Plumbing sector faces real challenges 

by | Apr 13, 2022

As the world grapples with its respective battles against COVID-19 and Russia, industry sectors – including plumbing – are feeling the pinch. What can retailers do to overcome obstacles and remain profitable? John Power reports.

Plumbing - children washing their hands

Many hardware retailers, including specialists in plumbing product supplies, must be wondering, ‘What’s next?’ 

First came the onset of COVID-19, the effects of which continue to weigh heavily on supply chains, and now Russia’s invasion of Ukraine has added another layer of difficulty to Australian retail hardware operations.

Current markets are more fragile than most of us would like to admit. In mid-March the US and its G7 allies removed ‘most favoured nation’ trade status from Russia, effectively paving the way for arbitrary tariffs or bans on Russian products. 

China, the dominant manufacturer of Australia’s commercial and domestic plumbing products, is a rubbery ally of Russia, and is therefore theoretically one step away from suffering the same loss of favoured trade status… or worse. Any trade barriers to Chinese products would further erode wholesale price competitiveness and lead to even tighter profit margins for Australian retailers. Considering current political turmoils, a complete loss of supply is a hypothetical possibility. 

Additional commercial pressures on Chinese supply chains are mounting: Australian ‘manufacturers’ are being subjected to increasingly tight scrutiny of their WHOLE supply chains, including customer demands that suppliers uphold strict procurement standards and high levels of ethical social responsibility. Components and materials sourced from China (which is currently in breach of every main branch of international law) do not meet such standards.

The obvious solution, one might argue, is to prioritise Australian Made products and favour supply chains from local or ethical manufacturing sources – but that is easier said than done in the plumbing sector!

Australian made

The strongest protection against uncertain or unethical supply chains is domestic self-sufficiency, whereby satisfactory manufacturing processes and complete supply chains can be assessed swiftly and with integrity.

However, in the space of a generation Australia has lost some (or all) of its manufacturing capabilities for many of its most important plumbing lines. For example, over the last 30 years Australia has seen the disappearance of five vitreous china plants, a tapware plant, as well as two plastics plants. Today, there are no vitreous china products manufactured locally in Australia. When it comes to copper pipe, there is only one remaining local product manufacturer: MM Kembla in New South Wales. Need some flexi hose? You will have a tough time finding a local factory (Aquaknect Flexible, based in Queensland, is one genuine local manufacturer that springs to mind).

Like it or not, there are few realistic options to circumvent our current dependency on a huge range of vulnerable, mass-market, international supply chains. Nevertheless, there are strategies that can be adopted to minimise risk and hopefully keep clients happy.

Good communication

Good, honest communication between sellers and their clients is an essential starting point. If a retailer is having difficulty sourcing specific lines or brands, then make sure clients understand the true situation. A frank overview of a reduced range, for instance, allows plumbing professionals to tailor their own business offerings accordingly and alert their own clients to realistic delivery timeframes and limited product selections. In most cases, the end-user will be happy to receive nominated products on time.

It is also important to investigate the availability of locally made products. Notwithstanding the above observations about the difficulty of sourcing certain locally made product lines, there are still plenty of Australian made products that can form the mainstay of a store inventory.

Unfortunately, locally manufactured goods have often been used as last-resort options, regarded as ‘backup’ stock in the event of unforeseen disruptions to regular offshore supplies. This is unfair on the local supplier, as it creates a boom/bust business model. In the interests of forging a long-term, win-win relationship with local companies, it is far better to nurture a consistent ordering regime so all parties can benefit from local, resilient, secure operations. It goes without saying that local products are increasingly cost-effective in the context of exorbitant freight charges for foreign goods. 

The right stock

Another way of mitigating the effects of erratic supply chains is to enlarge warehouse stock levels and make sure the inventory caters to the latest trends. The latter point is, of course, crucial if a seller is to attract the best possible market share.

Current plumbing trends continue to be shaped by community expectations for sanitary, pragmatic products that offer true protection against pathogens, hence a rise in demand for hand sanitisers, sensor-activated ‘touchless’ tapware, as well as ‘smart’ (web-connected) plumbing products that can be programmed alongside other household devices. Commercial markets are especially focused on user-friendly designs that will deliver specialised performance, if necessary, while maintaining a traditional appearance. For example, touchless taps that have the look of more familiar devices are popular. As are relaxed and neutral colour schemes for major installations like baths and toilets. Rimless toilet designs are making inroads into light commercial settings as a means of minimising maintenance and cleaning requirements.

It is worth noting that clients are increasingly insistent on water-efficient products that can help save costs. Times have changed since the introduction of Australia’s national WELS (Water Efficiency Labelling & Standards) scheme 15 years ago, which mandated the use of water-efficient products in common ranges of plumbed fittings and devices. While the market initially resisted the evolution from guzzling waterfall showers to low-flow spray heads, for example, low-flow designs are now ‘must have’ features of fittings in both commercial and domestic applications.

Perhaps the most important new trend relates to lead-safe products. The National Construction Code (NCC) was amended recently to mandate the use of lead-safe products (less than 0.25 per cent surface area) for all WaterMarked products, i.e., plumbing products that carry drinking water. Despite a phasing-in period of three years, effective 2025, many markets – the most obvious one being Victorian schools – are already stipulating the immediate use of lead-free or lead-safe products to achieve maximum safety now. 

Even though it will remain legal, technically speaking, to sell conventional products (up to six per cent lead) for the next three years, sellers must ask themselves if such sales are ethical, particularly in settings involving children. Progressive sellers are already transitioning to lead-safe products in a big way.

Uncertainty matters

There is an adage that uncertainty is the enemy of good business. The variables at play over coming months are numerous: How will Russia’s invasion of Ukraine progress? Will rising interest rates slow construction and renovation activity? Will the effects of the pandemic subside or continue to undermine international trade? Unsurprisingly, as stated, a new conservatism of design is paving the way for simple, no-nonsense plumbing aesthetics, enhanced by modern features that retain traditional functionality. This simplicity is likely to be a friend of the plumbing community as generic styles take centre stage; there is no mainstream appetite for ‘wow factors’ at present. So, sellers who maintain small but reliable ranges should keep customers happy, even if margins continue to be tight. 

If the result of current supply shortages is a revival of local manufacturing over the coming year, then this unsettled period will have achieved at least one good thing.