� QUALI T Y SI NCE 1 800 � COATINGS & CARE
DEPARTMENTS Newsmakers Features 6 Viewpoint 8 Trade Focus 12 Behind the Counter 14 US News 16 NZ News 18 Timber Update 42 News 44 What’s New 46 Diary Dates 20 Garden & Outdoor Living As the price of iceberg lettuces skyrocket to over $12 per head and many other produce prices begin to follow suit, Australian consumers are now looking for the best way to cut grocery bills and save money by making the most of their backyards. 30 I nsulation & ventilation Condensation continues to be an increasing problem in homes. In response to this problem the National Construction Code (NCC) was updated with a new section titled ‘Condensation Management’. However, the update has caused ongoing implications when installing both insulation and ventilation products. 27 A fter three years of delays, the MGA TMA finally held its industry breakfast on June 22, with many members and industry contacts excited to be together once again. 42 B unnings defends face scanning technology. About the Cover Fiddes Australia is proud to provide tradesmen and DIYers alike with plenty of choice in creating and maintaining a finish to timber, concrete, cork and stone. Perfected for more than 100 years and four generations, Fiddes coatings and finishes are synonymous with durability and quality. Vol.137 No.7 Jul 2022 Quality l. . l � QUAL I T Y SI NCE 1 800 � COATINGS & CARE SINCE 1886 www.hardwarejournal.com.au Print Post Approved PP100007331 43 8 20 30 4 HARDWAREJOURNAL.COM.AU | JULY '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: email@example.com Journalists: John Power Emily Morrison Hartley Henderson Online Communications & Production: Justin Carroll Email: firstname.lastname@example.org ADVERTISING Harry Rabiee Email: email@example.com Phone: (03) 9544 2233 Mobile: 0403 000 444 ACCOUNTS Melissa Graydon Email: Melissa.Graydon@glenv.com.au SUBSCRIPTIONS Melissa Graydon $93.00 – 12 issues firstname.lastname@example.org ART AND PRODUCTION Justin Carroll PRINTING Southern Impact Pty Ltd 181 Forster Rd, Mount Waverley VIC 3149 Phone: (03) 8796 7000 It seems that every time we watch the news or listen to the radio at the moment, it is not too long before we hear about interest rates going up, inflation rising and of course the threat of a looming recession. As everyday purchases peak in price, including the price of fresh food as well as soaring energy bills, most consumers are now looking to tighten their belts. Consumers are nervous. At the time of writing, the Reserve Bank had announced another interest rate rise of 0.5 per cent which is the latest of three consecutive rises and is the steepest increase since 1994. The three rate rises have also lifted the average payments on a $500,000 mortgage by $333 per month. For now, most consumers are finding comfort in the fact that there are still plenty of jobs available with the employment rate sitting at under four per cent. But what does all this mean for hardware, trade and industrial businesses? Several retailers I have spoken with lately say while it is frustrating for customers to see the price of products going up in-store, most understand that independents need to pass on some of the price hikes to maintain a healthy business. This is particularly the case in rural areas and locals know that if they do not support their beloved local hardware store, smaller businesses have a higher likelihood of closing than larger establishments. The support for local business remains strong amongst trade and DIY customers and a recent marketing campaign by the Independent Hardware Group (IHG) has reiterated the importance of on-going support from locals. The ‘other hardware store’ campaign was recently launched throughout Mitre 10 stores and was designed to remind consumers that there is always an exceptional alternative to the big box. This edition’s IHG coverage details how the majority of Mitre 10 stores have got behind the campaign, with some stores utilising their staff on social media pages to spruik why they love being a part of the ‘other hardware store’. Team members also visited local businesses within their rural towns and posted images of small business owners standing with the campaign banner, reiterating the need for local business support. What a wonderful way to lift each other up, as the uncertain economic times continue. It seems that despite the tumultuous times ahead, there are several departments that economists are tipping will boom and are essentially ‘recession proof ’. While obviously any form of building material or tool will remain in high demand as the building industry continues to grapple with on-going demand, it seems that any type of pet care, plant or paint product is also expected to show no signs of slowing down this year. According to industry leaders, consumer’s desire to pamper their COVID pets will continue for some time, particularly for those who are spending more time with their fur babies while working from home. Plants are of course a luxury item that consumers use to create a calming atmosphere at home, while paint is still the cheapest form of updating a home or room. Look out for growth in these three segments throughout 2022. It is for this reason that AHJ’s August edition will cover both the Pet Products and Paint and Accessories segments, along with our extensive Timber/ Timber Flooring and Decking feature. Look out for all of this and more in the upcoming edition. Christine Bannister - Editor
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Store name: Ag and Trade Owners: Greg Prosser, Shane Powell and Gary Waideman Store Manager – John McLean Location: Esperance, Western Australia Building Group: Construction Supply Specialists (CSS) Ag and Trade sales growth shows no sign of slowing Initially established as a farming business 20 years ago, ‘Farm and General’ primarily catered to the needs of the extensive farming community throughout Esperance, located 700 kilometers south-east of Perth. But it was not long before the owners saw a new niche within the business. After a short time, the trade area of ‘Farm and General’ began to grow exceptionally well and owners Greg Prosser, Shane Powell and Gary Waideman decided this popular component of the store should be expanded into its own establishment. ‘Ag and Trade’ was born in 2013. Long-term Store Manager of ‘Ag and Trade’ John McLean says while the ‘Farm and General’ store already provided a small number of tools, hardware and industrial supplies, when the store owners saw how popular this space had become, they decided to separate the two businesses and establish a stand-alone hardware tool store. The establishment of the new ‘Ag and Trade’ business was seamless as there were already two retail establishments on the site and plenty of shed space as well. This shed space also allowed for a significant amount of stock to be stored throughout the pandemic when sourcing supply became difficult. Local farmers and builders now use ‘Ag and Trade’ as their go-to store, because they know that the business has plenty of highly trained staff who also provide exceptional customer service. “With a population of around 15,000, Esperance is well-known as one of the better farming areas in Western Australia and has an extensive cropping industry as well. We not only work closely with the local farmers but we also deal a lot with the Southern Port, particularly CBH which is a big grain exporter within the local area. We deal with many of the industrial and engineering businesses in town, while also supporting the local building industry as well,” John said.
