to be a major contributor to our success, and fortunately we had plenty of support from industry leaders such as BHP and Blackwoods.

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Recent data shows that 33% of users on Facebook, Instagram and Twitter have increased the amount of time they spend on social media during COVID-19, making it more relevant than ever as a marketing tool for businesses. Neil Hipwell, founder of NSW building firm Futureflip and James Hardie ambassador, said:

If you don't have a social media presence, it's time you did. A lot of our client leads have come in from someone seeing our work on Instagram, which is a great platform to showcase your work. With users saying that they increased the amount of time they spend on social media last year, the opportunity to secure more work is only growing.

Neil shares some of the social media practices he's used to drive the success of his growing business, even throughout COVID-19. He has also created a video with business advice for builders. The video features on James Hardie's Design Ideas site, which is also home to information on the looks that consumers are looking to their builders for help with.

Know your audience

Always remember that social media is a part of a marketing strategy. It's there to help you make sales, so while it can be enticing to create content that gets the most likes or attracts the most followers, you need to make sure you focus on engaging potential clients.

Think about what your audience wants to see. This could be inspirational homes that you can help them achieve, through to advice on how to pick the right building materials for their needs. It's all about adding value to their lives so that your brand becomes a trusted go-to for advice.

Choose the best platform

So, you know the who (your audience) and the what (your great content) the next step is the where (platform). My go-to is Instagram which is used by 52%3 of people in metro areas and accessed by users 28 times a week on average.

Instagram is image based, creating an ideal opportunity to visually share high quality photos and videos of your projects in posts, while the Stories function lets you take a more informal approach with short form content that's only live for a day.

Pick the right tone

Creating the right tone for your social media channel can be difficult as you need to balance professionalism with personality. Swearing or crude language are clear no-gos, as is technical jargon.

Take inspiration from brands in the industry you admire. Look at how they talk about homes, the length of posts, words and language they use. This can also be a good way to generate a list of hashtags that will help your content get seen.

Tone also includes images. I keep my in-feed posts professional and aspirational with a consistent look and feel. It's important to think about why you're posting the picture. For example, if you're showcasing the shadow lines created by Linea Weatherboard, don't turn the brightness up so high that the façade looks flat. I also use my stories to give a "behind the scenes" look to add a bit more personality.

Planning is everything

Social media is a bit like a project, you need a solid plan in place. Start by considering what is important for your audience to know, as well as what they will find valuable. See if there are any consistent themes, such as inspiration, trends advice and examples of your work.

Each month create content that hits each of these topics to keep your channel fresh and varied. I will have our projects shot by professionals but using a smartphone with a bit of editing on the social media platform you're using is a great option when you're starting out. Getting the images and videos right will not only help you grow your channel but can turn it into a great catalogue of your work for prospective and current clients.

Tag partners and collaborate

A quick way to increase the number of people who see your content is to get it reposted by an account that's got a large following. Big brands are often looking for content that shows off their product or service. When you tag them in your posts, they get an automated alert directing then to your content, which creates a quick way for them to share it with your channel's details.

The Design Ideas section of www.jameshardie.com.au provides inspiration and information on residential and commercial builds, compliance issues and trends from Hamptons to modern looks.

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The Knauf Group has agreed to sell its Australian plasterboard facilities to Etex, according to a report in the DataRoom column in The Australian.

Etex is a family-owned, global manufacturer of lightweight building products that operates in 42 countries.

In 2019, Knauf bought out USG in the plasterboard joint venture across Asia, Australia and New Zealand that USG owned with Boral. The deal was worth USD7billion. However, Knauf recently announced it would also buy Boral's half-share of its USG plasterboard venture for AUD1.43 billion.

The plasterboard factories being sold are those Knauf had before it bought the USG assets in Australia and Asia, owned in partnership with Boral. They are located at Altona (VIC), Matraville (NSW) and Bundaberg (QLD). It also has a metal profile production facility in Beenleigh (QLD).

Knauf Australia managing director Gavin Burton said the deal with Etex would offer synergies. He told The Australian:

Etex is known for its excellent customer service, innovative solutions and a strong focus on workplace health and safety.

The transaction is subject to regulatory approvals and the deal is set to be completed in the first quarter of 2021. DataRoom revealed the interest by Etex in October and that time, the portfolio was thought to be worth about AUD400 million.

Knauf said Etex was purchasing Knauf Australia as a going concern, and the existing employees in Australia, including the management team, would continue to operate the business in Australia. The company employs over 300 people.

Etex said in a statement that the transaction expanded its footprint on the Australian construction market with strong growth opportunities.

The company said in addition to strong business advantages, the acquisition was consistent with Etex's recent strategic refocus plan to reinforce the Belgian multinational's strengths in lightweight and modular construction technologies globally.

Etex said it expanded its plasterboard business into a market where the group is already present in the fire protection and fibre cement segments. It currently has its Promat, Cedral and Equitone brands available in Australia. Promat is for fire protection, high temperature applications and intumescent seals; Cedral offers pre-coated fibre cement sidings and slates; and Equitone supplies fibre cement cladding panels for large to mid-size buildings.

Related: Knauf exploring sale of Australian plasterboard assets

Drone delivery company Wing Aviation said it is considering expanding its services to take tools to tradies on jobs around Canberra.

The idea would be to team up with a hardware supplier so that tradies who suddenly needed a particular item for a job like a particular size of screw, a drill bit or paint brush would be able to order it online and get it delivered within minutes.

Wing is currently talking to tradespeople to see how the service might work and what the demand for it might be. It would need a change in the way the drone service operates. At the moment, users order and pay through an app - but delivery is to the home address. The tradies' service would need delivery to the location of the jobsite.

Wing's head of public policy in Australia, Jesse Surkin, said hardware deliveries would stop jobs or projects being delayed for days when tradies found they were missing an essential part. A company spokesperson told The Canberra Times:

A carpenter without the right drill bit might have to knock-off to go to the hardware store, which has a ripple-on delay effect for the other tradespersons working on site. The project that was scheduled to finish up in a week, will now take three.

Wing has commissioned an economics consultancy to study the idea. The report's conclusion notes:

In Australia, tradespeople such as builders make a total of 60 million unplanned trips to the store each year to collect hardware items, tools, or spare parts they need on the job.

At an average of one hour each, these interruptions amount to $2 billion annually in labour and vehicle costs.

They can also result in larger workflow disruptions, leading to lost time for clients, and in some cases, expensive contract penalties for delayed projects.

The company already has a service for tradespeople in Queensland and can't see why it shouldn't operate in the ACT in a similar way. In three suburbs of Brisbane, Wing drones have been used by landscape gardeners who found they had run out of line for a whipper-snipper.

Pilot cities

In 2019, US-based Wing Aviation - owned by Google's parent company, Alphabet - launched pilot programs in the Canberra suburb of Gungahlin and Logan City in south-east Queensland delivering food and domestic items. Orders (maximum weight 1.5 kilograms) are filled by "local merchant partners" at a centralised service-and-fly site.

Wing delivery drones typically fly at a height of 60 metres and can reach speeds up to 113km/h. Once a Wing drone arrives, it hovers around seven metres above the ground, lowers the package using a winch and after releasing it in the nominated front or back yard, returns to Wing's base. Average delivery time is less than 10 minutes.

Australia was hand-picked as a testing ground for drone services worldwide. Wing communications executive, Maria Catanzariti told the Sydney Morning Herald that Australia was chosen to be part of pilot scheme because "Australians are natural early adopters, and they give useful feedback".

But the feedback hasn't always been favourable. There have been noise complaints, and safety and privacy fears, which Ms Catanzariti described as "great learning opportunities". Wing drones now have quieter propellers; they comply with all safety requirements, and although they can take photos for geolocation, images are so greyscale and low-resolution that "you can't tell if you're looking at a person or a tree".

There are also limits to drones. If the weather is rainy, windy or dark then the Wing fleet is grounded.

Households in Wing's Early Flyer program have been able to order a range of goods from a coffee shop, grocery store and hardware outlet, with drone delivery initially offered free of charge.

Wing chief executive James Ryan Burgess said the company was committed to taking to the skies in other parts of Australia.

The RID brand has undergone a rebrand, manufacturing upgrade and product expansion since co-owners Natalene Carter, David Griffin and a third party bought the company from Thorley Laboratories in 2013. All the work is being done from Townsville and Brisbane in Queensland.

Both Ms Carter and Mr Griffin have extensive business backgrounds - in accounting - and this has helped to transform the company.

They had the vision, passion and work ethic needed to take on a national brand but when it came to insect repellent it was an unknown world to them. Unlike other businesses, the insecticide industry doesn't have the luxury of a quick turnaround. Ms Carter said products they were currently working on wouldn't see retail shelves for two years. This is why innovation and forward thinking was an integral part of their business plan.

The duo quickly decided to go down the path of product innovation after they took over the Australian brand. Ms Carter told the Townsville Bulletin:

We went on a real journey to expand our product as much as possible. We've grown our market share by accessing other markets.

The RID product range now includes its medicated insect repellent, an outdoor mosquito coil range, sunscreen insect-repellent combination product, a low-irritant range, and a line of flying and crawling insect sprays. The products are distributed to Asia, the UK and the Pacific region. Ms Carter explains:

In the years after we took over the company, we dissected the market into three areas - industrial, sports/leisure and then retail and groceries. We found the market gap was in the industrial area.

A lot of the larger mining companies now have to supply protection for their employees, so we have developed a new strategy to that market.

The company is now working actively in the industrial field and achieving significant results.

In a previous interview with Townsville publication BDmag, Ms Carter explains how it successfully doubled the RID range in four years. She said:

We constantly read the market. So we saw what trends were happening, what customers were doing and what we could develop to match future demand.

When researching their competitors, Ms Carter and Mr Griffin immediately noticed the lack of diversity in their range. This encouraged them to work faster and harder.

...We made a strategic decision, to increase our offering of quality Australian owned brands, across this sector. It's an endorsement to our strengths in the category of insecticides that now extends to bug killers for the home. It also gives our customers confidence with Australian owned brands that work in our Aussie environment.

Ms Carter she's proud that RID Australia is a business that's competing around the world, from its Townsville and Brisbane base.

COVID has taught us that you can be based anywhere in the world and do business effectively and efficiently. I can work from Townsville and know what is happening in the RID manufacturing plant in Brisbane.

There are cameras in every warehouse around the country, so from my phone I can see what is happening...I can see all the orders coming in and track their progress.

The company competes effectively against larger corporations. She said:

The main brands competing for the same market share as RID Australia are multinationals and multi-international companies. For us to get market share from them and grow products that RID wasn't in is something we're extremely proud of.

We were able to secure the only insect repellent in Bunnings across all stores nationally, which was five years of hard work and we are really pleased with the growth in this retail sector.

Ms Carter also said one of the keys to business success was staff.

I have really good staff. If they come to me with a problem, mostly they'll already have the solution to the problem.

The company remains 100% Australian-owned and maintains its manufacturing in Queensland.

European home improvement group, Kingfisher is buying an online platform that helps customers with DIY projects.

The company has bought an 80% stake in NeedHelp for GBP8.9 million that connects consumers with home improvement service providers, similar to the way hipages works in Australia.

The number of jobs completed through its platform is set to reach 58,000 in 2020, and Kingfisher is hoping to cash in on the surge in DIY projects as the COVID-19 pandemic saw more people turning to home improvements.

Executives are keen to stress NeedHelp is different to other online DIY marketplaces because it focuses on specialist skills - from vetted professional tradespeople and other skilled experts - needed for home improvement. Kitchen installations, painting, flooring and bathroom renovations are the most common jobs used on the platform. Other jobs include gardening, furniture assembly and house or furniture moving.

NeedHelp's services are available from a range of channels including retail partners' stores and e-commerce sites, and from its own site. It operates a data-driven end-to-end platform that manages all bookings, online payments, and rating of tradespeople. It also provides added value to tradespeople including insurance, professional business set-up support and assistance with tax returns.

Through its open architecture, NeedHelp already provides its services to customers in more than 500 stores.

Kingfisher had an existing relationship with NeedHelp in France through its Castorama and Brico Depot stores, but it is the first time such a service has been offered to British customers.

In the UK, NeedHelp will offer support to B&Q's customers who need help with their DIY while Screwfix's customer base of trade professionals will be able to source work from consumers needing help.

NeedHelp currently operates in Switzerland and has recently expanded into Germany, Belgium, Austria and the Netherlands. It plans to roll out the platform in Poland.

The company said the acquisition of NeedHelp forms part of its recently announced "Powered by Kingfisher" strategy, which focuses on building a mobile-first customer experience. Kingfisher chief executive Thierry Garnier said:

To serve customers effectively today, we need to be more digital and service orientated, while leveraging our strong store assets. Online services marketplaces are key to the future of home improvement retail and NeedHelp is an established and fast-growing player in this arena.

[The] acquisition accelerates our digital capabilities and extends the services that we can provide our customers - two central components of our future growth strategy.

This represents an exciting opportunity to create a more complete services offer and to help make better homes accessible for everyone.

As part of the deal, NeedHelp founder Guillaume de Kergariou will retain a 20% stake and remain as chief executive. Mr de Kergariou started the business in France in 2014 and has tripled its revenue every year since its launch. He said:

The additional investment and expertise that Kingfisher will bring, as well as the ability to help support its huge customer base, opens an exciting new chapter for us. We will continue investing in our technology, product and operational processes to drive even greater customer satisfaction.

JJ Van Oosten, Kingfisher's chief customer and digital officer, who has been appointed chairman of NeedHelp, added:

NeedHelp's success has been built by delivering ease and assurance to customers who want to improve their homes, and the tradespeople with the skills to support them. We know the business well, it is a natural fit with our retail banners, and it accelerates our service proposition.

Kingfisher is committed to supporting NeedHelp in unlocking its significant growth potential, by promoting and growing NeedHelp's open architecture with its existing retail partners, as well as with new retail partners across Europe.

