It has been reported by the Australian Financial Review (AFR) that weatherboard manufacturer Weathertex is looking at a potential sale.

The company is expected to appoint Miles Advisory to run a strategic review of the business, according to the Street Talk column in the AFR. The review is set to consider sale options, including talks with private equity (PE) and potential buyers from the industry.

Weathertex is understood to make about $50 million a year in revenue and about $10 million in earnings, which is consistent with accounts filed for its holding company CABP Group.

Weathertex was established in Raymond Terrace, in the NSW Hunter region, in 1939 and has employed more than 100 people for the past 50 years. Its products include cladding weatherboards and architectural panels, sold in Bunnings and other hardware stores. They are marketed as eco-friendly and made of real wood.

The business is expected to attract interest from Australia's PE firms, including those that have had success in building materials companies in the past, and other hardware suppliers.

Brickworks and BGC

Australia's largest brick maker Brickworks is believed to be exploring a BGC acquisition as a way of having a larger and stronger presence in the West Australian market, according to DataRoom in The Australian.

BGC holds around 5% of the country's overall brick market, based on data from IBISWorld. But it is a major competitor in WA to Brickworks, which has a market share of about 44% of the Australian brick market.

The Australian Competition & Consumer Commission would most likely oppose an acquisition by Brickworks of BGC. However, the thinking is that Brickworks could get around that opposition by offloading some of its own assets in the WA market.

BGC is up for sale through investment bank Macquarie Capital and PwC. Analysts have told DataRoom that BGC's brick business accounts for less than half of its value, with about half of its value in its WA cement grinding terminal, quarries, concrete and transport businesses. Also included in the sales is BGC's building construction arm.

Few buyers exist for the brick business, although given its scale it is seen as a rare and valuable opportunity for a major player like Brickworks which operates under the Austral brand.

Perth-based BGC operates its brick unit under the Midland Brick and Brikmakers brands and caters exclusively to the WA market. It operates four manufacturing sites and three retail sales centres in Perth.

Midland Brick accounts for about one-third of the WA's clay brick production, with an annual production capacity of about 110 million bricks. An acquisition would capitalise on the buoyant construction conditions in Perth.

Related:

In 2021, Brickworks restarted a mothballed brick kiln in New South Wales.

Earlier this year, Brickworks was seeing potential early signs of softening construction activity in Australia.

Hermpac

New Zealand-based Herman Pacific (Hermpac) could be an acquisition target for Australian building materials companies and private equity groups, according to Street Talk in the AFR.

It is understood Hermpac's family owners are considering their strategic options, and Ascentro Capital Partners has been introducing the business to potential buyers.

Sources told Street Talk that Hermpac had been pitched with about NZD30 million (AUD27 million) a year in earnings, fuelling expectations of a potential AUD250 million valuation.

Hermpac is a NZ made timber company, sourcing and selling timber for flooring, decking, weatherboard, cladding, panelling and more. It was founded in 1974 and is majority owned by members of the Carter family, and management.

It is understood to be attracting interest from PE firms and building products companies with operations on either side of the Tasman.

PE sources have told Street Talk that the potential sticking point with NZ-based investments is the exit strategy. While companies can make good money buying and running businesses, selling assets has become harder given the "tricky IPO market and a clampdown in foreign investment".

James Hardie chief financial officer Jason Miele said about 65% of the company's business is centred on the repair and remodel category, which was showing robust growth, according to The Australian Financial Review (AFR).

Mr Miele said its Asia-Pacific operations, including a substantial business in Australia, were reporting large backlogs for renovators using the company's products, which include cladding and plasterboard. And the prospect of higher interest rates in Australia was not curbing demand in the June quarter. He said of the Australian subsidiary:

The business is operating very strongly.

The AFR also reports the company will push through a fresh round of price rises in its big North American business in June to tackle soaring inflation. James Hardie's North America president, Sean Gadd, said prices had risen 5% in January in the standard annual price increase round, but a special out-of-cycle increase was needed on June 20. There would be another increase next January in the standard annual review. He said rising rates were not a handbrake and renovators were going hard in the US. Tradespeople were at the frontline. He said:

They will tell you they're not getting cancellations.

Mr Miele said there had been "hyperinflation" in energy costs in its European business, with sharp rises in gas prices resulting from the Ukraine war a big drag because gas is a crucial input in the manufacturing process of plasterboard.

Margins would soften slightly in the June quarter because of climbing freight and pulp costs, but will expand again for the rest of the financial year as the June price increase of 4% flows through.

James Hardie reported a 24% increase in net sales to USD3.6 billion (AUD5.1 billion) for the full year ended March 31, which helped deliver a 75% lift in profit to USD459.1 million following "above market growth and returns" in the fourth quarter.

The building materials group now expects fiscal year 2023 adjusted net income to be in the range of USD740 million and USD 820 million, a 19-32% increase.

The company remains without a permanent chief executive since the announcement in early 2022 that Jack Truong had been forced to step down following an investigation into claims of "intimidating behaviour" over allegations he created a "hostile" work environment. Mr Truong has denied these claims, saying he was "blindsided" by the move by the board.

James Hardie shifted to a strategy of heavily investing in marketing direct to the homeowner under Mr Truong's stewardship, saying female decision-makers were a major driver of demand for stylish building products.

In February, it signed US television renovation show duo Chip and Joanna Gaines to help in marketing its products. They host the Fixer Upper TV show, have their own network of renovation shows, the Magnolia Network and share 24 million Instagram followers.

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CSR

CSR said its Building Products division is well positioned to grow in the next 12 months as tradie shortages and supply chain disruptions mean an already strong pipeline of work in the detached housing market is stretching out to be "stronger for longer".

Chief executive Julie Coates said demand in the apartment building market was also starting to gain momentum after an extended slowdown, while non-residential construction was improving. But labour shortages and supply chain congestion are causing house building and renovations projects to take up to 50% longer than usual, according to the AFR.

CSR's building products include Gyprock plasterboard, PGH bricks, Monier roofing, Hebel lightweight building blocks and Bradford insulation. Ms Coates said Bradford and PGH bricks were strong performers in a market where housing construction timelines have extended to beyond 12 months in many cases.

She foreshadowed further price rises of products to offset rising input costs after putting through out-of-cycle price rises in late 2021 to offset rising input costs and inflation. However Ms Coates did not specify the quantity. She said:

Where we need to, we will continue to pass on price increases into the market.

The company announced its core building products division had produced a 24% rise in earnings before interest and tax for the year to AUD228 million. Net profit after tax was up 85% to $271 million after some one-offs from carried forward tax losses of AUD86 million bolstered the bottom line.

Ms Coates said margins in the building products division had lifted to 14.1% from 12%. The federal government's Homebuilder program had been an important catalyst in lifting demand. Applicants who sign a contract under that scheme have to commence building work within 18 months.

The company is expanding capacity at its PGH bricks operations at Oxley in Queensland, adding an extra 10 million bricks a year. Ms Coates said her strategy of centralising logistics functions was paying off, particularly at a time when there were shortages of truck drivers in the industry. Deliveries were more efficient and better able to adapt to supply chain congestion.

A number of market analysts believe ASX-listed building materials supplier Adbri may be keen to buy BGC's concrete plants and quarries, according to a report by DataRoom in The Australian. However it would be unable to acquire its cement facilities due to objections from the Australian Competition and Consumer Commission.

Adbri chief executive Nick Miller recently told investors at the Macquarie Australia Conference that parts of BGC remained of interest to the company.

Adbri is Australia's largest lime producer and concrete masonry products supplier and holds the number two position in the cement and clinker market to the construction sector. It is the fourth largest concrete and aggregates producer in Australia, according to The Australian.

BGC's No. 1 market positions in Western Australian cement, bricks and building homes are the focus of an eight-point sales pitch by its bankers at Macquarie Capital (MacCap), according to the Australian Financial Review (AFR).

In a detailed document sent to potential buyers, MacCap's bankers said BGC had 47% of WA's cement market and was the only player with a vertically integrated quarry, cement and concrete value chain.

In bricks, the bankers said BGC's Midland Brick had 80% of the market and 83% of WA pavers, and it built 16% of new homes, which made it No. 1 in WA and one of the largest home builders in Australia.

MacCap said BGC was making about $1 billion revenue and $100 million in earnings before interest, tax, depreciation and amortisation, with group earnings skewed towards BGC's cementitious (quarries, cement, concrete, asphalt) and bricks and masonry arms.

BGC is seen as a complex, eclectic business where operations are interrelated. While some suitors would shy away from those operations, others say that such businesses of scale in the west are rarely on the market and would be seen as a valuable opportunity for certain buyers.

Sources have told DataRoom that Knauf would be the obvious buyer of the plasterboard operations after buying Boral's plasterboard business on Australia's east coast.

In addition to global buyout firms, other parties exploring a BGC acquisition are believed to be Boral, while some believe that Holcim, Cement Australia and HeidelbergCement will likely form a consortium to bid for the assets. (Holcim and Heidelberg are Cement Australia's shareholders.)

Interested parties said they were told there would be an indicative bid round in June, with shortlisted groups to get further diligence materials soon after, according to the AFR.

BGC's shareholders are understood to be keen to sell in full, which may mean buyers interested in different parts of the group form consortiums to get a transaction over the line.

There is speculation that BGC could fetch more than $1 billion based on early expectations.

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When Alpine Truss launched in March 2002, it did so with only a handful of staff. The company, which is celebrating its 20th year in business, now employs 130 people and is one of the biggest employers in Wangaratta.

Prior to establishing Alpine Truss, director Chris Vafiadis and managing director George Prothero were employees at one of the largest frame and truss manufacturers in Australia. The pair were with the company for approximately 25 years. At the time, with Mr Vafiadis worked from Melbourne and Mr Prothero was in Benalla as the Victorian state manager. Mr Prothero told the Wangaratta Chronicle:

We were extremely lucky that when we decided to start Alpine Truss we were able to source the site we have now in Tone Road. Originally on five acres, we have since purchased the two acre adjoining property to enable the business to grow and a further 18 acres, which we have built a warehouse on for storage of raw materials.

The Wangaratta office, located at the manufacturing facility, services regional clients while supporting major project builders in Melbourne and southern New South Wales. It also has a sales and technical office based in Epping to provide assistance to their metropolitan-based clients. Mr Prothero said:

When we decided to ... start our own business, which my wife Belinda was an integral part of its growth and success, we were also lucky enough that some of my key design and production staff from the Benalla operation took a major gamble and joined Alpine Truss.

He said he is extremely grateful for all the support that customers had placed in the company over the years, especially in the beginning.

We're very grateful for the local businesses, including North East Fasteners, Wang Bearings, STY and Merriwa Industries, that backed us 20 years ago.

The timber shortage has put a planned expansion on the backburner temporarily but Mr Prothero said that it will continue to enhance its facilities and upgrade equipment.

Our biggest issue is timber supply, but more so lack of staff and the rental crisis is not helping us in being able to employ people who need to relocate.

The company is a licensed Mitek manufacturer of pre-fabricated timber roof trusses, wall frames and Posi-strut flooring systems. Being manufactured to size eliminates wastage and the need to trim on site, as well as save labour on site. Alpine Truss also supplies particle board flooring, which can be delivered at the same time as the floor systems.

Mr Prothero said its products are designed in accordance with the relevant Australian Standards and manufactured from renewable sources of structural graded pine. All products can incorporate H2F termite resistant pine that comes with a 25 year guarantee.

For USD900 million, Stanley Black & Decker (SBD) is selling its automatic door division to Allegion with plans to stay focused on its tools, outdoor and industrial segments that have experienced sales surges since the onset of the COVID-19 pandemic.

In a statement, SBD CEO Jim Loree said the company will use the proceeds to pay off debt and repurchase shares of its stock from investors.

The Access Technologies business was the original platform for Stanley to enter the commercial security industry in the late 1990s. Sales and profits from that move were so strong after the 9/11 tragedy that Stanley was able to buy its longtime rival, Black & Decker, which had tried to take over Stanley several times.

The sale means SBD will now exit security. The company recently sold its Stanley Security segment to Securitas for USD3.2 billion, but held on to Access Technologies. Security products included advanced locks, video surveillance systems and entry systems to screen people for weapons.

Allegion said the acquisition bolsters its "seamless access strategy with a complementary category market leader". Its expertise in mobile applications and software will increase Access Technologies' connected capabilities, and allow Allegion to further capitalise on the industry shift toward smart security solutions.

The acquisition is expected to close in the third quarter of 2022, subject to regulatory approval and customary closing conditions. Following this, Allegion expects to operate the Access Technologies business as part of the Allegion Americas segment.

Access Technologies claims credit to the first patent for a "hands-free" door in 1931. Grocery stores were the earliest adopters of the "Magic Door" with commercial builders and high-rise apartments quick to follow as the company added automated revolving doors and other products.

Today, Stanley Access Technologies remains one of the biggest vendors for automated doors, along with ASSA ABLOY which has a door security division.

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The federal government's Trade, Tourism and Investment Minister and Wannon MP Dan Tehan announced a $1.3 million trade and market access grant to help the forest and wood products industry develop hybrid engineering wood products.

