AUSTRALIAN HARDWARE JOURNAL

Vol.137 No.2 Feb 2022 SINCE 1886 www.hardwarejournal.com.au

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DEPARTMENTS Newsmakers Features 8 Viewpoint 10 Timber Focus 14 Behind the Counter 16 US News 18 NZ News 20 Timber Update 40 News 44 What’s New 46 Diary Dates 22 T imber, Timber Flooring & Decking Timber supply remains extremely tight both domestically and internationally, particularly as Europe and America look to the building and construction industries as a way of boosting their economies. In Australia, importers are now looking to the Northern Hemisphere for supply relief. 33 S mart Homes & Products The pandemic has no doubt led more Australians to spend unused holiday funds on upgrading their homes with all manner of smart home products. Now, more than ever, homeowners have the confidence to research and install smart home devices as they look to implement quirky, yet simple varieties throughout the home. 40 U SG Boral rebrands as KNAUF. 41 F rasers Property Industrial secures Zenexus Australian HQ & distribution centre. About the Cover DeWALT is obsessed with how users work in the real world and relentlessly pursues total jobsite solutions. By incorporating its latest technology and industry innovations, DeWALT is leading the charge for the jobsite of the future. DeWALT products. GUARANTEED TOUGH®. For more information, visit www.dewalt.com.au or follow DeWALT on Facebook, and Instagram. Vol.137 No.2 Feb 2022 SINCE 1886 www.hardwarejournal.com.au DW2673922_Hardware Journal Powerstack Feature.indd 1 11/2/22 10:02 am 43 10 22 33 6 HARDWAREJOURNAL.COM.AU | FEB '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: christine@glenv.com.au Journalists: John Power Hartley Henderson Jamie Della Online Communications & Production: Justin Carroll Email: justin@glenv.com.au ADVERTISING Harry Rabiee Email: harry@glenv.com.au Phone: (03) 9544 2233 Mobile: 0403 000 444 ACCOUNTS Melissa Graydon Email: Melissa.Graydon@glenv.com.au SUBSCRIPTIONS Melissa Graydon $93.00 – 12 issues subs@glenv.com.au ART AND PRODUCTION Justin Carroll PRINTING Southern Impact Pty Ltd 181 Forster Rd, Mount Waverley VIC 3149 Phone: (03) 8796 7000 ‘Shadow lockdown’ – this year Australian retailers have come to learn very quickly just what this means for their businesses as they come to terms with a new way of operating their stores once again. As I write this, I am undergoing a seven-day lockdown at home after my daughter contracted COVID during her second day of Year 12. It is a very surreal feeling when a family member tests positive to the virus after hearing and writing about it for so long. It also hits home why the retail and hospitality industries are again enduring an unwelcomed period of soft trading. Earlier this year the Federal Government redefined close contact rules to reduce the impact COVID was having on labour and supply shortages. New rules were also enforced for ‘essential workers’ who were made exempt from ‘close-contact’ quarantine in an effort to ease pressure on workforces. Thankfully for the hardware industry, those working within ‘building and construction’, ‘building and landscape supplies’ as well as ‘transport operations’ and ‘delivery services, are considered essential for now. Despite the new rules and the need “to push through”, as suggested by Prime Minister Scott Morrison, builders are beginning to struggle substantially as the combination of labour and supply shortages, along with rising supply costs, takes its toll on how they conduct their day-to-day business. This is particularly the case for smaller builders who simply cannot operate their businesses when they - or their workers – need to quarantine after testing positive to COVID. This is also why industry leaders fear more and more small builders could risk insolvency later this year or in early 2023. While the building industry boom has continued, the healthy workload does not mean anything to Australian builders if they cannot source workers or building supplies to complete their jobs. While easing restrictions late last year was intended to open up a locked-down economy, it seems ‘opening up’ has caused the opposite effect. According to the Public Health Association of Australia (PHAA), Australia’s determination to return to normal has backfired. The PHAA reported that it would be better to return to a policy of slowing the spread – including limiting people at public venues and re-introducing mask mandates - than allowing the virus to run rampant. What was most interesting was when PHAA Chief Executive Officer Terry Slevin said, "What we didn't understand then, but we better understand now, is that (slowing the spread) is also a way of keeping the economy viable.” As this third wave rolls on, those who lose work or have no leave entitlements during isolation can apply for disaster payments, while SME’s can also apply for guaranteed loans from lenders if revenue has been affected by the pandemic. Assistance packages remain important particularly as infectious disease experts believe the Omicron outbreak is far from over. This is because of the uncertainty around community cases due to unreported rapid antigen tests (RATs), asymptomatic cases, and people who do not get tested at all. For now it is back to a ‘COVID-normal’ approach for hardware independents, and the need for ‘Click ‘n Collect’ and ‘Click ‘n Deliver’ is in demand now more than ever. Retailers and builders may also feel the need to use clever marketing strategies to entice new team members in-store and on building sites, particularly as labour shortages continue. Coming up… Looking to the March edition, AHJ will feature its Building Materials, Electrical Fittings, Lights & Accessories, as well as its Workwear & Personal Protective Equipment features. For editorial or advertising inclusions in any of the above features, please contact myself or AHJ’s National Marketing and Advertising Manager, Harry Rabiee. Christine Bannister - Editor

