Residential
Developing Markets for Concrete Creating Profitable Value
CCAA Vision… CCAA will be the leading organization developing & defending the markets for cement, concrete & aggregates. CCAA Business Plan
Economic Outlook Chart 2.4
GDP Growth, Australian States Index base: 2001/02 = 100
Index
WA Qld
160 forecast 150
Aust
140
Vic NSW Tas SA
130
120
110 Source: ABS, author's forecast 100 01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
Chart 2.3
Australian Population Growth, by State NSW Vic Qld SA WA Tas NT ACT Aust 0.0
0.2
0.4
0.6
2006-2012
0.8
1.0
2001-2006
1.2
1.4
1.6
1.8
2.0
Source: ABS, author's forecast
2.2
2.4
2.6
Per cent a year
Supply - Production 112 million tonnes 2006
9.8 million tonnes 2007
37% Roads
26.6 million m3 2007
50% Aggregate + Sand
70% Cement
Demand - Construction Activity Residential building 14
Non-Residential building Engineering Construction
12
10
8
6
4
2 Source: ABS
0
M ar -8 M 7 ar -8 M 8 ar -8 M 9 ar -9 M 0 ar -9 M 1 ar -9 M 2 ar -9 M 3 ar -9 M 4 ar -9 M 5 ar -9 M 6 ar -9 M 7 ar -9 M 8 ar -9 M 9 ar -0 M 0 ar -0 M 1 ar -0 M 2 ar -0 M 3 ar -0 M 4 ar -0 M 5 ar -0 M 6 ar -0 M 7 ar -0 8
• New residential construction slow • Offset by strong Nonresidential and Engineering construction
$ Billions
Value of Construction Work Done by type 16
Quarter
28
13
26
12
24
11
22
10 9
20 18
8
16
7
14
6
Source: ABS
5
12 10
Portland Cement {LHS}
Pre-Mixed Concrete {RHS}
PMC '000 m3
14
nJu 90 nJu 91 nJu 92 nJu 93 nJu 94 nJu 95 nJu 96 nJu 97 nJu 98 nJu 99 nJu 00 nJu 01 nJu 02 nJu 03 nJu 04 nJu 05 nJu 06 nJu 07 n08
Portland Cement '000 Tonnes
Financial Year
Ju
Consequently… • Record 26.6 million m3 PMC Production 2007/08 • Up 6.6 % on 2006/07
Portland Cement & PMC Production
Ten Major Markets for Concrete, Australia Estimated usage of pre-mixed concrete 1.1a New houses 1.2 New multi-units 1.1b Housing renovations 2.1 Offices 2.3 Retail/Wholesale trade 2.2 Industrial NRB 3.3 Mining, oil & gas 3.1 Roads 3.4 Electricity 2.4 Education 0
500
1,000
1,500
2,000
2,500
Average 2007/08-2011/12
3,000
3,500
2006/07
4,000
4,500
5,000 '000 m
3
Concrete Market Share Movement 2001 - 2006/07
Ground Floor 2006/07
Upper Storey Floor 2006/07
External Walls 2006/07
Paving 2006/07
1.1a Residential (detached housing)
1.2 Multi Residential
2.0 Non-Residential
2.1 Commercial (office, high rise)
82% 88%
90%
2.2 Industrial
82% 90%
92% 93%
96% 95%
96% 99%
88%
95%
97%
98%
10% 11%
19% 46%
56% 47%
40% 52%
56% 63%
12%
62%
55%
52%
63%
75% 80%
76% 68%
52% 71%
53% 82%
67% 80%
90%
87%
75%
86%
80%
15% 22%
24%
Source: BIS Shrapnel Residential and Non-Residential Builders Panel 2007
Significant Additional Value Created… Estimated total additional volumes and revenues created; 2001-04
2004-07*
TOTAL
„000 m3
2,247
1,560
3,807
million
$ 335
$ 234
$ 569
tonnes
697
499
1,196
million
$100
$72
$ 172
tonnes
4,054
2,808
6,862
million
$80
$56
$ 136
Concrete
Cement
Aggregate
NB
Concrete, Cem & Agg are not additive. * Engineering Construction to be added * Home Improvements to be added
3
'000 m
Forecast PMC Usage in Construction , Australia
30,000
forecast
25,000
20,000
15,000
10,000
5,000
0 99/00
00/01
New houses
01/02
02/03