The grant should help the industry add more value to lower quality forestry resources onshore in Australia, creating more jobs in regional communities and helping to diversify timber exports.

It should also provide an opportunity for the industry to increase export incomes. The hybrid wood products would be sold to three alternative markets including Vietnam, Indonesia and Malaysia. In the Warrnambool Standard, Mr Tehan said the project would provide a significant boost for the timber industry across the Green Triangle region in Victoria and continue to secure jobs in Wannon and benefit the Port of Portland.

In addition, Mr Tehan said the hybrid timber could be used to meet the growing demand of construction timber in the south-west.

The manufacturing process would be the first of its kind in the region, he said. The project was an example of the federal government supporting trade diversification. Mr Tehan said:

This project offers great promise to establish new export markets thanks to the adoption of innovative technology.

Forestry and Fisheries assistant minister Jonno Duniam said the project would benefit the industry supply chain, from timber growers to wood processors and exporters.

SA Pine

Minister for Primary Industries and Regional Development, David Basham said the $1.36 million state government grant will help SA Pine expand its capacity to process an extra 25,000 tonnes of pine logs, which is enough to build approximately 950 houses.

The $1.36 million grant to the business comes from "the government's $2 million Additional Structural Timber program". Some timber has already been shipped off Kangaroo Island on the SeaLink ferry to a mill in Jamestown. Mr Bassham told The Islander:

SA Pine is a successful South Australian sawmill operating out of Kuitpo and Monarto and the largest customer of ForestrySA timber sourced locally from the Mount Lofty Ranges.

The SA Pine Kuitpo mill is well positioned to benefit from the joint Commonwealth-State funded transport assistance scheme to move bushfire salvage timber off Kangaroo Island to processing.

The minister's office told The Islander that state treasury confirmed prior to the election caretaker period that this initiative could be funded from within existing departmental resources.

Meanwhile, logistics company T-Ports on behalf of forestry owners is proposing to transship pine logs, as well as blue gum woodchips, off Kangaroo Island using its transhipment vessel near the Kingscote jetty.

The extra timber has been made possible by SA Pine successfully negotiating a long-term timber supply agreement with ForestrySA, as well as a plan to source logs from Kangaroo Island.

Pine was about 20% of the forestry trees on King Island, 90% of which was burned in the bush fires. Harvesting company Harvestco said there is still some undamaged pine standing, while some burned pine logs were stockpiled under water in McGills dam.

In an earnings update to US investors, hardware supplier WD-40 revealed that significant inflationary pressures are impacting its global operations, including Australia. Profit margins are down to 50%, from a traditional level of about 55%, as costs increase.

As a result, there are price rises across its range of products in the Australian market.

The largest cost increases for WD-40 are coming from the price of specialty chemicals and the aerosol cans its products are stored in. This had forced the US company to lift prices for its range of WD-40 products in Australia by as much as 8%. WD-40 chief operating officer Steve Brass said:

In Australia, sales were USD5 million (AUD6.7 million) in the second quarter, down 5% compared to last year due primarily to decreased sales of home-care and cleaning products, which were down 10% compared to last year.

The Asia-Pacific region makes up 16% of the WD-40 global business. WD-40's sharp sales retreat in the second quarter is in contrast to the rush by consumers to tackle home improvement projects in 2020 during the early months of the pandemic.

At the time, sales momentum in Australia eclipsed that of WD-40 in its US home market. The boom in sales then generated double-digit sales growth for WD-40 in the Australian market, with its Solvol soaps and No Vac carpet sanitiser also generating strong sales.

The company believes its local subsidiary is holding up well despite the recent decline in second-quarter sales.

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Dremel

Nearly 40% of millennials and Gen Zers say they lack the confidence to take on solo DIY projects, according to a US-based consumer trends study by Gartner. So Dremel is telling these generations, "You Got This", in new brand campaign that aims to inspire and help them find the courage to take on creative projects big or small. Dremel global president, Sonesh Shah said:

Through the "You Got This" campaign, we are giving this new class of DIYers the inspiration to unlock their creativity. Gen Z specifically is one of the most artistic generations yet, as the value of creativity among this group ranks 40 points higher (according to MRI-Simmons Custom Audience Data) than the general population.

With our high-quality versatile products, expertise and after sale support, we are here to coach them as they work through creative and DIY projects around the home.

In other aspects of their lives, these "new DIYers" don't require much hand holding. Millennials and Gen Zers have been self-educating for years - mastering skills such as the art of the smoky eye (make-up) or coding their own websites. According to research conducted by MRI-Simmons who surveyed millennials and Gen Zers that describe themselves as altruistic/purpose-driven and creative minded, said they're also willing to extend that passion to their home. Research findings include:

With Dremel's latest campaign, the brand brings three ad spots titled, Tub, Mirror and New Place. They showcase a range of creative and functional DIY and home improvement tasks, from polishing an op shop find to removing a nail in order to hang a vintage mirror, encouraging people to pick up a Dremel tool and let their inner DIYer shine.

OneFortyOne Jubilee Sawmill's second continuous drying kiln (CDK) is now online and operational, completing a $16 million capital investment at its Mount Gambier (SA) site. Jubilee Sawmill general manager Paul Hartung said the kilns are working well and have increased site capacity while improving the quality of the timber dried. He said:

The CDKs are powered by our own sawdust and wood waste offcuts, and their efficient design is using less energy to process more timber compared to our old batch kilns.

With the old batch kiln we put 150m3 of timber in at a time, drying it at up to 160 degrees to achieve a moisture level down to 12%. These high temperatures can stress the timber.

With the CDK, we load the timber to move through the drying process. With the efficiencies of shared energy and temperature control, the new kilns have a maximum temperature of 130 degrees which is a lot less aggressive on the timber as it dries.

Two of four older batch kilns will be reconditioned and remain on site to provide added flexibility and backup for when the CDKs are offline for maintenance.

The upgrade project is part of a greater Jubilee-wide modernisation program, which has included with state-of-the-art sawing equipment upgrades, through to the addition of robotic pack wrap and strapping machine.

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AFPA campaign

As the main industry body charged with representing the interests of the sustainable timber and forestry sectors, Australian Forest Products Association (AFPA) believes Australia is on the cusp of a serious nationwide shortage of locally grown timber and wood-based products. Its goal is to influence government policy and public support to significantly increase the growth of sustainable plantations before the decade ends. AFPA communications director Joe Prevedello, said:

At the current rate of timber production versus usage, Australia is on a path to have massive wood shortages in the future if no action is taken. And the fact is, we desperately need locally grown timber and wood - not just for the construction industries or our collective economy, but to build new homes, reduce our reliance on plastic products, and also contribute to fighting climate change given that harvested timber sequesters a massive amount of carbon.

Tim Kirby, founder at advertising agency Galore explains:

The AFPA came to us with a great story that needed telling. There is a clear current problem, but it's one that brings a multitude of enormous benefits for Australia if we can help to solve it. So, we set about working out the best way to tell that story.

Written and directed by Nick Snelling, the emotive spots for the "Australia, we need a tree change" campaign open with a young girl engrossed in colouring in her school homework project. When her curious father interrupts to ask what she's doing, she spells out the case to him in simple language as to why Australia should aim to plant one billion new trees. Mr Snelling said:

We felt it was vital that we bring the high stakes of an Australian wood shortage home - not just for tradies, who will feel its ramifications first, but for parents. We all know kids possess a simple wisdom and purity of thought that often escapes us as adults. Kids tend to only see the common sense or potential for good in things. So that felt like the perfect way to approach this film.

You can view it here:

Mr Prevedello said:

AFPA are delighted with the whole concept of 'Australia, we need a tree change'. We have the kind of ambitious but achievable goal that we believe a lot of Aussies will rally behind, and who better lay out our argument than a super-smart little girl, whose generation will ultimately inherit the vital decisions we all make today.

In addition to out of home (outdoor) ads, the new AFPA spots will run across commercial television and online platforms throughout April 2022.

Building products and housing group BGC is back on the market for the second time in four years after a period of restructuring, according to a report in The West Australian.

The market has changed significantly since 2018 since it first attempted a sale. The company was taken off the market the following year because of a slowdown in the number of housing starts in WA that meant it would be selling at a low point. CEO Daniel Cooper told The West Australian:

The construction market in WA was at an all-time low and housing starts were at their lowest level for 20 years (in 2019).

It's a very different story now in that it is a strong market and if we look ahead, the forecast for construction and materials supply into WA and across Australia is very strong for the next many years.

For us, the market timing is right but also our internal completion of transformation work has been done.

Mr Cooper said BGC was "in great shape" after the restructure and divesting a string of non-core businesses, which involved the sale of BGC Contracting and the release of a large amount of property and assets such as The Westin and Aloft hotels.

Much of the work in strengthening and consolidating the core business was also complete, Mr Cooper said, referring to the purchase of Midland Brick a year ago.

The sale of the group is expected to take six to 12 months and while no price target has been named, Mr Cooper said he was expecting global interest from a range of buyers.

I think there will be some strategic materials buyers and others will be more financial buyers. Our leadership team are excited about the opportunity a new shareholder will bring and we think any new shareholder will be looking to add value, add synergy and expand and grow the business.

For the staff at BGC it's a bit of clarity, it's a bit of certainty, but it's also exciting.

Consortiums are forming to buy BGC, according to DataRoom in The Australian. It understands that a break-up of the company is off the table, with only shares in the business on offer, so the owners can avoid paying tax. Few buyers are interested in the business as a whole (mainly because of its complexity), so efforts are being made to put together buyer groups.

DataRoom has learned that overseas building materials companies are interested in parts, with Knauf the obvious buyer of the plasterboard operations, while Hanson may also be interested. Knauf earlier acquired Boral's plasterboard business on Australia's east coast.

Analysts told DataRoom that BGC's cement grinding plants would be the most attractive to suitors. Sources also said private equity firms will only participate if they can find a break-up solution for the business.

Mr Cooper said the unwinding of the business would be a decision for the new owner but "my view is there's a lot of value in the business as it stands at the moment".

Favourable market conditions helped the timing of the sale and have left BGC with a large pipeline of work. Activity is particularly robust for its building materials businesses, which have "relatively full order books", said Mr Cooper.

Mr Cooper said the BGC business is No.1 in home building in Western Australia and the fourth-largest home builder in Australia. The group is forecasting a robust four to five years for the WA housing market.

However, its construction businesses have not been spared from supply chain challenges which have seen builders across the country face surging construction costs amid shortages of labour and key building materials such as timber. Mr Cooper said:

I think like all builders we've got our challenges. Certainly, as borders have reopened there's opportunity for us to improve and we're working on that.

BGC started out as a property development and building company focused on residential home construction in Perth when it was founded by Len Buckeridge over six decades ago.

The company has been simplified but still operates 16 businesses which span the production of building materials including bricks and cement, quarries, and residential building under brand names such as HomeStart, Aussie Living Homes and Commodore Homes.

The proceeds of a sale will go to Mr Buckeridge's beneficiaries.

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The initial idea for Green Hip workwear came about in 1997 when Liv Thwaites started an apprenticeship in horticulture. It wasn't until 2007 that she registered Green Hip as a business, and after a few years of product development it officially launched in 2010 with just four products.

Ms Thwaites learnt about garment construction while working for a landscape architecture firm in Bangkok, having moved to Thailand for her husband's job. She told the Geelong Advertiser::

...I was in the land of tailors and I knew exactly what I needed...I was able to learn about the construction of garments, the process of designing them, garment specifications and fabric.

Along with selling the brand online and in stockists including Total Tools, Hip Pocket, Totally Workwear, and RSEA, Green Hip is supplied to Melbourne Water and Department of Environment, Land, Water and Planning employees across the state.

Green Hip has also been featured on TV renovation show The Block, with contestants Kirsty and Jesse and Kerrie and Spence making appearances at the Green Hip shop and at the recent Melbourne International Flower & Garden Show.

The TV show is always a highlight for the business, especially since COVID has stopped it from going ahead the past two years. Ms Thwaites said:

It's a place where we get to speak to our customers and get to know what they want.

Ms Thwaites said women had been expected to wear men's clothing for decades when it would have been unacceptable for men to have to wear women's clothing. She explains:

It also affects the safety perspective. If you're not working in comfort, with your sleeves too long or pants falling down, your mind isn't completely on the job.

We believe women should have the appropriate clothing and we cover all stages of life, including maternity, and represent women of all ages and sizes. What we were finding is that larger women were having to be pushed into menswear, which is not OK.

Ms Thwaites feels proud every time she sees the clothing on different body shapes. Green Hip offers sizes from 6-24. The range currently includes four styles of pants, overalls, shorts, various shirts, T-shirts and hats, in four different colours, plus hi-vis. She said:

You can go onto a work site and not feel girly or different, and they fit perfectly in all the right places.

The 100% female-owned and operated brand is continuing to evolve, with a long wish list of future product ideas. A new inventory system has been put in place, so that more time and effort can be put into growing the business that is based in Geelong (VIC).