Results

Kingfisher recently revealed that total group sales rose by 17.6% to GBP3.5 billion for the quarter to October 31, with a 17.4% increase in like-for-like sales. But the company said it saw like-for-like sales growth slow to 12.6% in the first weeks of the current quarter as it was impacted by a tightening of restrictions across Europe. All of its stores remain open to customers despite lockdown measures, due to their essential status.

E-commerce sales rose by 152.6% and accounted for 17% of total group sales in the third quarter. Click & collect sales increased 216% and accounted for 77% of e-commerce sales.

Related: Kingfisher is placing stores at the centre of its online strategy.

Australia has seen a consistent slump in construction workforce productivity over the past decade. According to the Productivity Commission, comparing the financial years from 1974/75 to 2004/05 with those from 2004/05 to 2018/19, the overall decline is around 21%. While those numbers are nothing new, what is new is an increased focus on what they are, and what they indicate about the future of the industry.

For those who work close to the industry, it's no secret how those numbers came about. Not only is there a great deal of union activity which has led to only limited evolution in how work is done, but both state and federal governments have funded and supported the construction industry as a means to provide more employment for less-skilled and unqualified workers.

The result has been an industry whose utilisation of technology - as one example - might be generously described as "uneven". The adoption of Building Information Modelling (BIM) is a clear illustration of this. While Australia lags behind the global leaders, with the UK in first place followed by the US, France, Singapore and the Scandinavian nations, it has kept pace with China (so far) and Germany. There are some Australian construction companies that are heavily invested in BIM, while others see it as more of a compliance issue.

What happens in these situations where there is both a small active and large passive resistance to technology, is that technological change becomes dammed-up, until it reaches a critical point where the advantages are so great that they can no longer be ignored.

If construction technology is not quite at that point, it will likely cross over it in the next two to three years - pushed in part by a likely global slowdown following a brief, government-financed recovery from the Sars-CoV-2 pandemic.

The two prominent technologies on the horizon that will help to reshape construction are robotics and the 5G mobile data networks currently being built-out around the world.

Robots are coming

In fact, the robots have already arrived. Lichtenstein-based power tool company Hilti has recently released its JaiBOT, a single-function semi-autonomous robot for large-scale construction sites. The best description of the JaiBOT is provided by Hilti's Aidan Maguire, business unit manager for measuring systems in North America:

Powered by the data in this BIM model, JaiBOT is a complete self-contained software and hardware system for semi-autonomously drilling, marking and locating anchor locations overhead. This makes it the perfect solution for faster, safer and more accurate execution of digitally coordinated MEP systems on the job site.

Physically, JaiBot is about the size of a narrow double refrigerator, mounted on rubber tread tracks. It's electric powered, and its batteries can keep it working for eight hours before it needs to be recharged. Its operating mechanism consists of two parts. There is an enclosed lift mechanism, which gives it an operating height range from 2.5m to 4.9m. Mounted on this is the robotic arm, which carries three units: the drill unit itself, a dust shroud connected to an onboard vacuum (enabling it to meet US specifications for dust contamination), and, interestingly enough, a paint dot sprayer.

The JaiBOT is moved via a remote control to its work area - in transport mode the JaiBot is less than 90cm wide - and from one position is able to drill the required holes within a radius of around 90cm. Drilling widths are between 8mm and 16mm.

After each hole is drilled, JaiBOT then uses the paint dot sprayer to mark the hole with the required colour to indicate its future trade and function. If rebar is encountered during a drill, the operator can either skip that position, or adjust it to miss the rebar.

According to Hilti, the holes can be set with an accuracy of 3.5mm. The JaiBOT achieves this by using a Hilti PLT 300 as a reference point. The PLT 300 is the core unit to Hilti's fully automated positioning system which replaces the traditional optics-based total station. The PLT 300 uses the PLC 400 Android-based tablet as its controller, enabling it to integrate with cloud-based BIM two- and three-dimensional drawings.

To get started with the JaiBOT, the operator first sets up the PLT 300, which is then linked to a prism on the JaiBOT's robotic arm. The operator uses the tablet to approve and activate the drilling function, with a simple "stoplight" interface.

Users report that the JaiBOT succeeds in three areas. It is highly accurate. It's also time efficient, even though it does require a full-time operator, as the time spent on setting up ladders, going up and down, then moving the ladder to a new position is eliminated. As importantly, it's a big advance in health and safety, as drilling through concrete overhead is one of the most wearying and highest repetitive-stress injury potentials on large construction sites.

In addition to those advantages, the JaiBot fits seamlessly into the construction site's information flow. As Mr Maguire describes it:

This system can work on a wide range of projects in the commercial construction sector. JaiBOT synchs with a dedicated project cloud to access the most up-to-date design data, enabling infield access to the planned anchor locations for the entire project.

What's more, as the JaiBOT drills, it updates the BIM links, in real time, according to Mr Maguire:

Of course, the hole locations and drill progress synch back to the cloud and can be accessed live in the office.

Rafael Garcia, senior vice president of marketing for Hilti North America, sums up the information advantage:

Contractors will be able to more seamlessly get information from design directly to execution, with the JaiBOT, and then record exactly where and what has been drilled on site for progress monitoring and documentation of work completed.

Hilti, with its usual attention to detail, has of course developed solutions for the delivery, movement, storage and charging of the JaiBOT. Mr Maguire details these solutions:

The system arrives on site in a container that can be lifted by a forklift or crane allowing easy access to the working area. When not in-use, this container also works as a charging station and secure storage. When it's time to work, the operator simply drives JaiBOT out of this container directly to the working area.

One thing that is also clear is that Hilti is making a broad commitment to this area of development. Jan Doongaji, a member of the Hilti's executive board, responsible for electric tools and group research, commented that:

We all agree that our industry is facing significant challenges in the future, such as a shortage of skilled labour, health and safety issues, and also stagnant productivity. Now as opposed to other industries, construction by and large is today less productive than a couple of decades ago.

This is thus a game-changing opportunity, which we as innovation leader, want to drive. We always strive to offer holistic solutions to our customers with the JaiBOT we can finally digitalise the missing gap in the entire value chain from planning to implementation on the job site.

The 5G revolution

There's little doubt that the 5G cellular communications standard has been more than a little hyped during 2020. Nonetheless, as the network develops, it is likely that 5G will have a considerable impact on both mobile computing, as well as more traditional desktop computing. It could also help to bring changes to construction sites.

There really are three different types of 5G. At the low-end, one version of 5G boasts only a moderate gain in download speeds over the 4G network, 30 to 250 megabits per second (Mbit/s). Many 5G networks are likely to not even support that range.

Mid-band 5G uses microwaves of 2.5-3.7 GHz, allowing speeds of 100-900 Mbit/s, with cell towers delivering a signal beyond 5km. This level of service will be the most common in urban areas. High-band 5G uses frequencies of 25-39 GHz, though higher frequencies may be used in the future. This type of service can achieve download speeds in the gigabit per second (Gbit/s) range.

However, millimetre waves have a limited range, meaning that more cell towers, closer apart, are needed. These waves also have trouble getting through materials such as walls and glass windows. This type of service will likely be limited to areas where that host crowds of people, such as sports stadiums and convention centres.

While much of the focus has been on telecom providers of 5G, some private companies have gone so far as to license a slice of the 5G spectrum and replaced their wired networks with 5G connections. It is possible that in the future we could see some construction sites follow that trend as well.

What would be the benefits of 5G to construction? China has been finding out, with the launch of its first 5G enabled construction site. China Construction's Eighth Engineering Division has created a "smart site" using the latest 5G telecom network. This hooked into sensors which could provide updates on workers' health and interactions, enabling remote management of site personnel. This included using 5G AI glasses to provide users' location information, enabling engineers to perform remote site inspection.

The technology could also be used directly onsite, such as cases where a crane driver could see the real-time transmitted picture outside of the crane, including the load pickup and drop areas, which can help to reduce accidents.

The endpoint could see video become a functional, expected part of most construction sites, embedded into construction helmets, lighting systems, as well as heavy and light machinery.

Analysis

Why is there so much resistance still, today, to BIM? Academic papers commonly suggest it comes down to these five main factors:

What these really add up to, in the end, are the current culture of construction. It isn't that there are not enough construction workers who are smart enough to understand the requirements of BIM, and to work with the digital and intellectual tools, such as 3D visualisations, tablet computers and robots. There are, but their skills are going to waste.

What is required, however, is a move towards understanding and respecting a different skillset on the job site. That reaches back, really, into the kinds of training that construction workers receive, whether that is during apprenticeships or in a more formal environment. BIM needs to move from being some kind of option for training, to being the main way in which construction workers are trained to do their jobs.

So many heavy industries are finding themselves in this precise position. Often it arises because they feel themselves to some extent protected from direct competition. But the lesson of the digital age is that the real competition is not direct at all. When industries fail to keep pace with technology, technology finds ways to get around them.

Online home design and renovation resource guide Houzz has released its study of renovations, a survey taken in February and March 2020 regarding activity during 2019.

While reading the results does seem a little like a look backwards into a lost time, there are still some valid and interesting data points that do relate to 2020/21.

Expenditure

The median spend on home renovation projects came in at $20,000, about the same as 2018, but down from $25,000 in 2017. Most renovators relied on cash to fund the work (80%), while credit cards were the second most popular source (the two are not mutually exclusive in the survey).

Some 57% reported that they had managed to bring their project in on budget, while 25% were over-budget by less than 25%, and 14% overspent even more than that. Only 3% reported coming in under-budget. The most common reason cited for being over-budget was that products or services were more expensive than expected.

The biggest change in spending from 2018 to 2019 was that in the recent year an average of only $15,000 was spent on renovating the kitchen, down from $20,000 the previous year.

Bathrooms, however received a bit of boost, with spending on master bedrooms up $1000 to $13,000, and spending on other bathrooms up $2000 to $10,000.

What was renovated

While 53% of the those surveyed reported decorating or furnishing in 2019, renovations were down to 48%, a drop of 2%. Repairs held steady at 41%, however. The two leading reasons for renovating were "wanted to do it, finally had the time" and "wanted to do it, finally have the money". The first was 39% of the survey, and the second was 33%.

While they dropped by 3% for the year, kitchens were still the most popular renovation at 23%, followed closely by living/family rooms at 20%, also a 3% drop from 2018. Bathrooms, laundry and non-master bedrooms were all equal on 17%.

Plumbing and electrical led the trades upgrades, at 31% and 30% respectively. Survey respondents reports upgrading an average of 2.8 interior rooms, 2.6 home systems (such as plumbing), and 2.7 exterior features. All three were down slightly on the previous year.

Planning

In terms of planning a project, the survey reports the average planning time for a kitchen was 11.1 months, followed by - surprisingly - the laundry room at 10.4 months, and the master bedroom at 10.0 months. The shortest planning times were for the wardrobe (understandably) at 6.2 months, the home office at 6.4 months, and the basement at 6.5 months.

The laundry room also had the longest completion time (work started to finish) of 5.7 months, followed by the basement at 5.6 months, and then the non-master bathroom at 5.0 months.

Electricians were the most frequently hired trades at 60%, followed by plumbers at 45% and carpenters at 35%. Home builders were hired by only 17% of respondents.

Chief executive of building products group CSR, Julie Coates said she is keeping a tight rein on costs in an uncertain market where revenue in the core business - Bradford insulation, PGH bricks, Hebel lightweight construction blocks, Monier roofing and Gyprock plasterboard - fell 6% to $58.7 million in the six months to September 30.

Bottom-line profit at CSR was down 15% to $58.7 million in the period. However, earnings in the building products division edged up slightly to $96.3 million, with the earnings before interest and tax margin rose to 12.1%, up from 11.4%.

Ms Coates said greater diversification in the range of products CSR supplies to the construction industry, along with robust cost-cutting of $20 million, helped the company deliver the slight lift in profit and margins in building materials. But profits in its smaller aluminium business were impacted by the COVID-19 economic fallout.

CSR, has a 25% stake in the Tomago aluminium smelter in NSW, which accounts for about 12% of electricity consumption in the state. According to The Australian Financial Review (AFR) Ms Coates hinted CSR may eventually exit the aluminium business but emphasised that the first task was to ensure commercially viable energy prices for that operation. Ms Coates said:

We're predominantly a building products business.

It remains hopeful the Tomago aluminium smelter can strike a cheaper power deal with AGL Energy to ensure the facility remains profitable.

The company will also be closely watching the fallout on the building materials market as the JobKeeper and JobSeeker payments wind down. However renovations market had improved as people who were stuck at home for lengthy periods found flaws in their dwellings they wanted to fix. Ms Coates said:

We plan to monitor pretty closely what that might mean for our business and manage it ­accordingly.

Related: Ms Coates took the helm of CSR in September 2019 after heading up the Big W discount department store chain as its managing director and running the Australasian operations of $2 billion food group Goodman Fielder.

At its virtual annual general meeting, plumbing and bathroom company Reece announced that group sales revenue rose 4.4% in the first quarter but remains wary of the outlook for the year ahead.

Australia and New Zealand sales revenue was up 6.9%, while sales from its US-based business was up 8.6% on a constant currency basis. According to a report in The Australian, chief executive Peter Wilson said:

We have continued to see growth in both regions which has exceeded our initial expectations.

It's important to note that we do not see the first quarter's performance as illustrative of the remainder of the financial year due to significant uncertainty and negative economic indicators across our regions.

Trading conditions in the US are softening as we speak as the COVID-19 cases escalate and as we are being forced to close more stores.

While the company's business has seen increased demand from people spending more time at home in light of COVID-19 restrictions in some areas, it's faced major challenges by having to close stores in other areas.

As such, despite the record $6 billion in sales revenue over the 2020 financial year, Reece is being cautious in terms of expectations.

The company said "significant uncertainty and negative economic indicators across Australia and New Zealand" meant it couldn't confidently provide any guidance.

Mr Wilson also said activity in Australia was increasing as COVID-19 restrictions eased, largely stimulated by government incentives and low interest rates. He told the AGM:

With borders closed, population growth - a key driver for new housing - has fallen sharply since March. And we don't expect overseas migration to return to pre-COVID-19 levels until 2024. Dwelling approvals are expected to fall by 5% in the 2021 financial year. This represents a 30% decline since 2018.

