Paint & accessory industry thrives

by | Aug 16, 2021

Paint & accessory industry thrives

Ongoing shipping and importing issues due to the pandemic has seen increased pressure within the Australian paint industry for a reliable and consistent supply of quality raw materials. Paint Place Group General Manager, Gary Liddicoat, believes increasing shipping costs have caused prices of raw materials to more than double in the last 18 months, while the time it takes to book shipping container space has been pushed out dramatically, triggering a major reduction in supply of raw material.

While the shutdown of key resin suppliers over the last 18 months has had a negative impact on the paint industry, with the supply of certain products reduced significantly, there are still many positives that have come out of the pandemic, according to Mr Liddicoat.

Paint Place General Manager, Gary Liddicoat says he expects unprecedented paint sales to continue.

“This includes a huge swing back to DIY rather than DIFM (Do It for Me) as people have more time on their hands and cannot travel. This also means they have an increasing disposable income so they are taking on more projects to make their home their castle,” Mr Liddicoat said.

“When you also look at some of the record prices we are seeing in real estate throughout major cities, people are re-evaluating their homes and job location because of this. In many cases they are choosing to stay where they are and make their homes more comfortable rather than sell, relocate or build. I think staying put and renovating is an option that has been forced upon some people who may have been thinking of building a new home but have found costs have increased too much due to supply and demand. Then of course there is such a shortage of timber and building materials, so they make the decision to stay where they are.”

“Consumers are also tackling more DIY projects and are more confident to have a go thanks to the internet and YouTube. However, once in store we find there is often more apprehension from the customer about tackling their DIY project. This is where our people shine, by explaining and showing specific techniques and products that will help them get the desired results. We have recently started a series of ‘how to’ videos which we give our customers access to when required,” he said.

No-one ever could have guessed how unprecedented sales would be in the retail paint and hardware sector and we expect it to continue, Mr Liddicoat said.

“The DIY trend has been solid with lower wage growth, so the potential for those repeat customers to continue on with projects with the confidence of previous successful projects should not be discounted,” he said.

When looking at the paint industry as a whole, Mr Liddicoat said from the Plaint Place Group of Store’s perspective, it is now seeing a drive towards franchise models backed by manufacturers, “which in our opinion limits choice for our customers because these manufacturers are focused on their brands only”. 

“This puts the true independent paint specialist channel at risk. When demand on raw materials is very high and somewhat volatile, just like our customers we require flexibility and consistent supply channels as well as the ability to keep stock on shelves at all times which is where our model, with some flexibility, really works,” he said. 

The pandemic has also caused some variations in paint quality, according to Mr Liddicoat, who said any product inconsistencies are more in tune with the ability of manufacturers to obtain consistent supply of quality raw materials. 

“With paint, most finished goods are manufactured in Australia but manufacturers are very reliant on off shore suppliers for raw materials to do this. Apart from the likes of Rust-Oleum with Zinsser specialty products, we do not see much imported in the way of finished goods and in their case, they are supplying premium solutions-based specialty products, so not of a lower standard,” he said.

Which is why it seems the shift towards embracing Australian Made products has continued. Paint Place has embraced this with the launch of its new Private Label and also the relaunch of its corporate logo further solidifying our commitment to “painting Australia”, according to Mr Liddicoat.

“Launched in March, our Private Label has been a huge success. Australian made and owned, our private label also has low VOC and is APAS approved. Affectionately known as Paint Place’s Black Label it has resonated well with our customer base and the above-mentioned characteristics. Its premium quality at affordable pricing has seen sales to both the retail and trade market segments not only meet, but exceed initial expectations. Alongside this launch we have also introduced a new and improved rewards program and after pay service with humm. We have several promotions planned for this new range including double rewards on exclusive brands, a gift with purchase offers and much more,” he said.

“We have also seen a big trend towards things that can be done at home, such as art and resin pieces, and have tailor made workshops in-store to capture these opportunities,” Mr Liddicoat said.

The continued development of environmentally responsible products also remains on-trend and paint manufacturers continue to focus on these products to sustain not only their businesses, but also the environment heading into the future.

“One of our key suppliers, Nutech Paint have now begun to manufacture an environmentally friendly range of paints under the Graphenstone brand. This paint is unique because it actually draws in and captures CO2. This really is a true highlight and point of difference within the environmentally friendly paint space,” Mr Liddicoat said.