New multi-units
03/04
04/05
05/06
Housing renovations
06/07
07/08
08/09
Non-residential
09/10
10/11
11/12
Engineering construction
Product Life-cycle…
Profitability
The S-curve…
Source: CORUS UK; 2007 Market Share Survey
Margin & Volme
Players Winners Losers Source: Margin & Volme; Dr. Jay Heuer
From supply to value chain… No Optimisation
Supply Chain Optimisation
Value Chain Optimisation
3
2 1 Manual Management
No Focus
Minimise costs to fulfill demand levels
Volume Focus
Maximise Profit by optimising Volume & Value throughout the value chain
Volume + Value Focus
Evolution from supply chain to value chain optimisation
There is a lot of value at stake… At stake Improvement potential Downside
Volume Million m3
x EBIT margin $ / m3
= Total $ billions Current situation
Evolution
Future situation
Deeply know our markets… Regulators, Government, Allied Industry
Cement Aggregates
Architects Engineers Owners Premixed Developers Builders Specifiers Concrete Subcontractors
Winning Value Propositions VP
Chose, Provide & Communicate Value Developing Profitable Value
$
Construction Innovation… Collaborative Sustainable Integrated
3D+ Complex
BIM
Prefabrication Skilled Labour New Materials
Information Technology
Value creation & innovation… Residential
Non-Residential
Engineering Construction
Value Creation
Opportunities
•Low risk
•Prefabrication
•Low cost
•Hybrid Tech
•High speed
•Materials Tech
•Durability
•Finishes
•Sustainable
•Formwork
Prefabrication / Off-site…
MDP 1.1 Residential, Multi-Unit Dwelling
Residential - Multi-Unit Dwelling of Concrete Walling Materials Australia 2006/07 Total Walling Area = 3,113,300 m2 50.00% 45.00%
289% growth since 2001
40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Concrete Block 01/02/2008
Pre-cast Concrete Panels 2001
2004/05
Concrete In-situ 2005/06
2006/07
Lightweight Concrete Block BIS Shrapnel
New Materials
Burj Dubai – world’s tallest building 820m & 164 floors
Phaeno Science Centre, Wolfsburg Architect: Zaha Hadid
Decorative Finishes
Sustainable construction material… Sound Business Case Known Product
Sound future investment
Adaptable Reduced Waste
Recyclable Thermal Mass CO2 Abatement
ROBUST
FLEXIBLE
Acoustic Privacy
CONCRETE
Low embodied Whole of Life Performance energy Small Ecological Footprint Water Supply Protection
Improved indoor air quality
DURABLE
Quality of life
Aesthetically Pleasing Disaster Resistant
Security Reduced Maintenance
Fire Performance
New Formwork Systems
Mercedes-Benz Museum, Stuttgart
Mercedes-Benz Museum, Stuttgart
Portfolio of innovation… Risk High
Concrete Housing
Sustainable Technology
Concrete Frame MultiResidential
Concrete Roads
Precast
Decorative Paving
Low Short Term
Long Term
Time
Innovation Strategies FOCUS; Where to innovate ? Product / Service System
New Business Creation
Radical
•New Product Category •New Service Offering
•New business model •New business system
INTENSITY
OBJECTIVE
How much to innovate ?
Why innovate ? Business Reinforcement
Incremental
•New or improved product / process •New / improved service offering
•New or improved •New Service Offering
Internal
With Partners
BOUNDARIES; With whom to innovate ?