With more people spending time at home, we will continue to see an increase in demand for alterations and additions, helping to balance the short-term impact of the housing downturn. With less people in the office, coupled with a decline of inner-city investment, non-residential commencements are expected to decline in the 2021 financial year.

Reece, which runs 630 outlets in Australia has navigated two global pandemics. The company launched a major campaign in 1920 in the US after the Spanish flu pandemic highlighting the importance of sanitation and plumbing. Mr Wilson said this idea still underpins the business today.

We often say that doctors and scientists help cure disease, but plumbers prevent it.

With this in mind, the company said it has a clear long-term vision and a resilient business model to withstand the difficulties of 2020.

Bluetooth connectivity for tools is now five years old. It was announced by the Techtronic Industries (TTI) company Milwaukee Tool in 2015, branded as "One-Key", and hit the market in January 2016. That followed on from the release of "connected batteries" by the Stanley Black & Decker brand DeWalt earlier in 2015. Both DeWalt and Bosch Power Tools announced matching systems in the wake of the One-Key announcement, and these became available about 18 months after One-Key.

Makita and Hitachi (now Hikoki), which round out the five major global power tool companies, have added some Bluetooth functionality to a few tools, but nothing at the scale of the other three.

At launch, the DeWalt and Bosch systems copied features from One-Key, but they also each had their own twist on what connectivity was, and how it would be used. Five years later, there have been further advances in the development of all three systems, but they have, for the most part, stayed true to their original differences.

The reason why now is a good time to review what has happened in the market so far, is that in its most recent release of One-Key, Milwaukee has moved to include integration with Autodesk's Building Information Modelling (BIM) system. That's significant, because it points to the possible future of these systems.

What Bluetooth connectivity is

The Bluetooth connectivity provided in power tools really consists of two different types. The most basic connection makes use of "beacon" technology, which likely follows either Apple's iBeacon standard or Android's Eddystone standard (or both).

Beacons basically do just one thing: continuously broadcast a universally unique ID (UUID). Bluetooth receivers - such as smartphones - can pick up that signal and retrieve the UUID. They also can assess the signal strength. If the type of beacon is known (as it always will be with these power tool systems) the receiver can use the signal strength to estimate how far away the beacon is. (It's an estimate, because signal strength can be reduced by obstacles, such as people.) The end result is that a single receiver can know it is close to a beacon, but it cannot determine the direction to the beacon.

This kind of access is quite general. Any receiver can pick up this type of Bluetooth signal. There is no encryption, as all that would do is change the UUID.

Milwaukee and other companies with similar technologies have leveraged this capability. Anyone running the One-Key app will pick up every Milwaukee tool beacon running in their proximity, and that information will be transmitted back to the central network database. This means that tools that "wander off" will likely be detected eventually, and their location will be transmitted back to the owner.

The second kind of Bluetooth connectivity is more like the connection you might have to smarthome devices or even Bluetooth linked radios. In these cases, the power tool is also a receiver as well as a sender. A smartphone can send signals to the power tool over Bluetooth which cause it to change internal settings, such as the speed of a drill, or the kickback protection on an angle grinder.

This connection does need to be protected and encrypted. This is done during the initial linking process, when the smartphone app and the tool are "synched", usually by pressing a button on the tool. Typically, a random token is generated, and that token is used to certify future connections between tool and smartphone. Transmission of that token is itself likely protected through the use of private and public keys.

These two systems can be combined to provide a powerful disincentive to steal tools. For example, a tool can be "geo-fenced", so that when it moves outside the connection range of its controlling smartphone, it is automatically disabled. Tools can be loaned to others, with a time limit attached, so that they shut down at a particular date and time.

Design parameters

The main problem that all three companies initially faced in adding a form of Bluetooth connectivity was how to handle incorporating that connectivity into the tools themselves.

Milwaukee saw this, initially, as being all about the tool. One-Key connectivity was built into a limited range of its M18 FUEL line of tools. This has had the advantage of making these tools increasingly theft-proof, as the location technology associated with One-Key has developed, and the network of tool owners has grown. However, it has also created an element of range complexity, as Milwaukee offers these tools in two models, with and without One-Key. Additionally, in its original form, One-Key made little allowance for tools that did not have One-Key built in.

Bosch took a very different approach when it launched its version in 2016. From the beginning, it offered a "TrackTag" that could be added to any tool - either glued in place or secured by a clamp to the power cord (in the case of corded tools).

Behind this system was Bosch's own TrackMyTools app, which offered (obviously) tool tracking. The Bosch system did eliminate the need for separate connected and non-connected tools, as well as being as inclusive as possible. However, it did so at the loss of virtually all theft-prevention safeguards. You could track tools, but not when the person in possession of them didn't want to be tracked.

Bosch also offered in-tool integration, but this was done by purchasing an additional module, that could be plugged into the original (not-yet-connected) tool. That meant Bosch did not need to manufacture separate connected and non-connected tools. However, a little confusingly, while TrackMyTools looked after tool tracking, users had to download the Bosch Toolbox app to customise tools via the Bluetooth connection.

A further complexity was added in early 2018, when Bosch launched a service named BlueHound. BlueHound is an inventory management system that greatly expanded on what was offered by TrackMyTools, enabling just about any construction-related asset (such as vehicles) to be tracked. The system also provides documentation, service alerts and user manuals. Another addition was the ability to integrate with software such as Triax's Spot-r system, which includes personnel and safety management as well. That system works by more or less tagging people as well as tools, so that they get tracked on the jobsite as well.

DeWalt steered a path that took it somewhat between the Milwaukee and the Bosch approaches. Following on from the "smart" batteries it launched in 2015, in May 2017 DeWalt expanded Tool Connect. This expansion included DeWalt tools which fully integrated into connectivity, as well as the Tag, a simple Bluetooth beacon that provides location information and little else, like the Bosch TrackTag.

There is also a special "connector", which the company labelled as the "20V MAX Tool Connect Connector". This can be fitted to the battery shoe on an 18-volt DeWalt tool, and provides basic Tool Connect functionality. According to DeWalt, once attached the connector cannot be removed. The Connector also does have the capability to shut down the tool, adding to theft deterrence.

At the same time it launched Tool Connect, DeWalt also announced a fully-connected mesh network system which, it promised, would power next generation Internet of Things (IoT) products for construction sites. While DeWalt has introduced a rugged WiFi access point for construction sites, HNN has not been able to find any reference to the IoT project post 2018.

To circle back, after the release of the Bosch and DeWalt products, in February 2017, Milwaukee released its own version of the Bluetooth tag, which was named the Tick. This allows a wide range of assets to be tracked by One-Key

Ongoing development

In general, TTI while TTI has continued its commitment to One-Key and connectivity in general, both Bosch and DeWalt seemed to have reduced their engagement. One indication of this is that, for example, DeWalt has not integrated Bluetooth into its line of Flexvolt batteries (for its 54-volt range), while Milwaukee has integrated One-Key into its MX FUEL line of 72-volt batteries.

Beyond that, however, Milwaukee has a truly impressive range of One-Key tools, while both Bosch and DeWalt have significantly smaller ranges. The Milwaukee website, in fact, lists no fewer than 1214 SKUs associated with One-Key - though this includes, of course kits and other repeats of tools. Just to give a sense of the range, these are the first 30 SKUs listed:

One of the recent additions to the One-Key system has been its Asset ID Tags. These are not Bluetooth connected. Instead they are simple QR code stickers that come in two sizes, and two different types, one for sticking to plastic, and one for sticking to metal.

Milwaukee's thinking behind these tags is that they integrate more easily into the One-Key system than do the standard barcodes. Also, though, Milwaukee had found out in its field-based research that many standard barcodes would tend to peel off, or to become unreadable. The Asset ID Tags are designed to be durable, and extra-adhesive.

The disruption

As recent as these innovations seem, they are about to be overtaken by even newer technologies. Ultra Wide Band (UWB) devices offer a different approach to location tracking, one which is both far more accurate in terms of distance, and can also provide directionality as well.

Two events have sparked the development of UWB. In the US, the UWB spectrum was opened for commercial use in 2005 by the Federal Communications Commission for pulse-based transmission in the 3.1 to 10.6 GHz frequency range. Following on from that, around about 2015, a company named Decawave began selling inexpensive UWB chips that can be embedded into pretty much anything. The chip is able to schedule transmission of UWB packets and measure the time a signal is received in picoseconds.

The location data returned is very accurate, down to 200mm to 300mm in accuracy. It's the difference between knowing a tool is somewhere in a building, and having it pinpointed as being hidden behind one particular cupboard. The advantage when it comes to helping people located tools is evident.

Apple began including its U1 UWB chip in the iPhone 11, and it is, of course, continued in the iPhone 12 as well. This chip enables the hyper-accurate location tracking. Over the past year there has been speculation about the company launching its own version of the Bluetooth-based location tags that several other companies make. Rumours have included an Apple product named AirTag, as well as Apple simply making access to the UWB widely available to developers.

The difficulty Apple has is that it already faces concerns over activities which could activate federal anti-trust regulations in the US, where the company is headquartered (in particular some of its dealings with Alphabet, the parent company of Google and Android).

There is little doubt that an Apple location tag would severely damage the businesses of other location tags. These systems rely on there being a widespread network of people using their apps (to detect the tags when they are out of range of their owner's smartphone). Integrated into the iPhone, that detection could run constantly - something the apps cannot achieve - on every recent Apple smartphone.

While we can expect Alphabet to launch a similar service via Android, it's unlikely to work as well as Apple's version. That's because the UWB tags depend both on software and on the hardware in the smartphone itself - and Alphabet has next to no control over the latter, outside the smartphones it makes itself.

This places the connected tools of Bosch, Dewalt and Milwaukee in something of a corner. Do they simply persist with their existing Bluetooth systems, or do they integrate some form of UWB tags as well? Much of that will also depend on how Apple handles third-party software integrating with the UWB systems it has developed.

What HNN can fairly reliably predict, however, is that UWB may make tagging consumer grade tools a real possibility. That could include integrating a UWB chip directly into a tool, or just providing a place where such a tag can be glued of clipped. We would reliably expect to see this appear on Bosch Green, Black & Decker and Ryobi tools by 2023.

The UWB tags might also offer both Hikoki and Bosch the chance to get involved in asset tracking, if they can directly integrate the tags into their tools. This might depend on how well the Apple system is duplicated in Android.

In the market

While there has been some adoption of connected tools by major construction and infrastructure maintenance companies worldwide, the take up by contractors and trades would seem to be less enthusiastic. As an indicator of that, searches for the word "Bluetooth" on the websites of Total Tools, Sydney Tools and Bunnings show few, if any, connected tools. The results that come back include Bluetooth sound equipment, some measuring devices that use Bluetooth connectivity to communicate results, a few Li-ion batteries, notably DeWalt and FesTool - but no frontline powertools, such as drills, impact drivers and grinders. (Though, to be fair, searching for Milwaukee's proprietary connectivity brand, One-Key, does return a range of Milwaukee tools for the first two retailers. But then, One-Key is included in the name of the products featured.)

It would seem the tradies who buy from hardware retailers typically are not all that interested in Bluetooth connectivity as a main feature. The factors that do interest them are those that relate to durability, improvements in speed of task execution, and the range of tasks a tool can perform. Bluetooth connectivity, for the most part, does not seem to tick any of those boxes.

One response to this is to suggest we might see some more interesting advances in power tools over the next three to four years. For example, a cordless drill equipped with a LIDAR sensor (now available on iPhones and iPads, and a core technology behind near-autonomous vehicles such as the Tesla range) could provide information about drilling depth. The user would pre-set a depth in millimetres, click a button just before starting, and have the drill automatically turn off when the correct depth was reached.

There is also the possibility of using a wide range of augmented reality tools to help on construction sites. Imagine, for example, a carpenter putting up a house frame, and able see the entire structure from the plans projected onto her safety glasses. A plumber or electrician could have the ability to "see through" walls to the pipes and conduits beneath.

It's not technically difficult to provide that kind of functionality - the real problems come with both cost and durability. The cost relates not only to the LIDAR sensors (which will probably drop 30% in price over the next two years), but to the processing power required to make use of them in real time applications. It would not make sense to embed that power in every single tool. What could develop would be a kind of personal connective device housing the same kind of capabilities as a smartphone, but dedicated to providing the processing backend to a range of power tools.

What this comes down to is that the next wave of innovations in power tools is going to be about connected tools, and not just because of what can be achieved through IoT devices intercommunicating. What we are heading towards are truly intelligent tools. However, we can't afford (for the moment - we will be able to in the 2030s) to make each tool intelligent. So the most likely model is to develop central hubs that provide the necessary "smarts" to semi-intelligent tools through connectivity. It's really a form of distributive computing.

Connectivity, then, is likely to be a major path to innovation. That means today's tool system that enables inventory and some systems integration (both really good things) could in five years be the conduit used to make power tools smarter, safer, more capable and, as a result, far more productive.

The next step

It's true that those kinds of almost futuristic tools are probably five to ten years away being available. That's not because they are difficult to develop - there are probably a couple of dozen companies in the world that could code those up in less than a year. The barrier to their development is not about the technology, but about the systems with which they interact.

The construction industry has already made a considerable step towards developing systems for the future of the industry - it's just that the take-up of those systems has, until recently, been very slow. While it is not the only piece of this integration puzzle, perhaps the most evident piece is BIM. BIM is a good start at providing the kind of data/information "glue" that could make future developments such as augmented reality for construction possible.

In this area, closer to the cutting edge, while Bosch and DeWalt have made some notable contributions, it is really TTI through Milwaukee Tool that continues to make the truly outstanding advances - most recently through integration between AutoDesk BIM 360 and One-Key.