Innovation in Ventilation Available to hardware and builders supply outlets nationally. Call (03) 9758 7444 or email email@example.com + BAL compliant products + Shelf ready, retail friendly packaging solutions + Innovative new products + Wide range of vents for roof, wall and eave + Full range of accessories including duct, joiners, clamps, reducers + Wide range of sizes to cover most applications + Ideal range for new homes or DIYers Double-digit growth Incredibly, the ‘Ag and Trade’ business has continued to grow in sales every year since it first opened, boasting double-digit sales increases for eight years. John was brought on as the store’s Agricultural Specialist just after the business opened after having worked within the agricultural sector for some time. His experience is complemented by the rest of the ‘Ag and Trade’ team who all have vast experience in the retail and trade areas. “I did think that the sales increases year-on-year might have slowed down at some stage but we have achieved this again this year. COVID also did not slow us down at all, we just seemed to keep going at the same pace,” he said. The high level of business growth has continued due to the exceptional customer service implemented in-store, according to John who says this aspect of the business is extremely important because word gets around fairly quickly - in a tight-knit town - if customer service is poor. “Our main priority is to provide excellent service by greeting all customers by name and we also conduct a lot of follow-up calls on any enquiries we might have during the day. We build the business by focusing on our range which is why we substantially increased our stock range over the past few years.” “Since COVID we have found that a lot of suppliers have not been able to supply parts to us straight away. Quite a few local suppliers have also moved their warehouses back to Melbourne or Sydney so when we order products it can take up to two to three weeks before anything arrives here. This is another reason why we believe it is so important to maintain an increased range and our stock holdings as well,” he said. Luckily the site of ‘Ag and Trade’ and ‘Farm and General’ featured two substantial showrooms to begin with, as well as several large storage sheds at the rear of the property so there was plenty of room to hold stock. While it has become easier to source products since lockdowns and border closures ceased, tools still remain one of the hardest products to source, according to John, who says he now has an abundance of stock in-store and has the ability to supply, “customers with products that even the suppliers cannot supply”. “Being 700 kilometres from Perth we are quite isolated, so the farmers, trades and the ports depend on us to have the right products in-store so TRADE FOCUS ‘Ag and Trade’ staff members Taleah La Touche, Brett Moffatt, Rod Kirkup, Nick Barrett, John Mclean, Rick Martin and Corin Smith. ‘Ag and Trade’ is well known for its exceptional range and by accessing most products required by customers. JULY '22 | HARDWAREJOURNAL.COM.AU 9
they can continue operating. All of the engineering businesses that undertake steel fabrication are also very busy so they need plenty of product from us as well on a regular basis.” “While we do offer a huge range in-store, we have access to pretty much any part that a customer comes in for. We also build the business by always following up on customers enquiring on a product. We are more than happy to look into it and source pricing for them. Our competitors often do not have access to the suppliers that we have access to and do not have the time to track down a part which is why we always do this for the customer as well,” John said. Being part of the CSS group for the past seven years is a substantial advantage, according to John, who says attending CSS meetings and trade shows allows the store to source most products. Having a network of CSS dealers to fall back on when sourcing products is also incredibly helpful. Online dilemma While expanding the store’s offer online has been a topic of discussion amongst the team, John says developing an online space is not yet a priority because he finds the majority of his customers still want to come into the store and check out new products before purchasing them. “We sell a lot of Milwaukee and we have a vast range in-store on display. We have brought our pricing in-line with online competitors and customers know they can come into our store and we have all the tools they need in-store. We also handle all of the warranties as well.” “We find less people are ordering on-line locally because if something goes wrong, they often need to send the product to Perth and then wait for it to come back. Locals also prefer to support local business.” While the store’s biggest sellers are tools, it also offers an extensive range of Cigweld products. Its agricultural and safety segments are also big sellers in-store. There is a 50/50 split between servicing the agricultural and the trade/hardware/engineering business with seven staff running the ‘Ag and Trade’ and about 20 staff running ‘Farm and General’. Looking ahead… For now, John says he will continue to look for new suppliers and also add to the range via customer requests. “If someone wants us to carry a product and we can see that they are going to use it all of the time then we are happy to stock it in our range. We are also looking into having an online presence but it will be more about showing customers what we have to offer rather than advertising products to purchase.” “We still want people to come into our shop because this is the best way to ensure that they understand all of the products that we sell. Being fairly isolated we still have this advantage over stores that are located in towns that have a higher population,” John said. Ag and Trade staff members, Breez Pirangi and Nick Barrett are proud of the store’s extensive Sidchrome display. 10 HARDWAREJOURNAL.COM.AU | JULY '22
