Construction and building materials giant Fletcher Building is continuing to flirt with the idea of mass-producing low cost homes for the New Zealand market.
The company under the auspices of chief executive Mark Adamson, who took on the CEO job last year, has set up an internal programme to look into the potential manufacture - perhaps of thousands - of low cost homes.
The programme is looking at Europe and the rest of the world as to how they manufacture lower cost housing in factories.
“We’ve got a team going to Europe in the next couple of months," he told a media briefing at which the company announced net earnings of $326 million for the June year up from $185 million a year ago.
“That really is a fledgling strategy. I won’t be in a position to talk numbers or intentions for probably 12 months around that. It is very much new to us," he said.
Adamson said that since taking the reins at Fletcher Building he had bought a house in New Zealand "and one thing that dawned on me is just how unique it is".
"Every house seems to be entirely different to the last one and that drives huge cost in terms of building the house."
He conceded that a "cultural change" might be needed in terms of Fletcher producing low cost houses that "are more uniform if you like" but said there were ways around that.
“The main cost that’s driven in the house is the floor plan, where the walls are, where you put the plumbing, all that can be the same and yet on the outside it looks very different."
He stressed "that there will not be a factory in Auckland in the next three weeks building prefabricated houses because we have to look at it from a marketing point of view".
But he said the company would be looking whether there was a market for such homes, at what price, would people go for it culturally and how could the company meet the need in the market.
"The technology really is the easy bit. With our scale, our balance sheet and our existing positions in wood, timber and concrete, plasterboard etc, that’s kind of easy. "
But the question about whether it would fit culturally in New Zealand was "very pertinent".
"Is there an appetite in the market for that sort of house? That’s the big question for us. It is by no means determined that we will go into low cost housing of that nature. It needs to be tested."
Less of a testing ground in the past year has been Fletcher's existing residential activities, which helped lift the company's NZ operating earnings before significant items by 38%. This increase was driven mainly by rising levels of new house building activity and strong momentum with the repairs and rebuilding work in Canterbury.
The company has been buying buying up land in Auckland as it seeks to find ways of supplementing and ultimately replacing earnings from its development of bespoke homes on the old Stonefields quarry in suburban Auckland.
“We’ve enjoyed strong earnings from that this year and that will continue for at least another 18 months we think."
However, the company had been "conscious for a while now" of needing to replace that.
“We have the Three Kings Quarry and we are looking to accelerate developments around that. It was originally anticipated that would be a five-year process to refill that to the point where we could build.
“[But] We think that with some clever engineering and design we can bring that forward to two years."
The company had recently purchased the Manukau Golf Course and "that will be an exciting development". There were some smaller parcels on the outskirts of Auckland that the company had also purchased.
“Really in terms of our housing strategy, we would look to build more of that type of house [in Stonefields], but it is not just going to be driven by that."
As well as the possible moves to lower cost housing the company was also keen to "participate in the regeneration" of public housing stock.
"...We do have dialogue with the various agencies around what we can do to help those guys.
“We have skills and expertise now that we have developed in Canterbury around the [earthquake recovery] work. At any one point in the cycle in Christchurch in the last 13 months we’ve been managing up to 19,000 contractors repairing homes.
“It’s not a great leap to expect that sort of management team and process to be able to construct homes as well. So, we are in dialogue from a public sector point of view.
“So, it is not just finding more Stonefields, it really is broadening our net in terms of how we can provide houses of all kinds from the million dollar homes to the cheaper homes right across New Zealand."
Adamson believed that initiatives such as the Auckland Housing Accord, which targets the building of 39,000 new homes in Auckland over a three-year period, would be helpful to getting more development done.
"I think there is definite political will on all sides. You look at the Unitary Plan in Auckland and some of the recently announced measures. None of them in themselves are going to be a magic bullet but I think it is really pleasing to see that both the industry and the Government – of all colours – really have this as a top priority."
44 Comments
Hey there David Chaston - get a load of this - remember - I told you so
Fletchers recently purchased the Manukau Golf Course and "that will be an exciting development". There were some smaller parcels on the outskirts of Auckland that the company had also purchased.
