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When I asked the players in this category if their sales had been declining, steady or growing, given previously that all players reported “positive, even stellar growth” many, but not all, admitted that sales were relatively static.
But let’s put sales growth into perspective. This category, like our entire building industry, until now has been enjoying double digit year-on-year growth.
Is this, like Auckland’s slowing real estate market a “correction”? Will growth accelerate again and if so when?
BUT WAIT, THERE’S MORE
Winstone Wallboards’ Product Manager Cath Montgomery tells us: “I think the market is pretty near capacity. We’re already at a high level so there’s not much growth left in it.”
NZ National Manager David Knight from Macsim agrees: “Things are stable at the moment. There’s not as much new activity happening as there has been. But I don’t think it is declining either.”
Selleys Country Manager, Darren Newland, tells me: “The category has been fantastic. We’ve had a really strong summer period, it’s been great. Overall, sealants and adhesives have performed extremely well.”
Sika’s Business Unit Manager, Tony Smith, thinks the category is still performing and says that Sika is still growing: “Our year is a calendar year so January to December 2018 was a very good year.
“We’ve had a really good start for the first quarter and every year we’ve had a good first quarter has ended up a stellar year.”
Stu Meadows from Tollesbury is also bullishly upbeat, saying: “It’s pretty buoyant out there and still plenty of opportunities for growth.”
Likewise GM of Marketing at Soudal (formerly Holdfast), Merv Williams tells me: “We would definitely see the category as growing, largely driven by both the end user demand, but also by innovation that’s happening from within.
“So certainly for us growth continues to be a constant.”
SKILL SHORTAGE, RED TAPE BOTTLENECKS?
I’m told by some of the players that it’s a combination of factors that have brought about this apparent stalled growth in the category.
Big projects like Auckland’s City Rail, America’s Cup and the Convention Centre are racing to completion and over 30,000 building consents are queued for action, so what’s the hold-up?
Yet again it’s about the thorny old issue of a lack of skilled labour plus a new “wariness” exhibited by councils, especially Auckland City Council, which is still smarting from leaky building issues and the collapse of large construction companies that is contributing to a backlog.
As Merv Williams puts it: “Our observation and it would be the same for many is that the major constraint is about labour and the resource required to get work underway and completed.”
Most believe red tape or time spent obtaining consents and Building Warrants has increased – an ironic disconnect, considering our coalition-led Government is promising to build 100,000 affordable homes.
WHERE THERE’S FIRE, THERE’S GROWTH
No-one seems despondent however and everyone is looking forward to launching new products. The “hottest” topic causing excitement however is the issue of fire retardant sealants.
“The fire retardant area is absolutely top of mind for both the councils and for the industry itself,” explains Merv Williams at Soudal.
“And it’s a growing category, there’s no doubt about that. I think all the major suppliers are actively advancing their offering in those sectors,” he says adding: “We already have a nice suite of fire-rated products that are highly regarded.”
Technically these are “passive fire protection” products.
Tony Smith gives us a masterclass: “There are two types of fire protection; active fire protection like sprinklers, hoses and extinguishers that have to work if there is a fire and there is passive fire protection; products designed to allow time so people can get out of a building safely.
“If you’ve got a building that’s got a firewall and you put a pipe or a cable through that wall, then you have to put sealants or collars in there to make sure people can exit in the required 60 or 120 minutes.
“It’s about how long it keeps the temperature down before the flames, smoke and gases can get through that pipe penetration. So that’s a big thing for us,” he says, adding: “We’re going to be extending our range of passive fire protection sealants and associated products coming up later in the year.”
Cath Montgomery too has seen a real uptake for the recently launched GIB Fire Soundseal, a sealant that “meets the requirements of our fire systems as well as our noise control systems. The product is selling so well I think we’ve potentially underestimated the demand.”
Bostik’s Paul O’Reilly agrees: “We’re seeing growth in fire-rated sealants. They’re a real hot topic at the moment because if you haven’t got all the correct certification the architects will not specify it. They’re very adverse to changing specs on fire and acoustic-rated products.”
SOMETHING BORROWED, SOMETHING NEW
One thing that continues to impress is this category’s seemingly endless ability to invent or reinvent itself with new iterations.
Darren Newland, for one, is “really excited” for Selleys’ product developments.
“We’ve got a raft of new and innovative products and it’s really driven off the back of our Silex technology. That’s really the key moving forward. It’s all about the technology and the product benefits in both the sealants and adhesives.
“Liquid Nails Instant Hold has only been out for a little while now, but it’s already one of our hero products. It’s really starting to make strong inroads.