In this edition of Behind the Counter, conference keynote speaker, business strategist and consumer behaviour analyst Barry Urquhart reveals which segments of the hardware industry are expected to boom despite predictions of uncertain times ahead. Inflation therapy – plants and pets Consumers are developing a new take on retail therapy and comfort purchases. Inflation and price increase-induced stress and anxiety, continue to influence consumers’ buying intentions. Recession will accelerate the process. Attitudinal research conducted in five mainland capital cities has identified two categories that consumers have nominated as being relatively immune to expenditure cutbacks: • Plants. • Pets. Retail therapy The therapy, satisfaction and fulfilment associated with the care, feeding, health and interactions with pets, dogs in particular, and the planting and nurturing of f loral items were recognised by Australian consumers as value in the current period of increasing prices, inf lation and pending recession. A majority of consumers expect and will accept ‘reasonable’ price increases for products in both categories. Outlays on services including visits to veterinary surgeries and non-emergency medical procedures for pets, and landscaping/design/concepts/advice will be subject to scrutiny, review, possible delay, rescheduling and omission. Less than 10 per cent of participants in 10 focus groups conducted in five mainland capital cities since the increase of official interest rates stated that they had, or intended to document budgets for expenditures related to pets and plants, gardens/landscaping. A significant minority of consumers reported having insurance policies for pet care. Each reported increases in premiums over the past two years. None had cancelled or intended to cancel the insurance policies. In stark contrast There was a broad consensus within and among the focus groups in five states that expenditures, in general, will be selectively reduced for specific products and services. Total outlays will be maintained in the immediate future. Therefore, sale volumes will contract in certain categories. Foremost among those were (in descending order of nomination): • Fashion. • Footwear. • Electrical appliances. • In-home entertainment. • Furniture. • Meat. • Vegetables. Decisions on ‘big ticket’ and capital items were most likely to be suspended, delayed and deleted. These included (in descending order of nomination): • Home extensions. • New motor vehicles. • R ecreation vehicles – bicycles, quadbikes, caravans. • Non-essential overseas travel.
Replacements, service and maintenance costs were, in the main, not budgeted. Expenditure on such will be outlaid on a needs basis. Repeated concerns were expressed by focus group participants about the lack of availability of trades-people, product supplies and specific item price rises. Accordingly, ‘costs of living’ are expected to increase for one year, ‘and beyond’. What recession? Guided, but unstructured discussions about recession revealed an absence of immediate concern about, and an understanding of the implications for personal lifestyles among participants. The primary focus related to recession was home mortgage payments, followed by credit and credit card charges. An overwhelming majority of focus group participants anticipated that they will need to curtail expenditure because of a recession. However, timing was not defined. Analysis commentary At this time, notwithstanding the recent increases in official interest rates, most adult Australians are comfortable with their financial capabilities and with price affordability. Almost all of the focus group participants anticipated future, and possibly ongoing price rises, many of which will exceed 10 per cent. Expenditures on discretionary items will be reined in. However, those aspects which provide emotional comfort, particularly pets and plants, will be largely isolated from substantial and ongoing contractions. Food, its freshness, quality and value will remain important. No substantial variations are forecast and intended in the foreseeable future. The latter point is fundamental. Few of the participants could or would specify time-frames for “the foreseeable future”. Poor service hits sales, reputations and brands Poor, inconsistent and lack of customer service is adding to increases in prices, inflation, and the threat of recession as influences on falling consumer demand and sales. Delayed departure and arrival times, ‘lost’ baggage, cancelled flights, long queues in terminals and congested parking are inflicting brand-damage on, preferences for and transactions with airlines and airports. New home builders, construction companies and renovators are bearing losses because of extended contract times, trade and material shortage and the replacement of fixed prices to variable and cost-plus agreements. Consumers are not happy, are anxious, apprehensive, and hesitant. Shoppers are increasingly expectant of empty shelves, inconsistent supply, widely fluctuating prices, and absences of preferred brands. Customer loyalty for specific supermarket brands is waning ... rapidly. Patronage of all four major brands in Australia is increasing. It is considered inconvenient, but defensive and necessary. Intended purchases of new motor vehicles are being delayed and reassessed. In an increasing percentage of instances, low-kilometre used vehicles are being purchased as a means to secure preferred brandnames and models. These are among the perceptions, expectations and experiences being expressed by participants in ongoing attitudinal market research being conducted by Marketing Focus. Standout exceptions Expectations about, and expenditure on maintenance, service, and replacements (particularly in and around the house) are, overall, strong and positive. Contract plumbers were identified to be consistently good, responsive and reasonable service providers. They were followed by electricians, painters, handymen and mechanical technicians. A consensus exists that