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Business: Finlayson Group Owners: Michael and Skene Finlayson Location: East Brisbane & Summer Park, QLD Buying Group: Independent Hardware Group (IHG) Finlayson’s forefathers lead the way to success “It is not just about business. It is about being involved in the community and looking after people.” These are the wise words of fourth-generation family member, Skene Finlayson, when describing his family’s 147-year-old timber business based out of Queensland. A company that substantially evolved from its origins as a local timber mill to become a leading milling, manufacturing and distribution business today. Much of the Finlayson Group’s success can be attributed to its continual diversification over many years. As a vertically integrated business, the group sources its products from plantation resources and processes through its own sawmilling and manufacturing facilities, and supplies directly to customers through its product distribution centres. It is a model that other businesses have not been able to easily replicate. The Finlayson business was initially founded by Charles Patterson in 1875 (current part-owners Skene and Michael ’s greatgrandfather) after Charles emigrated from Scotland. Charles and his two brothers set up the Bon Accord Mill at Indooroopilly, and as one of Queensland’s first milling operations, it quickly laid the foundations for a thriving family business that was to eventuate in the decades to come. After a fire ripped through the Indooroopilly site in 1884 the brothers wasted no time rebuilding and relocating to Toowong where the mill became a landmark for nearly a century. Several fires nearly wiped the business out on many occasions, but the family always saw these challenges as an opportunity and each time went on to rebuild with better equipment and upgraded machinery. It was in 1961 that Charles Patterson’s grand-son, Malcolm Finlayson was appointed Charles Patterson and his two brothers set up the Bon Accord Mill at Indoorpilly, Queensland in 1875, laying the foundations for a successful family business that would thrive for decades to come.

TIMBER FOCUS Director and continued to work his way up in the business before becoming Managing Director in 1979. According to Malcolm’s son and current part-owner, Michael Finlayson, it was throughout the 1960s and 70s that Malcolm began to set the foundations as an industry leader in timber manufacturing and distribution. “Dad invested heavily in technology including laser cutters and a fully-computerised joinery factory, while the company’s sustainably sourced Queensland hoop pine developed a reputation for colonial woodwork, mouldings and joinery,” Michael said. Today the mill remains owned and operated by brothers, Skene and Michael Finlayson. “The design of the business means we have not relied on others to determine our supply chain and success. When Skene and I entered the business in the late 80’s we quickly adopted a multi-channel distribution offer to spread the risk over the cyclic nature of our industry,” Michael said. “We did not want to be exposed just to the building cycle from a trade perspective so we looked at exporting from our sawmills to get a portion of our cut overseas and spread the risk a bit. At the time the majority of our timber was going through the Finlayson trade retail business,” he said. “We then opened a wholesale arm as well so we could sell to Mitre 10 and other trade merchants. In doing this, we aimed for a good split across the three – a third via export, a third being wholesale to other wholesale merchants and a third through Finlaysons.” “While the export business has not been an easy project, we have looked at this as a long-term strategy. Today we are exporting around 35, 40-foot containers per month which is great business but for us it was about smoothing out those bumps when one market is going through a tough time,” Michael said. Finlayson’s goes full-circle After being part-owned by other shareholders for several years, in 1998 Malcolm and his two sons bought the business outright. It was such great timing when the business went full circle to be fully owned by the Finlayson family once again, Michael said. “At the time Skene and I had enough equity in our homes to buy these three shareholders out – apart from Dad – and we did that over several years. Then it was just Dad, Skene and I as shareholders and directors and it was such a special time to be working with Dad for so many years before he passed three years ago.” “Now both of our sons are working in the Heritage business and we are so lucky to work with them on a day-to-day basis,” he said. Recognising the shifting market dynamics and the opportunity to grow the business, in 2020 the brothers entered into a sale agreement of its trade retail and installation businesses with the Independent Hardware Group (IHG). The divestment included two sites in East Brisbane and Sumner Park, as well as the flooring installations business which runs hand-in-hand with that retail trade operations. “Being a vertically integrated group, and often competing at a trade level with our wholesale customers, we realised we could not continue to cover all bases. A decision was made to focus on the export, wholesale milling and manufacturing side of the businesses.” “IHG was just a great fit because they know the trade. Their people were also accessible, approachable Throughout the 1960s and 70s, third-generation family member, Malcolm Finlayson set the foundations for Finlayson’s to become an industry leader in timber. FEB '22 | HARDWAREJOURNAL.COM.AU 11

