Anticyclical - The South West of Sydney will predominantly be...

Anticyclical - The South West of Sydney will predominantly be constructed by project home builders . Whilst volume may be healthy - maybe - margin will be tightened as the project builders that are getting any decent volume in the current environment will be demanding better pricing from the back end negotiations that they do direct with GWA -Dux Caroma and Gainsborough as GWA endevour to bundle their range. This is profit that the merchants - smiling assassins- historically would normally have enjoyed and they too are placing huge pressure not just on invoice pricing at local level but on the rebate arrangements at State and National levels . Add to this the following

1.. Price pressure that comes from the 2 larger players previously mentioned . The merchant that will take the high ground will be the one that has the higher % of home brand product to supplement the margins that they will attract with GWA product assuming it has been spec'd up by GWA . This will always present as a problem to the value proposition that is mentioned in the last couple of announcements as there will always be a niggling pressure to flip product away from GWA.


2. Historically this area of Sydney has always been very price competitive due to the indepedent operators that reside in this area - in particular with hot water . Its always been a hot spot and not likely to change any time soon.

3. Add to this the fact that the 20,000 lots that you refer to will NOT not be concentrated to the next couple of financial years trading. Average this over the next 10 years and you will find that it will likely not compensate for the downturn nationally.

4. If GWA turn to cost this will help in the short term. This is dangerous as a mid to long term solution as this action is likened to holding some one under water for a period of time. Sooner or later the recipient will turn blue and stop breathing .

5. VALUE PROPOSITION - GWA are distributing commodity product - China is to blame for this. You wish to talk about project home building in South West Sydney . This is where everyone goes with new product from China.

This IMO is a pretty accurate account of this area of the market. I don't wish to say this in a derogatory manner but from my view this is a pretty candid and accurate account of 'it is what it is".

Fat Bloater - your previous post is not appropriate and not in the spirit of what HC is intended. Sorry mate.