Game changer in the Australian Market! Yale Unity Security Screen Door Lock Introducing the NEW Vol.137 No.4 Apr 2022 SINCE 1886 Print Post Approved PP100007331

Introducing the NEW YALE UNITY SECURITY SCREEN DOOR LOCK Game changer in the Australian Market Yale continues to provide innovative solutions to seamlessly access the home, without the hassle of searching for keys in bags. The Yale Unity Entrance Series is the answer to seamless entry with the Unity Entrance Lock and the NEW Unity Security Screen Door Lock. The Yale Unity Security Screen Door Lock has been designed specifically for the Australian Market, achieving digital deadlocking in a slimand contemporary profile. MeetingAustralian lock standards AS4145.2:2008, SL6 and D7, you can be sure that it’s reliable and secure. The Entrance Series works with the Yale Access App, providing control of the lock via a smart device, grant access to others, keep track of visitor access, monitor and secure the home from anywhere* along with much more. Disclaimer: Other products’ brand names may be trademarks or registered trademarks of their respective owners and are mentioned for reference purposes only. Products are sold separately. *Remote access requires a Yale Connect Wi-Fi Bridge. Products are sold separately. Download the free Yale Access app on iOS and Android. Part of ASSA ABLOY

Grant entry from wherever with the Yale Access App Remote access means that your customers can let in family, friends and trusted visitors like the cleaner or dog walker– from anywhere – when a Yale Smart Lock is paired with the Yale Connect Bridge. If someone forgets to lock when they leave, it can be taken care of with the tap of a finger. Expecting guests? Send a virtual key Send virtual keys to friends or family via the Yale Access App. Guests can come and go as they wish – without the worry of lost keys. Know the ins and outs of the home The 24/7 activity feed will help check who is coming and when – even when nobody is there. Know when guests have arrived, what time children got home, and whether a tradesmen or cleaner was in to get the job done. Use your voice to control your lock Yale Access works with Amazon Alexa, Apple HomeKit and Google Home. The lock is voice controllable using Alexa or Google Assistant. Auto-lock and unlock when coming and going The auto-lock feature can automatically lock the door upon leaving, either immediately after closing or after a set amount of time via the Yale Access App. When returning, the door will auto-unlock using geo-fencing technology, so there is no need to fumble around with keys. Yale Access App Features Scan to register your interest Or to view the range visit

DEPARTMENTS Newsmakers Features 6 Viewpoint 8 Trade Focus 12 Behind the Counter 14 US News 16 NZ News 18 Timber Update 54 News 56 What’s New 58 Diary Dates 26 Bathroom & Plumbing As the world grapples with its respective battles against COVID-19 and Russia, industry sectors – including plumbing – are feeling the pinch. What can retailers do to overcome obstacles and remain profitable? 36 Sales & Merchandising Australian merchandisers have had their work cut out for them over the past two years, not only tackling store closures but staff shortages as well. But the on-going challenges have only led to diversification and evolvement, as local service providers continue to deliver high-quality service to Australian and New Zealand retailers. 54 S unshine Mitre 10 builds new distribution centre 54 A mazon plans massive sort centre for Melbourne 54 C onstruction activity set to weaken About the Cover Introducing the new Yale Unity Security Screen Door Lock, a game-changer in the Australian market. Meeting Australian lock standards AS4145.2:2008, SL6 and D7, users can be sure that this door lock is reliable and secure. It also works with the Yale Access App providing control of the lock via a smart device, granting access to others, keeping track of visitor access and much more. Game changer in the Australian Market! Yale Unity Security Screen Door Lock Introducing the NEW Vol.137 No.4 Apr 2022 SINCE 1886 Print Post Approved PP100007331 55 8 26 36 4 HARDWAREJOURNAL.COM.AU | APR '22