Ms Thwaites hopes to increase the number of stockists nationally and is in discussions with larger chains.

At the same time, she is on the lookout for a new warehouse space where there can be a showroom, office space and warehouse all in one.

Related: Toowoomba based Co Gear workwear range supports women's real-life decisions.

Related: Bisley Workwear designed for lady tradies.

Google Wing's head of government relations, Jesse Suskin recently told Australian Aviation that while builders don't often forget their power tools, they can call upon Wing's devices to fetch things such as painter's tape. He said:

We have a hardware store we deliver from. As long as the product weighs what it does and fits in the box, we can deliver it.

Wing launched commercially in Canberra (ACT) and Logan (QLD) in 2019 and currently allows for the delivery of packages that weigh less than 1.5 kilograms from a variety of stores that sell household and perishable goods, including coffees and sandwiches.

The business now conducts more deliveries in Australia than in any other country. Mr Suskin said:

There's a worksite in Queensland where they're building a series of homes. We're not delivering to the homes, we're delivering to the people who are building the homes.

We're delivering their tools and hardware when they run out of something or their food during lunch. We didn't originally think we'd be moving hammers and screws with drones!

We had a customer reach out who runs a landscaping business, and they constantly ran out of the Whipper Snapper line. So we stock that now.

Wing began in 2012 as one of the first projects at the tech giant's secretive research lab, Google X, alongside its augmented reality eyeglasses and self-driving cars. It launched its first trials in 2018 before starting more commercial flights the following year in both Canberra and Logan.

Once a customer submits an order via the app, the drone flies to pick up the package at the designated delivery centre before climbing to a cruise height of 45 metres and flying to the destination. Once there, it hovers and lowers the package to the ground, automatically unclipping the parcel without assistance from the customer.

In October 2021, Wing drones began picking up packages from the roof of a Logan shopping mall to deliver to customers in the area.

The development was a major milestone because previously, retailers had to co-locate in the tech giant's distribution centres rather than being able to work from their own stores.

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New Zealand billionaire Graeme Hart's Rank Group is exploring the possibility of floating its building supplies unit Carter Holt Harvey and Carters distribution business, according to the Street Talk column in the Australian Financial Review (AFR).

The business would be spun off and trade under the name Building Supplies Group with revenue of about AUD1.55 billion per year and earnings before interest and tax of about AUD150 million.

Although it is early days in terms of the mooted IPO, sources told AFR's Street Talk that Rank would look to raise more than AUD500 million in the IPO for a valuation of over AUD1 billion.

It would be pitched to potential investors as the leading New Zealand trade-focused building supplies distributor, integrated with the country's largest wood products manufacturer, with a track record of earnings growth and cash flow generation.

Carters has a national footprint of stores and frame and truss plants, and about 38% of its sales are products internally made by Building Supplies Group. The wood products side of the business, Carter Holt Harvey is dubbed the market leader in structural timber, laminated veneer lumber and plywood.

Together, they make about 75% of sales in the residential building market and the other 25% to commercial/other building customers in New Zealand.

The sharemarket listings are being spruiked at a time when the New Zealand construction industry is running hot, with building approvals for new homes at a record 48,899 last year, while supply chain disruption and capacity constraints push up prices for building materials. Castle Point Funds Management co-founder Stephen Bennie told the Waikato Times:

The building cycle in New Zealand has been very strong. Clearly Carters is enjoying a bumper year. It's been a sweet spot. That's often a time when people look at IPOs.

Carters is on the right side of things at the minute in terms of having supply. That's obviously a good place to be right now, when other supply chains are basically dysfunctional. It's had an extra kicker from being able to supply customers and enjoy the price increases.

Rank Group paid NZD3.31 billion for Carter Holt in 2006 and has since sold the company's forestry and farm land and its pulp and paper unit, leaving a smaller business focused on wood products and building supplies.

The distribution of building supplies is under the spotlight in New Zealand amid rising prices and product supply constraints. Last year the Government asked the Commerce Commission to look at whether Kiwis are being ripped off by the cost of building materials.

The cost of building materials has been a longtime concern in New Zealand, even before the latest bout of inflation. The Productivity Commission estimated people in New Zealand pay 20 to 30% more for building materials than those in Australia.

In November 2021, the Commerce Commission confirmed it was undertaking a market study of factors that may affect competition for the supply or acquisition of key products defined as foundations, flooring, roof, structural and non-structural walls and insulation.

A draft report is due in July and a final report by December.

Government-owned energy generator and retailer CleanCo has struck a deal with Wesfarmers to provide renewable energy to a number of its major retail subsidiaries, Bunnings, Kmart, Target and Officeworks.

This will result in participating stores using a combined ~140,000 MWh of renewable energy each year by mid-2025, following a staggered onboarding of sites starting July 2022. This is equivalent to the energy consumption of approximately 23,000 Australian households each year and will result in the removal of carbon emissions from the environment equivalent to taking about 48,000 cars off the road. It represents 30% of Scope 2 emissions from Bunnings and about 18% of Scope 2 emissions for each of the other businesses.

Queensland Energy Minister Mick de Brenni made the announcement and said the deal represents a major step forward for renewable energy made and delivered in Queensland. He said:

Every time Queenslanders visit these iconic retailers, whether to Bunnings for mowers, Officeworks for school supplies or Kmart or Target for clothes for the kids, they are now supporting Queensland renewables jobs...

This agreement with the Wesfarmers' companies represents a win-win for Queensland with CleanCo providing renewable energy at a competitive price, on the back of jobs growth in regional Queensland.

The Queensland Government has a target to reach 50% renewable energy generation by 2030 and we congratulate Wesfarmers for joining us on this journey.

Bunnings Group managing director Michael Schneider said partnering with CleanCo is an exciting step in their sustainability journey, as Bunnings continue to make progress towards our commitment to source 100% renewable electricity by 2025.

This builds on the work we have already done to increase our renewable power use by installing solar PV systems at 88 sites across Australia, generating the equivalent capacity to power over 4,600 households.

While we've made positive headway, we recognise we have a lot more to do in this space, and we look forward to pursuing more initiatives to reduce our footprint.

CleanCo has been steadily building its customer base since its establishment just three years ago and interim CEO Darryl Rowell said Wesfarmers is a great partnership to strike with its businesses committed to 100 per cent renewables by 2025.

Kmart, Target and Officeworks are contracted to take our energy and large-scale generation certificates (LGCs) to the end of 2030, while Bunnings is currently signed up to 2027.

We will be providing this energy and LGCs in part from Neoen's Western Downs Green Power Hub solar farm, from which we have a power purchase agreement to take 320MW, and in part from the Macintyre Wind Farm when it comes online in late 2023.

Deals such as these allow us to support business and industry to reduce their carbon footprint with affordable, reliable green energy. We are proud to be supporting Wesfarmers to meet its renewable energy targets for its selected businesses across Queensland.

REenergise Campaign director Lindsay Soutar, from Greenpeace Australia Pacific, also welcomed the announcement, and told The National Tribune:

Queenslanders will soon be buying their homewares, power tools and office supplies from shops powered by the wind and sun ... Kmart, Bunnings, Target and Officeworks combined are Australia's 33rd largest electricity user, using vast amounts of power every day. Making the switch to clean power in Queensland will make a big dent in Australia's emissions and bring online enough clean, reliable renewable energy to power 23,000 homes, and create good, future-facing Queensland jobs.

Smart businesses know that wind and solar are cheap, reliable and ready to power even our largest companies ... For a company like Wesfarmers, one of Australia's biggest and most profitable businesses, making the renewable switch is the obvious choice, and this power purchase is a significant step towards making it a reality.

This is a big win for the community. Greenpeace supporters have been pressuring Australia's big retailers to shift to cleaner power, alongside a strong green push from shoppers. With Australian communities struggling with climate disasters, like the recent catastrophic floods in Queensland and Northern NSW, there's increasing pressure on big companies to speed up the energy transition. Ending reliance on fossil fuels like coal and switching to renewable energy is critical for tackling climate change, and these companies are showing how it can be done.

Related

Plumbing group, Reece is believed to be in the United States seeking a new business that could add to its American operations that currently generates $3.5 billion a year, according to the Australian Financial Review (AFR).

Sources told the AFR that Reece is exploring the water distribution products market, and considering a private equity owned player that could be worth as much as AUD1 billion.

Reece entered the US market in 2018 when it acquired plumbing showrooms business MORSCO in a $1.9 billion deal that doubled the size of the company. At the time, Reece told investors it had run out of opportunities in Australia. It was already the No.1 player in an industry where it had a large chunk of the bathroom and plumbing supplies market. So it headed to the US, where growth rates in the plumbing market were said to be twice as high as Australia's.

Supply chain issues hampered its performance during the COVID-19 pandemic, while its most recent earnings results showed improving EBIT margins to nearly 5%. Macquarie analysts said the recent result beat expectations, thanks to the US business' performance.

Earlier this year, Reece told shareholders it was focused on the fundamentals of its existing business, but flagged potential growth opportunities across markets and formats.

Related

Moose Industries

Founded in 1997, Moose Industries has been placed into voluntary administration. Initial investigations by administrators Oracle Insolvency Services has found hundreds of thousands of dollars owing to various creditors, according to Stock Journal.

Servicing the agricultural sector across Australia, Moose Industries uses 3D design technology to custom manufacture machines and components to suit individual farming needs. These include delvers, land rollers, tree seeders, hydraulic coulters, grain doors and PTO trailers.

Moose Industries has also worked with the aquaculture industry in Port Lincoln and previously designed tree seeders for Landcare and Greening Australia.

The business has faced tough conditions as a manufacturer in the current economic climate.

As part of the assessments by Oracle Insolvency Services, the administrators plan to keep Moose Industries operating for several weeks in an effort to complete as many customer orders as viably possible.

Oracle Insolvency Services' founding partner Nick Cooper said the goal was to explore every opportunity for the business to "trade out of its difficulties". He told Stock Journal:

If that is not possible we have a strong focus on maximising the return to creditors. These farmers are waiting for important pieces of machinery vital for the continuing operation of their business and we are in the process of contacting them.

Oracle Insolvency Services has determined that without a significant change in circumstances, Moose Industries will likely face liquidation.

It is now looking into opportunities for a potential sale of the business assets after receiving some initial interest.

Diversified building materials maker Brickworks is seeing potential early signs of softening construction activity in Australia, which could affect demand at its local building products division.

The ASX-listed company said that underlying demand remained strong across Australia due to a large backlog of detached house construction work that built up amid recent strong demand, a shortage of skilled labour and COVID-related disruptions.

Yet declines in building approvals and moderating house-price growth suggest the potential for a subsequent period of softening construction activity, the company said.

The average price for Australian homes grew by a record 22% in 2021 but edged just 0.6% higher in February, logging its slowest monthly increase since September 2020, according to data from property analytics firm CoreLogic. Brickworks said:

It is clear that government stimulus has brought forward a large volume of work that has the potential to leave a void once the existing pipeline is exhausted.

Brickworks also said it expects inflationary pressures and supply-chain issues to persist for the foreseeable future. After presenting the company's first-half result, managing director Lindsay Partridge believes there could be a "fallout" in the building industry as surging prices of raw materials cut further into profits.

Mr Partridge told The Australian the company had so far been able to pass on rising costs to customers in the local market. But he has warned that supply chain constraint and the recent floods on the east coast are slowing down construction in the housing market, resulting in building timelines stretching out as prices continue to increase. He said:

There's a lot of work in the pipeline at the moment because builders can't get the builds done for a variety of reasons.

Some builders were already constructing houses at a loss, due to the combination of delays and rising costs, he added.

I think we might see a bit of fallout in the industry going forward. Many of the homes that builders would be working on, they'll be building at a loss...

Some of them, if not on fixed price contracts, have been able to get higher prices. But eventually you'd have to be concerned that, particularly if interest rates are rising, you're going to see housing will become unaffordable.

Recent heavy rain that inundated large parts of the country's eastern seaboard severely limited construction activity in key markets such as Sydney, hitting demand for materials early in its fiscal second half, the company said.

Brick sales volumes were down about 50% in the first two weeks of March, while manufacturing operations were also hit by major disruptions across nearly all east-coast plants in February and March.

Brickworks half-year result showed it is on track to record over $1 billion on annual group revenue for the first time, as revenue for the half topped $500 million. The building materials maker saw its profit surge 729% to $581 million. However not all of it was organic growth from its building materials division.

The record profit number for the six months through January was boosted by the deemed disposal of (investment company) Washington H Soul Pattinson shares following its merger with Milton Corporation. Stripping this and other one-off times out, Brickworks' underlying profit still jumped 269% to $330 million, as its property division assets experienced a boost in valuation.

Underlying group earnings before interest, tax and depreciation from continuing operations rose 200% to $488 million, while revenue was 24% higher at $535 million.

For the Australian building products division, pre-tax earnings jumped 66% to $27 million over the six months, while its North American division saw a 70% plunge in pre-tax earnings as a jump in sales revenue, driven by the acquisition of Illinois Brick Co., was more than offset by rising labour costs and supply chain challenges.