customer service standards have declined during the past 12 months and continue to do so. Shortened trading hours, absences of service-staff, lack of training, product knowledge and inconsistent service procedures are apparent to or believed by customers to be major contributing reasons for inadequate service standards. A majority of participants in a recent national series of attitudinal research (focus groups) stated that they understood many of the reasons for poor, inadequate and inappropriate service. They were tolerant but did not accept rationalisations, and are receptive to, and are seeking out alternative service and product providers. Companies and entities which advertise, promote and promise consistency of availability, personal service, established brand names and specific time-based performance standards attract interest, preference, enquiry and demand. To meet customer and client expectations, business models, customer service practices and standards, advertising content and staff recruitment endeavours need to be recalibrated. None of those aspects are easy or inexpensive. However, commerce at large is being contaminated with stereotypical negative images and reputations. That is expensive. Customer service that meets and exceeds consumer expectations will attract, satisfy, and retain customers and clients. This will equate to enhanced sales, competitiveness, satisfaction and most importantly, profitability. Barry Urquhart Conference Keynote Speaker Marketing Focus M: 041 983 5555 E: Urquhart@marketingfocus.net.au W: www.marketing focus.net.au BEHIND THE COUNTER JULY '22 | HARDWAREJOURNAL.COM.AU 13
US NEWS The Home Improvement Research Institute (HIRI) is often asked the question, “Where is the home improvement market headed?”. The Institute often answers, “It depends on which segment or category of the industry.” As tumultuous times continue in the US building industry particularly, this is a question being asked now more than ever but the HIRI says the answer is never an easy one. The flooring market is one segment that shows not all product categories act similarly with US economists estimating that floor sales will soon show a drop for renovations and remodels compared to 2021, a recent Hardware Retailing report has found. Home improvement forecast Lowe's has been at the forefront of building in the real world for over 100 years. However, times are changing for the leading hardware retailer who is now helping builders create new possibilities in the ever-growing popularity of the metaverse. Rather than entering the metaverse with a storefront to sell virtual goods, Lowe's aims to equip builders free of charge with items from its real-world shelves to make their creations more useful and more inspiring. To start, Lowe's will make more than 500 3D product assets available for download for free via Lowe's Open Builder, a new asset hub available to all creators, addressing key challenges of interoperability and accessibility. For added inspiration, Lowe's will also release a limited NFT wearable collection for builders in Decentraland to the first 1,000 participants starting to outfit their avatars in boots, hardhats, and other accessories. The NFTs will be accessible via a free airdrop to users who have linked a MetaMask wallet. Lowe's Chief Brand andMarketing Officer MarisaThalberg said the metaverse is in a pivotal stage of development. “It is only natural that we would be interested in working alongside and in service of the emerging community of builders creating this new world, with the democratization of possibility in mind. At the same time, we are also very clear on our reason for being – to make homes better for all by helping our customers to create real world value in their homes, in their jobs and in their communities. This will continue to be our North Star in the metaverse,” MsThalberg said. While this is the company's first step into the metaverse, Lowe's has been using emerging technology to help customers gain inspiration and more easily visualize and plan their home improvement projects for years. Offerings include the recently launched ‘Measure Your Space’, which uses LiDAR to sense depth and map dimensions of a space, and Holoroom How To, which was one of the first home improvement virtual reality clinics and taught customers how to tile a shower in a virtual environment. Lowes Chief Information Officer Seemantini Godbole said Lowes’ customers have benefitted greatly from being able to explore and test home improvement projects in the virtual world before taking the leap to implementation in their real-world homes or job sites "By entering the metaverse now, we can explore new opportunities to serve, enable and inspire our customers in a way no other home improvement retailer today is doing." 3D assets that will be available include such items as lighting, patio furniture, area rugs, kitchen and bath accessories, and décor accents and will be usable across metaverse and non-metaverse environments, such as gaming, augmented reality and creative design. Assets could be leveraged by metaverse builders making virtual land, homes, goods and experiences for a myriad of decentralized communities. Custom, wearable NFTs will focus on the outfitting of metaverse builders, rewarding and incentivizing these critical pioneers to engage with Lowe's as they work to deliver positive, inclusive experiences for all in this new frontier. Users can visit LowesOpenBuilder. com to access and download Lowe's 3D product assets and NFT.LowesOpenBuilder.com through to July 20 to link their MetaMask wallet and sign up for our airdrop. Lowes helps builders create a new world of possibility