CAB Audited Glenvale Publications and Australian Hardware Journal are pleased to provide the articles contained in this publication to keep its subscribers up to date on issues which may be relevant to their businesses. This publication is supplied strictly on the condition that Glenvale Publications and Australian Hardware Journal, its employees, agents, authors, editors and consultants are not responsible for any deficiency, error, omission or mistake contained in this publication, and Glenvale Publications and Australian Hardware Journal, its employees, agents, authors, editors and consultants hereby expressly disclaim all liability of whatsoever nature to any person who may rely on the contents of this publication in whole or part. Published by GLENVALE PUBLICATIONS A.B.N. 31 218 591 688 11 Rushdale Street, Knoxfield Victoria 3180 Phone: (03) 9544 2233 Editor: Christine Bannister Phone: (03) 9544 2233 Email: Journalists: John Power Hartley Henderson Online Communications & Production: Justin Carroll Email: ADVERTISING Harry Rabiee Email: Phone: (03) 9544 2233 Mobile: 0403 000 444 ACCOUNTS Melissa Graydon Email: SUBSCRIPTIONS Melissa Graydon $93.00 – 12 issues ART AND PRODUCTION Justin Carroll PRINTING Southern Impact Pty Ltd 181 Forster Rd, Mount Waverley VIC 3149 Phone: (03) 8796 7000 The past few weeks have been rather bittersweet for the hardware industry. While it was so refreshing and stimulating to finally attend the 2022 Paint Place Group of Stores Conference held in Townsville recently, during the event there was also plenty of discussion around expected, on-going prices rises particularly within the already struggling timber sector. As demand continues to exceed supply, particularly now that the devastating floods will see a dire need for timber as residents rebuild their homes and businesses, Bunnings has also recently ordered suppliers to cease the purchase of Russian timber. The ban of Russian timber is in-line with Bunnings’ timber policy, Bunnings Director of Merchandise Jen Tucker said in The Australian Financial Review, which requires the Big Box to “exclude source material under specific circumstances”. Only time will tell just how much this ban will affect the already struggling timber industry. Even though Russia is said to contribute just three per cent of Australian timber imports, Russian imports still account for one-fifth of all Australian laminated veneer timber. While most of us would agree Bunning’s stance on Russian timber imports is an ethically viable decision after witnessing Russia’s catastrophic invasion of Ukraine, the Australian Timber Importers Federation (ATIF) also pointed out that the interruption of Russian supply could disrupt 60,000 detached housing starts and see up to 20 per cent in supply chain job losses, not to mention a further push on price rises. Despite the upheaval within the timber industry, for me it does feel like the hardware industry is finally returning to some type of normality particularly after attending the Paint Place Group of Stores Conference last month. An event highlight was the trade show. It was so invigorating to finally catch up with many suppliers and experience the buzz and excitement of a show after two years of border closures. The Friday evening show ensured a relaxed atmosphere, with laughter and excitable chatter echoing throughout the show. While the group did experience the absence of some stores due to staffing issues and floods, two stores that had been inundated with floodwaters still managed to attend the conference despite the significant challenges being presented within their businesses. I sat in awe of them thinking about what it must have taken for these stores to not only endure the flood crisis but also be resilient enough to attend the conference. It just goes to show there really is not much that can hold an independent retailer down! As we look towards May, HBT (Hardware & Building Traders) is again busily preparing for its first national conference in two years to be held on the Gold Coast from May 3-5. It will be interesting to see how the largest conference and trade show in the industry will be conducted post-COVID. No doubt HBT has an incredible event planned with many suppliers and members already expressing their excitement about attending the upcoming trade show and conference. Finally, the AHJ team would also like to send our congratulations to Oliveri for having recently celebrated its 75th birthday. As a proud Australian manufacturer and importer of kitchen, bathroom and laundry products, Oliveri is also Australia’s only commercial pressed bowl sink manufacturer. Congratulations Oliveri on 75 years of home-grown success. Coming up… AHJ’s May edition will feature some of our most popular features, including Safety & Security, Fasteners, along with Adhesives, Sealants & Fillers. Please get in touch should you wish to be a part of any of these exciting features. Christine Bannister - Editor

Business: Demak Outdoor Timber and Hardware Owners: Daniel, Michael & Kieran Trewin Location: Ferntree Gully and Heathmont, Victoria Buying group: Hardware & Building Traders (HBT) Demak Outdoor Timber and Hardware delivers quality over quantity With one store in Ferntree Gully and one in Heathmont, Demak Outdoor Timber and Hardware is a successful family business that was established purely by chance in 1989. As a former fencing contractor, Peter Trewin began his journey as a timber merchant after the company he sourced fencing material from closed down. Soon after Peter quickly learned there was a significant shortage of timber suppliers and decking products in the local area and he became desperate for materials – not much unlike the situation facing most builders and fencing contractors today. Peter had no alternative but to buy directly from the manufacturer and stockpile his timber in the front yard of his family home. It was not long before other contractors wanted to purchase from his stockpile as they too struggled to source local supply. Peter’s stockpile was the talk of the industry, with new customers approaching Peter every day. Peter’s son and current owner of the business, Daniel Trewin, said Demak Outdoor Timber and Hardware was born the moment Peter decided to rent a property in Melbourne’s South East to cater to the growing timber demand. “The business started out on a muddy block of land with some packs of timber on it. Pete’s customer base just grew and grew so he put on some staff, a driver, rented a couple of forklifts and continued to offer fencing materials and The first site in 1989 Demak Outdoor Timber & Hardware's Heathmont store.

