Marketing Report On Multinail Pty Ltd

Introduction

History

Multinail Australia Pty ltd. was founded in 1979 by Peter and Sonja Taylor as a privately-owned family company with 250 employees and offices established in South Africa, New Zealand, South Africa, Malaysia and Australia (Multinail, 2020). From its humble beginnings, the company now has grown exponentially for offering software, engineering and training services. It also offers metal connector production and machinery manufacturing. It recently acquired Mango Tech (Australia based software provider) and Spida Machinery (New Zealand based machinery venture).

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Key Areas

The company operates in designing of residential as well as commercial timber structures. It also manufactures quality metal connectors, software and machinery for the commercial timber and pre-fabricated residential truss industry (Multinail, 2020). With its 40 years of investment in technology, manufacturing and commitment towards service excellence, the company has enjoyed significant growth (Multinail, 2020).

It has used the concepts of “agricultural engineering” and applied the Artificial Intelligence and Robotics for providing its customers with leading edge technology.  It provides engineering as well as software services for its customers with the help of its dedicated and experience team of registered structural engineers and in-house software programmers (FTMA, 2020). It operates in three major paths i.e. software development path, machinery development path and service development path (see figure 1 below for the services under each path) (Multinail, 2020a).

Current Vision/Mission

It is a long-term vision of expanding machinery division in Australia, New Zealand and North America. The aim of Multinail is to “Help build safer, stronger structure”. Its main focus is to maintain its position as “Personalized, Local and Progressive”.

  • Personalized: This status is maintained by offering responsive boots on ground services and support driven by a family.
  • Local: This status is maintained by being 100% Australian, self-sufficient, local designer and manufacturer of products.
  • Progressive: This status is maintained by keeping improved production, efficiency and profitability.

 External Environment Analysis

Market Analysis

The company operates in “Consumer Discretionary Sector”, “Timber Processing & Products Industry” and “Timber Manufactured Products Sub-Industry” (Bloomberg, 2020). The timber manufactured products sub-industry sources the timber from sawmill and other timber processing enterprises in order to manufacture the wooden structural components or systems including pre-fabricated timber building systems (Australian Industry & Skills Committee, 2020). The average industry growth rate remained sluggish at 2% over past five years due to several challenges including decline in demand. With over 192 businesses operating in the industry, the market size of the industry stood at $2bn in 2019 (IBISWorld, 2019).

Porter Five Forces

The porter five forces model is used for analyzing the market competitiveness of Timber Manufactured Products in Australia (Dobbs, 2014). The forces used to analyze the market are threat of substitutes, rivalry, barriers to entry, bargaining power of suppliers and bargaining power of buyers.

RIVALRY AMONGST COMPETITORS – HIGH

The rivalry amongst competitors in the current industry is fierce because there are huge numbers of small and large enterprises with no major market share (Steinhardt, et al., 2012). Many of the larger firms tend to expand and diversify their portfolios in order to stay at the top. However, brand identity gives Multinail a competitive edge over its rivals. Moreover, the offshore companies are giving tough competiton to Australian Prefab Construction industry as according to Daly (2015), the country is set to lose up to 200,000 construction jobs to the offshore companies operating in Australia.

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BARGAINING POWER OF SUPPLIERS – LOW

The bargaining power of suppliers is low to moderate in the current market as suppliers in this industry can work as intermediaries as well (Steinhardt, et al., 2020). The products that are manufactured in this industry are transportable and are manufactured as modular homes. In Australia, there are 57 integrated suppliers who can produce and provide installation material for prefabricated houses (Steinhardt, et al., 2020).  The suppliers cannot raise the prices or reduce the quantity supplied in the current industry without having to deal with its buyers (Steinhardt, et al., 2020). The supplier power is moderate because the industry requires specialized machinery for producing the products (Dobbs, 2014).

BARGAINING POWER OF CUSTOMERS – HIGH

The bargaining power of customers in the current industry is high as customers are more concentrated then sellers and there is no switching cost to substitutes (Steinhardt, et al., 2020). Moreover, the customers of Multinail are well informed about the specifications and features of the products being offered. The sales of the Multinail company is highly dependent upon the purchases made by customers (in this case the customers are the construction companies and builders). However, the company produces slightly differentiated products, yet the highly evolving pre-fabricated timber housing industry is hit by changing demand (Multinail, 2020). Hence, buyer power of customers is high because the customers tend to be big multinational and local building companies and not the individual consumers.