and knowledgeable and that starts with Chief Executive Officer Annette Welsh right at the top. IHG has the scale, resources, expertise and capital to invest in the Finlayson business versus what we could have done as a standalone independent.” “The more my brother and I discussed the potential acquisition with them, the more comfortable we felt for our people first, and also the future direction of the business overall so it has been a great thing. Especially when you have 90 staff with over 10 years of service across the group, they are like family so it is not just a matter of selling a business and trying to make money. It is about the longevity of the business and making sure the people are secure and the business will continue to grow,” he said. General Manager of Retail and Trade operations, Oliver Krumins has leveraged the strength of Finlayson Group as a timber distribution outlet to strengthen the IHG network, establishing hub and spoke arrangements to support other independents with supply. “IHG’s investment and strategic retention of its network not only drives growth, but it also allows us to support independents with another avenue of alternate supplyparticularly stores who are looking to diversify and expand their range. Finlayson’s continues to support its loyal builder customer base whilst helping independents nurture and grow theirs. It is a win-win for the network,” Oliver said. “We then have our Finlayson’s installation business providing builders and the IHG network with diversified product offerings. We are currently updating our installation’s f looring showroom to be one of the largest, most up-to-date timber f looring displays in South East Queensland. This allows our customers, our suppliers and the broader IHG network to have a central selection showroom that we can all benefit from,” he said. Today, Michael and Skene remain on the advisory board for the Finlayson trade retail operation while also continuing to run the remaining Superior Wood business - a plantation araucaria softwood sawmill located in the Mary Valley. “We also have Heritage Products – a joinery and timber value-adding manufacturing plant in Carole Park, along with a sandblasting and coating business – Superior Sandblasting and the Annandale Timber Moulding Company in Sydney, which is a moulding manufacturing business that sells direct to trade and wholesaling as well,” Michael said. L-R – Brothers Skene and Michael Finlayson, bought the business with their father Malcolm in 1998.

Business recognition In 2021 the Finlayson family was acknowledged for its leadership and internationally recognised product innovation when it was inducted into the prestigious Queensland Business Hall of Fame. Michael believes the long-term success of the Finlayson Group stems from the early mindset of his forefather, who not only worked hard to build the business but also ensured that everyone within it knew that they were an important part of the team and always had a voice no matter what their role was. “From an early age one of the things our father instilled in us was that all staff were to be respected and heard. These simple principles have assisted us in recruiting the right people and we are fortunate to have long-term, loyal and knowledgeable staff whose focus is to keep our builders building. At our recent long service leave lunch celebration, we had 90 staff attend with over 10 years’ service across the group of companies, with around half of those over 20 years. You just cannot buy that sort of knowledge,” Michael said. “The other stand out feature of Finlayson’s is our trade focussed range of products. We do not pretend to be retailers and get confused with this. We also have the largest stock range of mouldings in Brisbane. And of course, our relationship with Superior Wood and Heritage Products has kept product on our shelves for our builders throughout the pandemic. Having resource security has been paramount over the last two years especially,” he said. Timber supply issues On-going timber supply shortages have brought their fair share of challenges, according to Michael, but have also exposed the need for loyalty from the merchant to the supplier. “The shortages have caused those merchants who just shop around and seek the cheapest price to be caught out. During this time, we decided to look after the builders who were loyal to us ongoing, big and small builders as they are both just as important,” he said. “The pandemic has proven that resource security is absolutely paramount and loyalty throughout our staff, customers and suppliers have faired very well in all of this. This is particularly the case when it comes to the long associations that we have had with substantial building products and hardware companies. If you have not got this and you are just chopping and changing, I think you are in big trouble, and we have seen this.” “In the pandemic’s peak we received around 20 new account applications per week but we simply could not supply those accounts. As much as we would have loved to, we needed to look after the builders who have stuck with us through thick and thin and make sure they have material on site. Only then can we help as many people as possible to source supply,” Michael said. Supply will continue to be an issue for some time, according to Michael, who said one only has to look to the US market that is forecasting building starts to be at 1.7 million this year. “Nobody knows how long the supply issues are set to continue but with strong US demand coupled with ongoing supply chain constraints, we are still a long way from being out of the woods. Future plans Today the Finlayson Group has over 400 employees and a turnover well in excess of $100 million dollars. “We have some great plans for both our Superior and Heritage businesses which all continue to grow. As horrible as the pandemic has been, it has been a wake up and catalyst for our customers to realise the importance of resource and supply security here in Australia. Many have been totally reliant on imports and while they are critical to fill in the gaps, having a domestic supplier and producer is crucial.” “We also have some very bold but realistic growth plans across the Finlayson Group. IHG have the capital to do this and the future is looking so very positive for all of our staff, customers and businesses going forward,” Michael said. The Finlayson family was acknowledged for its leadership and internationally recognised product innovation when it was inducted into the prestigious Queensland Business Hall of Fame last year. TIMBER FOCUS FEB '22 | HARDWAREJOURNAL.COM.AU 13