Another environmentally friendly feature which has continued to be implemented throughout the paint industry is of course the ‘Paintback’ paint disposal program, alongside local council chemical clean up days, which gives retailers and end users the socially responsible means of disposing household chemicals including paint. As part of this clean up, paint manufacturers and retailers are also encouraging flocculant wash systems for their trade clientele, he said.

When looking at innovative paint accessories that have continued to lift the game in the painting industry, Mr Liddicoat says Mirka’s dustless sanding products, as well as onsite spectrophotometers (NIX), have definitely been a huge hit within the industry of late. 

“To be fair there have always been great products in the industry but in the past we have not capitalised on the features and benefits of these or asked the customer ‘if they want fries with that’. However, through ongoing product training and a renewed focus on all categories, we are able to help lift the game in all sectors be it trade or retail, residential, commercial or industrial – I think more so than new products we have a new approach in-house which is making a real difference,” he said.

Looking to new innovations within the Australian paint market, Concept Paint has just released an Australian made hand sanitiser that meets WHO standards of 75 per cent Isopropyl alcohol, he said.

“With retail customers now expecting this level of cleanliness when entering a store, it is supplied in a larger size for the stores who have the mindset of a duty of care to their customers and staff. Colourtrend Paints have also introduced a hand sanitiser. In the case of both of these businesses, I think it has helped them in the sense that their customers saw them react quickly to a problematic situation and they want to support Australian manufacturers first and foremost.”

While Mr Liddicoat agrees the market remains fairly competitive, he says this competition does not come so much from new players – as in brands – but new players as in who owns the brands. For example Dulux, now owned by Nippon, and Wattyl now owned by Hempel. 

“Trade paint remains fiercely competitive, especially as we see Australia’s major paint manufacturer trying to gain more market share in this area. When you have a huge benefit in being Australian Made and owned, I think consumers will try to support you. Which is why we do not need to sell on price, especially when you have good products, but I guess you need to have a decent share of the market to start with. The market is only so big and there are many players after the same piece of the pie so price is very much an issue amongst the trade.”

“As more tradies understand service and consistency is also important to their business, price becomes less of an issue. I think independent paint specialists will always offer a better service to the trade. They want to keep their customers happy and they have ‘skin in the game’, rather than an employee in a corporate store who gets paid regardless of keeping a customer happy. Decent tradies are also happy to pay a little extra for good service. If they know they will get their paint when they are told and it will be the right product, right colour, right sheen level etc. it is one less thing they need to worry about – it saves them time which saves them money,” Mr Liddicoat said.

While Paint Place prides itself on achieving a point-of-difference in the market by maintaining a good reputation and delivering on customer service, it is the quality of the group’s members that has the group continually stand out from the crowd, according to Mr Liddicoat.

“We have a team of dedicated members who are passionate about their independence, combined with the reputation of Paint Place always revolving around the ability to service the customer’s needs by being multi-branded in our offer. We are continually working with our people to ensure they are up to date with new products and technology in every paint category be it interior, exterior, roof paint, paving paint, pool paint, marine, texture coatings, membranes, metal protection, woodcare, concrete and masonry, protective and industrial, automotive, epoxy and more.”

“Our point of difference also comes from our combined experience throughout the network, with many of our stores now into their third generation of ownership – with one or two about to go into fourth generation,” he said.

For now, the future is bright for Paint Place with the group currently rolling out its Retail Management System – a bespoke point of sale system that enables each store to build and maintain their own database in conjunction with a built in CRM. 

“The new system is also linked to our new VIP Rewards program and humm after pay service, all overseen by the group office as well. We will be running double rewards promotions, exclusive brands/offers, gift with purchase and holidays for ‘painting Australia’ over the next 12 months,” he said.

Inspirations Paint upgrades in-store and online

While the 2020-21 business year has seen the unpredictable and challenging times of 2020 continue, overall, Inspirations Paint’s store-on-store, year-on-year sales across both trade and retail increased by between seven and eight per cent. The individual state government’s varying responses to COVID and the extent of lockdowns and restrictions over the last 12 months have resulted in differences in store sales, according to Inspirations Paint Chief Executive Officer, Robert Guy.