BIM 360 is a construction collaboration system, which enables project managers to consolidate most of the relevant design and build information. While it most closely integrates with other AutoDesk products, such as Revit, BIM 360 also provides for a wide range of additional integrations. Its modules include:

Users of One-Key can link their account into their BIM 360 account, and then import records such as Projects and Contacts, enabling synchronisation between the two systems. That can create considerable workflow efficiencies. Milwaukee quotes the head of integrations at Autodesk Construction Solutions, James Cook, as saying:

Integrating with One-Key enables us to provide customers access to their asset data in BIM 360 so they have the context they need for project management, simplifying decision making ultimately helping reduce project risks.

However, the really exciting news, from a power tools perspective, is that even more direct integration is being offered. Milwaukee also informs us:

Furthermore, users of Milwaukee's new M12 FUEL Digital Torque Wrenches will be able to upload torque reports directly from One-Key into BIM 360 Docs, digitally syncing torque quality data from the field to the back office. Milwaukee plans to roll out similar reporting functionalities with other tools over time.

That capability is really the end goal of connected tools: direct reporting of the technical details of tasks completed to a centralised project management hub.

Eventually, we could see this kind of reporting, as it grows more comprehensive, being tracked by blockchain processes, which would result in a building certification process which indicated not only what work has been done, but also who is directly responsible, right down to one tool, one operator, on one particular day.

Analysis

Why does this matter? What is the point behind connected tools, LIDAR, UWB, augmented reality?

The fact is that construction companies and individual trades remain some of the least technologically advanced areas of the Australian economy. While they've benefitted from being the endpoint users of some technological advances, such as those in adhesives, paints/coatings and the development of Lithium-ion (Li-ion) batteries for cordless power tools, their own practices have changed little over the past 15 years.

This is reflected in productivity as measured by the Australian Bureau of Statistics (ABS). ABS statistics show that construction industry multi-factor productivity (MFA - this includes both labour and capital productivity), in the ten years from FY2009/10 to FY2018/19, fell seven times. That includes every year for the most recent five years of that range.

The main reasons for that fall are twofold. In the first place, for the construction industry productivity is seen to have little effect on profitability outside of a certain basic range. Profitability in construction is instead largely driven by market forces. During periods of undersupply of construction services, the price for these climbs substantially, and over the past six years in particular, there have been frequent, lengthy periods of undersupply.

Secondly - and these two factors interact strongly - the construction/housing market is one of the most highly subsidised industries in Australia. Looking back over the histories of construction activity and dwelling prices, the pattern that emerges over the past ten years is that this industry has repeatedly fallen to lows and has been boosted back up again by cuts to interest rates.

That combination - an industry reliant on short supply to boost profits, tied to indirect government subsidies - is a known recipe to economists for failed productivity rates. If anything, as with the broad, general tariffs of the 1970s, productivity is disincentivized, as the government support has been largely based on employment provision, and better productivity would likely see a reduction in the construction workforce.

What has happened during the Sars-CoV-2 pandemic of 2020 is that the "buffer" of interest rates the construction industry had been counting on for the next two years or so has run out. The cash rate set by the Reserve Bank of Australia (RBA) is now just 25 basis points (0.25%). There is no room for further cuts - unless the economy re-enters recession.

Without this kind of monetary stimulus, the only other option is fiscal stimulus, which is what happened with the government's HomeBuilder $25,000 boost to renovations and new home builds, which cost around $680 million. That expires at the end of 2020. There might, possibly, be an equivalent package during 2021, but it is highly unlikely this kind of regressive (it favours better-off Australians) stimulus spending will exceed a total of $1.4 billion.

That means that by the start of 2022 the construction industry is going to have to seriously consider how it rebases itself as an industry like any other Australian industry, with its profit gains linked more closely to gains in productivity.

The good news is that Australian construction, especially in home building, is so inefficient that making those gains will not be difficult to manage. And you can be sure that the areas that will receive a lot of attention will be inventory management and BIM - an ideal use case for connected tools.

After completing a strategic review, Boral chief executive Zlatko Todorcevski announced the company will sell its 50% stake in the USG Boral plasterboard business for $1.43 billion to its joint venture partner, Germany-based Knauf.

Mr Todorcevski said limits on the joint venture arrangement with US Gypsum and the big offer price were the key reasons for the asset sale.

The deal gives Boral profit before tax of $540 million and was higher than the market expected. It would enable Boral to cut debt.

USG Boral is a strong performer and has solid growth prospects in emerging Asian markets but Mr Todorcevski said the sale would help simplify the Boral portfolio of businesses.

Boral experienced six profit downgrades over two years after former chief executive Mike Kane spent $3.5 billion buying the Headwaters business in the US in late 2016.

Mr Todorcevski has conceded previous management had paid too much for Headwaters, but no further write-downs of goodwill would be needed after it took a $1.22 billion impairment on the US business in August. He said:

We've failed to maximise the opportunities. Integration and execution have been found wanting.

He said fly ash volume for the September quarter was down 11%. Fly ash was a core part of the Headwaters acquisition.

In a recent trading update, Boral said that in the three months to the end of September, revenue from the Australian operations fell by 9%, and earnings before interest and tax dropped 5% on the same period a year earlier.

The first quarter of the 2021 financial year has seen fewer disruptions in most businesses relative to the previous six months, which is encouraging, but it is still not business as usual. We're not seeing consistency in activity levels from month to month, which reflects ongoing uncertainty and challenges.

US business

Mr Todorcevski said overall revenue at the North American operations fell in the first quarter in a patchy market, although new home construction was improving. He said:

In terms of North America we're not committed to selling. It's a really good business and we see a lot of upside and we've had inbound inquiries both directly and indirectly. But we have a value expectation there and if potential buyers don't meet that expectation, I think it's in the best interests of shareholders to hold those assets and deliver the opportunities we see.

The preference was for a sale of the entire building products portfolio rather than a piecemeal approach. Mr Todorcevski said:

What we don't want to do is have people pick the eyes out of that portfolio and we're left with some of the less attractive building product segments. That is something we're very conscious about.

Mr Todorcevski said Boral had fielded a number of approaches from potential buyers but wanted to see what impact an improving US housing market would have on the value of its US divisions, which are tied to the building and construction sectors. The US residential construction market has renewed momentum in the COVID-19 pandemic fallout, as people look to regional areas to live.

Kerry Stokes' Seven Group has been pushing for an exit of the US business. It holds 19.9% of Boral after a steady buy-up of the stock that began early in 2020 as it eyed the big infrastructure spend in the pipeline in Australia if an aggressive Boral turnaround was pursued.

Strategic review

The company has completed months of work on whether it should unwind the ambitious US growth plans championed under Mr Kane, and narrow its focus to the Australian construction materials market as part of a push to lift investment returns after a disappointing past two years. Property asset sell-offs are also under serious consideration.

Its review found that its Australian operations have a strong market position but need to be better managed, leaner and more customer-focused to lift returns. Mr Todorcevski said Boral in Australia was also eyeing a move into recycled concrete and asphalt. The focus will be on getting costs down and improving speed to market.

Boral, with its strong quarries and aggregates position, was in a strong position to do well out of big infrastructure spending by governments in Australia if the business was tightly managed.

Knauf

Merchant banker Goldman Sachs has noted that Knauf faces risk with the USG Boral deal. Goldman analyst David Schwartz told The Australian:

One key impediment to the transaction remains the possible divestment of Knauf's existing Australian assets, given competition concerns in the Australian plasterboard market - Knauf's call option on USG Boral Australia was previously rejected by the Australian Competition & Consumer Commission (ACCC), and the market remains largely concentrated between Knauf, CSR and USG Boral.

The Data Room column in The Australian also reports that Belgium-based building materials provider Etex could be looking to acquire Knauf's Australian assets.

Etex is a family-owned building materials company that operates in 42 countries but generates most of its revenue from the European market. It sells cement, fibres, gypsum, sand, clay and other materials such as vermiculite, paper, mica and coatings.

Boral's sale of its half share of its USG plasterboard venture to Knauf places pressure on the German building materials group to sell its other plasterboard plants in Australia to appease the ACCC.

Knauf was already planning sell the plasterboard factories it owned before it purchased the USG assets in Australia and Asia through the Boral partnership.

Before acquiring USG, Knauf's Australian operations consisted of plasterboard, metal framing systems and acoustic linings and ceiling tiles. It has four manufacturing plants in Victoria, NSW and Queensland. The plasterboard manufacturing sites that it owned before the USG deal are located at Altona in Melbourne, Matraville in Sydney and Bundaberg, Queensland. There is also a factory in Beenleigh (QLD) where it makes metal profile lines.

The plasterboard sites that were part of the USG joint venture and are not for sale are at Port Melbourne, Camellia in Sydney and Pinkenba in Brisbane.

Data Room has reported that European building materials company, Saint-Gobain could be looking at Knauf's portfolio for acquisition. The company has a presence in 67 countries including Australia. It has an annual revenue of about EUR10.9 billion.

China National Building Material (CNBM) is also understood to have shown interest. The publicly traded company is involved in cement, lightweight building materials, glass fibre, fibre-reinforced plastic products and engineering services

Related: Boral had a plasterboard joint venture across Asia, Australia and New Zealand with USG, but Knauf bought out USG in a deal last year worth USD7 billion.

This week's Tools of the Week looks at two innovative products. Ryobi's electrostatic sprayers could be a big help in coping with COVID-19, and Bosch's cordless sander could be aimed at the 3D maker market, as well as DIY woodworking.

Ryobi electrostatic sprayers

Industrial tools have made use of electrostatics for some time, most notably by applying a positive charge to paint and other coatings. That positive charge makes the fine droplets of the coating attractive to the negatively charged surfaces they interact with.

The result is a better coating that can, to some extent "wrap around" the edges of the target object, as well as providing more coverage on the sides of nooks and crannies. The coating gets applied more evenly, and in most cases, this means that less of the coating material is wasted so less of it is needed to treat surfaces.

The newest use for electrostatics is in applying cleaners and disinfectants to surfaces. With the Sars-CoV-2 pandemic, one approach to limiting contagion has been to disinfect public spaces such as trains and buses. This has increased attention regarding getting disinfectant to reach into holes and crevices - something that electrostatics are good at boosting.

Victory Innovations, based in Minnesota, USA, was one of the first companies to make electrostatic sprayers suitable for maintenance and facility use. Their units typically cost over USD850, and demand has been high enough for there to typically be a waiting list of a month or more.

The Hong Kong and US-based Techtronic Industries (TTI) has now entered the field, with its mid-range Ryobi brand. Ryobi has recently released a range of three electrostatic sprayers, with capacities of 1.0 litre, 1.9 litres and 3.8 litres. The smallest unit has a range of up to 1.5m, and features nozzles that can provide 50, 70 and 100 micron droplet sizes. It can spray 60 litres for one charge of a 2.0 amp-hour Ryobi ONE+ Lithium-ion battery.

The 1.9 litre and 3.8 litre models appear to use the same base unit, with the smaller one using an attached container, and the second a backpack container. These can spray at 65 microns to a distance of 0.6m, 85 microns at 1.5m, and 160 microns at up to 3.1m. They can spray over 100 litres from a single charge of the same 2.0 amp-hour battery used by the handheld units.

These sprayers are currently being sold through Home Depot Pro in the US. The 1.0 litre sprayer is priced at USD399 and the backpack spray is priced at USD429. The mid-range sprayer has yet to be fully released. Prices are for a full kit of battery and charger.

As these are very new products, and likely to find high market demand in the US, there are no details as to whether they will be distributed by Bunnings in Australia.

Bosch EasyCurvSander 12

At first glance, it might be just a little bit difficult to understand the EasyCurvSander (ECS). Looking somewhat like a Philips electric shaver, it features three rotating pads mounted on flexible joints which enables them to independently adjust to a wide range of angles. To use it, a mesh-type sanding material is attached to each of the pads, or, alternatively, a polishing pad can be fitted.

The end result is a sander that can easily cope with bowl-shaped surfaces and a wide range of variable curves. It's powered by Bosch's well-known 12-volt (really 10.8-volt) in-handle Lithium-ion battery. It retails for under EUR70, and is available in many countries of the EU, as well as the UK. At the moment it is not distributed in Australia.

For the average DIYer this might seem a handy gizmo for sanding the fiddly bits of, say, garden furniture, but its prospects of being a truly popular and profitable tool might seem a bit dim.

However, HNN would suggest that this tool is really not aimed only at the average DIYer. Its target market is likely to include the "Maker" area as well, as it is an ideal tool for finishing products produced through 3D printing. Objects made with 3D printers that have large curved surfaces typically have some degree of striations (or they do if you don't want to spend three days printing them in ultrafine mode).

Sanding these smooth is a fairly unpleasant task, especially if they've been printed in one of the harder filaments (in particular ABS).

One reason why this seems like a valid suggestion is that Bosch is already highly regarded in the Maker community through its Dremel brand of rotary tools. These are used for fine work on 3D printed pieces to remove the thin frameworks the printers add to keep the object stable, as well as to smooth out notches and holes.

Outdoor power equipment (OPE) supplier and small engine manufacturer, Briggs & Stratton will now operate as an independent company after it was sold to private equity firm, KPS Capital Partners. According to a company press release:

KPS Capital Partners, through a newly formed affiliate, has acquired all of the assets of Briggs & Stratton Corporation.

In July, Briggs & Stratton filed for protection from creditors in US Bankruptcy Court and a judge recently approved the sale. Under Chapter 11 bankruptcy protection, a company and its creditors work out a reorganisation plan that enables the business to continue operating.

As part of the bankruptcy, KPS Capital Partners agreed to purchase all of Briggs' assets for approximately USD550 million. Known as a stalking horse bid, the agreement set a minimum price for the sale. The offer was subject to court approval and also depended on whether any higher bids were received for the company. There were no other bids, according to court documents, so the court approval provided for a relatively quick closing of the sale.

Performance

Briggs & Stratton was losing money and burdened by large debts when the economic downturn caused by coronavirus hit. Its sales fell by USD107 million, or 18%, to USD474 million in its third quarter ended March 29, compared with the same period a year earlier.

The company lost USD54.1 million in its 2019 fiscal year and USD11.3 million in its 2018 fiscal year.