In this edition of Behind the Counter, conference keynote speaker, business strategist and consumer behaviour analyst, Barry Urquhart, investigates who is really controlling your business throughout the pandemic. Let the force be with you Market forces have been sidelined. Overall demand, revenues, foottraffic and on-line activities are being influenced and, in some instances, determined by artificial state-controlled influencers… CMOs. That is: Chief Medical Officers. Individually and collectively, nine Australian CMOs are advising Prime Ministers, Premiers, Chief Ministers and Health Ministers in the determination and implementation of regulations and policies. The consequences for commerce and society, in particular government-nominated essential services which include retail hardware and trade, are typically immediate, widespread and on-going. Empty supermarket shelves, airline service withdrawals, extended purchase lead-times and staff-member absentees (particularly in warehouse, distribution and fulfilment centres) bear witness to the prevailing distribution marketplace realities. Declines in demand and bookings for tourism and hospitality-oriented interstate and international travel are not primarily because of costs, availability and schedules. Rather, concern exists about the need for, or prospects of seven-to-14-day quarantines in health amenities, hotels and homes. None are alluring. Alas, another indirect inf luence. Heightened demand by, stay-athome (often furloughed) individuals for home improvement products have waned over time. A recent series of on-line focus groups among participants in five mainland capital cities revealed that consumers are generally aware of, and responsive to the presence and rulings of Chief Medical Officers. In essence, the inputs and inf luence of these unelected and unrepresentative active individuals are stronger than company/supplier induced pricing, sales events, discounting, bargains and savings policies and campaigns. The appeal and effectiveness of each can be, and often is, tempered by changing and variable health rulings. The effectiveness of advertising, marketing, merchandising and promotional initiatives are being compromised. Content and schedules necessarily need to be subjected to on-going monitoring, review and refinement. Supply-chain and inventory management, together with the careful monitoring of optimal stock-turns is difficult to achieve and to sustain. The stop-start nature of unexpected and unprecedented regulations, impact substantially on demand, cash-flows,

BEHIND THE COUNTER margins and profits of manufacturers, distributors and retailers in the broader hardware sector. Significantly, the impact of CMO-determined and recommended regulations, offered to governments in-confidence, in-camera and not subjected to peer-review or justification, impact five fundamental phases of the buying cycle, being: • B uying intentions - Discretionary purchases in particular are being suspended, delayed or dismissed, at present. Stimulating awareness, interest and demand can be effected by astute, consistent brand marketing. Collaboration between retail hardware outlets and suppliers has the potential for immediate, ongoing and substantial rewards. • I ntended purchase schedule - Time and timing are key variables and can or should be central to certain campaigns. Time-specific offers generate urgency, foot-and online traffic. Recognise, respect and communicate to NOW consumers with premium immediacy. • S earch routines - Falls in foot-and on-line traffic are indicative of substantial changes in consumer mindsets. Scopes have narrowed. Accept those realities. Outline the details, the steps and procedures which hardware stores have introduced to expedite the search and purchase routines. That is, convenience. • B ricks ‘n’ mortar visitations - Consumers are typically focused, informed, price and time sensitive and aware when active in the marketplace. Hence, on-going communication is imperative. The core focus is access ... to communications, exposure to products, services, applications, simplified payment systems and delivery services (including self ). • P urchase criteria - The factors that represent and quantify value have changed. ‘Value propositions’ may need to be recalibrated and promoted. Contemporary hardware consumers assign premiums to recognised, trusted, respected and responsive outlets, and their service providers. Collectively, these initiatives represent a prescription for a healthy business, notwithstanding the unwelcomed intrusions by Chief Medical Officers and governments. The power of word The mere expressions of, or references to certain key words elicit widespread public and corporate responses. For consumers, heightened sensitivity centres on four words: (In descending order of ranking) • Masks. • Hard borders. • Lockdowns. • Social distancing. Responses are emotive-based and not dependent on governmentenforced implementation. Consumer confidence is tentative, if not brittle, and continuity, consistency and peace-of-mind are perceived by consumers to be out of reach at present. Positive personal visuals which project the images and faces of frontline service providers are reassuring and quickly develop a sense of acceptance and endorsement. That is recognition that – “we are all in this together” Influencers Some will conclude that the primary causal factors relate to staff shortages, absenteeism and supply-chain difficulties. Actually, these and other characteristics of the marketplace are symptomatic of the prevailing forces and realities. Competiveness between hardware brands remain high. Personal interactions and resultant relationships, foster increased repeat and loyal business. The fundamental causes of the disruptions emanate from the offices, decisions and recommendations of Chief Medical Officers. Rationale for such may be, and probably are, founded on sound medical grounds. The essential issue is whether, and to what degree are the economic and marketplace consequences given consideration. A sense of understanding at the point-of-purchase can be all pervading and influential. All is not lost Consumer sensitivities, awareness, expectations and perceptions are largely being influenced by repeated media stories. Understandably, their focus tends to be on the following categories: • Food. • Fashion. • Furniture. • Kitchenware. • Homeware. • Travel. Hardware remains accepted as being a nominated essential service. Not surprisingly, the sectors detailed above are reporting short-term surges in demand and subsequent declines in revenue. Hardware, interestingly, remains a relative constant. Well-constructed, integrated and consistent communication strategies are providing an increasing number of trading entities competitive advantage, heightened relevance and improved sales conversion rates. It often just takes adaptation of a new perspective and input from an independent external professional resource, beyond that of the Chief Medical Officer. Experienced and qualified hardware store staffmembers are marketable attributes. They are, individually and collectively, a force. Barry Urquhart Marketing Strategist Marketing Focus M: 041 983 5555 E: urquhart@marketingfocus.net.au W: www.marketingfocus.net.au FEB '22 | HARDWAREJOURNAL.COM.AU 15

