James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Day (September 2015)
40 slides from James Hardie Industries's investor day presentation, Sep 10, 2015
Slide 1: Central Operations
CENTRAL OPERATIONS September 2015 Exhibit 99.6
Slide 2: Disclaimer
PAGE DISCLAIMER FORWARD-LOOKING STATEMENTS This Investor Presentation contains forward-looking statements. James Hardie Industries plc (the “company”) may from time to time make forward-looking statements in its periodic reports filed with or furnished to the Securities and Exchange Commission, on F
Slide 3: Disclaimer (continued)
PAGE DISCLAIMER (continued) Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “aim,” “will,” “should,” “likely,” “continue,” “may,” “objective,” “outlook” and similar expressions are intended to identify forward-lo
Slide 4: Agenda
PAGE AGENDA 4 • Introduction & Org Overview • JH Manufacturing Advantage • Capacity Update • JH Supply Chain Advantage • Freight & Procurement Update
Slide 5: Central Operations Organization
PAGE CENTRAL OPERATIONS ORGANIZATION 5 Raw Materials to Customer Integration: – Procurement – Production/Capacity Planning – Outbound Freight – Distribution Management (VMI) – Customer Operations – Supply Chain Strategy Supply Chain Central Operations Key Shared Manufacturing Capabilities: – Long-Te
Slide 6: JH Manufacturing
JH MANUFACTURING
Slide 7: JH Manufacturing Overview
PAGE JH MANUFACTURING OVERVIEW 7 Proprietary technology delivers unit cost & ROCE advantage Innovation in process capability enables product leadership JH manufacturing: Major lever in our competitive advantage Unique throughput advantage in our Hatscheck manufacturing Engineered scale creates labor
Slide 8: Manufacturing Processes
PAGE MANUFACTURING PROCESSES 8 PROCESS TECHNOLOGY SEGMENTS MANUFACTURING APPROACH Pre-Autoclave Post-Autoclave Manufacturing Process Continuous Process Raw Material Conversion Key Process Objectives Material handling Coatings application Long Continuous runs Raw material yield Optimize coating yield
Slide 9: JH Manufacturing Scale Evolution
PAGE JH MANUFACTURING SCALE EVOLUTION 9 A culture of engineering step-change has yielded a tremendous increase in manufacturing scale Equipment Automation 4’x4-tub Manual Manual Fontana 4’x5-tub Auto Manual Plant City 5’x6-tub Auto Auto Tacoma 5’x9-tub Auto+ Auto Pulaski Tub Config Finishing Interle
Slide 10: Scale as a Competitive Advantage
PAGE SCALE AS A COMPETITIVE ADVANTAGE 10 Manufacturing scale creates a significant competitive advantage Fontana Plant City Tacoma Pulaski Fontana Plant City Tacoma Pulaski Capital Efficiency Unmatched by Competitors Machine Size & Automation Yields High Labor Efficiency
Slide 11: JH Manufacturing Advantage
PAGE JH MANUFACTURING ADVANTAGE 11 Internally developed process capability enables product differentiation Product thickness and density control HardieTrim ® and Artisan product lines Fit-to-purpose manufacturing processing HardieZone ® Engineered for Climate Post-processing engineering HardieShingl
Slide 12: Manufacturing Advantage Summary
PAGE MANUFACTURING ADVANTAGE SUMMARY 12 • Step change engineering focus has delivered a substantial manufacturing scale advantage • Constant investment in manufacturing process capabilities enable our product differentiation • Flexibility in manufacturing & capacity model allow for cost advantage th
Slide 13: JH Manufacturing Capacity
JH MANUFACTURING CAPACITY
Slide 14: JH Capacity Philosophy
PAGE JH CAPACITY PHILOSOPHY 14 CORE CONCEPTS OF OUR MANUFACTURING CAPACITY PHILOSOPHY: Enable 35/90 by ensuring market supply ahead of demand Invest in capacity that maximizes value creation Commission new capacity to optimize network costs
Slide 15: Ensuring Market Supply: Long-Term Capacity Planning
PAGE ENSURING MARKET SUPPLY LONG-TERM CAPACITY PLANNING 15 Our trigger to invest in new capacity is designed to buffer demand uncertainty over our design/construction/commission period 85% utilization threshold hit Decision Point Construction Commission Demand
Slide 16: JH Capacity Types
PAGE JH CAPACITY TYPES 16 As a result, we manage several different types of capacity: Active 30-day “flex” lead-time Not Commissioned Idled & New 90-day start-up lead- time 18-24 month construction lead-time Capacity Category Time to Mobilize Network Examples Summerville Next Greenfield Cleburne SM3
Slide 17: Short-Term Capacity Management Approach
PAGE SHORT-TERM CAPACITY MANAGEMENT APPROACH 17 IN OUR SHORT-TERM CAPACITY PLANNING, ACTIVE & NOT COMMISSIONED CAPACITY ENABLES A HIGH UTILIZATION TARGET Active Not Commissioned Idled & New Capacity Category Utilization Triggers Targeting high network utilization optimizes total network cost while g
Slide 18: How We Measure Utilization
PAGE HOW WE MEASURE UTILIZATION 18 OUR UTILIZATION METRIC CONSIDERS THE ACTIVE CAPACITY BUCKET ONLY Active Not Commissioned Idled & New Capacity Category Available manufacturing included in our current network utilization calculation Manufacturing capacity that is not yet capable of producing produc
Slide 19: How We Calculate Utilization
PAGE HOW WE CALCULATE UTILIZATION 19 OUR UTILIZATION METRIC IS CALCULATED BASED ON GROSS HOURS OF OUR “ACTIVE” CAPACITY Active Capacity Category Current % utilization 100% of available machine hours Consumed gross hours JH Utilization Consumed gross hours 100% of available machine hours