related components to the local trade,” Daniel said. “The office was an old shipping container with a fire pit, where the fencers could come and get their materials as well as stand around socialising with a beer into the evening. It was very rough and the sort of thing you would never be allowed to do these days and it just evolved naturally. In 1996 we had the opportunity to purchase a former Vic Roads depot in Ferntree Gully because it featured some sturdy sheds and had substantial space for a machine shop as well.” “We immediately set up a welding bay and timber machine shop on the new site and we have a full-time welder on staff to this day. Initially, the Ferntree Gully site was established to complement our initial site and was meant to be a manufacturing plant with timber and steel custom made products. In no time it grew to be its own complete stand-alone business. So suddenly we had two locations without even meaning to,” he said. Both sites continued to evolve for four years before the rustic Ringwood branch moved to a new site that was originally established as Heathmont Timber in the early 1940s. “This was also when I first came on board after starting an apprenticeship in graphic reproduction and web design, but this did not work out for me. After initially saying I would never work in the family business, Pete convinced me to come on board as a labourer while we spent 12 months renovating the site ready for the big move. We used our experience to purpose-build the new location to be exactly how we wanted it and it has been a stand out business in the local area ever since,” he said. Stand out features The 12 months of hard work that went into designing the perfect set-up at the Heathmont site now sees the business stand out from its competitors on a daily basis. Wholesalers, customers, and fellow timber yards often tell Daniel they are blown away by how neat and clean the timber yard is. “While the initial design of the yard does assist in maintaining a clean look, we also attribute the pristine condition of the yard to our staff who care about their job and really look after their space. It also helps that the racks were purpose-built so when the timber is stored in the racks, everything is nice and tight. This also stops timber from moving so you end up with a much better-quality end product.” Another standout feature of the business is the quality of its product with Daniel adamant on always paying more for better quality material. “We have developed a reputation over the years that we might not be the cheapest but we are always the best. If a customer goes elsewhere and has to throw out just one piece of timber this is often enough to be the difference in the cost that we have with our competitor. Our customers also know that there is no hassle with our product and if there ever is a problem, we fix it. Servicing our customers properly is such a huge focus for us,” Daniel said. With a DIY/trade ratio that is close to 50/50, Demak Outdoor Timber and Hardware has a substantial retail base that is constantly evolving, along with its regular fencing customers who are also a huge part of the business. When discussing the impact on supply, particularly within the fencing sector of the business, Daniel says that because there is such a shortage in paling fencing, they have been forced to ration supply according to their customer’s demand. “We sought out our top 30 fencing customers and looked at their purchase history for the last 24 months to work TRADE FOCUS Demak Outdoor Timber and Hardware's racking is custom made to ensure its timber remains in top condition. APR '22 | HARDWAREJOURNAL.COM.AU 9

out how much timber they bought in comparison to others. We then allocated the same percentage of our limited paling stock to these main trade fencing customers. The allocation is updated daily with the undulating stock levels and it keeps a rolling tally of everyone’s allocation while supporting the guys who are the bulk of our business. They are so appreciative of our support during this time of low supply,” he said. “In saying this we never know when supply is coming. We often ask suppliers when a load is coming and they say they have no idea and then a truck rolls up the next day. It is a perfect stormwith the timber supply shortages and we are just riding the wave. Now the floods have occurred in a large forestry area up north this will have huge on-going effects because now the ground is so wet the loaders cannot get into the forests and log. It will be months before things get back on track,” Daniel said. For now, Daniel is grateful that Demak has experienced no decline in business since COVID despite all of the Melbourne lockdowns. “Obviously everyone who was in lockdown decided to renovate their outdoor spaces which was great for us. We went to 100 per cent in retail sales during this time, but it takes a lot more time and effort to serve these customers and then of course the influx of deliveries took a lot of time as well. We initially offered free deliveries within 10 kilometres during the first lockdown which grew our deliveries by a couple of hundred per week,” he said. Local demographics Over the years both stores have remained quite reactive to trends which means that the majority of the stock in-store is dictated by the customer, Daniel says. “While we also present new products to the customer, we are primarily focused on the outdoor timber market. However, if we have customers request a product that we do not have in-store, we document their requests and if it is requested again, we often get it in because we should have it,” he said. As the only full stockist in Victoria of Trex Decking, Daniel realised some time ago that the composite decking market would be a big part of the industry. Demak Outdoor Timber & Hardware's Ferntree Gully store.

“We import many containers of Trex Decking every year and it is by far our best-selling product. Our staff also love the product which makes it so much easier to sell because it is so low maintenance and will look the same for years. We have a massive display area of Trex Decking at the front of the store which is accessible to our customers outside of store hours, along with plenty of niche deck lighting including illuminated balustrading and glass panel fencing that lights up at night,” he said Hardware and Building Traders (HBT) has also remained proactive in introducing products to the store outside of Daniel’s scope, including accessing great deals that can be utilised online. “We recently found a fantastic deal through HBT with Coleman pop-up gazebos. We bought a few pallets even though we have nothing to do with camping, but it sold incredibly well online. It is the little things that make us standout including the products that customers ring for from all over the country that they cannot find anywhere else,” Daniel said. Working with HBT As a HBT member for over eight years, Daniel says there are many benefits to being part of the group including being an invaluable networking asset. “I have met so many great suppliers, retailers and HBT staff who have put me in contact with the right people and this is beyond a monetary value. When I aligned with the group eight years ago, I realised there was no cost involved but benefits everywhere. Over the years I kept looking for ‘the catch’ to being part of the HBT group but there just wasn't one and I never looked back.” “HBT offers incredible deals for hardware. This is not so easy within the timber space because the margins are not there at wholesale level to start with. HBT is definitely on the road to putting in the work with the right staff and the right investments and making timber work for them as well as hardware does,” he said. Substantial online space Incredibly Daniel has utilised the online space for over 20 years now, and is proud of being one of the first in Australia to launch an online timber store back in 2012. Through HBT, Daniel met fellow member, Mick Lawlor from the Fastener Factory in Melbourne, and the two stores often bounce ideas off each other. “Mick and I are both technologically minded which has meant that our online spaces have grown drastically in the past 20 years and is now a major part of both of our businesses. I have one staff member allocated to pack all of the online orders each day, while another staff member looks after the online space as well.” “While it is a struggle to find the time to continually update the online store, it does generate a lot orders we otherwise would not have had. Customers use the online store as much for ordering as they do for quoting and put everything in the cart and print the list out so they have a quote for what they need,” Daniel said. Further expansions For now, Daniel and his two brothers continue to grow and evolve the stores. Michael was the former manager of the Ferntree Gully store but has moved out to the workshop now to ensure this runs smoothly, while Kieran manages the Ringwood East store. Daniel continues to focus on business development, the website and administration. Outgrowing the current sites is the biggest issue for the family currently, who have already purchased a few thousand square metres of shed space to assist with storage woes, particularly when it comes to storing container loads of the Trex Decking material. “My brothers and I have spoken about opening a third location for many years. Staffing is the most prohibitive issue, but never say never!” he said. “At the moment we will continue to do what we do best which includes custom machining and welding. We are constantly evolving. This is also why we extended the Ferntree Gully store about five years ago, doubling the size of the showroom, and extending the building out substantially.” “We are always looking at new machinery but we are at the maximum in space and power. In saying this we are reviewing products all the time and making the space that we have continue to work for us now and into the future,” Daniel said. TRADE FOCUS The stores are well-know for only selling high-quality timber products. APR '22 | HARDWAREJOURNAL.COM.AU 11