US NEWS Lowe's and Petco have announced a pilot store-in-store program that brings well-known products, services and expertise – for both home and pets – into one, convenient stop at select Lowe's locations. The first Lowe's + Petco store-instore concept is expected to open at Lowe's Alamo Ranch, Texas location this month, with plans to expand to 14 additional Lowe's locations in Texas, North Carolina, and South Carolina by the end of March. Over the past two years, Americans have found more comfort, security and emotional connection through their homes and pets than ever before, with more than 11 million new pets entering US homes since the start of the pandemic. While Lowe's stores nationwide have had a longstanding open-door policy to pets, Lowe's + Petco locations will provide a unique customer experience where pet parents can support their pet's health and wellness through a curated assortment of Petco's highquality pet nutrition, supplies and services, and also improve the home they share in one shopping trip. Lowe's Executive Vice President of Merchandising Bill Boltz said for many customers, their pets and their homes top the list of things that matter most, especially after two years spent mostly together within the same four walls. "This partnership enhances the total home solution we offer them by bringing home improvement and pet care products, services and expertise together under one roof,” Mr Boltz said. Petco's Chief Merchandising Officer Nick Konat said providing pets with a safe, healthy and stimulating home environment is an essential part of Petco's Whole Health philosophy. "Bringing Petco's pet care expertise, high-quality products, and veterinary and grooming services to Lowe's helps make it easier than ever to create healthy, happy homes for pet parents and the pets they love,” Mr Konat said. Lowe's + Petco locations will offer a curated assortment of Petco's high-quality pet nutrition, and health and wellness supplies and services, including Petco's beloved owned brands: WholeHearted, EveryYay, Youly, Leaps & Bounds and So Phresh, as well as a variety of popular national brands. Lowe's + Petco locations are also expected to offer a selection of Petco's pet services, including Vetco vaccination clinics, microchipping, prescription pest prevention, and mobile grooming at select times and locations. To better serve those looking for expertise in both the home and pet space, pilot locations will staff knowledgeable Petco partners (employees) during peak hours to offer pet-focused guidance alongside Lowe's associates' advice on home improvement projects. Lowe’s to open Petco shops in-store Filling job openings a hard task ‘Now hiring signs’ are popping up everywhere throughout the US retail landscape as businesses attempt to fill open positions with quality staff. It seems challenges with hiring go way beyond finding employees with experience, according to a recent Hardware Retailing report, with US businesses finding it hard just to fill job openings. The US Bureau of Labor Statistics recently released findings on the number of unemployed persons per job opening. When this number is above ‘one’, there are more unemployed Image: Petco The first Lowe's + Petco store-in-store concept will open in Texas this month.