“We have products coming for the wetter months like our Storm product; that is a very significant seller for us.
“And there’s a range of both sealants and adhesives that are unique and different which are going to be benefiting from that Silex technology.”
Soudal’s Merv Williams is genuinely excited by the biggest changes at the Hamilton company: “Our company was recently bought by Soudal (a Belgian company represented in over 100 countries) but the major brand that will represent us in the market will always be Gorilla.
“Sales may have slowed for some but the players in the glues, sealants and fillers category are all seasoned professionals and will no doubt continue to grow volume”
“Soudal has been the key supplier to Holdfast for the last 20 plus years and now we’re delighted that they are the owners. For us it has actually opened up all sorts of opportunities in terms of innovation direct from our European supplier.
“We’re already strong in sealants, foams and adhesives and new innovation will continue to increase our range and reach.”
David Knight explains that Macsim has just revamped its range in Australia: “There’s going to be a big push on that for us in July with the new product range and the catalogue. It’s a branding exercise and seeing what products we don’t have and what else we can introduce into the market. The range is certainly more trade focused.
“We’re in the DIY market with some small toothpaste tubes. They’re little 120ml squeezable tubes of the same sort of range of product for the roof, the kitchen and bathroom products. These small tubes are for the DIY patching market.”
SOMETHING BORROWED, SOMETHING NEW?
Sika’s Tony Smith, however, doesn’t agree that all new product is all that new: “There’s a lot of stuff that gets relaunched as new and improved when really it’s the same old stuff in a new package,” he says.
However, he is also quick to add: “Our new MS Bond is truly revolutionary. Our customers are literally only finding out about MS Bond as we speak.
“MS is our biggest selling sealant and this product is completely new in that it’s an adhesive as well as a sealant, but based on the same technology. The one big difference compared to a lot of the other products like this on the market is our adhesion profile – it’ll bond to things that a lot of the others just won’t bond to.
“For example, we can use it on bitumen. Normally, bitumen will attack a sealant. It works with Laminex. So now they’ll be able to put Seratone on the wall onto a non-porous substrate. We’ve just completed a whole raft of testing for all the Laminex wet wall linings.
“Anybody can use it. If someone wanted to bond a sign on the side of a building and they can’t use mechanical fixings, you could use it for that. It’s going to be used by the trade or serious DIYer or just the home user. It’s a true SMP (Single Minded Proposition) with an adhesion profile that is as wide as your arms can stretch.
“We’ve never had anything like it in this category, it’s going to be really good for us.”
DIFFERENT STROKES FOR DIFFERENT FOLKS
It’s not just new product that has Acme’s Jonathan Skelton fizzing, it’s how the product is applied and to what. “In the Superglue area it’s about different formulations and different applications.
“You get a gel, a liquid, an epoxy, you get a particularly opaque dry, even a flexible superglue for belts and leather. But you have different dispensing methods too through the nozzle. I mean you get a narrow nozzle, wider or like a pen. It’s personalised to meet the market expectation.”
Jonathan is also boldly “giving notice” to the likes of Sika, Selleys and Soudal that the company will be “making a much bigger push” this year into the DIY/consumer market with the Henkel Loctite range.
He is also pleased to report, “Loctite has been doing well across Australasia thanks to its inclusion at Bunnings.”
And there’s more to come, says Jonathan: “Walk down those big box aisles at all the adhesive and sealant ranges. That’s a very competitive market, price-wise.
“Loctite are intensely interested in positioning the product in the New Zealand market going forward,” he says, adding that the competition better look out: “We’ll be introducing new product that will be very competitive on price.”
TEST FOR THE BEST AND IGNORE THE REST
Even though they jostle for shelf space and market share, the “established” players in this category hold a begrudging respect for their competitors and their brands acknowledging the benefits and stringent testing done to meet local standards.
Speaking with measured equanimity, Winstone Wallboards’ Cath Montgomery sounds a warning for the end user: “It’s important, whether it’s us or another supplier, that those products do the job that they need it to do and that they have all the facts behind them to ensure that they’re delivering quality. There are suppliers that I think people need to be wary of.”
“I don’t like to use the word ‘cowboys’, but they’re still out there,” agrees Bostik’s Paul O’Reilly. “I think it’s imperative to have your products tested, especially UV, that’s the classic for us. We have some of the harshest UV conditions in the world. We go through rigorous testing on all our products.
“You know it does concern me that some suppliers are importing from overseas and they haven’t gone through the testing regime. What’s going to happen in years to come?”
FLOORING IS ON THE MOVE
Like their ubiquitous products, players are spreading the love and their brands across multi-channels and some are speculating if consumers are moving from the sell-all mass merchants to more vertical stores like flooring specialists.