Central Purchasing Services Ltd (CPS) General Manager, Stephen Wren recently revealed this year’s trends within both the hardware and industrial sectors along with the recent performance of the CPS group at the recent Paint Place Group of Stores Conference held in Townsville last month. CPS reveals hardware and industrial trends for 2022 Boasting plenty of experience within buying groups, Mr Wren shared some of his insights as to how CPS adds value to the industry as a buying group as opposed to a business, and how aligning with strong buying groups has allowed CPS to thrive in a highly competitive industry. “Our top four suppliers grew $6.5 million of volume in the business in the past calendar year with 58 per cent of our total growth coming through Milwaukee, who are part of the TradeSmart group, along with James Hardie, Kincrome and Bordo. So why did these suppliers do so well?” “There has been expediential growth in power tools and hand tools over the past 18 months with this growth coming primarily from the cash flow of young tradespeople. Primarily those that are based along the east coast are not spending their money on trips to Bali or wherever they usually get away to. Recent statistics indicate that Australian’s savings have increased by $258 billion in the COVID period with young trades mostly looking to spend their spare money on tools,” Mr Wren said. It is for this reason that competition within the specialty tools space continues to grow. This is particularly evident with groups such as Sydney Tools, who only had four stores just ten years ago, growing to 58 stores within such a short space of time, he said. “Bunnings also now has four Tool Kit Depot (TKD) stores established in Western Australia and they plan to open another eight stores within the next eight weeks alone. This is incredible considering they only opened their first TKD store in November last year. Despite the stiff competition these stores are doing very well,” he said. Looking at some of the leading suppliers within CPS, some have come and gone and come back again, including Bordo who have returned to CPS now contributing over $600k per year to the group. “With suppliers like James Hardie we only used to do about $200k per year which is quite small but we have taken a big plunge with them and we have really tweaked the trade terms which has inturn seen a very high volume of growth with them as well,” he said. Suppliers will have plenty to contend with throughout 2022 including ongoing supply chain issues and increasing pressure of being threatened by Bunnings, he said. “Bunnings is also in a very tough spot because the growth expectation of Bunnings from the market is about eight or nine per cent. When you are running a business that is achieving $14 billion per annum, as the business grows the target for next year also grows along with the on-going pressure of retaining margins.” “This is during a period where there are cost pressures coming from all angles, particularly because of the supply chain concerns. Bunnings will have to look more and more to house brands in order to retain their margin and this will again put pressure on some suppliers. We think this is great because suppliers then need to consider their supply channel as indpendents become increasingly important to them,” he said. The growth of 3PL into warehousing is also on the rise, with companies such as Tenaru being a great example of utilising this system, according to Mr Wren. “This is where people are collecting more brands and are presenting those brands to you as a single offer. I think we will see more of these businesses emerging which is a great thing because it has a positive impact on the quantity and value of the product.” For now, the current hardware and industrial boom delivered unprecedented growth for both CPS and TradeSmart – an industrial channel within the group, with the CPS group achieving its financial year budget by the end of the 2021 calendar year, “so I told the team to take the next six months off,” he joked. “We are now very comfortable and we literally have a couple of million dollars to spare. The economic outlook for our business and our group is very strong. Despite the growth, there are on-going supply challenges for power tool and building material suppliers and this is not improving,” he said. BEHIND THE COUNTER