Ace Hardware sits on top of the world Ace Hardware is among the top one per cent of franchise business opportunities in the world, according to Entrepreneur Magazine's annual ‘Franchise 500' for 2022. Ace ranks twelfth out of 1,177 franchise businesses analyzed and also out of the 500 ranked, according to Entrepreneur. Entrepreneur's Franchise 500 is the oldest and most comprehensive franchise company ranking in the world assessing unit growth, financial strength, stability, and brand power. It scores 150 data points with the highest cumulative scores becoming its Franchise 500 ranking. Ace Hardware’s Vice President of Retail Operations and New Business at Ace Hardware John Kittell said Ace was honored to be ranked highly in Entrepreneur's 43rd annual Franchise 500. "Helping locally-based entrepreneurs to independently own profitable businesses, often in the neighborhood in which they live, supported by our trusted global brand, industry-leading products and services is the backbone of our company," he said. Ace also ranked first in the Franchise 500's ‘Miscellaneous Retail Businesses’ category, improving its ranking from 23rd overall in 2021. Earlier in January, New York-based Incisiv ranked Ace Hardware as tops in the home improvement category for online-offline consumer experience, citing its "omnichannel prowess." In December, Redwood City, California-based Reputation ranked Ace Hardware as the second most beloved retailer in America. The firm analyzed 3.7 million Google reviews to calculate a Reputation Score for each; Ace Hardware scored highest for "consumer sentiment" and "shopper engagement." In November, Quebec-based Orckestra's fifth annual study of omnichannel capabilities ranked Ace Hardware as third overall of 100 retailers considered. It scored highest in the home improvement category, ahead of The Home Depot, Tractor Supply. Co and Lowe's. persons than there are jobs available, however since June 2021, this number has remained below ‘one’ which means there are more job openings than unemployed persons to fill those spots currently, according to the report. The US Bureau of Labor Statistics recently reported that by the end of 2021 there were 10.6 million available jobs but only 6.9 million unemployed persons to fill those spots. In late 2021 the North American Hardware and Paint Association (NHPA) conducted an informal survey and found that 60 per cent of respondents indicated they were having trouble finding workers to fill open slots, according to the report. Hardware Retailing recently revealed the insights of retailers’ hiring strategies when finding and hiring new employees and how they continue to navigate labor shortages. The team at Hagan Ace Hardware found that being adaptable was one hiring strategy that has helped find workers to fill job positions, with Hagan Ace’s Director of Human Resources LaDonna Silcox saying in the report that the pandemic had changed the way the company hired and trained employees. Prior to the pandemic a new employee’s first day took place on one of the biweekly New Employee Orientation (NEO) meeting days. “In the past few months, we found that we were losing workers before they even started. We would hire someone but they would change their mind or decide to go another route between the time we hired them and their first day of NEO. So, we changed our policies.” “Managers now have an employee start on any day and come to the next available NEO day for training after they start. An employee does not necessarily have to start on an NEO day,” Ms Silcox said in the report. Hardware retailers also pointed out the importance of hiring from within when looking to fill management or associate roles, and recognising the excellent team members that are already on staff. For independent retailer Factory Paint & Decorating, being flexible means responding immediately to any job applicants rather than waiting. “We have been lucky to have retained most of our employees but with the few hires we have made this year, our new strategy has been to respond instantly to the application rather than take a few days to review. When the candidate seems like a good fit, we request an interview via text and email to cover both avenues of communication,” Marketing Director Kristen van Dyk said in the report. “We also advertise our open positions on Indeed, Facebook and our company website but I have also added our job openings to Linkedin and ZipRecruiter,” Ms van Dyk said in the report. Companies should also consider hiring for their culture, according to the report, and look for workers who fit in well with the team and who can be trained to thrive within a certain role. FEB '22 | HARDWAREJOURNAL.COM.AU 17

NZ NEWS The rising costs of New Zealand’s construction materials show no signs of slowing as widespread shortages of key products continue to plague the industry, a recent RNZ report has revealed. Combined Building Supplies Co-Coperative Chairperson, Carl Taylor said the delays are the result of increased demand as residential building consents hit record highs, along with a shortage of labour needed to make the materials and unavailability of materials needed to make specific building products. Mr Taylor said that ongoing delays for a wide range of products was stretching the build time for an average house from five to 12 months. "We are aware of jobs where the builders will stand their frames and they are having to wait another three or four months until they can get their cladding or get their roofing or get their windows - and that is just in the residential sector,” Mr Taylor said in the report. Prices for building a new dwelling increased by 16 per cent in the December quarter, compared with the same period in 2020. It is expected the prices rises are only set to become worse with Combined Building Services forecasting further price hikes of 15 per cent across all products in the coming year. BuildLink General Manager Simon Burden said he did not think much could be done about the shortages other than different parts of the supply chain communicating clearly with one another to manage expectations. "If we were to have a set of plans to come over our desk at one of our stores right now, you have got to be realistic with the builder or the homeowner who is wanting to build that house [about how long it would take],” Mr Burden said in the report. He said another factor causing delays was the time it took for certain products to achieve clearance from councils or the Building Research Association of New Zealand (BRANZ) before they could be used in New Zealand. "That system almost needs to be fast-tracked so other companies on the other side of the world can actually bring their products here with ease. But on the same token, the products still have to be tested,” Mr Taylor said. A BRANZ spokesperson also pointed out in the report that when companies brought their products to the domestic market it was up to the councils to test if they met the building code through the consenting process. Not all of these will be either appraised or individually certified, the spokesperson said. "It is, therefore, unreasonable to imply that product testing processes are a considerable contributor to broader supply chain issues,” the spokesperson said in the report. BRANZ offered appraisals and CodeMark certifications as a means for suppliers to ensure their products comply with requirements, but it was only one of a range of CodeMark certification providers, and suppliers did not need to engage it to demonstrate code compliance, according to the report. Price hikes and material shortages plague construction New Zealand inf lation has had its biggest increase in 31 years - up 5.9 per cent last year, with many New Zealand households reporting that they have noticed their household NZ inflation rates hit 30-year high