There goes another one - recreational space that is - I can't believe this
For those southerners who don't know what Three Kings is - it is one of the few landmark volcanic cones on the Auckland Isthmus. The land on the city-side of the cone was the site of one of the original scoria quarries established back in the late 1800's and early 1900's by JJ Hunter Ltd later merged into Winstone Ltd and later acquired by Fletchers
If we could recruit some 13 year old boys and girls with at least 8 years of design and construction experience using the Scandinavian LEGO Build system, as a design team, I think we could be ok! Fletchers would need design the modules, but almost every engineer has apprenticed with Lego Corporation.
We then pour concrete pads. The on site design and constructions could be left to 8 year olds when they get home from school..
I can confirm from my own experience as a dad, that no two houses will look the same, even though they will be made with a very limited range of standard modules. Voila, cheap, easily modified houses.
Just how stupid, incompetent and corrupt have we become? It didn't used to be like this. For millions of years we built amazing houses for nothing or bugger all. Many of those structures are still around.
Hugh - the problem is right here when you quote this "3 December 2012 Colmar Brunton Poll found, 62% of all and 75% of young New Zealanders are demanding the Authorities allow the provision of affordable housing".
We shouldn't be having to demand something from the Authorities as this means the Authorities are not serving us. We should be just going out and doing things.
The fact is we have no say on how the Authorities administer issues. This is not democracy. The Authorities should be following us around not the other way around.
Well Hugh..it is looking like a constitutional nightmare in Australia if you read the below link.
Democracy is only messy, noisy and muddled because Politicians allow it to be and the public don't know their rights.
As usual when the politicians Labour and Nats) and the Beaurocrats (Wheeler/Treasury etc) get into the act, it is the sign that the boom is ending.
Again as usual when oliticians and beaurocrats gets into the action, they always overextend their reach, which means that we will seeing a housing slum in NZ soon (within the next 2 to 3 years...not tomorrow)
Couple this with Feds (Yes the USA ) "taper" which will see liquidity being withdrawn from NZ...ie higher interest rates and lower exchange rate....that's the last nail.....Sellers of properties better beware...and buyers too of course !!!
That's quite right kin, I am continually amazed at how people still insist on "the Government should do something" as the answer to any social or economic problem. Surely by now the evidence - from all around the world and all throughout history - is overwhelming: Government intervention never, ever makes a problem better.
Government intervention never, ever makes a problem better.
I couldn't agree more - extended public servant control of the OCR should cease immediately to allow for the intervention of market forces to clear the cost of money. Then a pivotal factor in the arsenal of economic stabilisers would be free from the tyranny of party politics.
The ideological blinkers are out this morning. Show me the country that is successul without a government! Would that be Somalia?
Show me a marketplace that survives without any input from the government. No contract law, no judicial system and police force to administer the law. No currency. No educated workforce and customers. No transport and communication infrastucture. And the list goes on and on.
If you cut this BS ideological thinking you would realise there is just good government interventions and bad ones.
Brendon - a pure laissez faire Capitalist society has never existed. So you are asking for proof that cannot be provided. It would also be imperative to draw the distinction between Anarchy and Pure Laissez Faire Capitalism.
There needs to be restrictions imposed upon Government and Bureaucrats. It is not an ideaology it is common sense.
Governments should be ensuring the basics are being met and they are unable to do that. The basics are those outlined in documents like the Universal Declaration of Human Rights.
a) Pure communism/socialism has never existed, that doesnt stop those of your ilk saying it wont work. Not that I do not agree with you I'll add. However what's good for the goose is goof for the gander.
b) In fact we have spent the last 30~40 years heading towards less intervention and "free markets" and things have got progressively worse.
c) Proof, indeed somalia say is pretty close to Libertarianism, close enough that we can see its not what I for one dont want.
d) So the Q is why try and claim it would work when you have absolutely no proof that a Libertarian society could function, even short term.
e) "Common sense", indeed...well we have the voting booth and Libertarians score 800~1000 votes, that makes you a non-event...not wanted by 99.99% of the population.
regards
Stephen, it has been explained to you again and again that Somalia is not an expample of libertarianism. What is going on in Somalia is anarchy. That is not the same thing. Libertarianism requires safeguarding of individual liberty - that is, individual safety and property rights, and the enforceability of contract law. These things are not present in Somalia.