“Makita recently advised the time frame for ordering product is now 28 days with an additional 10 days required just to freight their product. So, Makita is running about 38 days supply of products which is unheard of,” he said. Competition is also expected to remain fierce in both the industrial and hardware sectors, according to Mr Wren, particularly with so many companies buying up businesses within the industrial space. “There is a company called Stealth Global who are out there buying industrial style businesses left right and centre and they are snaffling everything. In the meantime, Metcash is also trying to convert stores over to Total Tools so there is plenty of competition in the market.” With new CPS members contributing 4.3 per cent growth to the business in the 2021 calendar year this membership growth saw an additional $2.5 million in sales within the last financial year, he said. Mr Wren said while he is grateful new members have come to the group, current members also continue to track well due to current high demand within the Australian construction and building industries. For now, Mr Wren believes the building industry is set for growth for at least another two years, and this is primarily due to the ongoing national housing shortage and the decrease in Australian rental vacancies in recent years. “Even in the big cities such as Melbourne rental availability has dropped from 3.6 per cent to 3.2 per cent. Western Australia now has just 0.6 per cent availability on its rental properties and this normally sits at 2.4 per cent of rental vacancies. It is frightening to think that this is the state of the market without any foreign students in the country. I wonder where they are all going to live as the figures are only set to get worse,” he said. Current wage growth is also sitting around 3.6 per cent but this will probably grow higher within the coming months, according to Mr Wren. “I know the government is saying that wage growth will not be this high but I think they will come under enormous wage pressure and we will probably see an interest rate increase after September this year I expect. Interest rates have to go up because of inflation pressures,” he said. For now, retailers should, of course, expect a slow April/May due to the Federal Election. Mr Wren says regardless of whether it will be a stable Federal Government or a change in Federal Government there is always a deterioration in the retail market beforehand. CPS and TradeSmart background CPS was initially established as a co-operative in Western Australia in 1980, changing to a company after finding the initial structure unstable. With 180 active members, CPS currently generates about $70 million through its broader business. CPS has two business channels including its overarching business CPS and its second TradeSmart channel housed in Melbourne. Based in Perth, the CPS channel is 90 per cent Western Australia based, trading with 180 suppliers in hardware, building and rural. “Our history is far from perfect starting as a co-operative over 40 years ago and CPS was king of the independent hardware business in Western Australia until the Big Box opened in 1993. Since this time CPS has slipped from being very much the kings, with sales dipping 15 per cent or $16 million in sales, with cashflow within the business becoming critical in 2010,” he said. “In 2010 we partnered with Natbuild who have 40 members and retail sales of $2.6 billion. They are a very powerful group within the building supplier market. What they did has put us under an umbrella of trading terms that they held and they shared these trading terms with us.” “The business turned around a little bit in 2015 when we underwent an IT upgrade which enabled us to gain a greater insight into what was going on within our business. We also joined with TradeSmart in 2015, and started to tweak our business in 2016, gaining some ground in cashflow to now, where things are going our way again,” Mr Wren said. Today CPS sales sit at just over $70 million for the financial year 2022 with the group expected to achieve $75 million in sales this financial year, Mr Wren said. CPS General Manager Stephen Wren recently delivered a market outlook to Paint Place Group of Stores members. APR '22 | HARDWAREJOURNAL.COM.AU 13

US NEWS Not so long ago US based developer and home builder Estridge Homes could guarantee that the price quotes it received for asphalt would hold steady for at least nine months. However this time frame has now closed to just 15 days a recent CNN report has revealed. A combination of the RussianUkraine conflict along with postpandemic supply chain disruptions has seen items such as garage doors remain on backorder, floor tiles discontinued mid-construction and appliances marooned aboard waylaid shipping vessels, with US home builders now bracing for further price hikes as oil and metal supplies dry up, according to the report. Bank of the West Chief Economist Scott Anderson said he expects things to get worse before they get better, with Bank of the West economists recently lowered expectations that housing starts would pick up this year, after previously predicting that supply chain shortages and material price pressures would ease. The Associated General Contractors of America's analysis of February Producer Price Index data recently found that most construction materials and commodities are now seeing doubledigit year-over-year cost increases, with steel and diesel seeing some of the largest gains at nearly 75 per cent and nearly 58 per cent, respectively. The association’s Chief Economist Ken Simonson said in the report that although the February numbers represent some of the highest year-over-year price increases ever recorded, they have already been surpassed by even steeper price hikes since the war in Ukraine broke out. According to Estridge Homes, which specializes in building semi-custom homes that sell in the range of $500,000 to $1.5 million, the nature of the pandemic has delivered both good and bad elements to the business. Estridge Homes Chief Executive Officer Clint Mitchell said the rise of remote work has resulted in many fleeing the cities and settling in the suburbs resulting in an uptick in its out-of-state buyers from places like California and Chicago. Previously about 20 per cent of Estridge's buyers came from out of state but last year this figure rose to 30 per cent, he said. “The demand for housing really increased across all ages. People were valuing the home more, choosing to spend more on the home, and wanting to customize it like we offer.” But Estridge could not construct the homes fast enough with build times increasing by three to four months when compared to two years ago, primarily due to the upheaval within the labor market combined with supply chain issues, he said. Estridge has tried to adapt on the fly by having customers select different fixtures and finishes or by popping in a temporary appliance or fixture with plans to install a permanent replacement once one finally becomes available. Along the way material prices have risen by more than 20 per cent, increases that Estridge has been able to pass along to the customer. “At some point, affordability does become an issue. We have not seen it yet, but we are definitely paying attention to that,” he said in the report. Material prices have continued to rise even more aggressively in recent weeks due to the volatility in prices for commodities such as oil, which neared $130 a barrel after Russia invaded Ukraine. Higher oil and commodity costs spilled over to myriad areas in the construction supply chain. Some effects are more immediate than others, according to the report with gasoline required for earthmovers, haul supplies and transport workers to job sites; while petroleum serves as a building block in materials such as asphalt, steel, glues, pipes and paints. Russian-Ukraine conflict squeezes American homebuilders