The average cost of building a house in Marlborough - located on New Zealand’s South Island - has become about $80,000 more expensive within the last 12 months, according to recent consent data, with local economists and builders saying COVID disruptions and inf lation are driving up the value of new homes within the region. A recent Stuff NZ report has revealed that 76 standalone houses that were consented in Marlborough in the third quarter of 2021 had an average value of $479,085. That was just the expected cost of construction, but did not include the cost of buying the section. Sections in Blenheim’s new Wai-iti subdivision were selling at auction for more than $400,000 last year, according to the report. Peter Ray Homes Blenheim Director, Donna Lee said she was not surprised there had been a year-toyear increase in building costs. What did surprise her however was the size of the increase, she said. “The increasing cost of materials was always a major factor on the cost to build. Bricks for example, a lot of bricks are made in Australia so they are imported. So when the price of bricks goes up in Australia, and then you have got to freight them to New Zealand, and there are shipping delays to deal with, and then there is also the cost of transport with trucks that require fuel,” Ms Lee said. Each unforeseen extra expense stacked onto every necessary material all added up to make building a house that much more expensive, Ms Lee said. “I think everybody is sort of wary at the moment, everybody across the board, wary of delays and unexpected costs. When interest rates were low people were [upgrading] their homes a lot, but now they are not so much. Now they are being cautious about what they do,” Ms Lee said in the report. Builder Rob Blick said he believed the costs quoted in consent applications would likely be conservative because prices were rising so fast, and budget blow-outs were common. Mr Blick said he noticed some contractors were now only giving quotes valid for seven days, instead of the usual month or so because prices were changing so fast. “How are people meant to get preapproved at the bank when a quote is old after seven days? Every day the goalposts shift. There is definitely a crunch coming. It is going to be an interesting time for builders and merchants trying to keep work going, and coming in affordably,” Mr Blick said in the report. Marlborough Chamber of Commerce Growth Adviser Alistair Schorn said along with global supply chain disruptions, Auckland-based manufacturers were also operating well under capacity due to last year’s lockdowns. However, the high number of consents was a positive sign, he said. Including units, apartments and townhouses, there were 90 residential consents in the third quarter of last year, the second-highest quarterly figure in the last 10 years. “What the data does not tell us, though, is how much additional pressure these consents put on the local construction sector, which already seems to be running at close to full capacity. It will also be interesting to see if these higher consent numbers are maintained over the next few quarters,” Mr Schorn said in the report. Marlborough’s labour market was also very tight, according to Mr Schorn, with unemployment in Marlborough estimated at 2.8 per cent in the third quarter of 2021. Marlborough building costs reach new highs bills creeping up over the past 12 months, a recent Newshub report has revealed. The soaring cost of construction is the main driver behind the current high inf lation, according to the report. "Everything has gone up - whether it is timber, steel, insulation and claddings. The whole lot, including building materials and petrol," Master Builders Association Chief Executive David Kelly says. Annual inf lation is also the highest it has been since June 1990, with housing and transport being the biggest contributors. According to Stats NZ, prices for new house builds rose 16 per cent compared to 2020, rent was also up 3.8 per cent overall and fuel soared by 30 per cent. Kiwis said the price hikes are becoming more and more obvious as time goes on. While prices soar, wages have not with the latest Stats NZ data showing 42 per cent of Kiwis did not get a pay rise last year and if they did it was less than inflation. To bring prices down interest rates are expected to steadily climb, hitting homeowners. Kiwibank Chief Economist Jarrod Kerr said homeowners are now looking at a mortgage rate “of mid threes, but it will be in the mid fours, mid fives soon [per cent]," says. But for those building a home there is some good news. Construction costs are expected to ease later this year, Mr Kerr said. FEB '22 | HARDWAREJOURNAL.COM.AU 19