Materials Market Share – 2004 to 2006/07 Sector
E l e m e n t s
(‘000 m2)
1.1a Residential (Detached Housing)
1.1b Home Improvement
1.2 Multi Residential
2.0 Non – Residential
2.1 Commercial (Office / High Rise)
2.2 Industrial
Floor (Ground)
Protect 88-90%
Grow 49%
Protect 90-88%
Protect 93-95%
Protect 94-97%
Protect 99-98%
Floor (Upper Storey)
B Growth 22-24%
B Growth 8%
External Wall
B Growth 11%
B Growth 8%
Grow 46-62%
Grow 47-55%
Grow 52%
Grow 66-63%
Protect 80-90%
Grow 72%
Protect 68-87%
Grow 71-75%
Protect 82-86%
Protect 80%
3.1 Roads
3.2
Bridges
Roofs
Paving
Road Paving
Protect (NSW +) B Growth
Source: BIS Shrapnel Fixtures & Fittings Reports 2006/07
Non-Residential Market • Strong growth is unlikely to continue unabated but will moderate off a high base. • Forecast 5% decline in 2008/09 with recovery in 2010/11
Work Done on Non-residential Building, Australia
$ billion
Chain volume measures, base 2004/05
26
24
22
20
18
16 forecast 14 97/98
99/00
01/02
03/04
05/06
07/08
09/10
Composition of Non-residential Building, Australia
• Offices (23%), Retail/wholesale (19%) & Industrial (16%) will continue to dominate the market
Chart 4.1
100%
11/12
Chart 4.2
Miscellaneous
90%
Accommodation
80% Entertainment and recreation Health and aged care
70% 60%
Education
forecast
50% 40%
Industrial
30%
Other commercial
20%
Offices
10%
Retail/Wholesale trade
0% 99/00
01/02
03/04
05/06
07/08
09/10
11/12
Competitive Steel Industry…
Australian Production: 8 million tons
CCAA Vision… CCAA will be the leading organization developing & defending the markets for cement, concrete & aggregates. CCAA Business Plan
Economic Outlook Chart 2.4
GDP Growth, Australian States Index base: 2001/02 = 100
Index
WA Qld
160 forecast 150
Aust
140
Vic NSW Tas SA
130
120
110 Source: ABS, author's forecast 100 01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
Chart 2.3
Australian Population Growth, by State NSW Vic Qld SA WA Tas NT ACT Aust 0.0
0.2
0.4
0.6
2006-2012
0.8
1.0
2001-2006
1.2
1.4
1.6
1.8
2.0
Source: ABS, author's forecast
2.2
2.4
2.6
Per cent a year
Supply - Production 112 million tonnes 2006
9.8 million tonnes 2007
37% Roads
26.6 million m3 2007
50% Aggregate + Sand
70% Cement
Demand - Construction Activity Residential building 14
Non-Residential building Engineering Construction
12
10
8
6
4
2 Source: ABS
0
M ar -8 M 7 ar -8 M 8 ar -8 M 9 ar -9 M 0 ar -9 M 1 ar -9 M 2 ar -9 M 3 ar -9 M 4 ar -9 M 5 ar -9 M 6 ar -9 M 7 ar -9 M 8 ar -9 M 9 ar -0 M 0 ar -0 M 1 ar -0 M 2 ar -0 M 3 ar -0 M 4 ar -0 M 5 ar -0 M 6 ar -0 M 7 ar -0 8
• New residential construction slow • Offset by strong Nonresidential and Engineering construction
$ Billions
Value of Construction Work Done by type 16
Quarter
28
13
26
12
24
11
22
10 9
20 18
8
16
7
14
6
Source: ABS
5
12 10
Portland Cement {LHS}
Pre-Mixed Concrete {RHS}
PMC '000 m3
14
nJu 90 nJu 91 nJu 92 nJu 93 nJu 94 nJu 95 nJu 96 nJu 97 nJu 98 nJu 99 nJu 00 nJu 01 nJu 02 nJu 03 nJu 04 nJu 05 nJu 06 nJu 07 n08
Portland Cement '000 Tonnes
Financial Year
Ju
Consequently… • Record 26.6 million m3 PMC Production 2007/08 • Up 6.6 % on 2006/07