So, what does 2021-22 look like? According to Mr Guy, with the on-going COVID situation, the only certainty is that the next 12 months will have continuing challenges and uncertainties, making any forecasts difficult. 

“Trends that have evolved in the first six months of this calendar year indicate that we should expect our collective store-on-store retail sales for 2021-22 to fall from 2020-21 levels but will still be ahead of 2019-20 levels. We expect our collective store-on-store trade sales to see moderate increases from our 2020-21 levels, resulting in a small overall total sales increase on 2021-22,” he said.

“As was the case in 2020, Inspirations Paint members should be very appreciative and proud of how our employees have responded to the continuing challenges of the pandemic. Our stores and store staff have continued to deliver the leading levels of customer service and ‘personal attention to your painting project’,” Mr Guy said.

Inspirations Paint has several key priorities for its business moving forward, that not only includes the health and safety of employees and customers, but also maintaining financial strength and support to the store network; continuing to improve its ‘click and collect’ and ‘click and deliver’ capabilities, as well as rolling out its store upgrade program.

With sign-ups to Inspirations Paint’s loyalty programs in 2020-21 increasing 16 per cent on the prior 12 months of strong retail sales, Mr Guy said the importance of the size of a store’s Paint Club (DIY) and Paint Edge (Business Customers) membership lies in customer loyalty and its ability to advertise targeted promotions to these customers. 

“The Paint Edge loyalty program was launched in late 2020, and is aimed specifically at ABN holders who purchase paint for commercial reasons (not DIY). Together the Paint Club and Paint Edge customer loyalty programs are an Inspirations Paint store’s most effective tool to build and maintain retail business, and hence profitability,” Mr Guy said.

Alongside the newly launched loyalty programs, Inspirations Paint’s ‘Recall’ advertising campaign is also aimed at tapping into the emotions of how a customer feels just before they tackle a new painting project.

“The new campaign looks into that moment before you start your painting project – you close your eyes to recall the expert advice you received from the team member at your local Inspirations Paint store… now you have the confidence to get stuck in. The commercial features the 1975 hit song, ‘Dreamweaver’ by Gary Wright. A tune deeply familiar to the target audience of 35- to 65-year-old home owners,” Mr Guy said.

“There are now eight different commercials in the campaign, each featuring a different painting project: a ceiling, a kitchen feature wall, a metal fence, a concrete driveway, a boat restoration, a car touch-up, a weatherboard home exterior, and a back deck.”

“Since its launch in January 2020 across TV, digital, billboard, print and radio the ‘Recall’ campaign has struck a chord with customers. Advertising research shows 91 per cent of the target audience ‘like’ or ‘very much like’ the campaign and 75 per cent of them say the campaign makes them more likely to visit an Inspirations Paint store. These scores are significantly higher than previous campaigns and have contributed to a retail sales uplift above the market rate throughout the pandemic,” he said.

The campaign will continue to run throughout 2021 and into 2022.

Looking to the on-line space, there certainly was no slowing of activity throughout the pandemic, according to Mr Guy who said, “it is amazing to think that in late 2019 you could not buy a can of Dulux Wash & Wear online and pick it up from your local hardware store or paint shop because eCommerce was not live for any national retailer.”

“It was a curious but unsurprising reality, yet again that the home improvement market, a $24 billion behemoth, had not kept pace with other retail sectors like electrical, grocery and fashion. Inspirations Paint had been envisaging a paint eCommerce website for many years that would help the customer through a tricky purchase. On 12 December 2019, Australia’s first full eCommerce store for paint went live at www.inspirationspaint.com.au which was the first eCommerce site to have selectable paint colours, with logic to automatically calculate the required base. The site now features over 60,000 colours available online.”

“This innovation was paired with a strong pick-up promise: tinted and ready in two hours nationwide. When the pandemic hit in March 2020 Click & Collect sales surged, however, it became evident that a Click & Deliver functionality was also required to service people who did not want to leave their home. By May 7, 2020, Inspirations Paint had developed, tested, and launched a next-day click and deliver service. Click & Deliver orders now make up 30 per cent of online sales,” Mr Guy said.

It was also on November 23, 2020 that Inspirations Paint’s customer loyalty program – Paint Edge – went live online, allowing business customers to purchase paint and accessories at cheaper prices while also offering a ‘same day’ delivery promise. 