TIMBER UPDATE The Australian Government, through the Clean Energy Finance Corporation (CEFC), is investing $300 million to support the Timber Building Program in an effort to increase support for the use of low-carbon timber in the construction sector, while also supporting forestry jobs across Australia. The program is set to promote the use of low-carbon engineered wood materials in apartments and office buildings to reduce constructionrelated emissions and create jobs in the forest industries. CEFC Chief Executive Officer Ian Learmonth said that timber has been used in construction for generations and innovations in engineered wood products have created new opportunities for mass timber construction to be used in larger projects, creating the potential for immediate and long-term environmental benefits. “Our new Timber Building Program will help finance this transition by encouraging owners, developers and builders to use lower carbon engineered wood products in their projects. The CEFC has a strong track record in financing new market developments, from large-scale solar to cleantech start-ups. We are excited to bring this expertise to sustainable construction,” Mr Learmonth said. Minister for Industry, Energy and Emissions Reduction Angus Taylor agreed that the forestry industry has great potential to support jobs in Australian cities and regions while reducing emissions “Increased use of low-carbon construction materials like wood products will help achieve our target of net zero emissions by 2050. The production and delivery of building materials account for 28 per cent of emissions in the construction industry globally,” Minister Taylor said. “Australia's Long Term Emissions Reduction Plan sets out the approach the Government is taking to help industries reduce their emissions, through research and enabling technologies,” he said. Assistant Minister for Forestry and Fisheries Jonno Duniam said this was another example of the Morrison Government backing forest industries. “Forest industries make an enormous contribution to rural and regional communities across Australia and employ over 65,000 people,” Assistant Minister Duniam said. “Through our National Forest Industries Plan we are reducing barriers to investment in our plantation estate, improving Australia’s value-adding capability and delivering opportunities for better returns on investment for our foresters.” “This program is another key initiative that will help to incentivise the making of more innovative forest and wood products right here in Australia and create more jobs in the regions,” he said. Last month, the Government released a new Emissions Reduction Fund (ERF) method to support plantation forestry projects to earn Australian Carbon Credit Units (ACCUs). ACCUs can be sold to the government or the voluntary private market. The new ERF method builds on regulatory reforms designed to encourage more plantation forestry projects in key forestry regions across Australia. The program will finance eligible projects Australia-wide on a case-bycase basis, which includes construction projects in office, retail, industrial, healthcare, education, residential, seniors living, hotels, and student accommodation. The program also aims to develop local skills and experience that will lead to more low carbon timber-based building activity in the future. More timber in construction to lower emissions Growing the return on Tasmanian timber The Tasmanian Government has recently announced that it will invest $6 million within the Tasmanian timber and forestry industry in an effort to increase value-added production and support regional jobs. Seven projects around Tasmania will share in the substantial investment through the government’s ‘Forestry On-Island Processing Program’, which will help the sector turn existing wood supplies, as well as wood residues, into highervalue products. The fund injections will lead to a direct $23 million investment in modern processing and production processes in facilities located around the state, from Smithton to Bell Bay to Glenorchy. The investment is expected to add value to the current timber harvest, better utilise wood residue, help insulate the industry from international commodity markets, reduce the need for imported wood products and support the

AFPA welcomes Andrew Leighton as new FWPA CEO Australia’s forest industries recently welcomed Andrew Leighton as the new Chief Executive Officer of Forest and Wood Products Australia (FWPA). Acting Chief Executive Officer of the Australian Forest Products Association (AFPA), Victor Violante said Mr Leighton is well known throughout domestic forest industries. “Mr Leighton’s senior roles include seven years as Managing Director of Norske Skog Australasia and he is a former vice-chair of the AFPA board. He is an excellent choice to lead FWPA into its next stages of research and development, including implementation of FWPA’s new strategic plan,” Mr Violante said. “There are exciting opportunities ahead for forest industries research and development as the world moves towards carbon-friendly products, but also major challenges where Mr Leighton will have an intimate knowledge and understanding. It is particularly exciting to hear that Mr Leighton will also reiterate his strong belief in forest industries supporting environmental sustainability,” he said. The AFPA works closely with FWPA on aligning industry research and development with industry needs, according to Mr Violante, while also addressing emerging challenges and opportunities for the sector and continuing to be at the forefront of global trends. “Mr Leighton’s extensive experience in Australia’s forest industries will ensure this strong collaboration continues. On behalf of Australia’s forest industries and the AFPA team, I welcome Andrew Leighton to his new position and look forward to a constructive working relationship in 2022 and beyond,” Mr Violante concluded. construction industry locally. It will also help secure scores of jobs across Tasmania and lead to at least 30 new direct and indirect positions. The projects receiving funding include upgrades to processing facilities that will see more value coming fromTasmanian’s renewable forest supply by converting low-grade plantation timber into high-value boards and also construction of wall and roof trusses to be sold locally and nationally. The programwill also help improve timber recovery processes that will see more local wood replacing imported timber, increased output of treated pine products and an expansion of the amount of sawn timber and by-products generated from lower grade logs. The supported projects include: Timberlink Australia Pty Ltd - $1,063,304 to create a finger-jointing and priming line to convert low-grade and short length plantation pine into high value boards, fascia and posts. CMTP Pty Ltd - $2,500,000 to upgrade the Branxholm Sawmill facility to a world-class standard, significantly increasing processing volumes of sawn log at increased lengths, with an improvement in timber recovery. The additional sawn timber volumes will replace imported timber. McKay Investments Pty Ltd - $1,049,235 to upgrade truss plant facilities for the manufacture of wall and roof trusses and install an upgraded finger jointing and laminating plant. Britton Brothers Pty Ltd - $689,000 towards a specialised timber recovery line that will join short lengths of timber into useable long sections. GL & VN Barber Pty Ltd - $250,000 to upgrade the existing kiln drying facility and install timber moulding capability to produce sawn timber and by-products from lower grade logs. Koppers Wood Products - $250,000 to upgrade its Longford pine processing facility to reduce waste and significantly increase the efficiency and output of treated pine post-production processing. Bakes Sawmill Pty Ltd - $147,668 for the purchase, installation and commissioning of wood treatment equipment to produce treated timber for a range of products - adding value to what is currently chipped residue wood. Bell Bay Mill. Image source: AFPA FEB '22 | HARDWAREJOURNAL.COM.AU 21

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