The National Retail Federation (NRF) recently announced that it anticipates retail sales to grow between six and eight per cent to more than $4.86 trillion in 2022, during its annual State of Retail & the Consumer virtual event last month NRF President and Chief Executive Officer Matthew Shay said the, “NRF expects retail sales to increase in 2022 because consumers are ready to spend and have the resources to do so. We should see durable growth this year given consumer confidence to continue this expansion, notwithstanding risks related to inflation, COVID-19 and geopolitical threats.” The NRF estimates this year’s retail sales forecasts could total between $4.86 trillion and $4.95 trillion. Non-store and online sales year-over-year are included in the total figure, expected to grow between 11 per cent and 13 per cent to a range of $1.17 trillion to $1.19 trillion as consumers continue to utilize ecommerce, The 2022 figure compares with a 14 per cent annual growth rate in 2021, the highest growth rate in more than 20 years, with this year’s sales forecast notably above the 10-year pre-pandemic growth rate of 3.7 per cent. Strong job and wage growth along with declining unemployment is also anticipated with the NRF projecting that full-year GDP growth will be slower this year, around 3.5 per cent, given the surge of inflation and tightening of monetary policy and less fiscal stimulus. Retail sales are also expected to remain strong as the economy opens further in the coming months, however there is considerable uncertainty this year which the NRF will continue to monitor closely. NRF Chief Economist Jack Kleinhenz said, “most households have never experienced anything like this level of inflation and it is expected to remain elevated well into 2023. In addition to inflation, the forces impacting the economy include COVID-19 impacts, international tensions and policy variability.” Mr Kleinhenz said in the report that although a roller coaster ride of incoming data is expected in the next few months, consumer fundamentals remain in place. Household finances are healthy and strong job and wage growth should see solid consumer spending throughout 2022. Sentiments among homeowners in the midst of continuing supply chain issues, increasing prices and product shortages were recently tracked in the US by the Home Improvement Research Institute (HIRI) and The Farnsworth Group. According to a recent Hardware Retailing report, the survey featured primarily homeowners who chose to complete projects themselves and those who hired professionals, finding that material prices and a lack of product availability continue to cause project delays. Just some of the products most commonly unavailable included lumber, treated lumber and plywood with 36.7 per cent of DIYers having issues finding these products, up 6.2 per cent from January, according to the report, and nearly 50 per cent of DIYers saying price rises have become a substantial issue in recent months. Material availability delayed projects more than price according to homeowners working with professional trades and despite the shortages, 80 per cent of DIYers surveyed said they would still complete the project by themselves to save money. When it comes to upcoming planned projects, the survey found popular projects included painting rooms, general home maintenance, painting or staining items and landscaping and outdoor work, with outdoor spring projects also becoming popular, according to the report. US retail sales set to grow DIYers remain versatile during shortages APR '22 | HARDWAREJOURNAL.COM.AU 15

NZ NEWS New Zealand building industry representatives are pushing for a new energy efficiency building code to be delayed one year, as escalating costs and disruptions to supply and labour cause ongoing stress within the sector. Announced late last year by the Ministry of Business, Innovation and Employment (MBIE) the energy efficiency building code requirements were one of the biggest changes in the industry for more than a decade. The new requirements are designed to make homes and buildings warmer and healthier, with less impact on the climate as the country moves to net zero carbon by 2050, according to a recent RNZ report. When the final code was released in November last year, MBIE Manager Jenni Tipler said in the report that the new requirements will reduce the energy needed to heat homes by up to 40 per cent, allowing people to heat their homes more easily and efficiently, leading to positive health impacts and increased energy savings for New Zealanders. Over 98 per cent of responses supported increases over the status quo in the shortest time possible, with the proposed changes to be implemented by November 2, according to the report. Master Builders Chief Executive David Kelly also said in the report that while there was support for the changes, the deadline was currently too tight. “You also have to think about different elements of the building have to think about how all of that works together to get the optimum solution. Because if you deal with them all individually, that is the most expensive way to achieve the outcome.” MBIE recently reported that it is talking to the industry about the concerns it raised around the tight deadline. EasyBuild Homes Director Mike Fox said MBIE needed to consult directly with the industry on what it would take to meet the code’s objectives, with a phased-in timeline for implementation. “It is important this should be done in a well thought out and timely way, and that it is a New Zealand-specific solution that gives an already struggling industry time to advise, adapt, cope and maintain delivery,” Mr Fox said in the report. Mr Kelly also said that there was concern the membership was already under enormous pressure, with increased concerns about the mental health of some members. “Rushing this will not help one little bit and it is just another thing for people to be worried about and for consumers to get more confused about,” Mr Kelly said. Builders push for delay in energy efficiency code A major building supply company is now spot-checking building sites around Wellington to ensure builders are not hoarding GIB® plasterboard, a recent RNZ report has found. A shortage in nationwide supplies is now being exacerbated by panicbuying, forcing construction sites to halt, according to the report. In an email to customers this week, PlaceMakers Kaiwharawhara Manager Paul Boden said orders were more than double their normal volumes since August last year. “While it is possible some of this demand is not real, it has unfortunately meant that lead times have blown out significantly,” Mr Boden wrote. The influx of demand has led to the checking of orders that were directto-site to ensure they were “genuinely ready for their plasterboard,” he wrote in the email. Orders were immediately cancelled if it was found the delivery was to a container or warehouse or building sites were not ready, the email said. Fletcher Building subsidiary Winstone Wallboards is also holding new orders from distributors while it works on a new “allocation model” to take effect in July, which supplies 95 per cent of plasterboard in New Zealand, according to the report. Shortages were ongoing throughout many segments of the industry, according to PlaceMakers, including frames, steel, fibre cement products, insulation and structural f looring while freight and raw material costs were the main drivers for the price increases from suppliers, driven by increased demand, both in New Zealand and overseas. “We are also seeing quote validity periods shortening down to as little as seven days. For this reason we are unable to guarantee fixed pricing beyond the expiry of the estimate you have been given,” PlaceMakers said in the report. Major building supplier seeks out GIB hoarders