A study conducted by Ace Hardware shows that while consumers are motivated to get those long, overdue but highly anticipated paint projects done ‘someday’, 40 per cent of consumers surveyed said they had no time to paint and 37 per cent said they do not want to deal with the prep and clean up. But with warmer weather in the US comes newmotivation, which is why Ace Hardware is declaring this year's ‘Some Day’ on Saturday, July 16. Some Day is a fun, DIY holiday created by Ace Hardware where consumers everywhere come together to tackle their overdue paint projects. To celebrate a job well done, Ace Hardware and Benjamin Moore Paint are giving away free ice cream inspired by popular Benjamin Moore paint colors on National Ice Cream Day on July 17. Ace Hardware is inviting fans nationally to flex their painting muscles and show off those at-home paint projects on ‘Some Day’ via social media for a chance to win limited-edition, Benjamin Moore-inspired ice cream, which comes in four delicious flavors to match some of Benjamin Moore's most popular paint colors. To close the weekend Ace Hardware is rewarding fans with Benjamin Moore-inspired ice cream from a special Ace Hardware ice cream truck in a surprise location on July 17, National Ice Cream Day. Ace Hardware Chief Marketing Officer Kim Lefko said, "whether it is an accent wall or every wall in the house, a painting project does not have to be daunting. The thousands of locally-owned Ace stores are ready to help their neighbors confidently complete their painting projects with Benjamin Moore paint and Ace's Extra Mile Promise." "And what a great way to have a little fun for our second annual Some Day event, by having Benjamin Moore paint-inspired ice cream as a sweet incentive and reward for a job well done,” Ms Lefko said. For more information, visit acehardware.com/thepaintstudio. ACE declares official DIY day However, this is one of the only segments that the HIRI sees dipping in 2022, alongside kitchen and bathroom cabinets. It is also worth noting that this dip is more of a correction after flooring products saw a 24 per yearover-year growth in the US over 2020, according to the report, with the total flooring product from 2020 through 2022 equating to a three per cent annual growth rate with an $8.4 billion bonus in 2021. As inflation stems from material shortages, increased demand and shipping delays sees other product categories face the same issues. However, flooring, kitchen and bathroom cabinets are different according to the HIRI, because they are segments that have long-lasting products with a much longer usable life than other product categories. This means that the lifecycle to replace these products is longer than most other aspects of a home, according to the report. Compounding on the longer lifecycle is the way in which these segments are installed, particularly when it comes to flooring, with pro installation being much more prevalent in this category than in others. HIRI data shows that lockdowns and general health concerns had a significant impact on limiting pro-activity across most trades during the first year of the pandemic and as work resumed, high demand saw skilled tradesmen backlogged with work. While total flooring sales are expected to decrease, according to the report, purchases made by professionals are expected to increase again into 2023. Heading into the remainder of 2022, the HIRI sees a correction to more historical growth patterns following a year of immense growth. As to how that will affect the long-term product lifecycle, time will tell as it is dependent on which products were installed, where they were installed and the quality of the installation. JULY '22 | HARDWAREJOURNAL.COM.AU 15
NZ NEWS The demand for online shopping is expected to grow even further next year, according to New Zealand’s retail experts who say now is the time that retailers need to update their in-store technology so they can keep up with the increasing demand. Global retail bank, payments and shopping service, Klarna, recently revealed in a Stuff report that four in 10 New Zealanders intend to mostly shop online in 2023. Retail NZ Chief Executive Greg Harford said he has, “seen strong growth in online retailing over a number of years and the sector has not looked back from the massive jump in online as a result of Covid-19.” However there were several pain points within the online shopping experience that needed to be addressed, according to the ‘Shopping pulse: New Zealand’ report, with the vast majority of participants (79 per cent) saying retailers needed to continually invest in new technology to offer a better shopping experience. Mr Harford said he believed retailers were working hard to make sure they could deliver top-class online services to their customers. “It is important for businesses to continue to invest in technology and systems, both online and in-store to meet customer demand,” he said in the report. It is for this reason that, during the pandemic, Mitre 10 NZ built a larger online website for consumers. Mitre 10 Chief Marketing Officer Jules Lloyd-Jones said Mitre 10 was investing in new technologies which would enable personalised experiences for customers, both online and in-store as part of the business’s wider transformation program. “We are moving towards a truly omni-channel experience where customers can shop with Mitre 10 when, where and how they want to. We are also investing in our website platform to improve searchability and transitioning to digital catalogues to be more sustainable in response to customer feedback,” Ms Lloyd-Jones said in the report.. All of Mitre 10 New Zealand’s 84 stores now offer a one-hour click-andcollect service, which she said was a key enabler of the omni experience. Katrina Ang, Klarna Director of Marketing ANZ, said shopping habits had changed since the beginning of the pandemic. “This has resulted in a higher demand for more purchasing opportunities at our fingertips, as well as greater expectations when it comes to the online customer experience,” she said in the report. As supply chain pressure and widespread inflation continues, Fletcher Building owned PlaceMakers is expected to raise the prices of multiple construction staples over the next three months, a recent Stuff report has found. Just some of the price rises include framing timber to increase 