Many building products suppliers are reporting strong year-to-date sales, reports JOHN POWER. But take note: behind every success story is a healthy dose of adaptability and careful forward planning.
Thanks to strong markets in the construction of detached housing and multi-residential dwellings, building supplies – generally speaking – have been in strong demand throughout 2016 in Australia.
Good sales, however, should never be ‘taken for granted’ in times of strong construction. Success requires continually refreshed product selections, a careful reading of market trends, and perfectly oiled supply chains.
In this article, we talk to several leading suppliers about their current sales performances, and their plans to remain successful for many years to come, by being adaptable to different market conditions.
A good starting point is timber supplier Timberlink Australia, which is achieving growth and streamlined performance through a range of strategic measures.
“2016 has been a good year for Timberlink,” said Theresa Weymouth, Marketing Programs Manager, Timberlink Australia – New Zealand.
“Sales continue to grow and we have continued to invest in our business. This year we opened a distribution centre in New South Wales and added to our local NSW sales team, allowing us to better support this important market. This is also our first full year operating our New Zealand mill (purchased in September 2015) and selling some of our New Zealand products into Australia,” she said.
Theresa said timber has emerged as a “preferred building product” in 2016, with the market seeing the environmental benefits (carbon reduction, use of plantation pine) and economic advantages (greater construction speed) of using timber structures.
“Our core range of structural products continues to perform well, with our low-odour outdoor structural product continuing to grow in popularity in the market,” Theresa added.
An important feature of the company’s success is its attention to new products – a practice that not only satisfies changing market demands and keeps ranges fresh, but also protects the business through greater market diversification.
“For example, this is our first year selling our New Zealand-manufactured Arrow Posts (premium, straight, outdoor glulam posts) in Australia, and we are pleased to see sales of this product growing,” Theresa said.
Arrow Posts are made from high-quality renewable plantation pine. They are GL8 graded, providing assurance that the product is both extremely flexible and strong and therefore suitable for load bearing applications, and are rated to H4 level (for outdoor and in-ground use).
Theresa said Timberlink, as a predominantly structural pine business, is preparing for increased sales of structural pine over the next six to 12 months, based on predicted strong demand in the mid-rise (up to 25m high) sector of buildings such as apartments, hotels and offices, following changes to the NCC (National Construction Code) in May 2016.
The ability to predict market demand – and to be agile in adapting to different conditions – is also a cornerstone of Simmonds Group, another leading timber supplier.
Company CEO John Stewart said, “2016 to date has been a good year for us – a good year for a lot of people in our industry, and the reason is because it is quite closely linked to housing starts.”
Nevertheless, he observed, the nature of construction in the past three or four years has been unusual compared to previous years, with a convergence of multi-residential unit construction and detached housing starts.
“That has changed our demand profile for products in our business, but the underlying housing starts are still quite strong. We see [activity] sustaining for the next year, but in 2018 looking like it’s going to start to drop off relatively dramatically,” he said.
So, what are companies like Simmonds doing to prepare for a possible slowdown in future years?
“Well, it has led us to experiment with some new products,” John said, explaining that rapid adaptability to changing market conditions, and new fashion trends, are crucial to survival.
A fine example of a new Simmonds product is the timber ‘decking tile’, designed for installation on solid apartment balcony substrates.
“So, strong apartment construction has forced us to adapt new products for these sorts of markets, and we have the kind of manufacturing partners who are quite agile and flexible to allow us to be able to do that,” John said.
Simmonds is also tackling the difficult task of building customer loyalty and branding awareness – notoriously tough challenges in markets where products are often perceived to be generic.
The company is achieving positive outcomes by adopting genuine ‘points of difference’, such as its DNA Lumber® class of products. In order to ensure perfect traceability of certified timber products from Asia, DNA technology is used to match specific batches of timber products to recognised timber concessions, thereby offering peace of mind to customers that all products have been legally sourced.
John says this kind of ethical timber sourcing may not necessarily garner higher prices, but it certainly helps maximise market share by appealing to similarly ethical businesses.
“What is the real challenge for us in the future?” John asked. “It is not really [competition from] imports. It is whether you can tell your brand story well enough so that imports, competition, all these macro factors, become less relevant over time.”
To this end Simmonds is doing what many other top-end building suppliers are doing, i.e. establishing diverse, clearly branded ranges of products – from everyday items to highly specialised premium timber products – to suit disparate markets and budgets.
“The value proposition for someone like Simmonds is choice. So when you come and do a pickup for your radiata pine you will also have our merbau DNA Lumber® decking on offer, or you’ll be able to pick up some prime treated mouldings or something like that, so it is about mix at this level as well.”
John said Simmonds, as an aggregator company, is also in a unique position to spot consumer and trade trends that individual stores might not be able to discern. A good example is the current long-term trend towards lighter coloured timbers, as proven by a rise in demand for Spotted Gum decking timbers.
The ability to preempt trends earlier than other market sectors means companies like Simmonds can plan ahead, reducing inefficiencies and delivering the right products to market in accordance with up-to-the-minute fashions.
This continual monitoring of current and future trends helps consolidate the company’s name as a true market leader, and gives customers assurance that supplies will be consistent and relevant, John said.
Present success, in other words, is as dependent on preparations for the future as it is on contemporary supply and demand. Unsurprisingly, John says he and his colleagues are already examining the impacts of new architectural styles, such as ‘full block’ construction methodologies that maximise building areas at the expense of garden and decking spaces.
What impact will these trends have on timber sales in future decades? And will large-footprint ‘McMansion’ homes reduce the likelihood (or possibility) of future renovations? By addressing such questions today, John said Simmonds is able to pave the way for appropriate products tomorrow.
Every store matters
How are more ‘discretionary’ building products performing in current markets?
The temporary floor protection market is a good litmus test of market health… though this sector is arguably more fundamental than discretionary!
Hans Unger, managing director of Bord Industries Australia, supplies SupaBord floor protection products to Australasian markets. Hans says SupaBord, which has been sold in Australia for four years now, is available in 45 retail hardware outlets – and the number is growing.
Flooring protection, he notes, has changed its image over the years, winning popularity initially as a discretionary product for luxury building projects, and subsequently gaining momentum as a primary product for both renovation markets and new building applications. For example, in cases where renovations require access to common-use stairways and corridors in multi-residential buildings, floor protection is absolutely vital.
Hans agrees that 2016 has been good for business, but like the above-mentioned companies, he also stresses the need for close examination of the market, as well as rapid responsiveness to customer trends.
Recently, the company revamped its core product to make it lighter, ideally suited to the 30–60 day timeframes of most projects, and SupaBord has also benefited from high-profile appearances in TV programs like The Block.
While inner-urban areas featuring small homes are a solid market for SupaBord products, Hans says outer-suburban areas of major cities are proving to be particularly strong. So, what is the company doing to keep business strong?
“We are focusing on two things: getting sales into distribution centres; and we are putting on two people to focus on trade and multi-residential DIY,” he said.
Furthermore, Hans said he is prioritising quality over quantity when it comes to distribution partners.
“The reason is that one store might be doing exceedingly well in sales, while an identical store servicing the same demographic might only achieve a third of the sales. It comes down to the individual store – how well they do things,” he said.
Attention to detail at each outlet, therefore, is paramount, and Hans says his team is mindful of the need to deal personally with all supply chain partners.
To sum up
If the above glimpses into individual business practices reveal one thing, it is that year-to-date success has been built on a lot of hard work in previous years – and high-performing building suppliers are already well advanced in their preparations for profitable trading in 2017 and beyond.