Mr Partridge cautioned the impact from the recent floods and the uncertain global near-term outlook. He said:

Within Building Products Australia, the start of the second half has been impacted by severe we weather and flooding along the east coast...

However underlying demand remains strong, and we are hopeful that all states will experience an elevated period of activity for the remainder of the second half.

The company said the war in Ukraine has created additional uncertainty, affecting energy prices and availability, adding upward pressure on inflation and interest rates, and weakening consumer confidence.

In the shorter term, Brickworks said easing pandemic restrictions and staff absenteeism should translate to strong sales for the remainder of its 2022 fiscal year, which runs through July.

Boral

In a recent market update, Boral said the "exceptional weather" that has affected NSW and parts of south east Queensland has significantly disrupted its operations.

The company also flagged sharp increases in fuel and coal prices as weighing on earnings despite recent moves to lift prices to offset rising costs. In The Australian, CEO Zlatko Todorcevski said:

The impact on sales volumes of the extreme rainfall across NSW and Queensland in late February and early March have adversely impacted Boral's earnings by (about) $23 million.

The company now expects underlying earnings from continuing operations, excluding property, in the financial year to be between $145 million and $155 million, assuming no further weather event.

Mr Todorcevski said the rains had prevented the company from delivering products to customers and caused significant production disruptions to operations. Boral is also facing higher fuel prices. He said:

Unusually extreme and rapid increases in the price of coal and diesel have recently occurred.

He said those energy costs would not be offset in January and February by price increases in Boral's products.

The company said the "elevated fuel prices (were) also exacerbating supply chain con­straints" as previously flagged and were likely to flow into the second half.

Related

Boral reported a 23% slide in earnings at its first-half result, with the company moving to implement "out of cycle" price increases.

Fletcher Building

The Commerce Commission in New Zealand has received a clearance application in relation to a proposed acquisition by Fletcher Distribution Limited (FDL) to acquire the six ITM stores, and a frame and truss manufacturing plant from Tumu Merchants Limited (Tumu).

FDL and Tumu ITM both supply building materials and related goods and services to trade and retail customers.

FDL is a wholly owned subsidiary of Fletcher Building Limited. It owns the PlaceMakers network of hardware stores, which sell building products and related goods and services throughout New Zealand. FDL also operates frame and truss manufacturing plants across New Zealand. Relevant to the proposed acquisition, PlaceMakers has stores in the Hawke's Bay, Wairarapa and Manawatu-Whanganui regions and operates a frame and truss manufacturing plant in Taupo.

Tumu majority owns and operates the six ITMs, and the frame truss plant, through the following subsidiaries that will be acquired by FDL: Tumu Gisborne Limited, Tumu Napier Limited, Tumu Hastings Limited, Tumu Havelock North Limited, Tumu Dannevirke Limited, Tumu Masterton Limited and Tumu Frame & Truss Limited.

The ITM stores that are part of the proposed acquisition are situated in Gisborne, Napier, Hastings, Havelock North, Dannevirke and Masterton and the manufacturing plant is located in Hastings.

Family-owned construction and building products group BGC could be on the market soon, according to a report in The West Australian. Its building materials and housing portfolio is owned by the Buckeridge family. BGC chairman Neil Hamilton told the newspaper:

We're pushing forward and it's my expectation that we will be in a position to make a decision within two months.

Mr Hamilton said subject to the board's decision, BGC would likely be offered as a combined business, an acknowledging there is keen interest in the operations.

Potential buyers have speculated that BGC could be sold to a private equity firm and then unwound, possibly creating opportunities for the likes of Brickworks and Adbri to pick up an individual business.

Boral could also be interested in buying some assets from BGC when comes back on the market. Boral chief executive Zlatko Todorcevski said it would "definitely" have a look at BGC's concrete, cement and quarry assets in WA as it looks to expand its proportionally small presence in the state, which accounts for just 5% of group revenue. He recently told The West Australian:

We like the potential in WA and so we are looking at how we build that out to have a greater footprint, particularly in that Perth and Peel region. They're areas we are actively looking at. WA is on the hit-list for us, so it's getting a lot of focus.

Improved trading conditions over the last two years as a result of the pandemic and increased infrastructure spending is expected to have boosted BGC's financial performance. The West Australian states that the last publicly available financial results show BGC turned over more than $910 million for the 2019-2020 year.

BGC is the largest producer of bricks in WA through its ownership of Midland Brick and has significant market share in cement and quarries, in the state. Mr Hamilton said, "The housing business is an interesting one, it's a big business but it has got some challenges at the moment," he said, citing the labour and materials shortages which have prevented BGC's builders from taking full advantage of the residential construction recovery.

BGC's business spans building materials manufacturing including bricks and cement, quarries and one of the country's biggest residential builders under brand names such as HomeStart, Aussie Living Homes and Commodore Homes.

The West Australian revealed late last year that the BGC board was preparing to revisit a sale of the group in early 2022. The Buckeridge family initially put it on the market four years ago, only to later postpone the divestment of the core home construction and building products arms to await a recovery in the local residential market.

Related

Australian safety footwear manufacturer, Steel Blue, has launched a creative campaign celebrating the tradespeople wearing the brand. It also positions its boots as a "premium" product.

Using the tagline, "A Mark of True Skill", the campaign makes a direct link between the exceptional craftsmanship that goes into every pair of Steel Blue boots and the skill and expertise of those who wear them.

The TV commercial opens on a male and female tradesperson walking out into a public space looking determined and ready to build something. We see them working and showcasing multiple crafts with both skill and laser focus. A crowd builds, admiring and marvelling at their work. The anticipation from the audience to see what they are making grows. As they finish, we hear the voice over declare, "True skill, it's easy to see, if you know where to look". The camera pans in, but instead of us being shown the mysterious structure, we see a pair of Steel Blue boots.

Filmed in Western Australia, the commercial features a variety of trades, and is currently airing during Network 10's Australian Survivor and Seven's SAS Australia as well as existing commitments with Fox Sports, Optus EPL and ESPN NBA. Steel Blue chief marketing officer, Jocelyn Da Silva, said:

The launch of our new brand campaign comes after a lengthy strategic and creative review process, partnering with Wunderman Thompson. It began from a desire to stand out further from our competitors and differentiate ourselves in an increasingly crowded market. We also wanted a creative platform that would grow with us in the future.

We've built our business on the difference great footwear makes and a belief that workers are worth the effort. Throughout this process, it became evident that the brand and those wearing our boots can have an aspirational role to play. Wearing Steel Blue boots can be a sign that you have made it.

In addition to the TVC, the latest brand rollout will include an updated logo and design guide, short videos of skilled tradespeople in action to be used for digital, social assets, in-store POS, website, content, and direct marketing.

Blundstone

The launch of Blundstone's #243 boot is an option for businesses looking to kit out their crew in durable, comfortable, and safe work boots.

Victorian construction company Evolv Homes was among the first to kit out their crew in this tyle, with an overwhelmingly positive reception from the guys, Gav and Dave, on site. They said:

The new wheat boots fit like a glove, built for the site all day everyday.

The new wheat boots make long days on-site on the feet a whole lot easier. Comfortable, durable and sturdy.

Made in Blundstone's signature water-resistant wheat nubuck upper, the #243 is a 135mm high safety boot with a padded collar and tongue, and Blundstone's exclusive SPS Max comfort system, making it an ideal boot for those on their feet all day. Adrian Blandford, global work & safety range manager at Blundstone said:

Our new #243 is a boot that every member of the crew, from the master to the apprentice, will love. This wheat coloured, water-resistant, low-cut style is packed full of all our mod-cons, with the added bonus of a lightweight TPU outsole...

Features include:

Blundstone boots are backed by a 30-day comfort and six-month manufacturing guarantee.

Download hnn-brief-003

On 3 March 2022 Techtronic Industries Group (TTI) released its results for its FY2021, which consists of the 12 months to 31 December 2021. The results show comprehensive and company-wide growth for the global manufacturer of power and hand tools, which is listed on the Hong Kong stock exchange. Sales for the reported period came in at USD13,203 million, up by 34.6% on sales for the previous corresponding period (pcp), which was FY2020. Net profit also rose steeply up 36.5% on the pcp, to come in at USD1099 million. Earnings per share (EPS) was USD0.6004, up 37.1%.

The company's performance metrics were equally impressive. Earnings before interest and taxation (EBIT) outgrew both sales and profits, lifting 37.2% over the pcp to hit USD1192 million. Gross margin also increased by 0.54%, to reach 38.8%.

TTI's long term investment in floorcare appliances, specifically vacuum cleaners, also showed signs of paying off, with the segment's sales up 14.8% to USD1242 million, and operating profit listed as up 18.7% to USD29.2 million.

In terms of regions, Europe outperformed with a 41.1% lift in sales, while North America was up 33.7%, and rest of world (including Australia) rose by 31.8%.

While the results for TTI were good, especially in an industry sector where competitors, such as Stanley Black & Decker (SBD), have seen substantially less growth, what was even more important was TTI's clarification - almost declaration - of the high growth potential it sees its strategic moves delivering over the next two to three years.

In the past, TTI CEO Joe Galli has suggested the company's end goal was to reach USD20 billion in sales by 2025. Looking at the results for 2021, Mr Galli has found himself in the position of having to alter that suggested forecast - by cutting off one year, and estimating TTI could reach that sales target in 2024 instead.

Part of that enthusiasm is likely the result of emerging from what has been, due to external circumstances, a difficult five years for the company. While Mr Galli, has been quietly reticent to make any public reference to US politics, having a global, Hong Kong-based company with extensive Pearl River Delta manufacturing resources during the four years of the Trump administration could not have been easy. This was, of course, then capped off with the COVID-19 pandemic.

What has set TTI apart from manufacturing companies both within its sector and more broadly, is that it adjusted to these challenges by making strategic, structural innovations. Where others adopted more temporary measures to, for example, reduce expenditures, TTI invested heavily in areas that would generate future growth.

In particular Mr Galli pointed to TTI's ongoing efforts to hire more engineers to assist with product development:

We now have for 2022, 977 degreed engineers, many [electrical engineers], many software development engineers. So two years ago, when we started to talk to Home Depot about developing a relationship together, a serious relationship together, in outdoor, we had 361 engineers. Last year, we hired 442 engineers. Remember our largest competitors is boasting about firing people and workforce reduction. Initially we had another 174 that'll get us to 977. We'd hire more if we can, but we're very selective about this.

But this is a statement. You know, our model of high gross margin, which self-funds investment in software development, engineering, in other forms of technical skills that we need, like acoustic engineering, this is where we feel like we're building an unassailable leadership position long term. A leadership position, we believe, much like what Apple's been able to do and what Tesla is doing in the EV market.

Segment growth

The difficulty with explaining the segment growth of TTI is that there is so much there, and so many multiplying potentials, it's not possible to fully document it within the scope of a results announcement. HNN did not get very far in our analysis before we realised we will need to produce a follow-up article examining, in particular, what is happening at Ryobi in more detail.

To some extent this was a difficulty shared by Mr Galli himself. While HNN would confidently suggest that Mr Galli has never been accused of underselling anything in his entire life, the sheer breadth of development at TTI brought him close to doing so during this presentation. In fact, Mr Galli chose wisely, and highlighted those aspects of TTI that would most connect with the company's valued investors.

The three dimensional matrix that describes TTI's approach consists of brand/market fit, market segment development and battery platforms. It is not going too far to say that by combining those three elements, TTI could be set to redefine a major part of the cordless tool market.

In order to cope with this wide field of information, HNN will take its lead from Mr Galli's own approach during his presentation, and concentrate largely on individual products, then develop the underlying potential from that.

In terms of overall segments, Mr Galli was very clear that he sees DIY as being a strong growth area, contrary to what some industry analysts have suggested:

Another maddening bit of misinformation that's in the public domain, is we have competitors that are saying, "Now that COVID seems to be slowing down, the DIY market is flattening out. So the potential is all with the Pro [tradie]".

This couldn't be further from the truth. The DIY market, we think, is a massive opportunity. We've established 20 verticals of DIY. Twenty. I'll show a few in a minute, that we think are untapped. We believe that the opportunity to create what we call the newly minted do it yourselfer is something that our competitors don't understand.

There are college grads, launching their careers, you know, the people who buy houses, condos, they're buying properties now, and they need [tools], they don't have any tools to start. I've never seen the rate of newly minted households that we've seen today in terms of ownership. And you know, that's just one of many, many examples here.

In fact, though, what is really interesting is that TTI seems to be redefining the DIY market, and in the process also redefining parts of the Pro market as well.

Ryobi zero-turn ride-on mowers with iDrive

Set to be released during the northern hemisphere's spring season, this is both a development of two previous generations of ride-on mowers, and a revolutionary product for its category. This zero-turn mower has two standout technologies to offer: the move from mechanical lap-bars to control the mower via a joystick system named Intelligent Drive (iDrive), and a new battery system.