The company warned that its losses, the pandemic and pending debt payments raised substantial doubt about its ability to continue as a going concern. Yet in June, while it skipped a USD6.7 million interest payment, the company's board voted to give executives and other key employees more than USD5 million in cash retention awards.

The awards were in lieu of annual bonus and long-term incentive compensation for the 2020 fiscal year, the company said in a filing with the US Securities and Exchange Commission. Such awards are often given before a company files for bankruptcy.

In March, Briggs & Stratton announced plans to sell its commercial turf products business, sold under brand names such as Ferris, Billy Goat, Simplicity and Snapper, and its pressure washer and portable generator product lines.

The company has more than half of the engine market for residential outdoor power equipment and established brands. It has large distribution network and profitable business in selling parts.

But the company has faced a flat market for residential outdoor power equipment, excess manufacturing capacity, pressure from large retailers to limit price increases and a growing preference for battery-powered outdoor equipment.

New team

Briggs & Stratton also announced that Steve Andrews has been named president and chief executive officer of Briggs & Stratton. KPS and Mr. Andrews have a history of successfully working together and they partnered in 2011 to form International Equipment Solutions, LLC (IES). It became a leading independent manufacturer of attachment tools, operator cabs and other complex fabrications for off-highway applications.

Michael Psaros, co-founder and co-managing partner of KPS, said:

This is the beginning of a new era for Briggs & Stratton...The company has a new owner, a new CEO, a new Board of Directors and a renewed focus. Briggs & Stratton launches with a portfolio of industry-leading products sold under iconic brand names, a rock solid capital structure and access to KPS' financial resources and expertise.

We look forward to accelerating the company's growth by increasing its already substantial investment in R &D, technology and new product development. KPS will also provide the capital for Briggs & Stratton to pursue strategic acquisitions.

Manufacturer

Briggs & Stratton products are sold in more than 100 countries under such brands as Briggs & Stratton, Victa, Simplicity, Vanguard, Branco and Allmand. It also sells engines to other manufacturers, including John Deere, Toro and Viking.

Briggs has plants in Wisconsin, Alabama, Georgia, Missouri and New York as well as Australia and China.

The company was founded in 1908 by Stephen Briggs, an inventor, and Harold Stratton, an investor, and incorporated in 1910. It initially grew by making parts for the booming automobile industry - starter switches were an early core product - small engines for washing machines as well as garden tractors, cultivators and generators.

In 1953, it introduced the first lightweight aluminium engine that found a ready market in lawn mowers just as Americans were flocking to the suburbs. The company produced more than 2 million engines a year on average throughout the 1950s.

Web-based tradie platform, hipages plans to raise about $100 million for its Initial Public Offering (IPO) scheduled for November, according to the Data Room column in The Australian. Expectations are that hipages will have a market value of about $400 million.

Co-founder and chief executive Roby Sharon-Zipser has said hipages is "all about home improvements and home services". He created hipages with David Vitek in a garage in 2004 after the former and his wife bought an apartment, which needed renovating, and they struggled with the enormous job.

Today, the business has 36,000 paying trade services around the country on its platform. More than 100,000 jobs are posted by customers each month, with over 1.5 million monthly visitors to the website. It will focus on gaining additional scale in the domestic market for about two years before expanding offshore. In an exclusive interview, Mr Sharon-Zipser told The Australian:

The domestic market in Australia is really significant, it's about 6 to 8% of the GDP in Australia. About $83 billion a year is spent on trade services and that includes anything from home renovations, home improvements to getting your garden done.

The opportunity in Australia is still so large. There's still an enormous way to go in terms of bringing on more tradies onto the platform and increasing the number of customers using hipages to post jobs.

Mr Sharon-Zipser said business is booming after "some initial wobbles and shocks" at the start of the coronavirus crisis.

Within three or four weeks we actually saw it turnaround and recover. What we're seeing now is an acceleration to above the already high growth that we were enjoying this time last year.

Mr Sharon-Zipser attributed a few factors behind the growth including brand investment on Channel Nine's renovation competition reality television show "The Block" as well as improving its digital traffic and marketing.

With people spending more time at home during the coronavirus crisis, they are investing more into their home whether it's an extension or painting and decorating, he said.

Hipages helps tradespeople generate business leads through an online marketplace but wants to expand into tradie invoicing and payments solutions next year. Management are looking to supercharge the platform with more technology that will help tradies better run their businesses. Mr Sharon-Zipser said:

We're looking at giving them more technology to help manage and run their business, not just leads from consumers but tools to help them quote, schedule and invoice to improve their overall professionalism and highlight and amplify their reputations as craftsmen.

Mr Sharon-Zipser said it had been a "milestone year" for the company. It is understood hipages booked revenue of about $50 million and underlying earnings of close to $4 million in the 2020 financial year.

He likens hipages to digital platforms such as Carsales, REA Group and Seek. He explains:

If you think about the traditional advertising products that were available to the classifieds and things like that, the trades were a major category. That product is now transitioning and at the tipping point where trades are now ready to adopt the technology.

Following a successful IPO, investors are likely to compare hipages to US-based and Nasdaq-listed ANGI Homeservices, regarded as the world's largest digital marketplace for home services, connecting millions of homeowners with home service professionals.

Hipages recently signed a deal with the NSW Department of Education to allow tradies to bid for maintenance jobs at the more than 2200 public schools around the state. It secured a three-year contract with an option to extend a further two years. He said:

If that is successful, there are opportunities to work with other government departments, which is being monitored.

International expansion is something the group would "explore" further down the track, he said.

Valuation

Institutional fund managers are said to be showing a keen interest to invest in hipages mainly because 90% of its revenue is recurring.

Hipages bases its revenue on ongoing subscriptions from its tradie customers rather than lead-generation charges. Tradies now mostly pay a subscription fee to get leads via the site rather than paying per lead, after a change of strategy overseen by Mr Sharon-Zipser in the past two years.

The company said its hipages app has now become the largest source of incoming jobs, followed by search engine optimisation. Search engine marketing is a distant third.

Analysts from investment bank Goldman Sachs believe key growth drivers for hipages include $83 billion of annual spending on home improvements forecast for this year, as indicated by Mr Sharon-Zipser.

Goldman Sachs' investor education report to fund managers said there are 1.1 million individual tradies and 257,000 trade businesses in Australia, while household formation is expected to grow at an annual average rate of 1.5%. Of the $976 million tradies are expected to spend on advertising this year, 12% goes to lead sourcing.

Online trade advertising growth is forecast to be 11.2% per annum to 2024, which implies the lead sourcing market will grow to $179 million over the period. Other growth factors include the general shift to online commerce by consumers, brand investment through strategic advertising and a deepening and broadening addressable market.

Goldman Sachs has valued hipages between $280 million to $370 million.

Funds raised would help Hipages pay off $12 million in venture debt and help the company invest in its brand and products, based on a report in The Australian Financial Review. The IPO funds will be used for expansion amid rising demand for home improvements and related services.

Investors

Hipages is 30% owned by News Corp, publisher of The Australian. It bought a 25% stake at the end of 2015, and less than two years later bought an additional 5%.

Mr Sharon-Zipser and Mr Vitek, who was co-CEO until last year, each hold a more than 10% in the business. Other backers include Ellerston Capital and Cadence Capital. Another major investor is venture capital firm Right Click Capital, which is expected to sell down its interest.

News Corp holds a majority stake in Australia's largest digital property classifieds business, REA Group, and is expected to retain its stake in hipages following the mooted listing.

The West Australian-based Buckeridge Group of Companies (BGC) has purchased Midland Brick, around 13 months after it was sold by Boral to a property consortium. The deal includes the 75-year-old Midland Brick brand and its manufacturing operations, putting it together with BGC's Brikmakers brand. The company will trade under the existing name.

The group is betting on a recovery in the local home construction market through its acquisition of Midland Brick. BGC is also buying the business at a time when COVID-19 stimulus is driving demand in WA.

BGC chief executive Danny Cooper said the group believes the combination of Midland Brick and Brikmakers would generate operational savings as they rode an expected recovery in demand, helped by state and federal government incentives for homebuyers. He told The West Australian:

There's a lot of synergies for us, and we see the continuation of the two brands as being incredibly important. With the stimulus lift in housing starts over the next 6-12 months, we are certainly very confident that there's a very good pipeline of work, at least in the short term, for both businesses.

Midland Brick, along with its rivals, has suffered from a protracted downturn in WA's home construction market since the last mining boom. It was founded by Ric New shortly after World War II, and sold to Boral after his death in 1989 for $200 million. Ironically, Brikmakers was set up only 15 years ago to meet a shortfall in local supply.

BGC is considered among Australia's top 10 largest privately-owned companies, with 3500 employees, an annual turnover of up to $3 billion and is one of WA's largest home builders.

It was put on the market more than two years ago by the heirs of founder Len Buckeridge, who died in 2014. Since the sell-off decision, BGC has offloaded more than $400m of property, including the Westin Perth and Aloft hotels.

However, the sale of its building products and home and commercial construction businesses was deferred last year to await better market conditions.

Background

BGC purchased Midland Brick from WA property consortium that includes Hesperia - which was formed when Linc Property and Fini Group merged - and CFC group. Midland's manufacturing operations that were sold off include the northern section of the 800ha site at the Perth suburb of Middle Swan where the business has been located for many years.

However, the southern part of the landholding will be retained by the property consortium and redeveloped into a residential subdivision.

The consortium paid Boral $86 million for Midland Brick in August last year, saying at the time that while it was focused on a redevelopment of the Middle Swan site, it was interested in running the brick business for the long term. However it said "substantial changes in future economic conditions" had made it "too commercially difficult to operate a brick and masonry business over the longer term".

It hopes to gain Australian Competition & Consumer Commission approval to sell the operating business to BGC by the end of the year.

The Hesperia-CFC subdivision proposal area of the site was recently approved by the WA Planning Commission.

Related:

In a recent sales update, Reliance Worldwide Corporation (RWC), said it had an average 22% increase in US sales over the three months to September due to more repairs and renovations as North Americans stay home during the pandemic.

Plumbers headed to hardware stores to stock up on items they were having trouble sourcing from wholesalers, while DIY enthusiasts spent up as they had a go at plumbing jobs themselves.

RWC is a manufacturer of plumbing and water control systems marketed and sold under the SharkBite Plumbing Solutions, JG Speedfit, HoldRite and Reliance Valve brands. It started out as a small Brisbane tool shop in 1949, and now has regional headquarters in Europe, North America as well as Australia.

The US makes up about 50% of the plumbing supplier's overall business. In the 2020 financial year, sales in North America were worth $1.16 billion. Reliance said the growth was driven by a strong increase in retail and hardware sales. It is aware that the professional user has relied on retail more often during the lockdowns, where its products are more highly represented. CEO Heath Sharp said:

The first quarter of the 2021 financial year has been particularly strong from a sales perspective. Looking ahead, we remain cautious. The US has been boosted by the surge in DIY activity and the return of construction activity to pre-COVID levels, but without further government stimulus measures this growth is likely to slow...

Given the continuing uncertainties in all our markets as a result of COVID-19, we would caution against extrapolating the first quarter's sales performance for the full year.

The company recently announced it would expand its North American operations and build a 300,000-square-foot distribution hub in Cullman, Alabama.

As sales were being driven by DIY in the US, RWC said there has also been a recovering demand in the UK and Europe despite slower dwelling approvals in Australia.

Australian sales

Sales in the Asia-Pacific region were comparatively flat, growing by only 2.3% over the three months to September.

Mr Sharp said he expected further softening in the Australian market because of a drop in new housing construction approvals, with half of all business in Australia related to new builds.

We expect some softening in the Australian market as the reduction in new housing construction approvals leads to lower building activity.

It has forecast a 10% sales drop in 2021 for the Asia-Pacific division depending on the extent of the COVID-19 bounce back.

In the long term, RWC said the fundamentals of the Australian market are strong and believes there could be rebound in Asian manufacturing in fiscal 2021.

Europe

Sales in Europe saw a complete reversal of fortunes, growing by 5% in August and 24% in September after contracting 4% in July. Europe comprises about 35% of the company's revenues.

Mr Sharp said the jump in sales over September was attributable to "pent-up" demand and channel partners being able to restock inventory that was depleted earlier in the pandemic. However, he said it would remain to be seen how long the sales growth lasted given the possibility of a second wave of coronavirus in Britain.

In the UK we are uncertain as to where underlying demand levels will settle once the pent-up demand for products and plumbing services has been satisfied. We are also watchful as to the impact the recent rise in COVID-19 case numbers may have on demand and plumbing activities there.

RWC made a big bet on the UK market in May 2018 when it paid $1.2 billion to buy the John Guest business. It makes plastic push-to-connect plumbing fittings, similar to the Sharkbite brass fittings range as a younger generation of plumbers emphasise time savings and steer away from welding and soldering of traditional fittings.

The sales update from RWC comes just over a month after it reported full-year profit of $89.4 million, down 32.7% on the prior year.

Related:

Ireland's biggest company, building materials giant CRH has reportedly been examining opportunities in the local building materials industry, according to the Street Talk column in The Australian Financial Review (AFR). It is understood CRH staff have spent the past 12 months or more making sense of Australia's building materials sector, at a time when companies such as Boral, Fletcher Building, ADBRI and BGC Group are potentially being considered for sale.

CRH already has a presence in the market with Ancon Building Products, Cubis Systems Australia and CR Laurence.

Ancon designs and manufactures a wide range of high integrity steel fixings for masonry and concrete construction, for large residential developments and infrastructure projects including major bridges, tunnels and highways. Cubis Systems is a manufacturer and supplier of a range of precast concrete and modular cable pits, manholes, plinths and access covers. CR Laurence is a supplier to the glass and glazing industry.

The report in Street Talk speculates that CRH could be targeting Boral's Australian assets. CRH has been linked to a buyout of the building products company after it was reported in the Data Room column in The Australian earlier this year. David O'Brien, analyst at Goodbody, told the Irish Independent:

Management indicated that a move into Australia would make strategic sense given it's a developed market and it would not provide any competition issues.