“Since the launch, thousands of Paint Edge customers have joined and now shop regularly both online and in-store taking advantage of the program’s benefits including monthly promotions and offers,” he said.

“As the fulfillment of online orders happens from the Inspirations Paint store network, it was critical to integrate the functionality of web sales seamlessly into the stores POS system. This integration was tailored to allow stores the flexibility to swap out products, delete or add lines, swap collection to delivery and vice versa. Stores have done an excellent job fulfilling 97 per cent of collection and delivery orders in full and on time.”

“National market research shows that 29 per cent of Australian’s who bought paint online in 2020 shopped on inspirationspaint.com.au, up from three per cent in 2019. To date no other paint specialist chain in Australia has eCommerce,” Mr Guy said.

In 2019 Inspirations Paint also embarked on a customer experience program, which has now resulted in the CFX Store Upgrade Program. CFX stands for Customer First eXperience and it is the culmination of two years’ worth of customer interviews, store designs, stakeholder engagement, store prototypes and funding models, which is now rolling out to all stores over the next three years, Mr Guy said. 

“The goal was to develop a store design that was attractive to both trade and retail customers, integrated with Inspirations Paint’s online offering, improved operational efficiencies, and maximise store profitability. After 60 hours of in-depth customer interviews and a competitive store design pitching process, we had our new store design,” he said.

“The new store design sought to eradicate the myriad of pain points customers had identified. They said our stores were: hard to shop, cluttered, messy, illogical, worn, dirty, cluttered, confusing and intimidating. We had nine different types of ceiling paint in six different locations! The motto for the new store design is, ‘we do the hard yards to make shopping easier for the customer’. This means easy wayfinding and line of sight, displaying products by category not brand, ensuring pricing is always present, planograms ensure every SKU has a place, service and tinting is separated, information panels demystify complex product categories, and the brand is present throughout the store.”

“Inspirations Paint went on to build four prototype stores that were tested over a two-year period, with tests results showing 90 per cent of the previously identified pain points had been eradicated. Inspirations Paint is now into the rollout phase with 12 stores to be upgraded before Christmas starting with a new greenfield store in Tamworth New South Wales, completed on July 29,” Mr Guy said.

For now, Mr Guy believes in order for Inspirations Paint to provide a sustainable, viable future business model for its members, the group needs to maintain and improve its independent business model, store support structure, culture of member support and continue to develop and enhance the current store and operator network. 

“As a group, we will further develop the necessary programs to allow the planned succession or retirement of long-term members, the development and growth of higher potential members and the entry and development of new quality members. This continues to be the major focus for the Inspirations Paint Board of Directors moving into the future,” he said.

HBT supports Australian Made

The Australian paint market has consistently adjusted in the last few years, particularly with international ownership of three of the four leading manufacturers bringing change to the way they operate within Australia. According to HBT Business Manager for Hardware/Construction, Rita Niforas, this is also why it is so important for the HBT team to work with businesses that understand the Australian market, Australian consumers and also Australian family businesses.

“Our partnership with Haymes Paint, Australia’s largest made and owned paint manufacturer, ensures that we have this. This ongoing partnership has made a massive difference to our group who continue to support us a core supplier. Their position within the market really resonates with our customers. Consumers have rallied around Australian owned businesses during the pandemic and this was particularly evident with customers looking for and purchasing Haymes Paint through our members,” Ms Niforas said.

“During the pandemic, Haymes Paint demonstrated its ability to pivot during unusual times by producing a hand sanitiser and making it available for our stockists to purchase. The ability for Haymes Paint to be able to pivot and supply sanitiser so quickly was extremely beneficial to our group because we already had a long-standing relationship with them and we did not need to look for another supplier when sourcing sanitiser throughout the pandemic,” she said.

Environmental concerns around paint disposal remains a prominent issue within the industry, according to Ms Niforas, who said this is also why it has been so encouraging to see primary manufacturers become proactive with their involvement with the popular ‘Paintback’ paint disposal program.

“As an industry led body, ‘Paintback’ looks to centralise and minimise inappropriate paint waste disposal across Australia and also manage ways to recycle packaging. Raw material shortages are also a primary concern across the industry. We have found through regular communication with our strong core suppliers and a shared understanding of our current environment, that there are many solutions to appropriate waste disposal. This knowledge benefits our customers as well,” she said.

