We continued to invest in customer and end-user driven innovation to further differentiate Aliaxis North America from its competitors, and we successfully integrated Silver-Line Plastics in our organisation.
In Latin America, we ventured into new channels in specific countries and segments, while focusing on markets with potential for sustainable, profitable growth.
We launched improvement initiatives to help us drive value in our manufacturing plants, in our supply chain, and for our customers, while ensuring we enforced all relevant measures to prevent COVID-19 virus spread.
North America: Market overview
Strong start to the year
We saw favourable market conditions across North America at the start of the year. Canada entered 2020 with growth in the real estate market, residential investment and household consumption. There was strong demand in the USA from both housing and non-residential construction starts, with low unemployment driving consumer confidence and spending.
Headwinds
COVID-related containment measures resulted in housing and non-residential construction starts falling in the USA, though the economy remained resilient in the first half.
Hurricanes and severe weather during the year caused significant disruption to our raw material supply in the USA’s Gulf Coast area. Two of the four major PVC resin producers had to declare force majeure, exacerbating the tight PVC pipe and fittings supply situation, which was already suffering due to COVID-related production slowdowns.
There was a dual impact on the Canadian economy, as alongside COVID-19, the global demand for oil plummeted. This led to a sudden, deep contraction in economic activity and rising unemployment in the country. Total construction starts fell, with demand for new buildings down sharply.
Recovery in the second half of the year
In Canada, the slowdown in construction eased in the second half of the year, with a rise in total building permits issued. There was an increase in housing starts and business fixed investment in the USA, leading to a strong second half in our markets.
New life for an old school building with System 1738® Flue Gas Venting
Built as a high school in 1904, the Carter School stood abandoned and decaying for over 30 years in the heart of Leominster, Massachusetts. Today, a new 39-apartment development is bringing the building back to life and creating new affordable housing.
We are helping to keep tenants healthy and safe at the building, having supplied its new System 1738® Flue Gas Venting that allows for outdoor venting of the boilers, to avoid any release of deadly carbon monoxide gas within the building.
North America: Strategy and performance
Robust demand and sales
After significant disruptions to construction activity across North America, sales and production in both Canada and the USA recovered in the third quarter, and remained buoyant for the rest of the year.
While our businesses continued to operate as an essential service, the pandemic impacted everyone and changed the way we live and work.
With stay-at-home rules in place, homeowners made significant investments in their property assets. This generated robust demand and sales in the home improvement retail sector, swimming pool construction, and turf irrigation segments. Our IPEX business benefited from this trend through its strong customer base in the retail, swimming pool, irrigation and well water segments.
Pent-up demand fuelling sales recovery in Canada
Restrictions in construction activity, most notably in Quebec and Ontario, Canada’s most populous provinces, have resulted in pent up demand for single family homes, as people look for larger living spaces.
The resilient housing market helped to fuel a recovery in sales during the summer. We have also seen growth in the irrigation segment, resulting in further sales opportunities.
Expanding our presence in the USA
We set ambitious targets for our Americas business in 2020. This included expanding our presence in the USA. A key initiative to achieve this was the integration of Silver-Line Plastics, a business we acquired in late 2019 that is now delivering on its anticipated synergies.
Our North American business has also continued to roll out its distribution optimisation project, opening three new distribution centres in 2020. This has significantly increased our available warehouse space, while bringing a broader range of our thermoplastic piping products and systems closer to our customers.
Looking ahead in North America
We will continue to pursue growth in North America. We are investing more time with distributors, contractors, engineers and municipalities with the aim of gaining a larger share of their spend.
We will also continue to invest in innovation, our manufacturing capabilities and automation. This will help us focus on bringing new products, systems and solutions to market faster.
Lightweight tanks solution for wastewater in Texas
Redeveloping the 1960s-built First National Bank building of Fort Worth meant refitting an office space for new retail tenants. To deal with the wastewater generated by a new restaurant and grocery store, a 15,000 litre, concrete gravity grease interceptor was specified, but there simply wasn’t space to install one. The project couldn’t have happened without four of our lightweight Endura XL100 grease interceptors that were installed quickly in a confined space, replacing the need for one large tank.
Latin America: Market overview
Healthy demand impacted by COVID-19
At the start of the year, demand was healthy in most of our Latin American markets, especially Guatemala, Peru, Chile and Uruguay. Private investment in South America was also up in both building construction and irrigation projects.
However, the impact of COVID-19 prevention measures was felt across Latin America, resulting in a steep drop in demand lasting several months. Many businesses had to close due to lockdowns, leading to delays in payments for goods and services.
The second half of the year saw a steady recovery in demand in the building construction segment in Latin America and, to a lesser extent, public investment in infrastructure.
Alleviating drought conditions in Chile with V-Well
Chile is experiencing one of its most prolonged periods of drought. Among the main regions impacted since 2008 is La Ligua, where harvests have been severely affected, and the economy is suffering badly. Smart solutions for well clusters to extract water from deep wells are really needed, and Aliaxis in Chile has provided a solution with its innovative V-Well system, driving significant growth.
Latin America: Strategy and performance
Growth in key markets
We continued to focus on markets with the greatest potential for sustainable, profitable growth. Our local team also smoothly completed the last phase of our footprint rationalisation by exiting Mexico.
While demand was impacted across the region due to lower levels of building and infrastructure construction in the pandemic, we maintained strong customer engagement. This helped us win back an important DIY customer in Chile, representing a significant part of our sales in the country.
Opportunities for market share gains
A number of our plants and warehouses in Latin America were closed for weeks and some for months. However, our resilient response enabled us to restart and achieve a rapid sales recovery across most markets. Some of our competitors needed more time to re-activate their businesses after the initial lockdown, providing us with opportunities.
MaxiCanal – coping with increased rainfall
Climate change is affecting weather systems around the world, leading to an increase in the frequency and severity of storms. We responded to the urgent needs of our customers in Costa Rica, El Salvador and Honduras this year by offering our easy and safe to install PVC MaxiCanal system, with a high hydraulic capacity to cope with increased rainfall, and an attractive and robust design.
Looking ahead in Latin America
We are targeting further growth in key markets across Latin America, while focusing on key concerns in the region, such as a difficult economic and political environment in certain countries or expected higher resin prices.
With significant potential for further disruption due to COVID-19, we will apply the lessons learned in 2020 against a likely backdrop of low to medium growth in general economic activity across the region.
APAC
In APAC, we strengthened our customer facing teams to focus on our key segments and extended our operational excellence programme across the region.
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