Construction giant Fletcher Building 'looking for partners and alliances' to bring ready-made houses to New Zealand

Construction giant Fletcher Building is still pursuing the possibility of factory producing houses for the New Zealand market and is looking for "partners and alliances" that might be able to make this happen more quickly.

Fletcher's chief executive Mark Adamson said members of the company's in-house project team looking at production of prefab homes had recently been on a “global fact-finding tour".

The company was now looking for partners and alliances "...so we can hopefully increase the speed with which we can potentially bring some of these products to market".

"...We have yet to have a firm plan in terms of production capability and/or technology. We will be looking to try and accelerate that within the next six months.”

Adamson made the comments when announcing a 5% increase in company after-tax profits to $154 million for the six months to December 2013.

When announcing the company's annual results in August last year Adamson said the prefab project was "a fledgling strategy", which he would not be in a position to talk numbers or intentions about for probably 12 months.

He said today that the "partners and alliances" being sought referred to on the one hand partnering with businesses that had the existing technology to produce prefab products, while on the other the company would seek alliances with its existing customer base.

"A lot of our builders are reporting such an increased level of activity that they are almost struggling to cope, and to the extent we can begin to pre-fabricate some of the components that are used offsite and speed that up, I’m sure we would have a ready market in our existing customer base and potentially beyond that.

"As part of this project we would look to consult with them and bring them in in terms of what it is they would be looking for."

Adamson conceded last year that any widespread introduction of prefabricated housing into New Zealand would require a "cultural change" on the part of Kiwis - and he reiterated this today.

He said he had lived all over the world and was now on his third continent in four years. There was no question that housing was very different in different parts of the world.

"It’s very hard to shift people’s perception of what is a good house there’s no question on that.

"These [prefab] houses are very well accepted in southern Germany and Sweden – not so much so in the likes of the UK."

'No prefabricated sheds'

In terms of introducing such products into the New Zealand market: "I think initially it will be something we will have to market and sell - but I think the way we do it is by making really good houses," he said.

"Nobody wants to build a prefabricated shed.

"These have to be robust, they have to be dry, they have to be warm – they have to look every bit as good as a house that was made on site."

Adamson said the reason Fletcher was taking its time on introduction of the product was to "make sure that the product we do end up bringing to market is of such a high quality that people will want to buy it".

“[But] It would represent a cultural shift.” 

Fletcher's latest results show that it is enjoying the fruits of its major participation on the Christchurch rebuild and the general upswing in the New Zealand economy. Operating earnings within the country soared by 35% to $167 million (from $124 million) in the six months to December, while operating earnings in Australia slumped during the same period to $77 million from $106 million.

The company has in recent times been buying buying up land, particularly 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, which is now nearing an end.

$20 millon spent on land

Adamson said in the past six months Fletcher had spent "something around $20 million principally around the Auckland region" to help build up its land bank.

Most of the acquisitions were "reasonably small parcels of land".

Adamson said it was difficult to replace the scale of the Stonefields development. None of the pieces of land acquired were yet ready to be built on so there would "probably be a bit of a hiatus" between the Stonefields development coming to a conclusion and these new projects being developed.