Recent high demand for paint throughout the pandemic has seen DIY customers push unprecedented growth, which is why HBT members have had to remain diverse in their businesses during this time, she said.

“Giving our customers the ability to ‘click ‘n collect’ has been of immense benefit, particularly with paint accessory companies such as Oldfields. Some paint suppliers have also now developed technology whereby paint can be colour matched via an app, enabling the customer to have their ‘own’ individual paint colour made up, and customising precise paint colours. A customer can scan the colour from fabric, flowers, walls, household goods etc., and the exact colour match will be tinted. This allows for bespoke paint colour that the customer can name and it can be shared with their painter, friends and family.”

“We have seen exceptional growth throughout the pandemic as people have become inspired to spruce up their home offices making it a pleasant place to work from. Additional to homes required painting, customers were also encouraged to prep and oil new outdoor decking space.  As a result, paint accessories, brushes, rollers, trays and spray gun demand increased. Spring/summer projects that include decking and decking oil will also increase at this time,” Ms Niforas said.

During this busy time, HBT has continued to compete strongly with competitors, particularly because members have the ability to serve every customer that walks through the doors and help them find a solution. 

“Alongside personalised customer service we also utilise educational tools and training from our suppliers, including online ‘How tos’, while also utilising our team’s experience to ensure we provide a point of difference from other hardware retailers. HBT is proud of the members that have continued to think outside the square during this time, and utilise programs that allow them to serve their customers better,” she said.

While new products do continue to innovate the category, so too does the quality and innovation of products with increased exterior durability, improved mould resistance and larger colour choice just a few consumer benefits that have been enhanced in recent years, according to Ms Niforas.

“The ongoing innovations sees the customer as the winner because they can easily access the solution that best fits their needs. Some recent innovations include improved indoor air quality and elimination of odors, advanced coatings can improve air quality by neutralizing odors, from carpets, fabrics and insulation,” she said.

“Advanced coatings are also now assisting in the reduction of mould and mildew on the paint surface, while coating with antimicrobial agents prevent the growth of mildew and mould on the paint film, as well as inhibit bacterial odour.”

“Enhanced durability also remains on trend within the market because painters, interior designers, DIY customers can create interiors that are hardworking and aesthetically beautiful by selecting paints that are durable. These paints provide unique benefits due to advanced coating technologies, which can add incredible and lasting value to key building projects, leading to increased client satisfaction,” Ms Niforas said. 

As the largest independent buying group supporting independent hardware, building and trade businesses, Ms Niforas believes HBT will continue to work with its trusted suppliers on delivering innovation, as well as products that provide a good entry point to the market, including ‘The New Look’ range by Haymes.

“Our partnership with all of our paint suppliers helps ensure that our customers are able to have confidence that they are purchasing a quality paint. For instance, Haymes Paint have quality standards that are well earned and recognised.”

“Reputable suppliers such as Taubmans, Haymes, Dulux and Wattyl also offer colour consultancy services with retailers and customers. Campaigns such as GIVIT and the ‘In it together’ programs help raise funds for communities affected by droughts, bushfires, floods and COVID,” she said.  

While the paint market remains fiercely competitive, there are several major, stand out players that continue to do well because they have a long history in the Australian market and carry strong brand equity.  

“We have seen a shift to Australian owned and manufactured products across all categories, which has been driven by buying and supporting local businesses. This is indicative of the great Australian spirit and COVID continues to exemplify this,” she said.

Mini rollers, specialty brushes and applicators are increasing in sales according to Australian Brushware Corporation (ABC).

ABC pushes paint accessory sustainability 

While there are plenty of strong solutions around paint disposal there are still very little resolutions around the sustainable disposal of painting equipment, which is why sustainability continues to remain a pressing topic within the paint industry currently, according to Australian Brushware Corporation (ABC) Marketing Manager, Michelle Wee.

“Professional painters are used to washing out brushes and rollers and re-using quality tools, however this remains a challenge with DIY customers because brushes, rollers and trays used with paint often end up in land fill. As a business and a brand, Monarch continues to look at ways in which we can reduce our carbon footprint and most importantly, how we can continue to educate consumers on re-using painting accessories versus throwing them out,” she said.

“When it comes to sustainability, consumers have become savvier in their purchasing behaviour and are seeking products that ultimately help the environment. Due to the pandemic this is important now more than ever because people are not only painting their homes but also finding a love for furniture restoration and crafty projects,” Ms Wee said.