Despite Carter Holt Harvey continuing to benefit from the strong construction market and enjoying yet another bumper year in New Zealand, investors are now looking at its potential share market listing and questioning the sustainability of its profits, according to a recent Stuff report. Carter Holt Harvey is currently being prepared for an Initial Public Offering (IPO) on the Australian and New Zealand share markets. Owned by billionaire Graeme Hart’s Rank Group it reportedly generated about A$1.55 billion of revenue and pre-tax profit of about A$150 million in the 12 months to December 31, according to the report. The business, to be called Building Supplies Group, is valued at more than A$1 billion (NZ$1.1b), and Rank is seeking to raise A$500 million from the listing, the report said, citing fund managers it did not name. The share market listing is being spruiked at a time when the booming construction industry hit a record 48,899 building consents for new homes last year, while supply chain disruption and capacity constraints continue to push up building material prices. “The building cycle in New Zealand has been very strong. Clearly Carters is enjoying a bumper year. It is been a sweet spot. That is often a time when people look at IPOs,” Castle Point Funds Management Co-founder Stephen Bennie said in the report. The New Zealand Commerce Commission has singled out structural timber, as well as concrete and cement plasterboard for the next stage of its study into residential building supplies. With supply chain disruptions seeing the sector face challenging conditions globally, the study’s long-term focus will be “to ensure competition for key building supplies delivers enduring benefits to New Zealanders who are seeking to build new or renovate existing housing,” it is also “possible that this focus could enable greater resilience to international supply chain issues.” In November 2021, the Government requested the Commission take an independent look at whether competition is working well and, if not, what could be done to improve it. The study will look at the factors affecting competition for a range of building materials that contribute to the cost of house construction in New Zealand, Commerce Commission Chair Anna Ms Rawlings said. “The factors we will consider across the range of key building supplies include industry structure and the nature of competition. We will also look at conditions of entry and expansion, such as whether regulatory and standards systems create any impediments to competition and innovation.” “These three key building supplies (concrete, plasterboard and structural timber) have been selected primarily as a consequence of the relatively high proportion of the cost of residential building that they represent compared with other supplies, the relatively high concentration of suppliers for these materials, and information gathered to date that suggests these supplies have limited alternative suppliers,” she said. Between now and July, the Commission will continue to engage directly with a range of stakeholders to gather information relevant to its identification of factors affecting competition for key building supplies which are within the scope of the study. The Commission’s draft report is due to be released in July this year with the final report scheduled to be published on December 6, 2022. Will the Carter Holt Harvey boom last? Commerce Commission continues supplies study APR '22 | HARDWAREJOURNAL.COM.AU 17

TIMBER UPDATE Bunnings has ordered suppliers to cease the purchase of Russian timber after recently taking a strong stance against Russia’s invasion of Ukraine. The decision comes in the wake of recent declarations by global forestry bodies on timber exports from Russia and Russian ally Belarus, according to a recent Commercial Real Estate report. While Bunnings claims Russia is not a major timber source for the Australian building and home improvement market, the Big Box did admit that the ban, alongside existing constraints could see a further shortage of composite laminated veneer lumber, or engineered wood product, in the near future. Bunnings Director of Merchandise toldThe Australian Financial Review that the decision was made in-line with its timber policy, “which requires us to exclude source material under specific circumstances, we’re working with the industry to source suitable alternatives where necessary.” If the Federal Government additionally imposes sanctions on Russian imports, the risk to the Australian timber supply chain could worsen, according to the report. The increasing price of timber and metal has already hit the hardware industry hard, with costs surging at the fastest pace in 16 years, according to the report. Demand has also been exacerbated by rebuilding demands from the Queensland and New South Wales floods, along with the Federal Government’s HomeBuilder scheme. According to the report, conflict timber declarations by Geneva-based Programme for the Endorsement of Forest Certification and Bonn-based Forest Stewardship Council affect buyers with strict procurement policies, whether it is a retailer such as Bunnings or a government. Industry figures reported that Russian timber imports now account for $80 million or three per cent of Australia’s timber imports. Russian imports also account for more than one-fifth of the country’s imports of laminated veneer lumber (LVL), the composite material used for structural components such as lintels, I-Joists used in floors, and the formply used for the moulds that concrete is poured into for large commercial projects, according to the report. On a global scale Russia remains the largest timber exporter – wood processed into beams and planks – and the seventhbiggest exporter of forest products worldwide, with exports worth $US12.2 billion ($16.3 billion) last year. “There is a range of materials we do import from the region. If the Australian Government was to make any decision around sanctions of products – timber is one of those things – then Australia would have a pain point in terms of supply,” Housing Industry Association Chief Executive for Policy Kristin Brookfield said in the report. The Australian Timber Importers Federation (ATIF) recently wrote to Trade Minister Dan Tehan warning of a 10-20 per cent job loss across the supply chain should Russian timber imports be blocked. The ATIF is yet to receive a response. “If there was a major interruption to Russian supplies of LVL and I-Joists, it is estimated that this will disrupt more than 60,000 detached housing starts,” ATIF Chairman Nils Koren said in the letter. The ATIF also pointed out in the letter that both the loss of direct exports from Russia and shortages from Europe-based suppliers and manufacturers who sold products to Australia made out of Russian timber, would also cause disruptions. One local manufacturing source said the loss of Russian raw material to global supply chains had – when shipping costs were included – triggered a tripling in price in March alone. According to the report the conflict timber declaration also affected projects seeking Green Star certification. “As the only recognised timber certification schemes in Green Star, PEFC and FSC have announced that Russian- and Belarus-sourced timbers are now declared conflict timbers and no longer eligible for their standards. This means that Green Star will not be recognizing timber from those regions,” the Green Building Council of Australia Chief Executive Davina Rooney. In saying this, Ms Rooney also pointed out that Green Star projects would not be significantly affected because Russian timber was generally not used in those projects for structural purposes. It was more likely to be used in internal finishes or cabinets, which gave suppliers time to shift their procurement, she said in the report. Bunnings places ban on Russian timber