THREAT OF SUBSTITUTE – LOW TO MODERATE

The threat of substitute is low to moderate in the current industry as there is no close substitute of timber prefab materials currently (Steinhardt, et al., 2020). However, the current research and development suggests that the Architects are exploring alternatives of prefabricated timber in Class 2 to 9 so that the use of steel and concrete can be reduced in construction. Mineral, synthetic fiber, hollow concrete block, fly ash, tire veneer, plastic wood, rice husk ash and bamboo are some major alternatives available to prefabricated timber (Forest & Wood Products Australia, 2015).  Moreover, the panelised construction using precast concrete walls and floors have long stayed in Australian commercial construction and is still being used. Companies that are offering lightweight steel are also creating the volumetric modules that can substitute prefabricated materials in Australia (Forest & Wood Products Australia, 2017).

THREAT OF NEW ENTRANTS

The threat of new entrants refers to the potential competitors that are still outside the market and intend to enter the market (Dobbs, 2014). The extent to which the market entry is easy or difficult is known as the barriers to entry. The barrier to entry in the industry is low to moderate as it is slightly difficult to find supply and distribution channel (Navaratnam, et al., 2019). Legislations and government actions that are set for protection of timber market are also barriers to entry. Moreover, the high demand for innovative and highly automated products require huge investments for the new market players (Forest & Wood Products Australia, 2015). Although the demand for greener and automated building structures is high, the investment in machinery is huge to be set up (Navaratnam, et al., 2019). Hence the threat of new entrant in the Timber Processing Market is low to moderate given the increased consolidation and high capital intensity in the industry.

Internal Environment Analysis

SWOT

Strengths

– It is a leading 100% Australian manufacturer with over 40 years of experience (Autobuild News, 2019).

– Owns two small businesses (Spida and Mango Tech)

– Expanding in other markets quickly like Malaysia and North America (Autobuild News, 2019).

– Pioneered in offering cassettes consisting 15 Steelwood Joists with 6 by 9 meters flooring. The product revolutionized residential and commercial structures (Autobuild News, 2019).

– It also makes huge investments in research and development of software (Autobuild News, 2019).

– It has applied Artificial Intelligence and Cloud Computing as cutting-edge technologies in the business operations for improving productivity (Autobuild News, 2019).

– It has dedicated and experienced team of registered structural engineers that can provide detailed design services and advise to clients.

– The company has a long list of committed and loyal customers with relationship of over 20-30 years including TrussCorp, SupaTruss, Gubbins and King Truss. All of these companies are loyal customers of Multinail (Multinail, 2020b).

– It has long term partnership growth and support that makes a tangible and bottom-line difference for the company (Multinail, 2020b).

– It has a small team of dedicated workers and staff that are fully trained and dedicated towards the company (Multinail, 2020).

– The company owns largest manufacturing facility in Southern Hemisphere and offers agriculturally engineered products that are tough as nails and built to last (Multinail, 2020).

– It pioneered in manufacturing of new cutting saw PieceMaker, Tornado and Sprint that reduced labor cost and improved productivity for companies like Westruss (Timber Trader News, 2020).

 Weaknesses

– It has high leverage company as it had to take huge loans for rebuilding and investing in machinery after the Wild Storm hit Wauchope area in 2016 (Autobuild News, 2019).

– It has weak risk and contingency plan against the unplanned/unforeseen circumstances. During 2016, the electric shortage melted the machinery at Multinail factory and burnt down half of the area. This again pushed Multinail to borrow more money for rebuilding the division (Timber Trader News, 2020)..

– It also had to face huge costs related to litigation and case filing during 1994 (Timber Trader News, 2020).. The case was filed by Multinail against its competitor that stole Multinail’s customers and broke its contract. This blew the cashflows of Multinail and made it harder for it to cover its expenses (Timber Trader News, 2020)..

– Loss of sales and high legal fees were unable to be recovered for over a decade for the company in 2000s (Timber Trader News, 2020)..

 
Opportunities

– Robotics and machine learning are changing the automation, productivity and operations of many timber manufacturers around the world (Steinhardt, et al., 2014). Investing in robotics can lead to higher status of company (Forest & Wood Products Australia, 2017).

– Technology is transforming the company as many builders from North America and Europe are looking at using structural timber in high-rise buildings instead of structures made up of steel, concrete and unions.

– Demand for greener construction is on the rise along with cost effective building practices (Dave & Prasad, 2017). The demand for products that are easier to be integrated into existing building products is also rising (Dave & Prasad, 2017).