For Ardex that market diversity is helped by promoting two strong brands. “It helps”, explains Steven Irvine, “to have two brands and two product managers.
“I help run the Dunlop branded products that go into the big box stores like Mitre 10 and PlaceMakers. The Ardex branded products, of which there’s significantly more, go into more specialist retail stores like Look Floors and Tile Warehouse.
“So, from my perspective, we’ve seen a slow decline in tile adhesive or tile glues in favour of flooring glues for vinyl planks. Vinyl products are doing well.
“Having been to Germany recently and seeing first hand, the big box stores in Europe are definitely trending towards natural wood-look floors. I expect that to occur here being a relatively fast follower.
“The big question is, are tile purchasers moving away from big box stores to retail specialist stores? We’ll continue to support both channels. What I can definitely see is a trend away from tiles more towards those natural timbers and natural-look vinyls.”
SO – WHAT’S NEXT?
Despite a predicted global downturn in trade, the uncertainties of Brexit, Trump, China’s imposed tariffs, raw material price hikes and locally labour shortages and red tape slowing the pipeline, all the category players I talked to remain positive.
“We’re still predicting year-on-year growth”, says Sika’s Tony Smith. “If we stay within the range of the customer and the merchant chains do their range review and we stay on the shelf, we’ll sell. That’s been one of our successes.”
Over at Selleys, Darren Newland believes that the category and indeed the building sector in general will keep growing, given the still very high levels of work in the pipeline.
“The challenge for the industry is more around the ability to actually deliver on that pipeline of activity,” he says.
Sales may have slowed for some but the players in the glues, sealants and fillers category are all seasoned professionals and will no doubt continue to grow volume. They’re winners.
To sound a note of caution, they should think like the All Blacks approaching the World Cup and not be complacent.
A quick look at innovation
Here’s a quick snapshot of just some of the players bringing innovation to the glues, sealants & fillers category in 2019:
Two Kiwi manufacturers that are filling shelves
It’s not all about glues and sealants. Here, two well established NZ manufacturers each showcase a product.
To be successful long-term, to quote PAL’s Managing Director Richard Percy, suppliers need to either “adapt new technology or better merchandising and certainly from a retail POV always focus on adding value to those customers.
“Our Contract Filler has been the ‘go to’ for professional painters and DIY for years. What’s new is that we are officially endorsed by Master Painters.”
Just like the Heart Foundation’s’ “tick”, the logo is on the pack.
Chem Spec’s Phil Breytenbach admits he has new filler products in the pipeline but says: “It’s unfortunately a bit early to talk about it, but we certainly can talk about our Concrete Bog.
“It’s very convenient with the texture and the colour of new concrete and it’s an extremely hard, tough product.
“We’ve had the 1 litre can for three years, but we’ve just launched a smaller 500 mill can into Australia.
“It was Bunnings who asked for that and we hope to be introducing that to the local market soon.”
Sika’s new MS Bond a “true SMP”
Sikaflex-123 MS Bond is a new adhesive and a sealant in one (as featured on the cover of our April magazine). “The adhesive is very strong yet the elasticity of the sealant lets it accommodate stress and movement too and that ensures a very durable connection” says Tony Smith, Sika New Zealand’s Distribution Business Manager.
MS Bond has a very wide adhesive profile meaning it delivers excellent adhesion on just about any building substrate, including many plastics and even bitumen. It’s easy to apply, can be used inside or outside, and has excellent resistance to water and weathering.
Tony Smith describes it as, “A true SMP (Single-Minded-Proposition)” because other sealant adhesive products have “limitations”, whereas MS Bond has an adhesion profile, “as long as your arms can stretch”.
Silicone prices skyrocket as supply dwindles
“Supply and demand” is an immutable law of retail.
For the last 18 months, with a raw materials price peak in August 2018, silicone sealant manufacturers have been suffering.
“It’s been an absolute nightmare,” bemoans Sika’s Tony Smith, “because some products have gone up over 40% in raw materials. You simply can’t pass on those price increases.
“We understand there were a lot of factories in China that were closed down because of health and safety concerns, so the demand was higher than the supply. Prices just started to skyrocket.
“You simply have to suck it up and you just lose margin,” he says ruefully.
Selleys’ Darren Newland agrees that with silicone forming such a huge part of the category, “Huge cost increases are a real issue. We look at it in terms of overall cost structure and where possible we use prices as a last resort.”
Silicone supply is expected to remain tight until 2022 when it is expected that new factories will be completed that meet China’s stringent environmental regulations and production expands into South Korea and the Middle East.