Analysis by investment bank and financial services company Morgan Stanley in June found that Boral is an industry leader or top three player in Australia's construction materials, roofing, timber and plasterboard markets.

It is likely Boral would be at the centre of any action, particularly if the government pushes ahead with infrastructure spending packages later this year as tipped by some analysts and investors. If CRH did make a move in the local market, it could create a bidding war and/or round of industry consolidation, according to the AFR report.

CRH became the third-largest building materials supplier by market value internationally when it acquired the USD6.5 billion of assets from Lafarge in 2015 following the merger between Lafarge and Holcim.

In August, CRH said it would be more cautious with mergers and acquisitions going forward, as it suspended its share buyback program. Albert Manifold, chief executive of CRH, said while the company is always looking at mergers and acquisitions (M&A), the issue at the moment is the lack of visibility about the future. He told the Irish Independent:

In times like [these] you tend to be more cautious. A lack of certainty about the future performance of a business makes you want to pause your actual process. We have not hit the pause button yet, but we will be cautious.

The company spent EUR727 million last year, on just over 60 acquisitions and investments.

While CRH is focused on building capacity to go and do future M&A, it "feels like 2011-2013", Mr Manifold said.

We could see there would be growth again, and when that happens we would like to be able to go out and execute deals with more certainty than we would have at this moment in time.

New brand, DeWalt(r) Engineered by Powers[tm] is prepared to meet the growing demands of the estimated $240 billion construction of work in 2021, based on data from the Australian Bureau of Statistics, Australian Construction Industry Forum and Construction Forecasting Council. It said it will offer complete solutions that improve efficiencies, are code compliant and provide safer practice solutions with a focus on performance.

Both DeWalt and Powers products have been used in the design and construction of many iconic structures around the world. DeWalt said it now brings anchors, power tools and accessories to the forefront of structural engineers, specifiers, builders, contractors and on-site trades, with an understanding of tools and fastening systems that can deliver cost effective and exceptional results for construction projects. Adrian Davis, managing director, Stanley Black&Decker, said:

DeWalt is the trusted brand of choice for professional tradespeople, and Powers is a leader in the concrete and masonry fastening industry, so it makes a lot of sense to combine the expertise of these organisations to drive future innovation.

The merger of the two brands positions us at the forefront of the construction and engineering industries in Australia and New Zealand. It also means that we can continue to support our products with expert solution and technical advice for all anchoring requirements, through our dedicated Enterprise Solutions Team. The team has been selected for their proven ability to respond to the demands of ever-changing industry requirements. The team is committed to adding value to our customers and projects, throughout the construction process.

Professor Emad Gad, chairman of AEFAC (Australian Engineered Fasteners and Anchor Council) said:

From an industry body perspective, AEFAC is pleased that DeWalt Engineered by Powers, which is one of the founding members of AEFAC, will continue to enhance safety and efficiency associated with the use of structural anchors and fasteners through its products, and further elevate the technical knowledge and data for design engineers and specifiers. Implementing international best practice and offering products and systems with ETAs [European Technical Assessment] provide confidence to all stakeholders by meeting deemed to satisfy provisions of the National Construction Code.

The first product to be launched by DeWalt Engineered by Powers is the Blue-Tip 2 Screw-Bolt[tm].

The mechanical anchoring range has state-of-the-art, one-piece design, heavy-duty screw bolt anchors. These anchors hold a number of technical approvals which allows it to comply with various building codes and regulations. It can be used in numerous applications across a number of trades including mechanical, electrical, HVAC, scaffolding, plumbing, interior finishing, civil construction and formwork. Mr Davis said:

As part of our ongoing research and development, we continue to design products that meet today's requirements. The Blue-Tip 2 anchor is currently being used in a variety of applications by end users where a seismic rated anchor is required from a compliance stand point. Some of these projects include multi-residential units such as Quay Towers at Darling Harbour and St Lucia's Student Accommodation in Queensland, government projects including the Gold Coast Airport, Star Casino, Logan Motorway M1 Upgrade as well as tunnelling projects, M5 Tunnels and Metro Tunnel in Sydney.

Along with compliance and ETA approved products, DeWalt Engineered by Powers said it will always push the boundaries to create innovative tools for the construction professional with an emphasis on cordless tools for installation of anchoring systems. The one-piece design of Blue-Tip 2 makes it is easy to install with a powered impact wrench and is the preferred choice for fast but reliable anchoring which is also fully removable. The Blue-Tip 2 anchors are also designed with a tough cutting thread that allows for low installation torque, ease of installation and increased productivity.

Power tools and gardening equipment supplier Ozito is the first tenant in the 41.3-hectare Rubix Connect estate in Dandenong South (VIC). It will lease an 18,000sqm warehouse and 1815sqm two-level office at the site developed by Frasers Property Industrial (FPI).

Situated at 875 Taylors Road, it is one of the last undeveloped tracts in the suburb, considered Melbourne's most valuable for industrial property outside of the inner city.

FPI general manager - southern region, Anthony Maugeri, said the company is witnessing a strong flow of enquiry from e-commerce related businesses requiring more warehouse space. He told Real Estate Source:

The DIY home market is also very active which is reflected in Ozito expanding and consolidating its warehouse footprint in Melbourne to meet customer demand. The south east region is Melbourne's most established core industrial market.

It is close to a very large population base and has a limited supply of prime rezoned industrial land. This diminished land supply combined with strong tenant demand is leading to increasing land values and rents and decreasing vacancy rates.

The Ozito factory will be developed at Rubix Connect's entrance, specifically a site at the north west corner of Taylors Road and Fox Drive. It will have two crossovers from each street.

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Taubmans paint brand - owned by PPG Industries - worked with national online charity GIVIT to help raise $150,000 from DIYers in isolation and professional painters to support regional communities in need after recent bushfires, prolonged drought, floods and now COVID-19.

GIVIT CEO, Sarah Tennant, said the funds will allow GIVIT to purchase many more essential items to best support people in need, from parched outback farms to bushfire-affected East Gippsland. She told The Tenterfield Star:

Whether it's hardware items and water tanks for a drought-stricken farming community, or supermarket and clothing vouchers for rural families in need, we will put the donated funds to work to make an immediate and positive difference.

We also buy locally, wherever possible, to help stimulate the recovery of regional economies, ensuring the impact from every single generous donor is widespread.

Anne Neeson, Taubmans general manager, PPG architectural coatings - AUS and NZ, thanked all the DIYers and professional painters who supported the donation by choosing to paint with Taubmans.

And thank you to Bunnings, Bristol and our independent retail partners who came on board, despite the challenging economic climate. Your support for the program will make a difference to the lives of many in our regional and rural communities.

GIVIT works with more than 3400 charity partners on the ground throughout Australia to match the donation of goods with the individual and specific needs of recipients.

The "In It Together" campaign follows PPG's $98,437 donation in February to the Australian Red Cross Disaster Relief and Recovery fund, which included employee donations matched dollar for dollar by the company.

Related: The campaign ended on 20 June.

Paint charity benefits regions - HNN

Sourced from The Tenterfield Star

The next spoga+gafa (garden) trade fair in Cologne, Germany will be held from 30 May to 1 June 2021. Organiser, Koelnmesse responded to requests from the industry, and moved the event to next year.

Registrations for the September 2020 event increasingly came to reflect the ongoing concerns regarding COVID-19 especially the uncertainty of international travel. Despite the precautions being implemented, a majority of exhibitors and visitors decided not to attend spoga+gafa.

For these main reasons, Koelnmesse rescheduled the 2020 spoga+gafa. Chief operating officer, Oliver Frese said:

The aim of our conversations with the industry is to work together to give a strong trade fair a chance to gain even more strength and market relevance. The focus here is on the ordering [purchasing] behaviour seen in many parts of the industry, which has evolved over the years.

NHS moves to 2021

Over the last few months, the US-based National Hardware Show (NHS) has been closely monitoring the COVID-19 pandemic and its impact on members of the hardware and home improvement community. Originally slated to open its doors in May, the event was postponed to September. However, as it continues to make the safety of people its top concern, it has made the difficult decision to cancel the 2020 event.

Instead of an in-person experience, NHS plans to host a virtual trade show dedicated to providing education and support that recognises and addresses the needs of the hardware industry. Randy Field, group vice president, Reed Exhibitions, said:

The hardware industry has been greatly impacted by the global pandemic and hundreds of our international exhibitors have been forced to cancel their plans to participate in NHS due to market conditions and continued travel restrictions.

At the NHS we pride ourselves on being the leading industry gathering place and while we recognise and appreciate how important the show is to the community, we believe it is the right decision to transition it to a virtual experience for 2020.

Following the May postponement, we prioritised making NHS Connects the place for the hardware and home improvement community to come together to source information. It will soon be where connections, direct appointment setting, and virtual product showcases will debut.

We will also be adding a virtual tradeshow component to this digital platform that enables networking and we look forward to utilising that platform to allow business to continue. We seek to encourage attendees, exhibitors and all of the NHS community to explore the platform and utilise it until we meet again in person in 2021.

Rich Russo, industry vice president, NHS said:

We are re-imagining the entire physical trade show, so look forward to new initiatives, new pavilions ... and a complete transformation of NHS for 2021.

Parkland Nursery, based in Tinonee, near Taree on the mid-north coast of New South Wales, is a state-wide supplier for Bunnings.

Owners Leah and Bernard Hunt have experienced firsthand the brutal impacts of Mother Nature in the past year through drought and a devastating bushfire in November 2019 that destroyed infrastructure and some plants.

Now more than six months later, the business is well on the road to recovery. To get them back on their feet, the Hunts purchased a new potting machine with a $75,000 state government grant.

Bernard Hunt told The Manning River Times the installation of the machine "was the turning point". He said:

We still have a lot to outlay but that gives you the starting block to go. It's amazing having the backing of the state and federal representatives.

They've been ringing up and backing us right through saying, 'You've got to keep going'. It was a springboard to go 'Okay they're backing us so we're going'.

Leah Hunt said the grant ensured they could stay in business. She adds:

When we were looking at it, we thought do we take out loans to replace the machinery? At our age we thought we wouldn't do it. With that grant, it was enough to say, yes we can still do this.

Member for Myall Lakes Stephen Bromhead said he was happy to help arrange the grant despite some initial issues.

Parkland Nursery wasn't entitled to it initially, some people said nurseries aren't primary producers but we were able to convince them they are. It means 10 full time jobs, they're able to stay open, compete with other nurseries and provide fantastic products.

I take my hat off to these guys, the nursery was devastated by bushfires, they lost their stock sheds and machinery, but through that grant they've been able to keep going.

About 20,000 pot plants are currently produced weekly through the machine. Mr Hunt said:

Production had been stopped for months because of the drought. We were limping along for a year before the fire. We were smashed, all our infrastructure was burnt out but we only lost about 30% of our plants.

We lost most of our machinery except for three machines and a sun sail. We just had to start again.

The business managed to stay afloat and keep the team together by selling the unaffected stock. Working their way through drought, the Hunts thought they were prepared for any fire threat. Leah Hunt said:

We were in the midst of one of the worst droughts we've ever had. There was no water in the dam and we had to close down some areas (of the nursery) because there was no water.

We knew it was going to be a really severe fire season, you could see there was so much fuel around and so dry with a lack of water. We did a lot of work to get the property up to what we thought was fire proof but no it wasn't."

With decent rainfall this year, the dam is back to capacity.

Leah and Bernard have grown the nursery for more than 25 years.

Sourced from The Manning River Times

Clipex founder Ashley Olsson started the company in 2007 after he came up with an idea for a steel fence post with clips to quickly attach wire and netting while managing the family farm at Goulburn on the NSW Southern Tablelands.

He has lived in China for over a decade where he owns a factory which produces the Clipex range. Its head office is based in Brisbane (QLD). A spokesperson recently told The Land newspaper:

We are employing our own staff and distributing on a global level to Clipex Australia, Clipex South America, Clipex Ireland and others. Some other companies may have a joint venture manufacturing facility overseas, which means they do not wholly own the manufacturing facility but essentially share it. Others simply source their product from a dedicated overseas supplier.

Clipex Australia is passionate about supporting Australians and Aussie jobs and is proud to be one of the few Australian owned family companies that is completely vertically integrated, employing over 65 staff across the country in more than eight store locations.

Clipex said it also sponsors more than 50 local initiatives throughout regional communities every year and bring work to transport, printing, communication, marketing, IT, development and engineering businesses in these areas. The company uses its own store network and in-house installation teams. The spokesperson said:

We believe there has been a serious lack of innovation in the fencing industry, in part because companies have been afraid to implement technology and therefore do not expand and grow in innovation.

We innovated, developed and grew with the technology, giving us products like the Clipex fence posts, what are now being copied with an inferior 'paperclip post' which have now plagued the Australian market. We believe businesses should remain in Australia and be Australian owned.

Sourced from The Land

Tint is an online-only paint retail business selling direct-to-consumers and offers contactless paint delivery to customers' doors. A Melbourne-based start-up, it has been experiencing a major boost in sales as a result of social distancing measures that have been implemented as a result of the coronavirus. Co-founder Djordje (DJ) Dikic told Internet Retailing:

We looked at how customers buy paint today...Somehow painting and decorating has become a chore for most people, and that's because so many aspects of buying paint today are not user-friendly. There are too many colours, too many products with confusing names, too many trips back and forth from the shop, largely without any guidance...

That's what Tint is - we're making painting fun by creating a seamless and super simple way to shop for premium paint and accessories online.

The main idea behind Tint is to take the "pain" out of paint selection. Mr Dikic explains:

Colour confusion is the number one reason people don't paint, so we've spent a lot of time developing solutions to make it easier for Tint customers to feel confident when shopping for paint.

Firstly, we've developed super-size colour stickers you can stick up and peel off all around your house (they're reusable and don't damage surfaces either). We offer sample stickers across our entire collection ... and they make it really easy to see how a colour will look in your space without any of the mess of sample pots.

It officially launched in December 2019 with a range of 70 colours including its first collaboration with Pantone, best known for its colour matching system used by many industries. Mr Dikic said Tint's paints are vegan and 99% VOC free.

