In Praise of The Northwest

Parnall

Parnall is a company that started out in Victoria and has recently ‘gone west.’ Retaining its offices in Wangaratta and Gippsland, where it was established in 1956, the company expanded to Broome in January of 2009. As Managing Director Iain Edmondson explains, “it was in early 2008 that we saw an opportunity to move here. Even though the GFC hit and the market declined significantly, we said we would go and do it anyway. We wanted to set up and expand the business into the northwest – we had no ambitions to go south into Western Australia; we liked the northwest and the Pilbara and Kununurra regions, so we focussed on providing commercial and residential construction in those two areas.”

The Broome operation is an addition rather than a replacement. “We are maintaining our two Victorian offices which are both regional.” Iain and his twin brother James grew up in regional Australia and he says, “we have no desire at all to do work in major metropolitan areas such as Melbourne or Sydney. We prefer working in regional Australia – it’s a different culture and a different way of doing business.” Iain’s background includes working in Melbourne as a commercial builder and he’s able to confidently state that “it’s a completely different business culture.”

The company has, however, worked as far afield as Queensland and Tasmania, “and we have recently been awarded a contract to supply buildings to Antarctica for the Australian Antarctic Division.”

James is based fulltime in the head office in Victoria’s Wangaratta while Iain is “sort of permanently” based in Broome, spending around nine months of the year there fulltime and – during the wet season, when it’s hot and difficult to progress the work – splitting his time between Broome and Victoria.

No one should underestimate the competitive environment of the present industry. There is a lot of competition in regional and rural areas. “It’s just as crowded,” says Iain, “especially in the last 12 to 24 months, for two reasons.” First, there has been downturn in the work in the residential market and many builders in that sector are looking to supplement their income by moving into the commercial market; as a result, the downturn has also reduced spending in that sector. Secondly, the increasingly competitive nature of the market was brought about in part by the government stimulus package because it introduced a lot of Melbourne-based builders to regional Australia “who would not normally venture into country areas.” But the way the package was managed was such that projects in the three to four million dollar range were packaged into larger contracts that became 10 or 12 million. “That meant that the government clients felt more comfortable using Melbourne builders on those larger projects rather than smaller companies that would have been comfortable with the smaller projects.”

Parnall had already been pre-qualified for government work to the level of $8m, but with the stimulus package, says Iain, there were a number of projects in $10m lots “which meant that we could not get on the tender list.” One unintended consequence of the whole stimulus package policy was that the big-city builders have now established their reputations in the regional areas. “It’s gotten tougher rather than easier in terms of competition.”

It is simply not possible to compare the markets in Victoria and Western Australia, Iain adds. “It’s almost like managing two separate businesses. In regional Victoria we do not do residential construction; we are not a house builder, but rather we focus on lump-sum tender contracts for commercial works.” (There is some overlap because Parnall does ‘residential’ work for organisations such as the Department of Human Services or aged-care institutions). “But in Broome, we have developed our own signature line of houses that cater to the tastes and requirements of the Kimberly and the Pilbara and we market them and build them in Broome.” In a management sense it is a very different business compared to the commercial side, requiring a different skill set. Here Iain is dealing with individual home buyers and helping them realise their individually invested hopes and dreams as opposed to institutional or government clients.

Growth potential in Broome is “enormous,” Iain believes. “Especially since 2008 when [current WA Premier] Colin Barnett announced the gas hub would be centred just 60km to the north of the town, everyone has been waiting with bated breath for that project to kick off.” Woodside and its partners have not made their final investment decision yet. “That should come in mid-2013 and the whole town is taking the view that if it goes ahead it will be an enormous boost to the local economy.”

But even if the project doesn’t go ahead, it’s still a growth town. It’s booming regardless of the gas hub, with a large influx of permanent residents as well, and Iain predicts strong demand for housing. It’s a mixed economy, unlike Port Hedland or Karratha, he says, with quite a diverse base, from tourism to mining. The latter uses a lot of FIFO and many of them, as well as many of the shipping personnel, prefer to fly in and out of Broome rather than take the longer haul up from Perth, enjoying “a better lifestyle, less traffic, a better place to bring up their kids, better weather.” A lot of retired people are also flocking to the Broome area, he points out, seeking the weather; in addition, the tourist economy is strong, with many people using the town as the base to explore the Kimberley (though this traffic is uncomfortably dependent on capacity in Perth to be able to access the region at all).

Parnall builds houses that start at around $380,000 and range up to the million-dollar plus market. “We are just about to launch a new range of affordable housing which will go really well up here. Around here affordable housing is a critical issue; with loan packages for first-time buyers starting at around the mid-five hundred thousand mark, that’s a pretty big mortgage to bite off as you enter the market.” Accordingly, Parnall is developing a range of more affordable homes which should be available at prices below $300,000. But, asked if he would be interested in becoming a developer and dealing with more than individual lots, Iain responds with a flat “no.” Building is where the company is happy, he says, and where the team focus their strengths – there is no desire to branch out from that core ability.

Generally, says Iain, Broome does not present any specific challenges insofar as sourcing material and labour for projects except that the distances involved mean lead times are greater, “and our programming has to be done with greater accuracy.”

The largest project so far for Parnall was in Gippsland, a $14m project for the Department of Primary Industries, a dairy industry research facility, but most projects are typically in the $3-6m price bracket. There have been performing arts centres, the recent refurbishment of an arts centre, and an award-wining visitor centre for Mansfield Shire Council. In Victoria, nearly all of the company’s turnover comes from work for state, federal or local government. In Broome too, there is a healthy flow of commercial work to supplement the residential sector. “We are just starting a project for the Kimberley Land Council which will be their new office and hub, and we recently finished the Broome Recreation and Aquatic Centre amenities building.”

Broome is an interesting market – it’s driven by subcontractors, says Iain. “We prefer to develop and appreciate long-term relationships with our subcontractors and suppliers.” There aren’t too many of them in relation to builders and at the time Parnall started the local office, the economy was in the depths of the GFC and the subcontractors were pleased to get the work. “Building such a relationship early on has been a factor in Parnall’s growth and now, as the economy picks up, the mutual loyalty develops accordingly.”

Going ahead with that initial decision to move to the northwest was in any case “a big risk” in the face of the howling GFC gale. “It was heart-in-mouth,” Iain agrees. “It took us six months to win our first project and during that time we had to support someone getting out into the community and establishing relationships; that first year was really tough. But in retrospect it was definitely a good decision.”

Home Automation

Call it ‘domotics,’ and you are likely to receive a blank stare, but refer to it as ‘smart home’ or ‘home automation,’ and you will get a nod of acknowledgement. For the past few years, consumers have heard the word ‘smart’ attached to countless products and services, from food and drink to snacks like popcorn and mobile phones, which no one seems to refer to as a ‘cellphone’ anymore. Yet what, exactly, constitutes ‘smart’?

January 27, 2021, 1:40 AM AEDT