Bunnings looks to attract home builders with $75m investment

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DIY giant Bunnings is branching out further into making and selling prefabricated walls and roof trusses, ramping up its investment in local manufacturing as it looks beyond pure hardware retail.

The Wesfarmers-owned hardware chain has poured $75 million into three automated “frame and truss” plants over a two-year period, with a new location set to open in the Brisbane suburb of Wacol next year, bringing its sixth site online.

The DIY giant has been building out its services beyond hardware retail. Credit: iStock

The investment comes as Bunnings angles to play a bigger role in residential construction at a time when it says builders are demanding pre-fabricated products that can be delivered directly to their sites.

“They’re time poor, they need efficiency – it is harder and harder to get skilled labour on site, and it’s getting more expensive,” the chief operating officer of Bunnings’ commercial business, Ben McIntosh, said.

“Builders are finding it harder to attract tradies, the price of labour is going up. Anything you can do to help builder get things up faster, more efficiently…[it’s] what the customer is demanding.”

The group says it can build frames for builders of all sizes that are working on residential projects including houses, town houses and low-rise apartments.

Earnings growth at Bunnings came in at just 1.2 per cent for the 2023 financial year, hitting $2.3 billion, but Wesfarmers boss Rob Scott and Bunnings chief executive Mike Schneider were both upbeat about the long-term outlook for the company when discussing the group’s full-year financial results last month.

Australia’s residential construction market is facing a slew of challenges including rising labour costs, inflation and interest rate increases.

Australian Bureau of Statistics lending data suggests that in July, the value of new loan commitments for owner-occupiers for the construction of new homes fell by 5.7 per cent, and is 35 per cent lower than a year ago.

However, Bunnings has a bullish view of the long-term housing outlook. The retailer has been steadily rolling out a “whole of build” strategy recently, focused on delivering more service to commercial and trade customers.

Bunnings says its investments in manufacturing could one day see the retailer move into producing other key products like doors and window frames.Credit: Paul Rovere

“[We’re] starting our relationship from the very beginning of the planning process through to fit out, fixings and the rest of [the] build,” Schneider told investors at the Wesfarmer’s strategy day earlier this year.

McIntosh said the group was very optimistic about the long-term outlook for residential building.

“Fundamentally there is a demand out there to build more houses in Australia,” he said.

Beyond frames and trusses, the company’s investments in manufacturing could one day see the retailer move into producing other key products like doors and window frames, he said.

“Not a lot of people associate Bunnings with anything other than big warehouses with cool DIY products and sausage sizzles. Bunnings is very proud that we are investing in Australian manufacturing.”

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