The increasing popularity of the zero-turn mower is a result of both its convenience for manoeuvring in tight spaces and the resultant time-saving, with industry estimates putting time saved at over 35%. The lap-bar system of control of zero-turn mowers was invented back in 1963 by John Reiger, though the term "zero-turn" only came into common usage in the mid-1970s. The system was further developed through a series of patents registered in 1997. Essentially, zero-turn works by differential control of the rear drive wheels. A zero width turn is achieved by running one wheel in forward drive and the other wheel in reverse drive - as you would with, say, the tracks on a bulldozer.

There are some zero-turn mowers which are controlled by steering wheels, which control direction both by moving the front wheels, and by redistributing drive power to the rear wheels through a complex mechanical system. These mowers have some advantages when mowing steep areas.

Ryobi's iDrive is the first significant development in this area for at least 25 years. Previous systems were all mechanically based, while iDrive is electronically based - a system shift sometimes referred to as "drive-by-wire". The position of the joystick is sensed and used to determine the differential delivery of power to the rear drive wheels. This allows one-handed, minimal force control of the mower.

The battery system on these mowers uses a new Lithium-ion (Li-ion) 80-volt, 10 amp-hour battery. These batteries are "briefcase" style in design, and each weigh around 8.2kg.

In his presentation Mr Galli focused on the flagship of the range, the Z54Li. That mower has a 54-inch (137cm) cut width, and comes with three of the 80-volt batteries. However, it also can be simultaneously powered by up to four of Ryobi's standard 40-volt, 12 amp-hour batteries. While it would be difficult to swap out the 80-volt batteries during use, as the mower is the charger for those batteries, the 40-volt batteries can be easily swapped out. That's a particular benefit as the "range-anxiety" scenario that most EV mowers face is completing the cut on a large paddock, and then running out of power at, of course, the furthest point from the equipment shed. It would be feasible (but not recommended) to run the mower with a single 40-volt battery (the electrical system is 80-volt but the 40-volt batteries are not run in series, instead being electronically converted to 80-volt, so you only need one), which is a big advantage over pushing the mower back to the shed instead.

In addition to the flagship Z54Li, the Li-ion zero-turn ride-on mower range includes two other units. The Z42Li features a 42-inch (107cm) cut width, and the Z30Li has a 30-inch (76cm) cut width. The Z42Li seems to be very similar to the Z54Li, with both supporting the same number of batteries, along with independent suspension for the driver's seat.

The Z30Li seems more of a stripped down version, with support for only two 80-volt batteries and two 40-volt batteries, but it has also been carefully tailored to its intended market. The 76cm width is designed to fit through normal yard gates, even with its bagging attachment, which hitches on behind rather than to the side.

There is evidence of real depth of thought in developing these mowers. In his comments to analysts, Mr Galli pointed out the mowers were developed to avoid the windrowing effect:

There's a classic problem called "windrow", and this is interesting to me. So farmers for years would have tractors. When they would harvest their wheat, their wheat yields, they would have a tractor that was designed to push the wheat to the side of the tractor and create something called windrow, which is a technical term for clumps of wheat that go alongside the tractor so that you can go back and harvest the wheat ... So the problem is the design of a farmer's tractor is not the right design for [ride-on mowers]...as you get this this windrow issue. So you're cutting the grass and all of a sudden there are clumps of grass alongside of you while you're trying to cut the grass. You are not harvesting the grass. You want the grass to go away, in the bag or into mulch. So our design, because of the blades and the other things our guys have developed here, we've eliminated windrow.

There is a lot going on with this announcement. First of all, Ryobi has launched a brand new, high capacity battery platform, and TTI has built a factory in the US to make those batteries. Where else are those batteries likely to show up? One immediate suggestion is for generator replacement to provide household power during blackouts, as well as for outdoor activities. In fact, these batteries open up a whole new range of potential products.

Next, who is the target market for these products? Evidently, hobby farmers, people with large outdoor areas, but how much will the product penetrate the market for professional landscapers? These might not be designed specifically for professional use, but the systems are so advanced it's likely they will find a market there.

Along with the mowers, Mr Galli pointed to a range of other cordless OPE products from Ryobi, including a tiller, a new string trimmer, a powerful, quieter handheld leaf blower and a backpack-based blower as well.

Ryobi "workshop" tools

Though only referred to in passing by Mr Galli, there are three recently released tools that also bring up the question of what is Pro and what is DIY. The one that has attracted the most attention is Ryobi's release of a track saw. Track saws make use of aluminium "tracks" which are clamped to wood (such as plywood sheets) and help to guide a specialised saw to cut straight lines. The Ryobi 18-volt ONE+ Hp Brushless 6-1/2" Track Saw features a 140cm track and a true "plunge" saw with depth control and depth scale. While not quite up to the power of some Pro saws, it also sells for USD329 as a bare tool (no battery), making it highly price competitive.

This was released along with a Ryobi cordless table saw, and a new cordless 10-inch mitre saw. All three of these products really encroach into the area of Pro tools, largely because they are relatively low-cost cordless. There is a very different usage scenario, for example, for a corded and cordless table saw.

Ryobi "hobby" tools

HNN has previously covered the development of these tools, which consists of tools such as rotary, Dremel-like tools, complete with a stand, a powered wood chisel, a cordless magnifying light. Mr Galli explained what he sees as the strategic significance of these tools:

A new category for us. So we think hobby crafting - during the virus, one thing that's happened is people rediscovered hobbies, people who never would consider hobbies started to do it. And, unlike what our competitors think - that the virus ends and people are going to go back to some kind of normal day - we think that people are so excited about hobby and craft. And the feedback we're getting confirms that. So we rolled out a new leadership line. We intend to be global leaders in this space.

Analysis

Again, HNN believes that this announcement needs to be unpacked at more length later, and will be a developing story throughout 2022.

To use a power tool based analogy, what we could say about Mr Galli and TTI is that he is actually the first "brushless" CEO the industry has seen. We say that to reflect that the major competitors in the industry - SBD (DeWalt), Makita, Bosch, Hikoki (Metabo), and Chervon (Flex, Worx, EGO, Stihl) are really still stuck in the analogue, "brushed" version of the industry. That is best reflected in the slightly (understandably) bewildered reference that Mr Galli makes to a performance comparison made by SBD at an analysts' conference:

There's been some misinformation and misleading information that's been introduced into the public domain that we want to clear up a little bit here today. So our largest competitor, Stanley, actually announced last week at the Barclays conference - and I read the quote from one of their executives. Stanley said, "Our professional power tool business has had a 13% average annual CAGR [compounded annual growth rate] over five years well in excess of GNP [gross national product]".

Why would you compare with GNP? "It's clearly outpacing the market performance, gaining significant share". So I feel like up 27% would be outpacing the market and gaining significant share. We wouldn't even look at GNP because we're developing cordless solutions to achieve sustainability and to change, transform the way people use our products.

Frankly, GNP only makes sense for companies that see themselves as standard manufacturers of stable products - such as handsaws or bolt-cutters. For technology and innovation focused companies GNP reflects little more than current market conditions.

What makes this particular result, and the strategies that are emerging at TTI so significant is that we are seeing for the first time a true delta emerge between TTI and other companies, to the direct benefit of the overall market. That delta is based on years of good strategic investment and planning, but all those forces could come into focus over the next two to three years.

It is likely one reason why in this announcement Mr Galli tended to focus more directly on competitive statements such as the above is that when genuinely new innovations hit the market, there is often a kind of stuttering response to them, based on comparing what is new to the older standards. To build on Mr Galli's references to Steve Jobs at Apple, analysts and manufacturers initially tried to compare the iPhone to the Blackberry back in 2008. By the time they woke up to the real differences, Nokia was gone, Blackberry was a husk of its former self, and Microsoft's phone efforts were in a long, slow spiral down.

There has been just a slight sense of that happening with the Z54Li mower, with some reviewers stating that "users hate change". But do they? Isn't it really the case that what is happening is not so much change, as the alteration of an entire frame of reference? Once you had used an iPhone, it was very difficult to go back to pecking at the tiny angled keyboard of a Blackberry. Once you've driven a mower with a joystick, what will it feel like switching back to lap-bars?

More importantly, it's an easy matter to see how the joystick product can develop and evolve. A semi-auto, self-driving setting? Four-wheel drive to handle hills? There are lot of possibilities. But how would you build a better lap-bar? It's a good innovation, for its time, but because it is not digital, it is essentially a dead end.

What is really going to be fascinating is to see how (and if) TTI rises to the next set of challenges, facing into the coming six or seven years, which will involve more forms of task automation, making use of techniques in 3D printing and CNC processes to (finally) bring a boost to productivity in construction and associated fields. All of that innovation, and really big improvements it could bring, will be digitally-based. And TTI is, currently, by far the best-place company to benefit from these developments.

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Nick Miller, chief executive of Adbri, said a round of "out-of-cycle" prices rises for most of its products used in the construction sector is likely - probably in late March - as it looks to offset rising inflation, reports The Australian Financial Review (AFR).

As a major supplier of cement, concrete, sand and gravel, the company makes 42% of its revenue from residential construction.

Mr Miller said the size of the price increases is still being determined, but it will be above the official rate of inflation because of rising cost inputs in the Adbri business. He gave the AFR an example of the company having to endure a 30% increase in the price of pallets which is causing problems in the group's masonry and paving products arm amid an industry-wide shortage of pallets.

However, Mr Miller said the company's vertically integrated model, and the fact that it is a domestic manufacturer, has stood it in good stead through supply chain pressures and cost rises. He said Adbri was now well-positioned to take advantage of a major pipeline of work across commercial and residential construction, including an increase in multi-residential builds.

Performance

Adbri reported a revenue increase of 8% or AUD1569.2 million compared to AUD1454.2 million in the previous year with increased sales volumes experienced for all products other than lime. The company's net profit jumped 25% to AUD116.7 million in the year ended December 31.

Cement volumes increased by 11% for 2021 despite variable demand due to temporary government lockdowns that closed the construction sector in Victoria, New South Wales, South Australia and Northern Territory.

Demand across the southeast Queensland construction sector saw a 115% improvement in Sunstate Cement's contribution to earnings. Independent Cement & Lime Pty's earnings rose by 13% and Mawson Group's earnings increased by 23%.

Concrete and aggregate volumes increased by nine and 22% respectively, and overall, masonry sales revenue increased by 2% to AUD149 million as compared to the prior year.

Adbri experienced a $16.2 million in one-off COVID-19 costs stemming from shipping delays, higher pallet costs and other disruptions. Mr Miller told The Australian:

It was a really robust financial result which we're particularly pleased with given the challenges associated with COVID disruption throughout the year.

Importantly it does reflect our geographical footprint across Australia - our balance of exposure to the mining sector coupled with infrastructure, housing and commercial construction.

Adbri said it achieved a 2% reduction in emissions last year compared with 2020, and would be increasing the use of alternative fuels as it sought to hit net zero by 2050.

Outlook

Mr Miller remains bullish on the company's profit outlook, and he expects the residential housing construction market to remain strong, with a large amount of pent-up demand because of a backlog of projects as people struggle to find a builder for new homes and renovations. He said:

Our sense is that it is actually going to be stronger for longer.

Adbri had a "good line of sight" on demand across its business until at least mid-2022 because of its order book, he added.

The company wins 47% of the overall tenders it had been pursuing in the infrastructure sector in concrete and the aggregates segment, where it supplies sand, gravel and crushed stone. Mr Miller said:

We've been very specific and very targeted on tenders.

Adbri utilises its national network and tries to win projects where it has plants nearby. Mr Miller said there is a pipeline of projects over the next two years across Australia, with about AUD196 billion in infrastructure projects expected to come to the market by the end of 2023.

Related

Plumbing supplies group Reliance Worldwide Corp. (RWC) experienced a 3% dip in net profit in the first half of the financial year despite price rises and continuing demand for its products.

The Melbourne-based, global company said it generated a USD63.7 million net profit, down from USD65.9 million in the same six-month period in the prior year.

The decrease in profit came despite a 12% lift in net sales to USD521.8 million, with a 15% lift in the Americas and 11% growth in the Asia-Pacific. In The Australian, CEO Heath Sharp said:

We continued to experience robust market conditions and demand for our products. The trend of increased spending on home remodelling activity, coupled with strong new residential construction markets, has underpinned record levels of demand.

We were able to consolidate our volumes following a period of exceptional growth in 2021. Importantly, we were able to meet our customers' service and delivery expectations despite the increased incidence of COVID and supply chain challenges.

Reliance, pushed up its average prices by more than seven per cent. Mr Sharp said:

We have acted decisively to address input cost pressures now being experienced, principally through passing on higher prices, cost control and operational savings.

EZ-FLO acquisition

The company is still bedding the down its acquisition of US business EZ-FLO that was announced in November 2021.

EZ-FLO makes plumbing supplies and specialty plumbing products and was established in 1980. It purchased the Eastman brand in 2000 which is known for its appliance connectors, supply lines, stop valves and gas connectors. The Eastman brand helps to position RWC as a leader in appliance connectors, including plumbed appliances, gas, hot water and dryer venting. At the time, EZ-FLO president Paul Wilson said:

The EZ-FLO Eastman legacy is one of growth through entrepreneurship, quality, relentless customer service, and brands our customers trust.

