Paint maker DuluxGroup will build a new factory in Melbourne and establish a new, purpose-built distribution centre in Sydney.
The company said in a statement that the new investments will be offset by the closure of its NSW distribution centre at Padstow and Selleys’ national distribution centre at Moorebank, NSW, both of which are currently operated by DuluxGroup.
The statement said the closures will result in some job losses.
The new paint factory in Melbourne will produce nearly all of Dulux Australia’s water-based decorative paints, which are currently manufactured at the Rocklea factory in Queensland.
The Rocklea factory will be retained, but will focus on the production of solvent-based decorative paint products. As a result, there will also be redundancies at the Rocklea factory.
It is expected that the new paint factory will cost approximately $165m, though after taking account of capital expenditure savings at Rocklea and elsewhere in DuluxGroup, together with the expected sale of the Glen Waverley site, the net expenditure will be approximately $130m, spread over the next three years.
The factory will be built on a 17 hectare site north of Melbourne. With an annual production capacity of 100 million litres, it will be the largest of its kind in Australia and New Zealand.
Construction is expected to commence late this year and the expected completion date is 2017.
“We’ve spent considerable time evaluating various options drawing on expertise from the global paint industry. The new paint factory is by far the most compelling option strategically, operationally and financially, delivering a solid financial return, primarily through operating cost and capital savings,” said DuluxGroup Managing Director Patrick Houlihan.
“Our Dulux paints business is world class on any measure. This investment further strengthens our product quality, innovation, customer service and cost competitiveness.
“We also greatly appreciate the support of the Victorian Government for this significant investment in manufacturing.”
Last year Dulux posted a $104.5 million profit. Up from 2013’s $75 million, it represented an increase of 39 per cent.