Tint allows customers to capture any colour in any environment, view it live on their walls using AR (augmented reality) in the app, and then order online. They can also order Tint's colour capture tool, Pico, to customise paint to their desired shade.

Mr Dikic believes its supply chain is helping them to support its customers. He said:

It's a critical piece of the puzzle for online retailers. For now, we're able to dispatch our goods via courier and offer contactless delivery. For businesses looking to transition online, it's key to really think through the logistics of fulfilment, as they can actually be quite intricate, and distribution is often challenging.

The logistics of supply will also include packaging, order management, tracking parcels and how you share delivery communications with your customer. It can be hard to turn these aspects of a business on overnight, so it's worth making preparations in advance.

The business is also moving forward with plans to provide same-day paint delivery across Australia and expand on its product offering.

About Palette

The concept for Tint came about from a colour recognition business started by Mr Dikic and his co-founders back in 2013 called Palette that sells colour measurement devices to major paint brands. Mr Dikic explains:

We have approximately 100,000 colours scanned around the world each month by our users around the world. The data behind each colour scan gives us amazing insights into the colours people are actually interested in and what the trends are.

Looking at the data it was obvious that users wanted to scan a colour and then tap a 'shop' button to order paint for home delivery. No one was offering a compelling way to shop for paint online, and no one had made picking a colour easy, so we launched Tint to be the one-stop shop for paint and accessories.

It has sold more than 50,000 colour sampling devices in 66 countries. This allows the company to analyse over 1 million colours captured by Palette users and see colour trends in real time as they emerge, and to identify colour preferences based on locations as well as seasonal changes. Mr Dikic also told The Sydney Morning Herald (SMH):

Everything we develop with Palette leads straight into Tint and vice versa.

Palette's aim was to digitise colour and enable users to measure, match and visualise colour everywhere. Its hardware device, Cube was designed to scan and sample colours.

However the co-founders had been disappointed by the lack of uptake from paint companies in using Cube, and found their reluctance to use technology frustrating. So they took the idea for Tint to Palette's board and decided to start the business from there. Mr Dikic said:

After years of collecting colour data with Palette, we realised there was a huge opportunity to transform the paint industry, because only 1% of global paint sales are online.

After we released a world-first piece of tech that lets you walk up to a colour and record it instantly, we had made choosing colour a hell of a lot easier. But we noticed a big barrier in the way of what should be a smooth process. Customers still had to go to a store to buy their paint ... As a tech-first company, we wanted to make the process even simpler and move it all online.

We initially took our technology to incumbents in the paint industry, but were frustrated when they were reluctant to move their paint sales online for fear of disrupting their existing businesses.

So we took our idea to our board and decided to create our own direct to consumer paint brand - which became Tint.

We see a clear path forward to create a better experience for home renovations, professional painters, architects, interior designers and specifiers. By focusing on the customer, we've been able to redesign virtually every step in how people shop for paint.

Tint investment

Palette was born out of a university project and its co-founders came through the Melbourne Accelerator Program.

Mr Dikic said it has raised a total of $3 million to launch Tint from investors including Palette chairman Adam Lewis and Aconex co-founders Rob Phillpott and Leigh Jasper. The capital will primarily be used for expansion and marketing. Mr Lewis told the SMH:

What I have tried to do is back technology and people that try to disrupt existing industries...With Palette, all these industries that rely on colour could have their productivity fundamentally changed through this technology.

Mr Lewis believes the challenge is to get paint companies to adopt a new way of working, as there was a lot of money invested in colour cards and proprietary colour libraries. He said:

We look at Tint really as a proof of concept that people do want to buy paint online and they will find the interaction with digital colour fundamentally better. Tint is proving to every paint company around the world that customers want to interact with paint in this way."

Sourced from Internet Retailing, Dynamic Business and the Sydney Morning Herald

DuluxGroup (Dulux) managing director, Patrick Houlihan told a columnist from The Australian that COVID-19 has been a wake-up call about the benefits of local manufacturing, highlighting the advantages of reliable supply to customers.

Dulux is owned by Japanese giant Nippon Paints, which bought the Australian company for $3.8 billion in mid-2019 as part of a regional expansion. Nippon Paints alluded to the robust sales of the Dulux operations in a market update in mid-May, according to The Australian Financial Review (AFR): The company said:

In Australia, DIY paints demand increased due to outing restrictions.

It now earns 75% of its profits and 60% of sales from paint. The remainder comes from its other brands including Selleys, Yates and other products that are growing in Asia.

Around 35% of its goods (not including nursery) are made in Australia and the rest is imported, which has been maintained through the lockdown.

Mr Houlihan believes the value of local production was shown through the lockdown and he wants the government to ensure value-added production is boosted. This means proposed changes to the R&D rules should be scrapped because they are based on the percentage of operating costs, which favours companies with overseas production. Columnist John Durie writes:

If your costs are $100 and you compete with someone with just $50 in costs and you both spend $10 on R&D, then the competitor will be more R&D intensive and hence get better tax benefits.

The present system is more volume-based at 8.5 per cent of investment or a bit over half the 15 per cent on offer in New Zealand.

With 100 chemists and 140 scientists, Mr Houlihan believes he is doing his bit for the R&D effort and local manufacturers should be supported.

In-store sales

Bunnings accounts for around 25% of Dulux paint sales, according to The Australian, and is the largest brand stocked by big box retailer.

Bunnings managing director Mike Schneider said there had been robust demand among paint buyers as more people spent extended time at home in the coronavirus pandemic. He told the AFR:

During this period we've seen strong demand for DIY paints, especially transformation paints, for kitchen benchtops and cupboards.

There had also been a rush for "design and effect paints that can be used for upcycling furniture or on an interior feature like a concrete wall", he said.

Spray paints, for DIY touch up jobs and craft projects, plus interior and exterior paints have also been popular.

Strong sales for brands such as Porter's Paint, acquired by Dulux in 2015, has been noted at the more premium end of the market.

As people slowly move out of lockdown, they will find other things and experiences to spend their money on, so companies such as Dulux and Bunnings will face more competition. This will lead to a slowdown in sales unless consumers have fundamentally changed their shopping habits.

Sourced from The Australian and Australian Financial Review

Related: HNN has provided extensive coverage of Nippon Paint in Australia. To read more, please visit the following links.

ASX-listed agribusiness giant Elders said it has lured about 260 new farmer customers and 18 staff from competitor Nutrien Ag Solutions.

Managing director Mark Allison estimated at least another 200 customers had indicated they were likely to jump ship to Elders this year, while eight wholesale businesses have also broken away from the Nutrien-Combined Rural Traders (CRT) business model to join the Elders-Australian Independent Rural Retailers (AIRR) network.

Elders took official ownership of AIRR in November which it acquired for $187 million in July 2019.

Mr Allison was speaking after Elders released strong first-half results. Statutory net profit jumped 90% on the first half of last year to $52 million for the six months ended March 31, up from $27.4 million a year ago. The company's underlying profit after tax was $47.6 million.

Recent drought-breaking rains in eastern Australia have lifted farmer confidence, generating extra demand for fertilisers, chemicals and other Elders products and services.

The AIRR acquisition helped lift revenues to $925 million, from $733 million a year earlier, an increase of 26.2%. AIRR also contributed $8.6 million to EBIT.

AIRR is the wholesale supplier of about 6000 products to 240 independent rural merchandise retailers and about 100 Tuckers Pet and Produce stores. With eight warehouses and five of its own retail locations, AIRR should benefit from increased margins from consolidated buying across the Elders group.

Elders expects full-year net profit to be between the broad range of analysts' forecasts of $85.8 million to $102.9 million.

"Distressed assets"

Mr Allison has also flagged Elders' interest in potential acquisition opportunities of distressed businesses as the economic fallout from COVID-19 causes some industry players to stumble, especially after restrictions are lifted. He told the Australian Financial Review:

We're actively assessing distressed assets and we're actively assessing the economic fallout and the opportunities that will bring.

He said Elders was in a strong position even though there was uncertainty in some parts of the business, with rural property sales expected to be softer because of the impact of COVID-19, and wool prices weakening further as demand from fashion houses in Europe and North America drops.

The company would remain highly disciplined and only pursue acquisitions that added value and were earnings per share accretive, but there would be more to choose from as some industry players hit hard times because they had too much debt.

Acquisitions in the past few years have been strictly focused on the core agricultural sector including the TitanAg agricultural chemicals business, and Livestock in Transit insurance.

Elders recently announced the purchase of Dalby (QLD) independent stock and property agency, Eastern Rural. It is smaller, compatible business to the Elders group.

The acquisition will see the residential real estate side of the business integrate into Elders, retaining all staff and offering residential and commercial sales in addition to property management through the Elders Real Estate brand.

The livestock agency, rural real estate and clearing sales will continue to be operated through the Eastern Rural brand.

Sourced from the Sydney Morning Herald, The Australian Financial Review, Stock Journal, Beef Central and Queensland Country Life

Related: Taking on Australian Independent Rural Retailers allows Elders to have a presence in the wholesale market. Read HNN's previous article here.

The Queensland Supreme Court has ruled that building materials and services supplier, Wagners must meet lower prices offered by a competitor in the market when selling cement to Boral.

Justice John Bond found that a notice sent by Boral to Wagners in October 2019, showing that the company had been able to buy cement from a rival supplier, Cement Australia, at a lower price per tonne than what it was being charged by Wagners, was "a valid and effective notice".

While Justice Bond found that the prices quoted by Boral in October 2019 to buy cement were valid, he found the earlier March quote was not valid. The March quote was deemed not to be a "current" market price because it did not start until May when market conditions could be different.

Under the terms of its take or pay agreement, Boral was allowed to stop buying cement from Wagners for six months if it found cement at a cheaper "market price" elsewhere. It could also ask Wagners to match the lower price.

Boral resumed buying cement from Wagners on October 22, 2019, but at lower prices than previously, which will hurt Wagners' future earnings.

Wagners chairman Denis Wagner said the company would continue to hold Boral to the terms of its supply agreement until its end date in 2031, reflecting lower rates from competition in the market. He told The Australian Financial Review (AFR):

Whilst the outcome is not totally in our favour, there were a number of points determined that support our position and therefore provide clarity on the strength of the supply contract.

In a statement, Wagners also said:

The court's findings provide some certainty for the parties moving forward around Boral's ability to issue and rely on a pricing notice. This is important given the long-term nature of the cement supply agreement which remains binding on the parties until December 2031 and requires Boral to purchase a predetermined volume of cement from Wagners on an annual basis.

Boral referred to an earlier statement welcoming the judgment. Boral Australia chief executive Wayne Manners said:

Boral welcomes the judgment by the Queensland Supreme Court and we are pleased with the long-term impacts of this result under our cement supply agreement with Wagners.

The result fulfils our objective to exercise our contractual rights to ensure that we can source cement at competitive rates. Boral has pursued this objective in the best commercial interests of our business and our shareholders.

Boral extended a separate contract with Cement Australia in October 2019, reducing the amount of cement it needs to buy from its own cement joint venture with Adelaide Brighton, Sunstate Cement.

Before court action

Boral competes with Wagners in making cement. But after Boral bought the Queensland group's construction materials business in 2011, it signed a "take or pay" requiring it to keep buying minimum amounts of cement from Wagners' Pinkenba plant in Brisbane.

The prices paid by Boral for the cement (which were redacted from the court judgment) are adjusted in line with inflation, with a review by an independent expert every three years. In March 2019, Boral sent Wagners a quote showing it could buy cement at lower prices from Cement Australia.

After Boral issued a pricing notice, Wagners accused the company of trying to force down contract prices and disputed whether the lower price was "bona fide", arguing it was for a future period between May and December 2019 and not a current quote.

Wagners, which previously supplied 26 truckloads of cement daily to Boral, suspended its cement supplies to the company for six months at a cost of $20 million while the matter was before the courts.

Boral is Wagners' biggest cement customer and takes about 40% of its cement.

Sourced from The Australian Financial Review and The Australian

Related: In 2019, Wagners filed a statement of claim in the Supreme Court of Queensland against Boral after the two parties failed to settle their cement supply pricing dispute. HNN featured the story in a previous edition here:

The company founded by the late billionaire Len Buckeridge, BGC (Buckeridge Group of Companies) has appointed commercial real estate agent, CBRE to sell 47 industrial, office and residential property assets around the country, according to the Australian Financial Review.

The office and residential components of the portfolio are located around Perth (WA) including affordable housing apartment blocks that Mr Buckeridge built in the 1960s and 1970s. The portfolio also includes industrial properties in Brisbane, Adelaide and Altona in Melbourne, which service the construction side of the business. There are 18 industrial sites in total.

The industrial and office properties would likely be sold with leaseback arrangements in place. The sale of the property assets is expected to reap hundreds of millions of dollars for the company.

The intention to sell its assets was revealed by the AFR last year and coincided with the group's planned divestment of its large mining contracting and civil construction business, BGC Contracting.

Sell down?

Sources have told The Australian that BGC is now believed to be looking to sell down only part of the building materials group. However, this is likely to occur in the months ahead once COVID-19 restrictions are lifted.

The sources speculate that a private equity fund could initially own a stake in the business, then buy out the remainder once the performance of the operation improves.

Last year it was thought BGC had an annual turnover of at least $3 billion, but this included its contracting arm.

The business is now involved with producing construction and building materials and offering residential and commercial construction services, industrial maintenance and fabrication services, and property ownership and management.

It owns quarries and a cement grinding plant. Family members have been involved with running the business, but some believe they could be taking more of a backward step in future. It is thought that the group's divisions are all interrelated and are largely reliant on each other for profitability.

The opportunity for a buyer to acquire the numerous operations as one group would provide the new owner with an instant construction materials platform in Australia, according to The Australian.

Sourced from the Australian Financial Review and The Australian

Related: In previous editions, HNN reported that the building materials assets of BGC were expected to attract the buying interest of companies such as CSR and Wagners as well as private equity firms. To read more, visit the following links:

German, family-owned global manufacturer Knauf is understood to be making its Australian plasterboard assets available for sale, based on report in the Data Room column in The Australian.