In joining RWC, we're aligning with a likeminded partner to further accelerate growth and expand our capabilities to benefit our customers and the trade as a whole throughout North America and Latin America.

RWC's family of brands includes SharkBite[tm] push-to-connect plumbing solutions, HoldRite[tm] engineered plumbing and mechanical solutions, Cash Acme[tm] control valves and John Guest[tm] fittings and fluid dispense products.

Related:

Insolvency firm, DW Advisory is seeking buyers for Queensland-based bathroom fixtures maker Showerama Products after moving in as administrators, reports The Courier-Mail.

Queensland Building and Construction Commission records show Showerama was allowed to carry out work worth up to $12 million each year under a category two licence.

The company's core business has been the manufacture and distribution of bathroom cabinets and mirrors, bathroom vanities and cultured marble tops. It also manufactured and installed shower screens, sliding wardrobe doors, shelving and splashbacks.

DW Advisory administrator Cameron Gray has advertised the business for sale with expressions of interest open until March 9.

Founded in 1969, the company has annual turnover of $11 million with manufacturing and distribution facilities around the country. A company representative told the City Beat column in The Courier-Mail that Showerama was still operating and "it was business as usual."

A virtual meeting of creditors has been scheduled for 28 February 2022 with an agenda or purpose to do the following:

At the meeting, creditors may also, by resolution:

More information can be found at: Public Notice for Showerama Products - ASIC

BlueScope Steel Works Australia is the first organisation to be certified by business improvement and standards company, BSI against the ResponsibleSteel[tm] standard.

ResponsibleSteel[tm] is the industry's first global multi-stakeholder standard and certification programme. Certification to the standard demonstrates compliance based on 12 principles. From raw materials to end users, it addresses social and environmental impacts, ranging from climate change and greenhouse gas emissions, occupational health and safety and water management to human and labour rights.

By achieving certification to the standard businesses in the construction, steel, infrastructure, and sustainability industries can demonstrate their responsible steel credentials to customers and stakeholders. Firms can gain market benefits such as improved responsible sourcing and reduction in greenhouse gas emissions; and demonstrate their contribution towards the Sustainable Development Goals (SDGs), such as Goal 12 Responsible Production and Consumption and Goal 13 Climate Action. John Nowlan, chief executive, Australian Steel Products, said:

ResponsibleSteel site certification provides our customers with the confidence that BlueScope's Port Kembla Steelworks meets the highest ESG performance standards, assessed against the 12 principles of the standard.

Chris Meehan, chief operating officer - Australia at BSI said:

Driving change in the way we address our economic, social and environmental challenges is high on everyone's agenda, from achieving net zero to pollution reduction, climate change and the responsible sourcing and production of steel. We are delighted to be an approved auditor for the ResponsibleSteel standard and certification programme and look forward to working with clients and organisations to help them achieve sustainability and resilience.

I would like to congratulate BlueScope on their achievement in being the first site in Australia to attain ResponsibleSteel certification from BSI. BlueScope is leading the way in accelerating the transition towards more sustainable steel.

Related

Building products supplier, Boral has introduced "out of cycle" national price increases. In a statement, Boral CEO Zlatko Todorcevski said:

To recover the impact of higher energy costs and other cost increases on our business, we've implemented out-of-cycle national price increases. These, together with further transformation benefits and less expected disruption to construction activity, should deliver stronger earnings in the 2H [June] FY2022.

In The Australian Financial Review (AFR), Mr Todorcevski said the price rises would be staggered across Boral's building products range.

It will be a different increase in different markets.

Mr Todorcevski said it was difficult forcing higher costs on its customers, but the move reflected a broader inflationary environment. He told The Australian:

The feedback is it's never easy to have a price increase conversation with customers but they're noticing it quite strongly in a lot of other building materials. Frankly, the increases we're putting through are not as large as what we've seen in timber or what we understand is happening with steel. They're more moderate and focus on offsetting what we're seeing in energy.

Rising energy costs - the price of coal had jumped - are making it more expensive for Boral to operate plants such as its Berrima cement works in the Southern Highlands region of NSW. Boral's diesel fuel bill had also soared as oil prices jumped.

It estimated a net impact of $6 million from extra energy costs in the December half, with hedging contracts helping to limit the increase to some extent. Mr Todorcevski said:

Inflation is predominantly short and sharp around the energy space.

The hit from higher energy costs and construction site shutdowns in Sydney and Melbourne in the first few months of the December half weighed down on profits by $33 million. Long periods of wet weather on the eastern seaboard also negatively affected the Australian building operations. Boral's first-half earnings before interest and tax slid by 23% to $78 million.

Boral said its revenue fell 12% to $2.38 billion in the six months ended December 31 compared to the year-earlier period. However, its net profit surged sixfold to $1.02 billion, because of a pre-tax one-off gain of $931 million from asset sales in North America.

The company noted supply chain constraints after COVID-19 lockdowns for items such as heavy vehicles, along with labour shortages that affected the first half, are expected to continue to June 30. Mr Todorcevski said:

The supply chain has extended so it's taking a lot longer to get the vehicles in the country, which means we've got to pre-order to a large degree. The other one is just availability of labour. We have particularly noticed that in drivers and quarry managers. So we're not only looking at accelerating some of our recruitment and retention progress, but how we reduce the impact on our fleet.

Mr Todorcevski expects the detached housing market to soften later in calendar 2022 as construction under the federal government's HomeBuilder scheme starts to roll off. But the high-rise apartment market is showing signs of life with approval numbers rising. It also has a pipeline of big infrastructure projects. The company said in a statement:

New major projects remain slow to move into execution, despite the sizeable infrastructure pipeline. We have successfully secured a number of major project opportunities in the half, which will predominantly benefit from 2023, and are tendering on numerous other opportunities.

Boral is 70% owned by billionaire Kerry Stokes and his family through Seven Group Holdings after a takeover bid last year.

Classic Australian soap bar, Solvol will no longer be produced or sold in Australia. It was used by tradies, mechanics, farmers and households for more than a century, since 1915. In 2000, the product was bought by US-based WD-40 Company.

WD-40 Company general manager Nick Roberts said production of the bar had long been carried out by specialist soap manufacturers in Sydney, but due to its "highly unique" formula, they had found the production of Solvol to be very harsh on their equipment and could no longer make it.

Due to production circumstances outside of our control, the much-loved Solvol soap bar will no longer be manufactured and sold in Australia.

After 105 wonderful years, we're hugely disappointed and saddened by this news and we know many of our customers are too.

Although the Solvol bar has been discontinued, the liquid version remains, and will continue to be produced and sold.

GLG - Pierlite

Private equity owned Gerard Lighting Group (GLG) is selling its Pierlite business to Netherlands-headquartered Signify, formerly known as Philips Lighting. The value of the transaction is believed to be worth about $100 million, reports The Australian.

The sale comes after GLG sold two of its other divisions, Sylvania and Austube, to Schreder, a Belgian family-owned company that has 2,600 employees and operates in 35 countries around the world. Sylvania delivers lighting solutions to infrastructure projects including roadways, tunnels and sporting facilities and Austube is a custom light manufacturer.

Pierlite designs, manufactures and distributes indoor architectural, industrial and commercial lighting systems. It is the largest remaining part of the GLG business and generates approximately $150 million in revenue a year and is understood to be profitable, according to The Australian Financial Review

Gerard Lighting chairman Ben Sebel said Signify's scale and worldwide footprint would rapidly accelerate Pierlite's growth and enable the business to better service the Australia and New Zealand market.

The sale process is expected to be completed in the first half of the year, subject to customary closing conditions.

Background

Gerard Lighting was founded by Alfred Gerard in 1920s when it was then known as electrical accessories business Clipsal.

As part of its history, GLG became Australia's biggest lighting company. The company was listed on the ASX for a short stint before CPE Capital (then known as CHAMP) bought it in 2012, via a $186 million takeover. But it struggled in a competitive market with shrinking margins, in particular due to the rise of low-cost Chinese manufacturers.

GLG built significant debt in the years between 2012 and 2017, before it became majority owned by Investec and Bain Capital Credit in June 2017. Part of the terms of the acquisition was to invest capital into the business to reduce its debt.

The two private equity firms embarked on a comprehensive turnaround program, and steered the company through several large transformations, focused on enhancing internal operations, the technology infrastructure, innovation, and shifting the distribution model to a customer-led approach.

The transformation has been successful because Investec and Bain Capital are understood to have recouped their investment. GLG has also prospered from the booming housing market.

When announcing the deal, Hyne Timber said the new partnership brings together a combined 320 years of family-owned sawmilling heritage to pursue growth opportunities.

James Jones & Sons Ltd (JJSL) is the UK's largest, family-owned timber processor with annual sales in excess of GBP330 million. Founded by James Jones in 1838, its history includes supplying timber for Captain Scott's Antarctic exploration vessel Discovery. Tom Bruce-Jones is the fifth-generation family chairman and David Leslie is its joint managing director. Mr Bruce-Jones told Timber Trades Journal Online:

We first commenced discussions with the Hyne family members in late 2020, and it quickly became apparent that the two companies were very similar culturally and shared complementary values regarding service and quality and looking after their employees.

Jon Kleinschmidt, CEO of Hyne Group, said there was no overlap in the operations of the two companies because of the locations, with the Hyne Group focused on Australasia and JJSL on Europe. He told Timber Trades Journal Online:

We can now concentrate on identifying and developing growth opportunities in our region and beyond, through organic growth and acquisition, and through a cross fertilisation of ideas.

Mr Kleinschmidt also confirmed there were no plans for any changes to the Hyne Timber and XLam brands. He told the Fraser Coast Chronicle:

It is business as usual for the Hyne Group operations with no changes to the company's team members, customers, suppliers and our ongoing commitment to supporting the communities in which we operate.

Fifth generation Hyne family member James Hyne said it was another significant milestone in Hyne Timber's 140 years as a business. He told the Fraser Coast Chronicle:

With this exciting partnership, we are bringing together two multi-generational family-owned and operated companies with a shared commitment to world-class product quality, service, safety, innovation and sustainability...

The JJSL Chair, Tom Bruce-Jones, is also now the Chair of our Hyne Group board, who we welcome with his extensive experience in our industry at a global level.

Mr Bruce-Jones said the partnership provided a strong platform for further consolidation and growth in Australia and New Zealand.

We choose our partners very carefully and in the Hyne Group we have found a culture of integrity and excellence that mirrors our own.

In an increasingly corporate and private equity dominated industry, we believe that family culture and values not only provide differentiation but are a key competitive advantage. Together, we believe there are enormous opportunities to use our combined know-how, experience and financial strength to grow the business by delivering even better products and services.

The transaction has secured Foreign Investment Review Board approval and all other regulatory approvals.

Hyne Timber, dates back to 1882, and operates two modern sawmills in Tuan (QLD) and Tumbarumba (NSW) producing around 800,000m3 of sawn timber. The mills source approximately 1.6 million tonnes of pine logs from plantations located in Queensland, NSW and Victoria.

XLam is a cross-laminated timber (CLT) manufacturer acquired by Hyne Timber in New Zealand, in 2015. The company commissioned Australia's first ever CLT manufacturing plant in 2018.

Expansion and growth

The deal with JJSL follows a period of major investment by Hyne Timber. This includes a $14.5 million expansion of the Hyne Timber factory in October 2021 through the construction of a continuous drying kiln (CDK). At the time of its official ribbon cutting event, Mr Kleinschmidt said

The CDK not only delivers efficiency for the Tuan Mill in addressing the timber drying bottleneck, but it will also improve the consistency of drying quality and overall quality of our timber in addition to delivering energy efficiency.

This project was funded through the Queensland Government's Jobs and Regional Growth Fund.

Just before the launch of the CDK, Hyne Timber took on three-year lease with an option on a 12,608sqm office/warehouse in the Osprey Estate on the Port of Brisbane. At the time, Hyne Timber's general manager of customers Peter Hyne said the warehouse was a significant upgrade to their distribution network. He told the Courier-Mail:

It offers us increased capacity and is designed to offer our customers even greater service as we increase production at our Tuan Mill to meet the future demands of the market. The new distribution centre is our largest nationally and services 90% of all deliveries to the southeast Queensland region.

Hyne Timber national logistics manager Adrian Garnett also said the move saw the company close its Kunda Park facility on the Sunshine Coast (QLD).

Hyne wanted a bigger footprint in the northern region and consolidate across their network. Hyne Timber were drawn to the highly functional layout, drive-around capability and direct access to heavy vehicle road routes, providing a streamlined production and distribution process that greatly improved their operational efficiencies.

Underpinned by a booming construction sector, the expansion and relocation exercise was driven by proximity to critical infrastructure, tenant specific requirements and improved central locality to their southeast Queensland customers.

In May 2021, the company in conjunction with Hutchinson Builders, was awarded the contract for the construction of the new $12.1 million fire and emergency station at Maryborough (QLD).

Hyne Timber also opened a $23 million dollar timber laminate factory at Maryborough (QLD).in August 2020.

USG Boral Building Products Pty Limited is now known as Knauf Gypsum Pty Ltd, or simply "Knauf" in Australia.