Slide 20: Example Capacity Add Sequence
PAGE EXAMPLE CAPACITY ADD SEQUENCE 20 No Active Utilization New Capacity Build Triggered Line Commissioned 88% No Yes 95%/78% Yes – year 3 No 84% No No 93% Yes 95%/84% Yes – year 6 Yes – year 5 Year 0 Year 1 Year 2 Year 3 Year 4
Slide 21: Outlook on New Capacity Timing
PAGE OUTLOOK ON NEW CAPACITY TIMING 21 MANUFACTURING CAPACITY EXPECTED COMMISSIONING Based on the this logic, our current outlook for capacity start-ups is: Actual start-up dates are highly sensitive to: market growth, JH PDG performance, & product-specific capability requirements PLANT CITY SM4 FY1
Slide 22: Headwinds to Capital Efficiency
PAGE HEADWINDS TO CAPITAL EFFICIENCY 22 SEVERAL FACTORS ARE DRIVING UP THE COST TO CONSTRUCT NEW CAPACITY Increasing regulatory requirements in air & water Manufacturing processes to continue differentiation Inflationary pressure in install & engineering labor We have recently begun several initiati
Slide 23: Capital Efficiency Example: Greenfield Capacity Initiative
PAGE CAPITAL EFFICIENCY EXAMPLE: GREENFIELD CAPACITY INITIATIVE 23 Greenfield Capacity Initiative We have recently resourced a team to off-set these cost headwinds Value Engineering Product Selection Process Selection
Slide 24: Manufacturing Advantage Summary
PAGE MANUFACTURING ADVANTAGE SUMMARY 24 • We are committed to ensuring product supply and will continue to invest ahead of demand • Our short-term capacity management program targets high active utilization • We are resourcing programs to maintain our capital efficiency advantage
Slide 25: JH Supply Chain Advantage
JH SUPPLY CHAIN ADVANTAGE
Slide 26: JH Supply Chain Overview
PAGE JH SUPPLY CHAIN OVERVIEW 26 Procurement Network Planning Outbound Freight Channel Management Production Scheduling Customer Experience A fully integrated value chain that begins with customer value creation… ...and has capabilities that create a substantial competitive advantage: • Highly integ
Slide 27: JH Supply Chain Scale Advantage
PAGE JH SUPPLY CHAIN SCALE ADVANTAGE 27 JH Network – Today JH Network – * Specific locations subject to change
Slide 28: Slide 28
Slide 29: Supply Chain Advantage: Jobpack Example
PAGE SUPPLY CHAIN ADVANTAGE: JOBPACK EXAMPLE 29 Aligned Channel James Hardie Enable access – The entire ColorPlus ® product range at an unmatched lead time Custom Builder Production Builder R&R Contractor Optimize JH manufacturing and freight - automated order flow and truck routing that significant
Slide 30: JH Supply Chain – Capability Advantage
PAGE JH SUPPLY CHAIN – CAPABILITY ADVANTAGE 30 (HardieLink ® ) Automated Order Taking Software (JDA) Sequential low cost tendering for delivery (APO) Optimization Planning Software builds & aggregates large production runs (APO) System Generates VMI Replenishments Trucks (JDA) TMS Software combines
Slide 31: Optimizing Supply Chain Costs
OPTIMIZING SUPPLY CHAIN COSTS
Slide 32: JH Transportation: Our Approach to Freight
PAGE JH TRANSPORTATION: OUR APPROACH TO FREIGHT 32 CORE CONCEPTS OF OUR APPROACH TO FREIGHT: We optimize much of our network around freight We manage to detailed performance metrics on controllable cost drivers Freight is a commodity – the spot market is an advantage for us
Slide 33: JH Freight Cost vs the Market (FY12 – Current)
PAGE JH FREIGHT COST VS THE MARKET (FY12 – CURRENT) 33 Source: DAT Rateview (Spot market $/Mile W/Fuel)
Slide 34: FY12 – FY16 Performance Improvement Levers
PAGE FY12 – FY16 PERFORMANCE IMPROVEMENT LEVERS 34 Truckload Utilization Result Achieved 5.5% increase How Optimized replenishment to VMI sites Order parameters that maximize value for the entire value chain Targeted “above market” lane program Carrier Sourcing: Truckload Purchasing Network Design:
Slide 35: Freight Summary and Outlook
PAGE FREIGHT SUMMARY AND OUTLOOK 35 • JH will continue YOY improvement in controllable areas • In FY16 we are benefitting from a favorable operating environment in both supply/demand and fuel costs • While the current operating environment is soft, our future state thinking on freight is impacted by
Slide 36: Procurement Approach
PAGE PROCUREMENT APPROACH 36 WE HAVE TWO PRIMARY OBJECTIVES FOR OUR PROCUREMENT PROCESSES Ensure long-term supply Optimize pricing power on scale & JH value proposition Strategic partnerships in select commodity categories Management capability to offset supply risk R&D capability to create alternat
Slide 37: James Hardie
AY tames Hardie
Slide 38: Pulp: Competitive Pressure & Supply Chain Efficiencies
PAGE PULP: COMPETITIVE PRESSURE & SUPPLY CHAIN EFFICIENCIES 38 JH Total Pulp Required Minimum Contract Volumes Our long-term pulp supply is secured through contracts with strategic partners. Within those agreements, we are focused on cost optimization Spot Market Development Increasing Competition T
Slide 39: Supply Chain Summary
PAGE SUPPLY CHAIN SUMMARY 39 • Supply Chain is a strategic area focused on value creation for our customers • We have substantial operating capabilities that enable optimized delivered cost through the entire value chain • We continue to be focus on elevating our controllable performance to market t
Slide 40: Questions
PAGE QUESTIONS 40
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