The Australian Forest Products Association (AFPA) recently welcomed the Federal Budget’s confirmation of $86 million in funding to establish new timber plantations nationally, but warned more action is needed to ensure Australia can meet future timber and wood fibre needs. The 2022-23 Federal Budget includes the $86.2 million grants program announced last month to establish new timber plantations and $4.4 million to strengthen Australia’s illegal logging traceability and timber ID systems. AFPA Acting Chief Executive Officer Victor Violante said the initiatives were a good start for the industry. “We commend Assistant Minister Duniam and the Coalition Government for recognising that Australia must urgently grow our timber plantation estate to ensure we have enough timber to build our homes and low-emission buildings, while achieving a circular economy,” Mr Violante said. “However more action is needed to meet the Federal Government’s goal to plant the one billion additional timber trees by 2030 which Australia needs to meet future timber and wood fibre demand.” “As we head into the election campaign, we look forward to the Government and opposition announcing more detail about their plans to grow Australia’s vital forest industries, including achieving the bipartisan One Billion Trees goal,” he said. The AFPA recently released its 2022 Federal Election ‘Plan for Growth’ initiative which outlines what forest industries need from the next Federal Government to build the country, help fight climate change and provide sustainable wood fibre solutions for the future. “We encourage all sides of politics to build on the Budget’s initiatives and commit to backing industry’s ‘Plan for Growth’ in its entirety,” Mr Violante said. The AFPA also welcomes Budget measures that improve supply chain resilience, tax incentives for farmers to undertake carbon farming projects and fuel excise cuts to ease transport cost pressures. “We look forward to seeing the detail of how they will support Australia’s forest industries. Australia’s modern, carbonfriendly forest industries are ready to play a greater role in Australia’s low-emission future, and we need a concerted focus from all sides of politics to maximise our potential,” Mr Violante concluded. Wind turbines will be built on a tree farm property in Gippsland’s Strzelecki Ranges, after the Victorian State Government recently gave approval for the construction of the Delburn Wind Farm. Expected to cost between $400 and $500 million, OSMI Australia’s Delburn Wind Farm project was given approval by Victorian Planning Minister Richard Wynne, paving the way for 33 wind turbines to be built in Gippsland, each 250 metres tall, a Daily Telegraph report has found. However, plans for a Battery Energy Storage System to also be built on the farm was not approved due to fire risk concerns. “The panel has not supported approval of the BESS at this stage. It is concerned there are issues with detailed design and location and findings to be incorporated from the investigation into the Victorian Big Battery fire (Moorabool). It considers such a proposal in principle may well be desirable, but it should be considered in a future planning process, the report said. Subject to a 12-day public hearing in October and November last year, the proposal received 436 supporting submissions, 283 opposed and three neutral. OSMI Australia’s Executive Director Development Peter Marriott said in the report that the company was satisfied to receive the tick of approval for the construction of the turbines. “Obviously we are pleased to receive these approvals, however as there is a lot of detail for us to work through in the panel report and the approval documents,” he said. The turbines will be built on freehold land owned by Hancock Victorian Plantations Pty Ltd. The approved project spans 4778 hectares across the Latrobe, Baw Baw and South Gippsland local government areas, with an OSMI Australia spokeswoman saying the project was expected to power 130,000 homes and generate 640,000MWh of energy. The company also estimated 186 new full-time equivalent jobs would be created during construction, with 24 ongoing jobs created during operation, according to the report. Federal Budget’s forestry initiatives welcomed Wind farm plan gets the go ahead APR '22 | HARDWAREJOURNAL.COM.AU 19