James Hardie has entered into a contract to acquire the land upon which its existing Carole Park, Brisbane manufacturing facility is located, together with the buildings on the site. In addition, the company will construct new manufacturing capacity on the site. Capital expenditure for the purchase of the property and the construction of new manufacturing capacity is estimated to be A$89 million.
The company expects to incur these capital expenditures over a two year period, with construction of the new manufacturing capacity commencing at the end of the first quarter of calendar year 2014, with production facilities projected to be fully operational in the first half of calendar year 2015.
The decision to invest in additional Australian fibre cement manufacturing capacity is in response to a long term trend in the Australian residential and commercial construction industries towards greater usage of composite building materials, of which James Hardie is a major beneficiary. The company expects that this capital expenditure will allow it to service expected increases in demand for its products and also enable further incremental capacity expansions in the Asia Pacific business at low capital costs in the medium term if required to meet future market demand.
The Carole Park facility was chosen as the preferred location for expansion as south-east Queensland delivers freight advantages, particularly as James Hardie enjoys strong market penetration in Queensland. Other expected benefits of the investment in the Carole Park facility include enhanced product differentiation and increased operating efficiencies, which are expected to result in manufacturing cost savings.
Production of building materials at our Rosehill plant in Sydney and of pipes at our Meeandah, Brisbane site will continue.