15 per cent, bagged concrete to increase 10 per cent and steel reinforcing to go up eight per cent, along with 13 other key construction materials, according to the report. Maintain to Profit Renovations Director Mark Trafford said in the 15 years that he has worked in the building industry he had “never seen anything like this”, with price rises coming from both imported and locally made goods. “The cost increases are not small either. We are not talking two per cent or three per cent. We are seeing 10, 15, 20 per cent, and sometimes even higher. It is a massive problem for the industry,” Mr Trafford said. The increases mean prices need to be passed onto customers, or too many builders would go out of business, particularly as the cost of projects increased 15 per cent over the past year. Auckland University of Technology, Professor of Construction John NZ’s online shopping demand continues Cost increases continue for builders John Tookey, Professor of Construction Management at Auckland University of Technology. Image source: www.rnz.co.nz
Constructive and solutions-focused political party ACT, has recently come up with a solution that will prevent excessive regulations getting in the way of building houses. ACT Leader David Seymour recently said regulations can often prevent competition in the housing market which is why ACT has proposed a Materials Equivalence Register to allow access to foreign approved substitute materials that can be used to build houses. “ACT’s solution cuts through to the central problem, reducing bureaucracy instead of creating it. The government announcing a ‘plasterboard taskforce’ to solve the problem of too much bureaucracy is like the start of a bad joke, not a solution,” Mr Seymour said. “We know that good substitutes for name-brand plasterboard and other scarce building products exist. We just need councils to accept them. This policy will require them to, making it easier for builders and architects to get houses built.” “How it would work: MBIE would be tasked with keeping a Materials Equivalence Register. They would initially focus on plasterboard substitutes for dry areas of buildings – for example not bathrooms where the risk is lowest. A material could get on the register in one of two ways. The first way is that an applicant would apply to have a material deemed equivalent. That might be an importer or producer of an equivalent material. The second way is that MBIE would proactively assess Material Equivalents in foreign countries, starting with Australia, and deeming any products available there as equivalents,” he said in the report. Councils would then be required to accept Material Equivalency as a matter of course. If they refuse then consent is granted. Mr Seymour also said in the report that councils would be absolved of liability for a decision to accept deemed Material Equivalent. “People will say that it is all terribly complicated and we cannot possibly allow this to happen. That is the thinking that got us into this mess. The truth is that plasterboard is a sandwich of plaster and cardboard. What first-world, industrialised country gets itself into such a pickle? An overly bureaucratic one and it needs to stop, today.” A recent report by Castalia found that regulatory barriers around materials are also a large contributor to New Zealand’s woes, reporting that, “relaxing planning and consenting standards could both, directly and indirectly, resolve the issue of lacking competition and innovation in the building materials market”. The Castalia report also suggested streamlining the substitution process for approved products as a solution. “The fact is building houses has slowed down as the industry has been suffocated under layer upon layer of government regulation and intervention. ACT has listened and is proposing real change that will give industry more choice and make building houses easier. The government's 'plasterboard taskforce’ should adopt ACT’s policy to streamline substitutes and immediately address the shortage that is stopping houses from being built.” “This is a practical solution that will provide better outcomes almost immediately. It will also lead to more competition and choice in the building materials market over time. ACT offers real solutions to New Zealand’s building woes. We believe in better, longer-lasting solutions. As a country we deserve better when it comes to housing to ensure we can live our best and most fulfilling lives,” Mr Seymour said in the report. ACT’s solution to building materials crisis Tookey also said in the report that the price increases would significantly impact projects budgeted on fixed contracts such as residential housing. “If your mortgage was for $1 million, and the cost increases make the price of the build $1.2 million, who is going to eat that price rise? Builders often can’t because they do not usually carry a lot of strategic debt. Over the short term we will see some significant dramas for the sector as we deal with the squeeze,” Mr Tookey said in the report. Small businesses would be the most affected in the early stages but larger businesses could also feel the pain as the “virus” of failure crept up the food chain, Mr Tookey said. Infometrics Principal Economist Brad Olsen said in the report that the price increases represented continued pressure in the construction industry, with the cost of residential construction rising 18 per cent this year seeing a costly trend of large activity and strained supply. As larger merchants such as PlaceMakers made it clear builders should expect continued price increases, it also signalled continued inflation in the building supply sector, Mr Olsen said. “The rising prices indicates a difficulty in securing products in general which pushes out time frames and delays construction. With a large amount of residential and infrastructure being built at the moment, this is going to have a run-on effect for the wider economy,” he said. JULY '22 | HARDWAREJOURNAL.COM.AU 17