On offer are believed to be the assets that Knauf owned before it gained an interest in plasterboard assets that Amercian group USG jointly owned with building materials supplier Boral.

Knauf is seen the No 3 player in the Australian plasterboard market, which is led by CSR. Its Australian operations includes four manufacturing plants in Victoria, NSW and Queensland. It also has plasterboard manufacturing sites at Altona (VIC), Matraville (NSW) and Bundaberg (QLD), and it makes metal profile lines in Beenleigh (QLD).

These assets are thought to be worth somewhere between $100 million and $200 million. Annual revenue generated from the assets for sale is understood to be about $200 million.

In 2019. Knauf closed a deal to buy Chicago-based USG for USD7 billion. This gave it ownership of USG's plasterboard joint venture with Boral across Asia and Australia and New Zealand. These assets are not offered for sale.

The Australian Financial Review (AFR) described the situation as Knauf considering options including a merger or sale. According to the AFR, it is understood that Knauf requested a number of Australian investment bankers to assess options for its assets which includes insulation, plasterboard and ceilings. It is understood Knauf is asking for ideas on where its own assets could fit into the wider industry and what they may be worth.

Sources have told the AFR they believe Knauf could be a seller at the right price or be involved in consolidation in another capacity, although the review of options is said to be at its early stages.

Knauf's review is expected to consider the company's relationship with Boral and whether it's time, effort and capital may be better spent in other parts of the world.

There are also some concerns about a decline in plasterboard sales in the months ahead with predictions that fewer apartments will be built. This is due to recession fears linked to the global COVID-19 pandemic.

Background

Knauf and USG-Boral were competitors in the local plasterboard and suspended ceilings markets, and Knauf's USG takeover paved the way for Boral to buy back the Australian joint venture.

After months of talks, Boral agreed a deal to take full ownership of USG Boral Australia and New Zealand, and tip some of its assets into an expanded 50/50 joint venture with Knauf in Asia.

However, Boral reneged recently after deciding the Australian Competition & Consumer Commission was unlikely to approve the Australia/New Zealand component. Boral and Knauf are back in talks, according to the AFR.

Competition concerns exist with Knauf jointly owning other plasterboard assets in Australia with Boral. While Knauf also owns the joint venture assets with Boral here, it has to have an arms-length involvement to appease the competition regulator.

By selling its existing assets, it can then have an operational involvement in the other assets it jointly owns with Boral.

Sourced from The Australian and The Australian Financial Review

Related: HNN included the story of Knauf's acquisition of USG in a previous edition. Click on the link here.

US paint giant, Sherwin-Williams is understood to be reviewing its wide-ranging portfolio which includes Wattyl through its ownership of paint and coatings manufacturer Valspar.

According to The Australian, Valspar is believed to have appointed accounting firm Deloitte to explore a sale of Wattyl. This report speculates the business could sell for about $100 million based on its understanding that Wattyl could be targeting annual earnings before interest, tax, depreciation and amortisation of about $10 million this year. It believes the most likely buyers to be private equity firms.

However, sources have speculated to the Australian Financial Review (AFR) that Metcash and New Zealand-headquartered Fletcher Building could be "logical" acquirers. (There is no suggestion either company has made an approach).

Wattyl is understood to be making about $35 million in earnings before tax, depreciation and amortisation, according to the AFR. Bankers have told the AFR that it could trade for as much as 15 times given its "established market share, trusted brand and defensive qualities".

It is considered a turnaround opportunity for a buyer as the third player in the local market after DuluxGroup (30.4%) and PPG Industries (17.4%) using data from IBISWorld, and reported by the AFR.

Wattyl was listed until 2010, when it was purchased by Valspar in a deal worth about $142 million. It became part of Sherwin-Williams when the US paint giant acquired Valspar Corporation for USD11 billion in 2017.

Sourced from The Australian and The Australian Financial Review

Australia's biggest cement group will now be called Adbri Limited after Adelaide Brighton gained shareholder approval for a new name at its online annual general meeting (AGM). Chairman Raymond Barro told shareholders the group has "evolved" into a national business. He said:

The change of name is appropriate at this point in our growth to recognise the expanded nature of the enterprise.

Chief executive Nick Miller believes getting more infrastructure projects off the ground as quickly as possible is the best hope for federal and state governments to get more people back to work. He told The Sydney Morning Herald:

The first thing we want is bipartisan support for the projects, so we get clarity of what the pipeline is looking like [and] a fast-tracking of those projects.

He added that projects of varying sizes, including social housing and defence works, were needed because the larger projects typically had longer gestation periods as funding and land acquisitions were arranged.

That's why the small and medium projects are very important in the mix, because they will get to market quicker, and get people on jobs, on shovels, out there working.

Mr Miller said that an increased investment in infrastructure projects could provide a much-needed buffer against the subdued activity on the housing front.

Trading in March and April had been in line with expectations despite the coronavirus lockdowns with strong demand from the mining sector for its cement and lime in Western Australia, South Australia and the Northern Territory. It has also seen strong demand for the masonry products it sells at Bunnings and smaller outlets, with sales up 40% in April.

The company is also targeting savings of $30 million against "cost headwinds" of $20 million this year.

About a third of its business has exposure to residential and multi-residential markets. The company has 44 quarries, 95 cement plants and 16 cement and lime depots across Australia.

Mr Miller is trying to re-position Adelaide Brighton so it can chase more work in infrastructure through an integrated offering of cement, concrete and aggregates, and be less reliant on the ups and downs of the construction cycle. Earlier this year, the company said it is aiming to be a supplier to infrastructure projects in western Sydney, regional Victoria and south-east Queensland.

Merger

The AGM also heard the company is open to a potential merger with its largest shareholder, Melbourne-based Barro family, but says navigating the housing downturn remains its immediate priority.

Barro Group holds a 43% stake in Adelaide Brighton and Raymond Barro assumed the chairman's role a year ago. His older sister Rhonda Barro also sits on the cement company's board, along with Geoff Tarrant, who also represents the Barro Group.

Adelaide Brighton said a deal still made sense. Adelaide Brighton deputy chairman Zlatko Todorcevski told shareholders at its online AGM:

We have been clear in the past we do believe there are likely synergies through a combination of Barro assets in concrete, cement and aggregates with the Adelaide Brighton assets. However, at this time there are no active conversations...

The Barro family has been steadily lifting its control over Adelaide Brighton with its stake raising talk the Barro Group could either launch a takeover of Adelaide Brighton or Barro itself could be swallowed.

ACCC decision

In January, the Australian Competition and Consumer Commission (ACCC) found no evidence the stake held by the Barro family in Adelaide Brighton had influenced competition between the companies in Melbourne, Brisbane and Townsville. However ACCC commissioner Stephen Ridgeway said the ACCC would continue to keep a close eye on the industry and might reopen the investigation if other information came to light.

The competition regulator completed a three-month investigation into whether the financial stake and the presence of Mr Barro as chairman of the Adelaide Brighton was influencing decisions made by the two groups in the cement industry.

The Barro Group's stake in Adelaide Brighton has been built up over two decades, and it has been a regular user of creep provisions, often referred to as slow ways of edging towards control; ways in which large shareholders can gradually increase - in small increments - their holdings.

The watchdog examined the issue closely because Barro and Adelaide Brighton have overlapping operations for the supply of cement, pre-mixed concrete and aggregates in Melbourne, Brisbane and Townsville.

The investigation found Barro and Adelaide Brighton would continue to face competition from Boral, Holcim and Hanson, three large vertically integrated competitors with national operations. Several smaller independent rivals were also operating.

Barro Group's main brand in pre-mixed concrete in Victoria is Pronto. The company also supplies quarry products, cement, concrete roof tiles and concrete precast panels.

Its pre-mixed concrete business in Queensland operates under a range of brands including Pronto Concrete, Gladstone Premix, Hervey Bay Ready Mix, Townsville Concrete and Mt Cotton Concrete.

In March last year, Adelaide Brighton increased protocols on corporate governance around the interactions between board members regarding areas with potential conflicts of interest.

Sources: Sydney Morning Herald, Australian Financial Review, Adelaide Advertiser and The Australian

PPG Industries through its Taubmans paint brand is working with GIVIT on a national initiative to help regional areas that have been devastated by the recent bushfires, floods, prolonged drought and are now facing the additional pressures from the coronavirus.

Until June 30, every four-litre tin of Taubmans Endure, All Weather, Easycoat and Sunproof paint bought from Bunnings, Bristol, Taubmans and participating independent hardware and paint specialist stores will support GIVIT's efforts to provide essential items to regional communities in need.

The campaign Is expected to deliver at least $120,000 for essential goods and rebuilding projects in impacted communities.

Anne Neeson, general manager, PPG architectural coatings, Australia and New Zealand, said:

There's been a huge outpouring of support for bushfire-affected communities in recent times, which has been absolutely incredible.

Sadly, many Australians are also experiencing hardship due to the relentless drought and previous damaging floods. During this extremely challenging time - with the coronavirus only making things harder - we want to ensure regional and rural communities continue to get the help they need to recover and rebuild. Our partnership with GIVIT will funnel support in the most effective, efficient and lasting way possible.

GIVIT works with more than 3000 charity partners nationwide to match the donation of goods with the individual and specific needs of recipients. The GIVIT website acts as a virtual warehouse by removing the need for charities to physically collect, sort. Sarah Tennant, GIVIT CEO, said:

Whether it's water tanks for a drought-stricken farming community or supermarket vouchers for families in need, we will put the donation to work to make an immediate and positive difference.

We also buy locally wherever possible to help stimulate the recovery of regional economies, ensuring the impact is widespread.

In addition to immediate assistance, the ongoing partnership between Taubmans and GIVIT aims to address the long-term needs of these communities by facilitating rebuilding projects that offer lasting and widespread benefits.

Sourced from The Advocate

The move from disrupted supply chains to the restrictions of movement and group gatherings as a result of the global pandemic has significant economic consequences for property development and construction, according to Property Council of Australia chief executive, Ken Morrison.

Mr Morrison said the opening of some factories in China - after they were closed to control the spread of the COVID-19 strain of coronavirus - had eased concerns about building materials shortages.

However, the industry is facing a greater test than the supply issue as the expected shortage in workers on site fall ill or need to self-isolate. Mr Morrison told The Australian Financial Review:

Empty workplaces will have a big impact on the economy. Some roles can be performed at home, but you can't construct a building from home.

Australian Construction Industry Forum chief executive James Cameron agrees the risks for Australia's construction workforce were broader ranging than just to supply chains. He said:

If the coronavirus takes hold in Australia, construction projects may be further affected with sick staff and others staying home due to fear of infection. The construction industry labour force is highly integrated, and one missing link can mean that projects cannot continue.

Brickworks

Businesses responding to COVID-19 are prioritising staff and customer safety. At Brickworks, Australia's largest brickmaker, all workers at its plants are having daily temperature checks and there are stringent hygiene and cleaning programs in place.

The company believes the federal government must do even more to keep people in jobs because a sharp climb in the unemployment rate will trigger much deeper housing market downturn.

Managing director Lindsay Partridge said preventing a big blowout in the jobless rate well beyond 10% was crucial to housing and construction for the later part of 2020 and beyond.

He said Brickworks, which operates 26 sites in Australia with a workforce of 1300 people is ready to curtail production if demand starts to fall as the economic damage from the coronavirus pandemic accelerates in the short term. He told The Australian Financial Review (AFR):

If there was going to be a downturn, then we would no doubt adjust production.

The company made three large acquisitions in the United States in a year from November 2018 across 13 sites with 890 staff, according to the AFR report. These include Redland Brick Inc based in Maryland and Sioux City Brick in Iowa. Its first acquisition, Glen-Gery has 10 plants and is the fourth-largest brick maker in the US.

But it was recently forced to shutdown of five manufacturing sites in Pennsylvania as local authorities tried to stem the spread of the coronavirus.

Since then, Mr Partridge said the Governor of Pennsylvania loosened the restrictions slightly to allow the five factories to keep selling bricks from their yards, even though production was still halted. In late March, he said:

We've probably got three or four months of stock on hand.

Local supplies

The coronavirus pandemic has led many companies in the construction and building sector to review their reliance on single-source country supply of materials in the face of project delays and resultant contractual disputes.

The ACIF lobby group has identified that Australia's building industry imports more than 60% of its annual $6 billion of materials from China.

Until now, construction companies have opted for mostly cheaper Chinese suppliers without a back-up plan, creating the problems on both residential and commercial sites, according to Dean Haritos, managing director of SOLOS Glass.

He writes in The Sydney Morning Herald they also face a longer-term problem when the quality of imported materials fail the test of time or compliance with Australian Standards, not to mention the sometimes dubious compliance certificates provided by overseas suppliers.

Mr Haritos said the supply-chain problems were prompting a rethink by builders of how they sourced materials. He said:

People are now starting to ask, 'What's the real cost? When you look at [the per-square-metre-cost] in isolation China can be more competitive, but when you add up the cost of delays, quality issues, of not being able to talk to someone locally and not necessarily having technical expertise to support you, it starts to change. The local supply chain comes into its own.

Non-conforming building products has been a hot-button issue across Australia over the last 18 months, with quality and efficacy being the key issues, while the virus crisis has brought supply certainty also into play. These issues represent a stark reminder to the construction sector that there are key advantages in supporting the local supply chain.

Many local building materials producers and processors have some the most technologically-advanced plant in the world, while also being reliable, accessible and accountable in supply, Mr Haritos adds.

Ian Lomas, principal at global architectural and consulting practice Woods Bagot, said that while there was no panic in the construction industry yet, there was also a growing awareness that the just-in-time inventory system, where supply is readily available to meet demand aimed at increasing efficiency and reducing costs, may have failed. He said:

So much of building today is done on that just-in-time system because nobody wants to store anything and nobody will pay before they receive the goods. Now that's being exposed because building sites and projects are running out of materials very quickly because they have no buffers.

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