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MonierLifetileTM
INSERT PICTURE MonierLifetileTM Changing the way people think about roofs December 2003 Outline • Overview • History • “Perform and Grow” strategy 1 Overview of MonierLifetile operations Plant also in Guadalajara, Mexico Concrete tiles comprise 6% of the USA pitched roofing market Market share - roofing 3% 1% 2% 0% 0% 3% 85% 6% Asphalt Concrete tile Metal Cedar shake Clay tile Fiber-cement Slate Others Market = 140 million squares* * Source: Fredonia 2 Concrete tiles are used largely in new residential construction rather than reroof 2002 Estimated market share for tile – US residential Tile All other 100% 80% 60% 81.6% 99.6% 94.3% 0.4% Reroof Total 40% 20% 18.4% 0% New 5.7% MonierLifetile’s competitive advantages • Parents with building materials expertise • National presence • Purchasing power • Brand recognition • Product range 3 The manufacturing process Tanks & silos outside plant Color Color Color #1 #2 #3 Packaged tile to yard Water Cement Sand Stretch-wrap machine Mixing screws Stackers Sorter Cured tile (mold drop below) Depalleter Cured tile (on Mold) Kilns Reject bin Turnaround (Molds) Mold Sealer Applicator Line 1 Mold release applicator Tank outside Mold plant Oil Tile Knife machine cut-off Slurry applicator Racker Rack Rack Wet tile on mold Mold oil MonierLifetile History 4 MonierLifetile History: 1962 - 1997 Lifetile 1962: Lifetile was founded in Northern California 1972: Relocated to Rialto, CA and opened several plants as demand soared 1978: Lifetile was purchased by Boral Industries 1996: Renamed Boral Lifetile Inc. MonierLifetile History: 1936 - 1997 Monier 1936: Cement Linings Ltd formed 1946: Name changed to Concrete Industries (Australia) Limited 1962: Name changed to Concrete Industries (Monier) Limited 1965: Concrete Industries built its first plant in USA with Raymond International of Houston 1970: Name changed to Monier Limited 1977: Monier Bought out Raymond International and renamed it Monier Company Inc 1987: Monier purchased by Redland PLC of England 1969-1992: 15 plants built or purchased 1997: Redland PLC was acquired by Lafarge SA of France 5 MonierLifetile History: 1997 - 2000 MonierLifetile 1997: Monier and Boral Lifetile merged, becoming MonierLifetile 1999: Disposed of three plants (Corona, Casa Grande, and Ft. Lauderdale), leaving 13 plants “Perform & Grow” strategy 6 Strategic initiatives achieved: 2000 - 2003 • Costs down – Rationalized plants – Plant re-engineering / improvements – Re-organized finance team – Re-organized sales & customer service team – Rationalized product range – Plant automation, standardization & continuous improvement • Prices up • Acquired capacity with market proximity • New products and services • Entered new markets Strategic initiatives going forward • Costs down – Complete automation and plan ‘second wave’ – Complete standardization • Sales and market expansion – Regain some market share – Launch Total Roof – then develop the range (cool roof, solar, etc) – Develop sales in new regions to justify building plants – Launch e-business 7 2000 - 2003: Rationalized plants & acquired capacity with market proximity • 2000: Closed Hawaii • 2001: Closed San Bernardino, consolidating production into Rialto facility • 2001: Built second line in Henderson (Las Vegas) • 2001: Acquired Vostile in Kansas City Hawaii • 2002: Built Colorado • 2002: Built new plant in Denver CO, supporting demand created by our local selling and “seeding efforts” Plant also in Guadalajara, Mexico 2000 - 2003: Entered new markets • Opened plant in Mexico November 2001 • Sales are slower than expected • Command higher prices as a quality product with high market acceptance • Opportunity to lead and develop the market introducing the roof systems approach • Looking to expand geographically 8 2000 - 2003: Reorganized finance team • Up-skilled 13 financial administrators at plants • Completed an extensive training program • Undertook a comprehensive automation program • Brought accounts payable & accounts receivable into head office • Up-skilled head office accountants • Decentralized accounts payable processing • Improvements: 2000 2003 Total headcount 53 39 Days sales outstanding 47 36 Days to close accounts 7 <2 2000 - 2003: Reorganized sales & customer service team and rationalized product range Reorganized sales & customer service team • Sales force headcount down 33% from 89 in 2000 to 60 in 2003 (52.5% of sales covered by National Accounts) • Re-roof sales under national sales manager • Customer service function removed from sales • Customer service staff down 56% from 64 in 2000 to 28 in 2003 (and regionalised) Rationalized product range • Reduced SKUs from 1,500 to 765 • Introduced product classification (SSVI) • Introduced Business Forecasting Group 9 2000 - 2003: Plant automation, standardization and continuous improvement Automation • Moved from hand stacking to automated stacking • US$2.2m investment has resulted in US$1.0m savings per year: labour excluding worker’s compensation Standardization • Converted seven types of flat tiles across MonierLifetile’s plants to one single type • US$5.4m investment to convert will result in US$3.2m savings per year: raw materials and productivity Continuous improvement • Sustain and improve by reducing process variation 2000 - 2003: Standardization - new flat tile Invested US$5.4m to convert from 7 tiles to 1 Saxony 17” x 12.9” 85 pieces / square 11.5 Lbs. per piece 977.5 Lbs. per square installed Savings of US$3.2m per year: raw materials + productivity 10 2000 - 2003: Continuous improvement - sustain and improve by reducing process variation • Document process • Develop Standard Operating Procedures • Train operators • 5S – Housekeeping and employee involvement • Shift briefing by Team Leader SPiD Centres • Top ‘5’ • Benchmarking and transfer of “Best Practice” • Weekly KPI’s • Problem solving – Red-X • Total Productive Maintenance 2000 - 2003: Continuous improvement - ‘5S’ Project • Key to continuous improvement is employee involvement • Selected ‘5S’ to initiate employee involvement • ‘5S’ is a 5-step process which allows employees at all levels to reorganize and clean up their work area – Sort – Set in order – Shine – Standardize – Sustain (self-discipline) • Encourages employees to identify hazards/inefficiencies and develop solutions • Once established, a similar initiative will be implemented to improve product process variation 11 2000 - 2003: Continuous improvement - ‘5S’ Project Sort – “Get rid of clutter” Set – “A place for everything and everything in its place 2000 - 2003: Continuous improvement - ‘5S’ Project Shine – “Cleaning and looking for ways to keep it clean and organized” Standardize – “Maintain and Monitor Sort, Set and Shine” Total shadow board Line circuit map 12 2000 - 2003: Continuous improvement - ‘5S’ Project • Each employee has an end of shift sign-off sheet for designated colored area • Audit and SPiD walk • Annual ‘5S’ event 2000 – 2003: Prices up • Price increases of 10% over 3 years • Increased pallet income • Simplified complex pricing structures • Introduced floor pricing • Introduced tiered pricing (market segments and premium products) • Included prices in sales force bonuses • Introduced customer service disciplines (part pallets, returns, etc) – Supported by new training centre and recruitment procedure • Some followers in market, but some market share lost 13 2000 - 2003: Prices up Introducing new higher margin products • English Thatch – mimics wood shake • Barcelona – Espana tile with score line down middle to create shadow line • Pre-Boosted Barcelona – mimics old world installation • Madera – replicates cedar shake roof • New colors Going forward: Launch Total Roof System Vented Ridge Zephyr Vent Underlayment Vented Eave Riser EBS RVM 14 Going forward: Develop sales in new regions Move East but where? Criteria • Population forecast • Building trend • New household creation • Future housing starts • Median home price • Average household income 15
