Maurie Anglin

Pryda Australia

Since its introduction into Australia more than forty years ago, prefabri-cation of roof structures using nailplated trusses has grown rapidly to be the framing method of choice.

Market penetration of prefabrication has reached high levels in the eastern states and is increasing rapidly in Western Australia.

Once a ‘new’ technology achieves such a high level penetration, market growth inevitably slows with competitors battling for share of the relatively fixed (but in our case cyclical) market.

The initial “good times” are replaced by periods of reasonable results at the top of the cycle but less than satisfactory results due to the intense competition, in the troughs. The competitive pressures during these troughs are typical of a maturing market.

Over the next few years, the combination of market maturity and the recently forecast shortage of skilled labour and higher labour costs, will place great pressure on profit margins in the prefabrication industry.

Even during the cycle peaks, while higher selling prices might be achieved, profits will probably be lower because of the higher cost of labour and constraints on its availability.

We can expect to see, as a result of these factors, not only a higher level of rationalisation in our industry, but an increase in interest in improving productivity in prefabrication - from the front door until the job is erected onsite.

It will be those plants with the highest overall productivity that will be able to achieve the returns that justify continued involvement.

Productivity improvements will need to be pursued in every stage of the operation, be it quoting, detailing, cutting, jigging and pressing, despatch, erection and administration - anywhere in the operation where labour is involved.

With around 70 per cent of the total labour in a typical fabricator plant tied up in manufacturing, it is in the plant that the biggest opportunity exists for improving productivity and therefore margin.

Often, considerable investment is made in automation but in the current environments we need to ask is there an increase in productivity as well as output.

Does the extra output just increase the need for extra people or does it really lower the unit cost of production?

Given the approaching market maturity and the forecast labour situation, to position ourselves for the next few years we need to look right now at overall productivity and set some targets for our operations.

A starting point is to focus on the most basic productivity measures of sales per employee per month and cost per employee per month, and to work on increasing the former and decreasing the latter.

If we don’t, we may find that profit, the residual when costs are deducted from sales, will be ever decreasing.

Now, 40 years after the introduction of truss technology, and 20 years since the publication of the first TimberTrader News is a good time to benchmark productivity and put in place an action plan in response to the price pressures associated with market maturity and cost pressures forecast from the labour market.