Boral had a plasterboard joint venture across Asia, Australia and New Zealand with USG, but Knauf bought out USG in a deal in 2019 worth USD7 billion.

In October 2020, Boral announced the AUD1.43 billion sale of its 50% stake in the USG Boral plasterboard business to Knauf. Soon after, Knauf agreed to sell its Australian plasterboard plants to Belgium-based Etex after they were placed on the market through Bank of America. (Etex is a family-owned global manufacturer of lightweight building products that operates in 42 countries.)

The plasterboard factories that were sold were those Knauf had before it purchased the USG assets in Australia and Asia, and located at Altona in Melbourne, Matraville in Sydney and Bundaberg in Queensland. It also has a metal profile production facility in Beenleigh, in Brisbane.

All plants and assets belonging to Knauf Plasterboard, including the Bundaberg facility, have been purchased by the Etex Group. The name of the Australian business has been officially changed to Etex Australia.

Knauf Gypsum

With transition to the new brand name underway, Knauf managing director Tony Charnock reassures existing customers, suppliers and partners with regards to changes to the name. He said:

Now we are part of the Knauf Group, one of the world's leading innovators and manufacturers of modern building materials, we look forward to continuing the established relationships we have with our- customers.

The synergies between the two brands ensure the transition to the new name will be seamless and our customers will receive the same high-quality experience they have come to expect, with access to locally manufactured products that meet Australian standards.

We have manufacturing facilities in Sydney, Melbourne and Brisbane, and will continue to supply plasterboard, compounds, cornice and associated products and systems to the Australian building industry through a national distribution network of 40 company-owned trade and retail outlets.

I wish to reassure all of our existing and future customers that, as part of the Knauf Group, we remain one of the best suppliers for the Australian construction industry.

Related: Knauf sells its Australian plasterboard plants.

Melbourne-based advertising agency Balance has enrolled comedian Nazeem Hussain to be the face of Haymes Paint's "Paint On Australia" campaign. It makes use of Nazeem's trademark personality to encourage Aussies to celebrate and embrace what it means to be uniquely Australian. Haymes Paint director Matt Haymes said:

We're over the moon. Here at Haymes Paint we've got our own way of doing things - and we don't do inauthentic. Nazeem totally fits our culture, as well as the mindset of our customers, so we're very excited.

Agency strategist and copywriter Rankin McKay said the campaign is all about "channeling the modern and dynamic version of Australian identity. That reflects reality yet rests on the strengths of over 85 years of Haymes Paint history. This is your version of Australia and Haymes Paint is one of the enablers of that. That's what 'Paint on Australia' really means".

Haymes Paint head of marketing Andrew Senyard said:

The process started with a critical brief, working closely with Balance on a fundamental review of our brand and strategy. We were looking for the strategic 'glue' that would keep our values and personality playing clearly and consistently across our multitude of customer segments and product categories. This campaign is the result of that journey.

Starting on radio, digital and social media, the campaign will also translate directly into retail promotions for Haymes Paint Shops, PaintRight stores and other Haymes Paint stockists around the country. Balance Creative Partner, David Gullotti, said:

Haymes has seen its market share grow strongly in a market dominated by internationally owned competitors. We wanted to break away from the paint ad cliches and put our message across in true Haymes Paint style.

Serious about paint, but not taking ourselves too seriously - and yet there's a real story there too. After all, how many people know that Haymes Paint has been awarded Canstar Blue's award for Most Satisfied Customers in the paint category the last four years in a row, or are the only major paint brand that's actually Aussie made and owned?

Haymes is the last big locally owned paint manufacturer since Japanese giant Nippon Paint bought DuluxGroup for $3.8 billion in mid-2019.

You can view a video of the campaign here:

Storage products supplier Zenexus has taken on a seven-year lease at a property in the 41.3-hectare Rubix Connect industrial estate owned by Frasers Property Industrial, according to a report in the Australian Financial Review. It will occupy a 15,000sqm combined head office and state distribution centre located in the Melbourne suburb of Dandenong South.

The facility comprises 13,724sqm in warehousing space and 1280sqm of office space. The facility, expected to be operational in October, will source certified carbon-neutral electricity and will target a Five-Star Green Star Design & As Built v1.3 rating by the Green Building Council of Australia. Commercial real estate agency TMX Global secured the deal for Zenexus.

The wide range of Zenexus products can be found in the aisles of Bunnings stores.

The company also has a five-year lease on a 9870sqm purpose-built facility that was being built on a 4.2ha site within Goodman Group's Redbank Motorway Estate in Queensland, according to The Courier-Mail.

Back in August 2021, Zenexus Group general manager Joe Guthrie said the distribution centre will drive greater efficiencies to the company's operations and will support its continued growth and strategic business plan. He told The Courier-Mail:

Our sector has seen an increased demand in home improvements from the impacts of lockdown and with this new facility we will be able to meet this demand by creating maximum efficiencies in our supply chain network to enable smoother and faster distribution.

TMX's Matthew Frazer-Ryan who struck the deal, said the Redbank Motorway Estate continues to attract large scale national and multinational occupiers due to its location near transport routes.

Related: In 2020, power tools and gardening equipment supplier Ozito became the first tenant in the Rubix Connect estate.

Backed by the resources, scale and financial strength of its owner Nippon Paint, DuluxGroup plans to invest in Cromology's future growth and sees excellent opportunities to expand. DuluxGroup International chief operating officer Richard Stuckes said it has acquired Cromology with a firm eye on growth.

We're about acquiring market leading businesses who already have a strong track record, retaining them and investing in them. Cromology is world class. It has a highly capable management team who have deep European market knowledge and experience, leading premium brands that are household names, excellent manufacturing facilities, broad distribution across key geographies, strong R&D credentials and - above all - plenty of more opportunities for growth.

For us, this is about acquiring a sizeable European platform as the base for ongoing growth. We see opportunities in adjacent geographic and related product markets, including through DuluxGroup's broader product range and technology as well as its retail DIY channel expertise.

As part of DuluxgGroup, Cromology will be empowered to grow autonomously while benefiting from access to the Nippon Paint Group's global scale, technologies, capabilities and extensive capital resources. Specifically:

Cromology CEO Loic Derrien said:

...Being part of the fourth largest paint company in the world will bring tremendous opportunities to all of us. We will leverage DuluxGroup-Nippon Paint Group's technologies and know-how to the benefit of our customers while offering new opportunity for growth to our suppliers. Cromology associates will be exposed to new professional and personal development opportunities.

DuluxGroup has a growing presence in Europe and is responsible for Nippon Paint Group's ambitious growth plans in decorative paints in Europe and other western markets. (It has no association or connection with the owner of the DULUX brand in other parts of the world including Europe.)

About Cromology

Cromology distributes its products in eight countries including Belgium, France, Italy, Luxembourg, Morocco, Portugal, Spain and Switzerland. It has more than 3,000 employees, five research laboratories, nine production sites and seven logistics platforms.

Throughout its 270 years of history, Cromology has developed a reputation for its expertise in decorative paints. Cromology's commercial brands have a major capacity for innovation (20% of its revenue was generated with products released in the last three years). It aims to expand its presence in the decorative painting industry in Europe, while doing the most to minimise its environmental footprint.

Cromology was formerly owned by listed European investment firm, Wendel.

Related: Nippon Paint plans to acquire French construction and decorative paint maker Cromology through its Australian subsidiary, DuluxGroup.

The abrupt dismissal of James Hardie CEO Jack Truong seems to be shift in the way public companies sack their CEOs over their behaviour.

In a statement to the ASX, the company announced the immediate exit of Mr Truong, after an "extensive and material" breach of its code of conduct.

Executive chairman Michael Hammes said terminating Mr Truong was a difficult decision but came after extensive due diligence from a third-party consultant and staff threatened a mass exit.

James Hardie said the board had received reports from employees in recent months about Mr Truong's work-related interactions. The company hired a third party to help investigate the claims and said it offered coaching to Mr Truong, but he did not alter his behaviour and refused to accept the need to change.

When executives threatened to leave, the board decided to remove him. Mr Hammes said:

It was clear that sincere change did not occur. Jack's behaviour remained inconsistent with the James Hardie code of conduct. It was not discriminatory, but Jack's behaviour was cited by the management survey as intimidating, threatening and not respectful of the individual.

Mr Hammes said James Hardie interviewed the 30 to 50 people who daily worked with Mr Truong, and about 80% of those people reported inappropriate behaviour.

He is a very tough, very demanding kind of executive. That is fine, That is the culture of Hardie.

But he started, over the last few months, treating people over the last few months with a lack of respect in intimidation, fear, humiliation, publicly and privately. And it wasn't a one meeting problem. Why? I can't answer that question but it was there, multiple times.

This was not a chemistry problem between Jack and his senior team. It was something much more fundamental. Our code of conduct is to treat people with respect to all cases, period full stop, and that wasn't happening.

On an investor call, Mr Hammes ruled out resetting James Hardie's culture, known for being "aggressive" and "upfront".

That culture won't change and shouldn't change. It needs to be managed with understanding and respect for people and that's what we'll take.

Mr Truong's departure comes as he oversaw a strategic transformation during his three years at the helm, which Mr Hammes praised while revealing a profit upgrade. Mr Hammes said:

The transformation that has occurred over the past three years is truly remarkable. The company now has a clear, correct and very well-defined strategy that is aligned with what the board and management identified as necessary in 2017. This strategy is now deeply embedded throughout the organisation, from the line employee at our plants all the way to the executive leadership team.

However Mr Hammes said the work environment under Mr Truong had become "too hostile".

James Hardie has appointed non-executive director Harold Wiens, who persuaded staff who intended to resign to stay at the company, as the interim chief executive. Mr Hammes said a permanent chief executive might be appointed within six months.

In response, Mr Truong has hired lawyers and is considering potential legal action against his former employer.

A public relations firm hired by Mr Truong confirmed to the Australian Financial Review (AFR) that he was considering his "next steps" and had retained legal counsel..

When the buildings supplies manufacturer fired Mr Truong, it scrapped his on-foot incentives, including unvested long-term bonuses. The executive walked out the door with just his statutory entitlements.

James Hardie appointed Mr Truong in May 2017 as president of international operations before promoting him to CEO in 2019 when he was tasked with transforming the global building materials company, according to the AFR.

Under Mr Truong's leadership, James Hardie recorded a rise in annual revenue of USD400 million, with shares climbing more than 363% since 2019.

Before joining James Hardie, Mr Truong was the chief executive of home appliance maker Electrolux North America and an executive at industrial and consumer products company 3M.

The company is now expecting full year net profit to be between USD605 and USD625 million, up from previous guidance of USD580 million to USD600 million. The increase would be driven by higher earnings across strong residential and market growth in the US.

For James Hardie, there seems to be a question over the strategy unveiled by Mr Truong in mid-2021 which commits to a 3M-inherited lean manufacturing model and direct marketing push to homeowners looking to renovate.

The company has profited from soaring demand for home renovations. The trend had been exacerbated by the COVID-19 pandemic, which required people to work from home and largely curtailed travel. Discretionary spending on renovations climbed despite shortages in building materials and difficulty in booking tradespeople.

The firm benefited from television and social media campaigns that targeted homeowners directly, letting them know what options were available for an overhaul of an exterior and an upgrade inside.

Related: James Hardie "pull" strategy delivers for Q2 results.

Workplace culture

Management experts say companies and employees are losing tolerance for workplace bullies. In The Age, Natalie James, a former Fair Work Ombudsman who now leads Deloitte's Workplace Integrity Team, said the "MeToo" movement highlighting sexual harassment and misconduct in recent years had sparked a broader rethink of what was acceptable in the workplace.

The heightened public debate about sexual misconduct has also extended into other conduct, particularly bullying because often the two come together.

(Ms James was speaking in general terms and not specifically on any company or executive.)

Ms James said many employees previously tolerated intimidating and humiliating behaviour from their managers because it was "just the way things are around here".

Now people, particularly younger people, are saying: that's not OK by me and I have choices, and I'm not going to work in a place where this is how things are done. There has been that moment where people have reflected on conduct that was perhaps normalised or considered banal in the past and now it is being recognised as harmful.

Social media also gave employees a direct way to speak out about mistreatment, Ms James said, with potentially dire consequences for a firm's reputation.

It's around, first and foremost, reputation and it's also around talent retention in this age when people want to see purpose and value in their work.

Mark Schmitt, who runs the workplace mental health consultancy Thrive In Work, said bullying remained "rife" in corporate Australia, but agreed it was becoming less accepted as companies realised workers would underperform and eventually leave if they failed to provide "psychological safety". He told The Age:

Our expectations of how we are treated are changing, and it's obviously changing for the better.

Mr Schmitt said it would take workplace safety regulators to start prosecuting more of these cases for employers to treat the issue with the seriousness it deserved. He said:

When we think about workplace health and safety, we need to think about mental health and safety [too]. It will take one case from ... the regulator, and then boards will become very understanding of the risk they face.