Could you provide some examples of where Government previously intervened and now does not, and what has got worse as a result of that reduced level of intervention?
Leaky homes probably fits that description. Relaxation of the building code, inferior products used, leaky homes, market failure, billions lost, no clear pathway resolution pathway.
Chinese State media certainly have a hang up about this dangerous laisev-faire behaviour, bringing this issue up during the botulism scare
Yet surely anarchy is very close to Libertarianism and since in effect there is nothing with anarchy, why isnt a better and stronger political system rising out of the ashes?
Oh lets see the leaky home building regs?
Enron?
Removal of the financial act(s)/legislation put in place to ensure there was never another 1930s Great Depression?
"The Glass–Steagall Act of 1933 created the FDIC were over 7,000 banks are under today to insure account holders from any losses.
The Security Exchange Commission was created to monitor investors and make sure they were not doing unethical acts that would be unfair and not giving competing investors chance to make money and possibly lose like insider trading, ponzi schemes, & other white collar crimes.
Stricter government regulation by monitoring banks and breaking up monopolies"
Good old Bushie removed these, and what he didnt remove his politcal stooges didnt enforce.
etc etc
MdM and others I work in a medium secure psychiatric forensic ward and we care for 15 patients, 3 of whom are murderers. So if government intervention never, ever makes a problem better should I unlock the door?
MdM out in the real world there is no simple answer like the government is part of the problem not the solution...
Reagan was wrong and later lost his marbles.
But if your simplistic view of the world helps you get through the day. Stick with it but don't try to inflict it on the rest of us.
[deleted as personal abuse. Ed. Here's our commenting policy - http://www.interest.co.nz/news/65027/here-are-results-our-commenting-po…]
Usury is the practice of making unethical or immoral monetary loans (Wiki), that is not what I do and I don't get your point.
I think your attitude of the government never helps anything is basically saying people like myself are useless. Clearly I don't like that and will rebut it strongly.
Broadly this discussion is about freedom, something I am well qualified to talk about. I make decisions about individuals freedom on a daily basis, is it ok for such and such to eat with the others, to use the courtyard etc. The underlying philosophy is to allow the greatest amount of freedom while maintaining the safety of the person concerned and others. So I know that freedom is not an absolute. As you would expect there is many checks and balances on my 'dictatorial' power to ensure that it is not abused.
At a society level I believe individuals should be given as much freedom as possible and when for the greater good we vest power in a higher body -usually the government then that should be done with sensible checks and balnces.
That's quite right kin, I am continually amazed at how people still insist on "the Government should do something" as the answer to any social or economic problem. Surely by now the evidence - from all around the world and all throughout history - is overwhelming: Government intervention never, ever makes a problem better.
And just to clarify, re your comment:
Usury is the practice of making unethical or immoral monetary loans (Wiki), that is not what I do and I don't get your point.
I was referring to myself and other moneylenders - I hardly expected you had funds to lend, given your job description.
Brendon.....we have the Crimes Act and the Justice system for a very valid reason. There is a big difference between criminal offences against people and having Government intervention in every area of life.
The Crimes Act 1961 was a codification of the criminal law in New Zealand and was generally meant to be a complete statement of the areas of the law that Act dealt with and to replace the previous law.
I absolutely did not intend to imply that everybody who works for Government is useless. What I was questioning was the contrary and equally invalid assumption that everybody who works in Government is more capable of making decisions about people's economic and social choices than are the people themselves.
Why would anybody expect that his best interests would be better served as a result of decisions made by somebody in Wellington who knows absolutely nothing about him and his preferances, than if he were left to make decisions for himself? No matter how intelligent, well-intentioned and uninfluenced by party-political and electoral considerations that Wellingtonian is.