– The demand for building low height structures, service accommodation and modular manufacturing is on the rise (Dave & Prasad, 2017).

– 90% of housing in Australia uses the prefabricated frames and trusses as compared to 70% users of prefabricated frames in Europe (Forest & Wood Products Australia, 2015).

 Threats

– The industry is based on innovation and creative designing. The threat of substitutes, Artificial Intelligence and Cloud Computing can hit the industry hard in coming decade (Forest & Wood Products Australia, 2017).

– Financial crunches like Great Financial Crises of 2008 can hit the company really badly in future (Timber Trader News, 2020).

– Natural disasters like wild storms can affect the operations of Multinail as it did during 2016 when storm lashed the Wauchope area and destroyed the Multinail factory (Timber Trader News, 2020)..

– The builders are getting more concerned about traditional building material systems because of dealing with multiple trades and contracts (Forest & Wood Products Australia, 2015). This leads to longer construction periods. Hence, trading restrictions can threaten the successful journey of Multinail in future.

– The Timber Industry has to match with the concrete sector. Any shock to the concrete sector can hinder the growth prospects of timber industry as well (Pablo & London, 2016).

– For timber industry, the change is inevitable. Either the company who adapt the new technologies and trends will succeed or these will die in terms of demand (UTAS, 2020).

– The company is highly dependent on skilled labor force. Any fluctuation in the supply of skilled labors can hinder the whole agility of the company (Daly, 2015).

Critical success factors

The industry has the following critical success factors;

  • Innovation and adaptability of new technologies in building and construction machinery production(Blismas & Wakefield, 2018).
  • Continuous investment in research and development for finding sustainable and green building solutions(Phillips, et al., 2016).
  • Applicability of robotics and automation along with boots on the ground support (Sandberg, et al., 2008).
  • Continuous training and development of high skilled labor.

Problems & Opportunities

Opportunities for the Multinail Pty Ltd. in the current industry segment are as follows:

  • The increased interest of clients in Building Information Modelling and digital manufacturing is encouraging and empowering the broader interest into prefabricated solutions(Sandberg, et al., 2008).
  • The governments’ interest is increasing for encouraging the innovation and takeup in off-site manufacture and site prefabrication usage(Forest & Wood Products Australia, 2015).
  • There is increased trend of using low grade but high strength engineered wood products(Steinhardt, et al., 2020).
  • There is an increasing demand of environmentally friendly materials as a response to wood encouragement policies by architects, designers and building owners(Dave & Prasad, 2017).
  • The increase in training and education opportunities in prefabricated system designing, manufacturing and supply is shaping up labor market (Dave & Prasad, 2017),

The following are the problems that Multinail Pty Ltd. has to deal with in current industry;

  • Building conventionally is the industry’s default position. Hence, Multinail has to stay conventional(Daly, 2015).
  • The prefabrication can become uncompetitive due to cost-on-cost nature of construction. Hence, streamlined processes are required to reduce likelihood of cost-on-cost construction situations(Forest & Wood Products Australia, 2017).
  • Prefabrication can suffer from the “vanilla aesthetics” hence a higher quality design is required for recasting this perception(Forest & Wood Products Australia, 2017).

RECOMMENDATIONS

The overall timber industry operating in Australia is highly fragmented and is much dependent on area of innovation and new market development (Forest & Wood Products Australia, 2015). The overseas versus local timber supply price variations and cyclic residential market demand are shaping up the industry. For Multinail Pty Ltd., following recommendations are made;

  • Identify the districts in Australian cities with brownfield rejuvenation programs in order to promote prefabricated timber construction and increase the sales.
  • Extend the services for providing technical support for design professionals, builders and prefabricators. This will increase the visibility of Multinail across industry.
  • Invest in research of out-of-grade softwood and plantation hardwood resources. This will add in literature on building new stronger engineered wood products for taller timber buildings.
  • Actively promote and integrate the use of BIM for supporting the wave of technology and timber design professionals. Also, extend training to its employees towards BIM and Computer Numerically Controlled (CNC) equipment(Samarasinghe, et al., 2015).
  • Invest and expand into European region and North America due to high demand for prefabricated housing/commercial goods.

References

Australian Industry & Skills Committee, 2020. Timber Processing and Products. [Online] Available at: https://nationalindustryinsights.aisc.net.au/industries/forest-and-wood-products/timber-processing-and-products
[Accessed 9 May 2020].

Autobuild News, 2019. 40 years of Multinail. [Online] Available at: https://www.multinail.com.au/wp-content/uploads/2019/12/TimberTrader-News-Dec-2019_40-Years-of-Multinail.pdf
[Accessed 9 May 2020].