Tony Boyd writes in the AFR's Chanticleer column:

Australian boards have a long tradition of obfuscation when it comes to telling the market about the departure of CEOs who get the boot for overly aggressive and disrespectful behaviour.

The most common approach has been to say the CEO left for "personal reasons" and leave it at that. This leaves the market confused and allows all sorts of wild theories to fill the vacuum.

Often, boards have bowed down to the demands of a disgraced CEO and kept secret the details of what really happened. This allows generous payouts or certainly payouts that are better than the terms allowed under a "termination for cause".

Accountability is a critical aspect of corporate governance and should not be the subject of negotiation.

OneFortyOne has committed to invest over $11 million in its Jubilee Highway sawmill over the next two years. Paul Hartung, general manager of Jubilee sawmill, said:

OneFortyOne has invested close to $40 million since purchasing the mill in 2018, on state-of-the-art technology projects such as sorter bins, a Lucidyne scanning system, reducing boiler emissions and upgrading to continuous drying kilns.

This most recent commitment will extend to an equipment and technology upgrade for Drymill A, replacing and modernising equipment as it reaches end of life.

Mr Hartung said the new equipment will be manufactured in New South Wales under a licensing agreement, a first for Australia.

OneFortyOne is committed to ensuring we remain one of the most progressive and efficient mills in Australasia. By investing in new technology, we are continuing towards our objective of valuing every strand of wood fibre that we process.

The company estimates that through this upgrade Jubilee sawmill will reduce its emissions by approximately 268 tonnes of CO2 equivalent annually. These savings will be generated by reduced electricity consumption.

The project is scheduled to begin in 2022 and will take two years to complete.

Jubilee Highway is a large sawmill situated in Mount Gambier (SA) and processes softwood sawlogs into structural framing timber products used in residential and commercial construction of wall frames and roof trusses. The sawmill also produces some non-structural timber products including packaging and decking. Its products are sold to wholesalers, frame and truss manufacturers and retailers.

Timberlink

Beginning in 2022, Timberlink will implement a two-stage upgrade to its timber manufacturing facility in Bell Bay (TAS). It will include an expansion of the site's existing sawmill, and other infrastructure improvements as well as:

The project is expected to increase the timber manufactured at the site by more than 50%, providing material for an estimated 7000 new houses.

According to Timberlink chief executive Ian Tyson, the upgrades were brought forward two years to support additional supply into the Australian market.

The Advocate reports the sawmill upgrades have come about as timber supplies around the nation remain tight. The shortage has been further constrained by a housing boom around Australia, with many builders unable to source sufficient structural timber to complete houses. With that in mind, Mr Tyson said the increase in structural timber from the company's two Australia-based sawmills would help - but not solve - the timber deficit.

When asked how Timberlink would feed the significant increase in output at site, a company spokesperson said agreements were in place with its pine plantations as part of a staged expansion.

To date around $120 million has been invested into the Bell Bay sawmill, which Timberlink first purchased back in 2013 from the receivers of the then-defunct Gunns Limited. This latest round of upgrades is scheduled to be completed in 2025. In a media statement, Mr Tyson said:

At the completion of this project, the combined output of Timberlink's Bell Bay Tasmania and Tarpeena South Australia manufacturing facilities will position Timberlink to increase supply of manufacture of structural timber for use in the construction of homes in Australia.

The improvements will enhance the volume of renewable plantation pine logs that can be processed as well as the yield per log, resulting in a future workplace with improved precision, safety, and job security thanks to high-tech machinery.

The anticipated investment comes on top of extensive modifications undertaken two years ago and the announcement earlier this year of the establishment of Tasmania's first Wood Plastic Composites manufacturing facility at the Bell Bay location.

The plans for Bell Bay mirror the major investment the company made into its Tarpeena sawmill in South Australia, as part of a push by the company into new structural timber materials.

Related: Timberlink began work on upgrading its Tarpeena (SA) sawmill in 2019.

New York-headquartered personal protective equipment company Protective Industrial Products (PIP) has acquired Australia's Bisley Workwear. This follows its acquisition of Paramount Safety Products which was announced in July this year.

PIP said it had signed an agreement to acquire DJG Corporation, Bisley's parent company. The deal is expected to close towards the end of December and financial terms were not disclosed. Joe Milot, PIP's president and CEO, said in a statement:

The Bisley brand will add new portfolios of innovative workwear and safety garments to the head-to-toe PIP product offering in different regions, including North America. This addition reinforces our key objective of serving customers globally by continually providing them with more opportunities for growth.

Bisley Workwear is another example of PIP's acquisition strategy that is built upon strengthening its portfolio of products so that global distributor partners choose PIP first for all of their safety needs. PIP has over 20 locations around the world and is a portfolio company of Odyssey Investment Partners.

Bisley has been shaping the Australian workwear clothing industry for nearly 60 years, and driven by "old fashioned ideals like quality, exceptional service and value for money", according to its website. The company has been recognised for its innovative workwear designs and its ethical and sustainable sourcing affiliations. The company's in-house design team has worked with leading fabric and material specialists to produce stylish and comfortable workwear, safetywear and technical protective wear. This includes garments for men and women that are used in oil and gas, construction, manufacturing, logistics, agriculture and maintenance and repair operations. David Gazal, CEO of Bisley Workwear, said in a statement:

We are thrilled to join the PIP Global family. Joe and I have a very similar business path and values while sharing the same mission: Using our scale to engage with key distributors while giving them more of a reason to buy all brands under the PIP Global umbrella.

About PIP

In late 2020, private equity investment firm Odyssey Investment Partners purchased PIP from Audax Private Equity for an undisclosed amount. Founded in 1984, PIP offers a broad suite of recognisable PPE products and brands across numerous industries, including hand & arm protection, protective clothing, head protection, eye & hearing protection, and other safety protection. Headquartered in Latham, New York, PIP supplies its products through distributors, retailers, and e-commerce platforms. At the time of the acquisition, Henry Bendit, a principal at Odyssey, said:

We look forward to pursuing a multi-pronged growth strategy for PIP, including both organic initiatives and strategic acquisitions. Given its scale and proven success with integrating prior acquisitions, PIP is uniquely positioned to capitalise on the fragmented global PPE market to grow within its current core offerings, while expanding further into adjacent PPE categories, both in the US and internationally.

PIP supplies innovative PPE to wholesalers and distributors in the industrial, construction and mining industries. Its brands include G-Tek, Bouton, Ironcat, Assurance, Kut-Gard, CleanTeam, QRP, Ambi-Dex, Dynamic, Maximum Safety, Novax, JSP, and Boss. The company's West Chester division offers safety products to retail customers under the Safety Works, Boss, Brahma, Mud, West County Gardener and Hearos brands, as well as licensed brands.

Related: Paramount Safety Products is now part of Protective Industrial Products.

Related: Bisley Workwear is designed for lady tradies.

The sale of Stanley Black & Decker's (SBD) security business to Securitas includes its Commercial Electronic and Health Care Security business lines, which have projected 2021 revenues of about USD1.7 billion. Automatic-door services provider Stanley Access Technologies is not part of the sale.

SBD said net proceeds from the sale are expected to partly fund approximately USD4 billion in share repurchases. SBD's CEO James Loree said in a statement:

The sale of Security is consistent with our commitment to generating substantial shareholder value and allows us to sharpen our strategic focus on growing our core businesses while also returning capital to investors through a significant share buyback. This transaction is a result of our active approach to portfolio management, and the attractive valuation we received reflects the investments we made in transforming our Security business over the last several years.

SBD officials expect to close the sale in the first half of 2022, but timing is "contingent upon receiving regulatory approvals and other customary closing conditions."

Based in Indianapolis in the US, Stanley Security has a 30-year history of protecting its clients world-wide through tech-enabled security services, ranging from alarm monitoring to systems integration, as well as a specialised healthcare offering. Today, Stanley Security is highly recognised as an electronic security provider with approximately 7800 global employees.

Securitas, which is headquartered in Stockholm, represents one of the world's largest security services companies. Employing approximately 355,000 people, it delivers guards, electronic security, fire-and-safety and risk management services to more than 150,000 customers.

Online tradie marketplace hipages has acquired New Zealand web-based trades platform Builderscrack. The 100% acquisition of MyQuote Limited, trading as Builderscrack, is for $11.8 million in (80%) cash and equity (20%).

It gives the ASX-listed hipages group access to a new $26 billion total addressable market, in addition to Builderscrack's 4000 active tradies and 200,000 registered homeowners.

Founded in 2007 by Jeremy Wyn-Harris, Mark Dickson and Keith Robert, Builderscrack is a website that connects tradies across New Zealand with consumers, allowing homeowners to post jobs, find trades professionals and leave reviews. It grew to post more than 95,000 jobs on its platform in the past 12 months, generating more than $67 million in revenue.

Since it was established, it has facilitated more than $237 million of value from over 480,000 jobs posted.

Hipages group chief executive and co-founder, Roby Sharon-Zipser told SmartCompany the deal was "a big milestone" for both platforms and an opportunity to share pricing models and growth strategies. He said:

Builderscrack has done an outstanding job over the last 15 years and we see a huge opportunity to take what we've learned and what they've learned and bring it together to make an even better business.

Hipages' take rate, which is the proportion of value the platform earns from the total value of jobs facilitated on the platform, is 2.1%. In comparison, Builderscrack's take rate is much higher at 3.9%.

Mr Sharon-Zipser said Builderscrack uses more sophisticated pricing techniques allowing it to capture the intent of its users and generate a higher rate. He said:

They know whether a user is more inclined to proceed with the job or not and then ultimately, they work on a commission model, so that's why their take rates are higher.

Builderscrack's co-founder and general manager Jeremy Wyn-Harris will continue managing the platform in New Zealand with its 14-strong team. Mr Sharon-Zipser told New Zealand's The Daily Post:

Jeremy and the Builderscrack team have built a great business around a strong technology platform and an incredibly loyal tradie base.

We will supercharge their growth by leveraging the strategic and operational experience we gained from scaling our business in Australia, as well as helping them to grow their brand to capture the huge market opportunity in New Zealand.

Mr Sharon-Zipser said the two businesses will remain separate and he has no plans to change the name Builderscrack because "it's just so appropriate to the New Zealand market".

The acquisition follows its recent investment in a property management technology platform Bricks + Agent and the field service software solution Tradiecore.

Tradiecore allows tradies to save customers' details, generate quotes and invoices, send them directly through the app and add individual notes.

Bricks + Agent uses a cloud-based platform that allows tenants to post maintenance requests online, which can then be allocated to tradies, who can also be paid through the system. It has 360,000 users, a pipeline of almost 500,000 properties under management and 21,000 tradies on its platform, reports the Australian Financial Review (AFR).

Hipages bought its quarter stake in Bricks + Agent for $6.25 million, an investment that would give hipages exposure to Bricks + Agent's user and tradie base.

At the time, Mr Sharon-Zipser said Bricks + Agent was a great cultural match for Hipages and fitted perfectly with its strategy to expand into adjacent markets. He told the AFR:

The $21 billion property management market is a huge opportunity for us.

Related: Hipages has been growing revenue from tradie subscriptions.

Related: In the UK, Kingfisher purchased a majority stake in an online home services platform.

Building materials company Boral has sold its fly ash unit to Eco Material Technologies for USD755 million (AUD1 billion), as it focuses on its Australian construction materials business.

Chief executive Zlatko Todorcevski said the group's ongoing divestment program has now "unlocked substantial value", according to a report in The Australian. He said:

Together with the sale of the North American Building Products business and our stake in Meridian Brick ... we will have divested the North American businesses for more than $4 billion. This is a significant milestone that supports our strategy to refocus on our construction materials business in Australia.

Boral has owned and operated fly ash businesses in the US for 40 years. The company has faced pressure to sell its assets in the US after Seven Group grew its stake to more than 69% in the company.

Fly ash relies on coal-fired power stations for production, a factor that makes it unappealing for environmentally friendly equity investors, and Boral has considered sourcing other greener alternative products that make cement.

The net proceeds from the sale will add to surplus capital, with the board to determine the most appropriate way to return surplus capital to shareholders at the relevant time, the company said.

The deal is expected to be completed in the 2022 financial year, allowing for the regulatory approval process. It is also subject to customary conditions precedent and completion adjustments.

Jaybro

As a supplier of products used in the construction and maintenance of infrastructure projects in Australia and New Zealand, Jaybro also sells hardware and tools, civil supplies, printed mesh and safety signs, road and traffic signs, fencing and barriers, emergency response equipment, personal protective equipment and other products.

It has been reported in Data Room in The Australian that buyout fund CPE Capital is putting it up for sale after acquiring it in 2017. At the time, Jaybro was generating about $20 million of annual earnings before interest tax, depreciation and the price paid was reported at the time to be about $170 million. The business was started by Stephen Joyce in 1996.

CPE Capital is led by John Haddock and has invested $3.8 billion since 1987. Other companies in its portfolio include the Rocla concrete solutions business that was recently purchased from Fletcher Building, online cycling retailer Pushys, the Banksmeadow Recycling facility in Sydney, automotive business The Dutton Group and engineering solutions provider Marand.

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.

...

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.

–-

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.