AUSTRALIA: Spanish imports win out as WA brickmaker Brickworks cuts factories and staff

Domestic freight costs killed plans by Brickworks to ship surplus stock to the east coast, with builders saying Spanish imports are cheaper.

WA homes are now being built with imported Spanish roofing tiles following savage local cutbacks by Australia’s biggest brick and tile maker that have cost nearly 130 jobs.
Brickworks today announced doubled annual profit of $186.2 million for the year to July 31 despite a sharp decline in earnings in WA in the face of a downturn in home building.
With WA building approvals down 40 per cent over the past two years, the group has closed or mothballed six plants in the State’s south-west as part of a painful restructuring undertaken to meet the plunging demand for building products.
Its Austral Bricks business closed its factory at Malaga and mothballed its Armadale plant, consolidating production at its two remaining plants at Cardup and Bellevue.
Also, Auswest Timbers sawmills at Deanmill and Pemberton were closed, along with a processing centre in Manjimup, while Bristile Roofing has mothballed its Caversham plan.
The latter closure in April means that Bristile is drawing on inventories and imported Spanish terracotta tiles to meet local demand from WA builders.
While there was potential for WA’s surplus tiles and bricks to be shipped east to feed the housing boom in NSW and Victoria, it was never viable.
That’s because, according to Brickworks, expensive domestic freight rates means it costs twice as much to ship bricks and tiles from Perth to Sydney as it does to import them from Spain.

The company said today that the cutbacks resulted in the loss of 126 WA jobs across the building products division in 2016-17 and $16 million of one-off costs for stock writedowns and the redundancies.
“However, we now enter 2018 in a much improved position, with a lower cost base and operating capacity in line with the expected demand, but with the flexibility to adapt to any change in conditions,” chief executive Lindsay Partridge said.
Mr Partridge said the “extremely challenging” conditions in WA reduced building products’ earnings before interest and tax by $12 million to $65 million in 2016-17 on record revenue of $763 million.
“Margins were particularly hard hit, due to the impact of lower pricing and higher unit manufacturing costs,” he said.
Brickworks directors declared a final fully franked dividend of 34¢ a share.
The stock was 20¢ lower at $13.78 as at 11.30am.

Source The West Australian by Sean Smith