Portland Cement & PMC Production
Ten Major Markets for Concrete, Australia Estimated usage of pre-mixed concrete 1.1a New houses 1.2 New multi-units 1.1b Housing renovations 2.1 Offices 2.3 Retail/Wholesale trade 2.2 Industrial NRB 3.3 Mining, oil & gas 3.1 Roads 3.4 Electricity 2.4 Education 0
500
1,000
1,500
2,000
2,500
Average 2007/08-2011/12
3,000
3,500
2006/07
4,000
4,500
5,000 '000 m
3
Concrete Market Share Movement 2001 - 2006/07
Ground Floor 2006/07
Upper Storey Floor 2006/07
External Walls 2006/07
Paving 2006/07
1.1a Residential (detached housing)
1.2 Multi Residential
2.0 Non-Residential
2.1 Commercial (office, high rise)
82% 88%
90%
2.2 Industrial
82% 90%
92% 93%
96% 95%
96% 99%
88%
95%
97%
98%
10% 11%
19% 46%
56% 47%
40% 52%
56% 63%
12%
62%
55%
52%
63%
75% 80%
76% 68%
52% 71%
53% 82%
67% 80%
90%
87%
75%
86%
80%
15% 22%
24%
Source: BIS Shrapnel Residential and Non-Residential Builders Panel 2007
Significant Additional Value Created… Estimated total additional volumes and revenues created; 2001-04
2004-07*
TOTAL
„000 m3
2,247
1,560
3,807
million
$ 335
$ 234
$ 569
tonnes
697
499
1,196
million
$100
$72
$ 172
tonnes
4,054
2,808
6,862
million
$80
$56
$ 136
Concrete
Cement
Aggregate
NB
Concrete, Cem & Agg are not additive. * Engineering Construction to be added * Home Improvements to be added
3
'000 m
Forecast PMC Usage in Construction , Australia
30,000
forecast
25,000
20,000
15,000
10,000
5,000
0 99/00
00/01
New houses
01/02
02/03
New multi-units
03/04
04/05
05/06
Housing renovations
06/07
07/08
08/09
Non-residential
09/10
10/11
11/12
Engineering construction
Product Life-cycle…
Profitability
The S-curve…
Source: CORUS UK; 2007 Market Share Survey
Margin & Volme
Players Winners Losers Source: Margin & Volme; Dr. Jay Heuer
From supply to value chain… No Optimisation
Supply Chain Optimisation
Value Chain Optimisation
3
2 1 Manual Management
No Focus
Minimise costs to fulfill demand levels
Volume Focus
Maximise Profit by optimising Volume & Value throughout the value chain
Volume + Value Focus
Evolution from supply chain to value chain optimisation
There is a lot of value at stake… At stake Improvement potential Downside
Volume Million m3
x EBIT margin $ / m3
= Total $ billions Current situation
Evolution
Future situation
Deeply know our markets… Regulators, Government, Allied Industry
Cement Aggregates
Architects Engineers Owners Premixed Developers Builders Specifiers Concrete Subcontractors
Winning Value Propositions VP
Chose, Provide & Communicate Value Developing Profitable Value
$
Construction Innovation… Collaborative Sustainable Integrated
3D+ Complex
BIM
Prefabrication Skilled Labour New Materials
Information Technology
Value creation & innovation… Residential
Non-Residential
Engineering Construction
Value Creation
Opportunities
•Low risk
•Prefabrication
•Low cost
•Hybrid Tech
•High speed
•Materials Tech
•Durability
•Finishes
•Sustainable
•Formwork
Prefabrication / Off-site…
MDP 1.1 Residential, Multi-Unit Dwelling