Blismas, N. & Wakefield, R., 2018. Offsite manufacture in Australia: barriers and opportunities. Environment Design Guide, 5(4), pp. 92-116.

Bloomberg, 2020. Multinail Australia Pty Ltd. [Online] Available at: https://www.bloomberg.com/profile/company/6038990Z:AU
[Accessed 9 May 2020].

Daly, G., 2015. Prefabricated housing Australia: skill deficiencies and workplace practice. Melbourne: International Specialised Skills Institute, 2(9), pp. 5-16.

Dave, M. B. W. & Prasad, D., 2017. Performance and perception in prefab housing: An exploratory industry survey on sustainability and affordability. Procedia Engineering , Volume 180, pp. 676-686.

Dobbs, M. E., 2014. Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp. 32-45.

Forest & Wood Products Australia, 2015. Timber in multi-residential, commercial and industrial building: Recognising opportunities and constraints. [Online] Available at: https://www.fwpa.com.au/images/marketaccess/PNA140-0809_Research_Report_Timber_in_MultiResidential_buildings_0.pdf
[Accessed 9 May 2020].

Forest & Wood Products Australia, 2017. Enabling Prefabricated Timber Building Systems for Class 2 to 9 Buildings. [Online] Available at: https://wesbeam.com/getattachment/84a05d97-a631-4954-8bf6-cd7687807943/Market-Access-Enabling-Prefabricated-Timber-Building-Systems
[Accessed 9 May 2020].

FTMA, 2020. Gold Sponsors. [Online] Available at: https://ftmanews.com/sponsors/
[Accessed 9 May 2020].

IBISWorld, 2019. Fabricated Wood Manufacturing in Australia – Market Research Report. [Online] Available at: https://www.ibisworld.com/au/industry/fabricated-wood-manufacturing/1865/
[Accessed 9 May 2020].

Multinail, 2020. About Us. [Online] Available at: http://www.multinail.com.au/about/
[Accessed 9 May 2020].

Multinail, 2020a. Research & Development. [Online] Available at: https://www.multinail.com.au/about/research-development/
[Accessed 9 May 2020].

Multinail, 2020b. Feedback from Customers. [Online] Available at: https://www.multinail.com.au/testimonials/
[Accessed 9 May 2020].

Navaratnam, S., Ngo, T., Gunawardena, T. & Henderson, D., 2019. Performance review of prefabricated building systems and future research in Australia. Buildings, 9(2), p. 38.

Pablo, Z. & London, K., 2016. A collaborative practices typology for Australian prefabricated housing networks: convergence, alignment and coordination. Proceedings of Sustainable Housing, 5(2), pp. 725-735.

Phillips, D., Guaralda, M. & Sawang, S., 2016. Innovative housing adoption: Modular housing for the Australian growing family. Journal of Green Building, 11(2), pp. 147-170.

Samarasinghe, T., Mendis, T. & Fernando, W. J. B. S., 2015. BIM software framework for prefabricated construction: case study demonstrating BIM implementation on a modular house. 6th International Conference On Structural Engineering And Construction Management, pp. 154-162.

Sandberg, M., Johnsson, H. & Larsson, T., 2008. Knowledge-based engineering in construction-the prefabricated timber housing case. Journal of Information Technology in Construction (ITcon), Volume 13, pp. 408-420.

Steinhardt, D. A., Manley, K. & Miller, W., 2012. Profiling the nature and context of the Australian prefabricated housing industry. Engineering, Construction and Architectural Management, 2(1), pp. 8-16.

Steinhardt, D. A., Manley, K. & Miller, W., 2014. What’s driving the uptake of prefabricated housing in Australia?. Construction Economics and Building, 8(1), pp. 8-19.

Steinhardt, D., Manley, K., Bildsten, L. & Widen., K., 2020. The structure of emergent prefabricated housing industries: a comparative case study of Australia and Sweden. Construction management and economics , 38(6), pp. 483-501.

Timber Trader News, 2020. Leaders. [Online] Available at: https://www.multinail.com.au/wp-content/uploads/2019/05/TTN_394_201905.pdf
[Accessed 9 May 2020].

UTAS, 2020. Trends in PreFabricated Building. [Online] Available at: https://www.utas.edu.au/__data/assets/pdf_file/0008/459107/D-and-C_2013_2_2-Prefabrication2-2013Nov.pdf
[Accessed 9 May 2020].