I am going to challenge you on this Brendon, but I think you are up for it.
Have you ever considered what factors influenced the end result you are dealing with and how many of those are because of government policy or intervention. I have experience and knowledge that cross over into this territory. Factors I can see are policies on health and/or nutrition, urban design, policing, education, culture, fiscal and economic policy, and what we actually legislate to be a crime(drugs). Most, but not all, of these are things the government have intefered to make things better but you are dealing with the result to show they didn't.
What jumps out at me the most is that what governments do to supposedly make things better but are really a guise serve themselves or other unseen masters.
Before each of your murderers committed the act I bet there were warnings given along the way where intervention might have changes the outcome. Just to choose one of the above is population density. Density is required to make a community, below a certain threshold we are just a bunch of individuals living in close proximity. If the density of population had been higher there might have been greater oversight and guidance of the behaviour of the mentally unwell people you deal with. Some of the other factors I mention might then have been positively influenced by this oversight.
So about unlocking that door. Perhaps if government intervention in (a lot of)other areas was relaxed along with opening those doors then it might actually be the right thing to do.
You are kidding right?
"Benevolent, honorable behavior considered to be the responsibility of persons of high birth or rank." yeah right...
;]
They will be in it purely for the money, but thats OK IMHO.
However we need (if you accept that argument, but lets not go there) say 20,000+ homes per annum country wide? That offers some chance of scale. Framing is already factory produced even to specific designs and then delivered so really its about clading and finishing. Out on site needs some skills, in a factory you can use the semi-skilled trained in specifc jobs, that is way faster, better quality and should be cheaper.
The great thing about std designs is you can also tender repetitively...a contractor knows he's going to build say 100 homes per year all needing the same tools (diggers etc) there should be big cost savings.
The problem is of course builders dont want that, they want unique one off designs they can charge fat margins on.....they need to keep their beer bellies and Ford XR wagons fed...
regards
Scarfie predicting violence and other anti-social behaviour with or without an mental illness factor is an inexact science, especially on an individual basis.
Obviously to a certain extent my service is the ambulance at the bottome of the cliff. If we had better systems so people didn't fall off the cliff my service wouldn't be needed or could be reconfigured to focus on prevention -which to a certain we do -not all our patients have commited major crimes.
And things have improved. The murder and violent crime rate is dropping. Psychiatric hospitals are many times smaller than 50 years ago. There is more openess about discussing mental illness - the John Kerwin campaign/example. Community treatment is improving.
I think a big factor is a lack of social cohesion. Population density may play a part of that, but it is not the whole story. If you look at our history our crime rate was at its highest in the late 19th century when we had mass migration from Brition. People lost their support network, there was less constraints on behaviour, it was easier to develope drug and alcohol problems. Problems develope that nobody notices and for certain number the result is often an anti -social act, sometimes of the extreme kind like murder.
I could give an example of this occuring now with the asian migration, but can only discuss it in general terms due to human rights and the privacy acts.
Interestingly (at least to me) violent crime rates rising since the 1960 and falling in the last decade or so can be exactly matched to environmental lead. You can break the trends down to when individual countries and states with countries introduced and banned lead and the correlation style holds (there is an explanatory physiological pathway as well).
http://www.motherjones.com/environment/2013/01/lead-crime-link-gasoline…
Bringing it back to the debate of the role of the government, there were various juristictions that tried to ban lead coming in, on the basis that as it was known to be hazardous so aerosolising it was probably not a good idea. Petrol companies spent a lot on lobbying using the "keep government out of business" rhetoric.
http://www.wired.com/wiredscience/2013/01/looney-gas-and-lead-poisoning…
Just think, out current crop of politicians and CEO's come out of that same bubble of lead inflicted thought dysfunction from the 60's, 70's & 80's.
I remember reading a comment once that prior to our change to unleaded the dirt along side some of our major roads was almost commercial grade lead ore.
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