TIMBER UPDATE The New SouthWales Government recently unveiled a record $28 million Farm Forestry package as part of the 2022/23 State Budget to bolster on-theground support for producers, drive innovation and promote best practice in sustainable farm forestry businesses. The funding boost follows the introduction of new Farm Forestry Codes of Practice earlier this year, and provides increased support to farmers through enhanced education and training Deputy Premier and Minister for Regional New SouthWales Paul Toole said. “This investment will fund a suite of programs and partnerships to facilitate and expand the development of the state’s sustainable Farm Forestry industry. This is the largest investment in Farm Forestry in more than a decade, and it reflects the increasingly important role it will play in supporting our sustainable timber industry,” Mr Toole said. The investment would provide farmers with practical advice and support services to ensure forestry becomes a part of future farm planning, Agriculture Minister, Dugald Saunders also said. “Our Australian-grown timber products are something we should all be very proud of, however access to timber in our state forests has been constrained over the last few years due to fires and floods,” Mr Saunders said. “This investment will put New South Wales farmers in the box seat to produce timber to be sold domestically, which will not only directly address timber shortages, but also increases and diversifies income streams for farmers after a tough few years,” he said. NSW invests $28 million to ease timber pain 3.2 million seeds to revive NSW bushfire zone The Forestry Corporation of New South Wales has begun its record 2022 replanting program, with 3.2 million seedlings set to be replanted into 2,950 hectares of Bombala pine plantations, previously harvested or affected by bushfires on the far south coast. Forestry Corporation’s Silviculture and Fire Coordinator, Tim Gillespie-Jones said this winter’s planting program is a vital part of the organisation’s operations. “The forestry cycle means that for every tree we harvest to supply renewable timber we need to plant another to take its place. The planting programwork engages several businesses and some sixty contracted planting staff, so the program is also an important step in supporting regional employment and economies,” Mr TimGillespie-Jones said. “Each seedling is planted by hand and an experienced planter can plant around 2,000 seedlings a day. Through their efforts we are regrowing plantations previously harvested for timber or affected by fires including Bondi, Nalbaugh and Coolangubra State Forests.” Mr Gillespie-Jones also said in a recent ABC report that it was both exciting and rewarding to be part of growing tomorrow's homes. "After the Black Summer fires we lost about a third of the plantation here, and the business set a target of re-establishing the forest within eight years,” Mr Gillespie-Jones said in the report. However, Australia’s severe timber shortage is expected to remain for some time despite the abundance of seeds being planted with Mr Gillespie-Jones saying he expects the shortfall in supply to be resolved in "about 10 years' time". "[A new plantation] probably grows between 15 and 18 years before it gets its first thinning harvest but it grows to about 32 years before we reach clear full age," he said in the report. Mr Gillespie-Jones also pointed out that once those carrying out planting mastered the correct technique they could plant up to "a couple of thousand trees a day". This year’s seedling crop was predominantly grown in Forestry Corporation’s Tumut production nursery following upgrades after the black summer bushfires. Forestry Corporation has around 230,000 hectares of pine plantations in New South Wales and in normal years produces enough timber to construct a quarter of the homes built in Australia each year. Image source: Forestry NSW
A leading building industry expert recently warned Australians that the fallout from the Russian crisis, combined with ongoing economic challenges within the local building and construction industry will create tensions within the industry that are expected to be the new normal. In a recent interview with The Fifth Estate, Intrapac Property Chief and National President of the Urban Development Institute of Australia, Max Shifman said laminated veneered lumber (LVL), structural timber, and soft timber supplies were “definitely a concern” for the development and construction industries that are already struggling to keep up with demand due to supply constraints. According to the report, Russia and Belarus imports account for up to 50 per cent of Australia’s supply of LVL and engineered wood products (EWPs), including formwork LV, which is essential for all concrete constructions for multi-residential, high-rise, commercial buildings, as well as i-joist beams and timber flooring systems. Importers are now planning to hold crisis talks to discuss the supply issues with the Federal Government next week, according to the report. “It is not only timber. There are issues with everything from concrete pipes to plasterboard to steel in some areas. It is really very concerning and has been for some time. And it does not appear as though there is going to be any short-term fix for it. We have recently seen the price of raw aluminium go up in the order of 40 per cent due to the lack of supplies. That filters through into all sorts of things that you would need for building materials, including aluminium windows for example.” “In a construction program, if you are missing something along the way, the rest of the program gets blown out. And so you might have seen reports of house building times, pushing out dramatically and that is going to continue,” Mr Shifman said in the report. Delays caused by skills and supply shortages mean the amount of building works being completed on a monthly basis is consistently dropping. “You cannot get those efficient construction programs to line up anymore because, at