Residential - Multi-Unit Dwelling of Concrete Walling Materials Australia 2006/07 Total Walling Area = 3,113,300 m2 50.00% 45.00%
289% growth since 2001
40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Concrete Block 01/02/2008
Pre-cast Concrete Panels 2001
2004/05
Concrete In-situ 2005/06
2006/07
Lightweight Concrete Block BIS Shrapnel
New Materials
Burj Dubai – world’s tallest building 820m & 164 floors
Phaeno Science Centre, Wolfsburg Architect: Zaha Hadid
Decorative Finishes
Sustainable construction material… Sound Business Case Known Product
Sound future investment
Adaptable Reduced Waste
Recyclable Thermal Mass CO2 Abatement
ROBUST
FLEXIBLE
Acoustic Privacy
CONCRETE
Low embodied Whole of Life Performance energy Small Ecological Footprint Water Supply Protection
Improved indoor air quality
DURABLE
Quality of life
Aesthetically Pleasing Disaster Resistant
Security Reduced Maintenance
Fire Performance
New Formwork Systems
Mercedes-Benz Museum, Stuttgart
Mercedes-Benz Museum, Stuttgart
Portfolio of innovation… Risk High
Concrete Housing
Sustainable Technology
Concrete Frame MultiResidential
Concrete Roads
Precast
Decorative Paving
Low Short Term
Long Term
Time
Innovation Strategies FOCUS; Where to innovate ? Product / Service System
New Business Creation
Radical
•New Product Category •New Service Offering
•New business model •New business system
INTENSITY
OBJECTIVE
How much to innovate ?
Why innovate ? Business Reinforcement
Incremental
•New or improved product / process •New / improved service offering
•New or improved •New Service Offering
Internal
With Partners
BOUNDARIES; With whom to innovate ?
Materials Market Share – 2004 to 2006/07 Sector
E l e m e n t s
(‘000 m2)
1.1a Residential (Detached Housing)
1.1b Home Improvement
1.2 Multi Residential
2.0 Non – Residential
2.1 Commercial (Office / High Rise)
2.2 Industrial
Floor (Ground)
Protect 88-90%
Grow 49%
Protect 90-88%
Protect 93-95%
Protect 94-97%
Protect 99-98%
Floor (Upper Storey)
B Growth 22-24%
B Growth 8%
External Wall
B Growth 11%
B Growth 8%
Grow 46-62%
Grow 47-55%
Grow 52%
Grow 66-63%
Protect 80-90%
Grow 72%
Protect 68-87%
Grow 71-75%
Protect 82-86%
Protect 80%
3.1 Roads
3.2
Bridges
Roofs
Paving
Road Paving
Protect (NSW +) B Growth
Source: BIS Shrapnel Fixtures & Fittings Reports 2006/07
Non-Residential Market • Strong growth is unlikely to continue unabated but will moderate off a high base. • Forecast 5% decline in 2008/09 with recovery in 2010/11
Work Done on Non-residential Building, Australia
$ billion
Chain volume measures, base 2004/05
26
24
22
20
18
16 forecast 14 97/98
99/00
01/02
03/04
05/06
07/08
09/10
Composition of Non-residential Building, Australia
• Offices (23%), Retail/wholesale (19%) & Industrial (16%) will continue to dominate the market
Chart 4.1
100%
11/12
Chart 4.2
Miscellaneous
90%
Accommodation
80% Entertainment and recreation Health and aged care
70% 60%
Education
forecast
50% 40%
Industrial
30%
Other commercial
20%
Offices
10%
Retail/Wholesale trade
0% 99/00
01/02
03/04
05/06
07/08
09/10
11/12
Competitive Steel Industry…
Australian Production: 8 million tons
