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Case study: Building the future at PlaceMakers

Case study: Building the future at PlaceMakers
For decades PlaceMakers has been loved by Kiwis, from tradespeople to DIY enthusiasts, and with the building industry gearing up for growth, its partnership with BNZ is more important than ever

(L-R) BNZ's Darryl Follows and PlaceMakers' Mark Baker. The partnership between the bank and the DIY brand has been in place since 1991.

The building industry has seen some difficult times recently, with both commercial and residential construction impacted by the global economic crisis. However, there is work on the horizon as the industry gears up to handle the forecast demand following the Canterbury earthquakes and ongoing remedial leaky building work.

For the building trade, as well as serious DIYers, PlaceMakers has been the supplier of choice. As New Zealand’s largest building material and hardware supplier, the company employs more than 2,000 people and serves in excess of 300,000 customers a year.

Business services general manager Mark Baker says PlaceMakers is gearing up for growth, increasing its capability and maximising its efficiency to support the building industry.

“It’s been a tough time and we want to support and optimise opportunities for our customers in this current climate,” Baker says. “As an industry, we’ve got a big job to do in terms of fixing leaky homes, rebuilding Christchurch and encouraging our young people to get on the tools and become builders and tradespeople.

"For the future, PlaceMakers is focused on working with our valued customers and suppliers to achieve great things.”

PlaceMakers has a unique and well-established business model that enables local owners to exercise their entrepreneurial skills. The company operates as a joint venture partnership with individual branches owned in half shares by the local operator and by Fletcher Distribution, the distribution arm of Fletcher Building Ltd. It’s an operating structure that developed following the merger between Fletcher Merchants and Winstone Trading.

“This JV model has been in place for 20 years,” says Baker. “It’s proven very successful because it promotes effective management of cash and working capital. It also brings a strong local ownership ethos, which customers appreciate, and that is backed by the strength, scale and expertise of Fletcher Building.”

As well as providing full transactional banking, BNZ provides working capital funding for each PlaceMakers branch. The financial needs of each branch are assessed to establish the amount needed for the business, says Darryl Follows, who manages the PlaceMakers account on a day to day basis.

“BNZ also offers a tailored funding package to help fund the joint-venture operators’ equity contribution,” Follows says.

“Each operator also has their own unique needs from time to time. We regularly communicate with them so we’re aware of any impending issues or special requirements and we can provide extra assistance as requested.”

BNZ has been involved with PlaceMakers since it began in 1991, and senior relationship manager Curtis Mercer, who has responsibility for managing the overall relationship with the Fletcher Building Group and PlaceMakers, has had a long association with both companies, ensuring strong continuity and a good understanding of what drives the business.

“Since the original provision of funding 20 years ago, we’ve weathered a number of property cycles and natural disasters together and our relationship has continued to grow during the upswings.”

PlaceMakers commercial general manager Vaughan Grant says the bank has continued to be extremely responsive over the years, listening and proactively developing solutions to meet both PlaceMakers’ corporate and individual needs.

“When we first started the joint venture business model it was new to New Zealand. We were taking some risks and we needed our employees, prospective JV partners and suppliers to come on that journey with us. It was great that BNZ was able to provide the appropriate financing options for our joint venture companies. 

“Their willingness to embrace a new venture and to back individuals prepared to ‘give it a go’ was really encouraging and explains why they are still our banking partner today.

“Ongoing support is critical. We’re a cyclical business and it’s important to closely monitor our financial ratios. "

BNZ gives us certainty and flexibility – they’ve been willing to explore more effective and efficient ways of doing things.”

And this desire to keep improving its client offering continues. Over recent months, BNZ has looked at several new initiatives to enhance its partnership with PlaceMakers.

“We decided to launch these in Christchurch, given that this is the area with the greatest need following the earthquakes, and we’ll be working with PlaceMakers to roll them out nationally,” says Follows.

Contact:
To find out more about BNZ Partners, phone 0800 273 916