As strong sales continue within the paint and paint accessory industry, Ms Wee said if consumers are not painting their homes themselves, they are hiring professional painters and labourers to do the job.

“It is for this reason that we will continue to see strong sales in paint this winter, even with COVID lockdowns across each state and over the entire country. With such trends in sales, we are still hoping spring and summer will peak as well.”

“Brushes and rollers continue to maintain great sales. While smaller projects remain on trend, like furniture restoration and thrift flipping projects, products like mini rollers, specialty brushes and applicators are also increasing in sales,” she said.

More recently, the Monarch team has been busy working on a new paint accessory range designed specifically for the professional trade painter, set to be launched around the spring/summer period this year. Alongside this range, Monarch will also release a new range of sustainable products by early 2022.

“The paint accessories category is very mature, with brushes and rollers around for as long as we can remember. At Monarch we have found that innovation is an important element in such a mature market. Anyone can source and sell a paint brush and roller. What sets Monarch apart is our ability to develop new products that help improve the painting process – whether it is increasing paint coverage or simply making it easier to cut in a wall,” according to Ms Wee.

Alongside the exciting launches, the Monarch brand will celebrate its Jubilee year in 2022.

“Our unique selling point is that we are a brand that has so much heritage and a strong reputation for producing premium quality paint accessories. Innovation and technology set us apart from our competitors as we are not only able to develop innovative products but our products provide true solutions to the end consumer. Once a customer has tried a Monarch product, they become a true advocate,” Ms Wee said.

“At Monarch, we not only provide the right tools for any painting project, we also endeavour to provide the right tips and tricks on how our customers can achieve that professional finish every time. Many consumers are often afraid of painting and perceive it as a difficult task. Monarch, through all its communicational efforts, aims to educate every time. We work closely with our retail partners to ensure consumers have an avenue for all the right information with Monarch,” she said.

Despite all the uncertainty of COVID, Ms Wee said Monarch will continue to innovate and evolve with some exciting new campaigns already planned for the year ahead.

“After the success of our House of Monarch online series, which sees the Monarch team renovate 12 spaces into an incredible home makeover, season two is set to be released at the end of October and is filled with many more innovative renovations for our audience,” Ms Wee said.

‘Paintback’ passes 21-million-kilograms

Australian Paint Manufacturer’s Federation Executive Officer, Bernard Lee.

Incredibly the ‘Paintback’ recycled paint scheme is now five years old but is still proving to be very successful as it continues to grow and make new records, according to Australian Paint Manufacturer’s Federation Executive Officer, Bernard Lee.

“In 2020, ‘Paintback’ passed the 21-million-kilogram mark with more than eight million kilograms of unwanted waste paint and packaging collected during the year. The industry has maintained a strong focus on sustainability as paint manufacturers continue to develop innovative and sustainable products, “Mr Lee said.

It seems there has been more great news for the paint industry over the last 18 months with the pandemic significantly pushing up sales as consumers stayed home and revamped. In saying this shipping delays has also impacted sourcing raw materials as well as pushing up pricing throughout the industry, according to Mr Lee.

“The pandemic has caused quite a mixed experience for retailers, suppliers and painters within the paint industry. Paint manufacturers that supply niche markets, including the events and conferences sector, have been hit hard by COVID. While the automotive refinishing sector has also experienced some slowing down in demand. In saying this construction and DIY have remained particularly strong during this time as homeowners have focused on renovations and maintenance during lockdowns,” he said.

Paint manufacturers also showed significant diversity during this time with many making hand sanitisers. Some used the sanitiser for their own use while others chose to supply this product as a way of supporting their customers and local communities, according to Mr Lee.

“As demand for hand sanitisers increased, the APMF wrote to the Commonwealth State Governments on behalf of its members offering to make hand sanitisers. Australian paint manufacturers were uniquely positioned to respond quickly to the increasing demand. Their plants were set up to mix large batches of raw materials, they have the necessary regulatory licences, and their work forces are trained and experienced with the handling of the raw materials in a manufacturing environment,” he said.

“The offer to assist with hand sanitiser production was made to support the community at the start of the COVID crisis.  We are not aware of any manufacturers with long-term plans to make sanitisers going forward,” Mr Lee said.