any given point, you are either missing a piece of material or you are missing the labour to install it, and it is dragging everything out. And that is going to be a dynamic that continues for the foreseeable future.” “There has to be a conversation around working with builders and clients to see if there is a middle ground that can be struck. Builders are stretched to the point where they just walk away from their businesses, but also that clients appreciate that we have just gone through an unprecedented and unexpected period,” Mr Shifman said in the report. While Mr Shifman says it is easy to look back and say the Morrison Government’s housing-focused stimulus packages exacerbated the issue – no one could have predicted the challenges that lay ahead within the building industry. “But what we did not anticipate was the level of supply chain crunch that would arise subsequently, because other parts of the world had similar ideas. We just saw this incredible boom in housing starts globally,” he said in the report. All of these factors, combined with surging inflation and interest rates, will mean that the pipeline for new project starts will slow dramatically, with a spill over impact on house prices. The higher risk and less certainty will prevent the industry from locking in prices, Mr Shifman said. “A return to normal migration rates, which we need to have because we are all struggling with a lack of labour across so many industries, is likely to push up house prices. At the same time, a lot of projects won’t be viable because of the higher costs. That is going to be the new normal for a while,” he said in the report. Building industry suffers as Russian timber crisis continues This announcement follows the New SouthWales Government’s recent introduction of new Farm Forestry Codes of Practice (formerly Private Native Forestry) that will ensure long-term sustainability for the industry and provide robust environmental protections across the New SouthWales private forestry estate. New changes for landowners under the codes include: • N ew harvest and operating standards that provide greater clarity and are easier for landholders to apply – now including pest, weed and fire management; • U pdated planning and reporting with a clear role for Local Land Services to engage with farmers, and options for small scale harvesting; and • E nvironmental protections that are clearer for landholders while ensuring long-term environmental sustainability in farm forests. This investment will also fund a pilot certification scheme to support landholders seeking certification for their timber products under the Programme for the Endorsement of Forest Certification standards. This will increase market access, improve social licence and incentivise the production of sustainable timber in Australia. JULY '22 | HARDWAREJOURNAL.COM.AU 19
GARDEN & OUTDOOR LIVING As the price of iceberg lettuces skyrocket to over $12 per head and many other produce prices begin to follow suit, Australian consumers are now looking for the best way to cut grocery bills and save money by making the most of their back-yards. The soaring prices might also explain why the vegetable segment is seeing the most growth and activity within the garden category this year, as Australian consumers start to prepare the vegetable patches they created during COVID for the upcoming season. And it seems this popularity is only set to increase when considering the steep growth in the cost of living over the past few months, Hardware and Building Traders (HBT) Indoor/Outdoor, Rural, Plumbing & Pet Category Manager, Marcella Indries said. “You cannot go wrong with vegetable and herb seedlings. Fruit plants are also proving to be popular even though they can take some time to bear fruit. We are finding that customers are happy to have their veggies ticking over in the patch during this time, particularly low-maintenance veggies.” “The lettuce issue now has consumers questioning why they do not grow their own, particularly considering it is a very lowmaintenance product to grow. I think there will be a lot of interesting behavioural changes from the consumer due to the price rises this season,” Ms Indries said. Potted colour is also always very popular in spring as consumers look for a pop of colour in the garden and it is a beautiful reminder that spring is here, while updating outdoor living spaces is also expected to be popular this season. “Consumers still want to update or add to their outdoor spaces as they entertain at home or go out less to try and save money. How well sales go within this space this season all depends on where a lot of people are sitting with their incomes when considering inflation is expected to continue rising throughout 2022,” she said. Ms Indries said that the majority of stores should be preparing now for their spring season, particularly in the north because their spring arrives a little bit earlier than the southern states. “This is the time when stores should be looking at forecasting their outdoor furniture, and barbecues and thinking about what they want their stores to look like going into spring. They also need to forecast their veggie seedlings, and their potted colour—all of this should be locked away now. “Greenlife supply can be tricky because suppliers need time to forecast, particularly their raw components. Greenlife takes at least eight weeks to grow and for the nursery to nurture and grow products, which is why retailers need to be on top of their ordering now for spring. It is so much harder to be nimble in this space,” she said. While the supply of greenlife, indoor and vegetable seedlings has been quite good so far, given the expected demand for these products in the upcoming season, it is better to remain organised, she said. HBT’s Indoor/Outdoor Category Manager, Marcella Indries said winter gardeners are happy to have their veggies ticking over in their patch. Iceberg Lettuce Price 1each $12 Fruit and veg segments gain momentum as produce prices soar