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| speculated that Boral, under Neal's leadership, would soon expand overseas. And indeed, Neal visited the United States virtually every year after he became chief executive, looking for business opportunities. However, he was very conscious of the fact that a number of Australian companies had tried to move into the United States market and 'stubbed their toes'. Neal wanted to be sure that when Boral made the move, it was the right one. When Neal took over in 1973, serious problems began to emerge in the Australian economy -- a sharp increase in wages and downturn in business activity. In this uncertain climate, the Boral board considered it prudent to postpone moves overseas until the domestic situation stabilised. This did not happen until 1978. Amalco, a Hawaiian-based company manufacturing concrete products, entered the Australian market in the 1970s. It acquired concrete product factories in Sydney, Melbourne and Adelaide. The Adelaide factory, called Hollostone South Australia, had just bought a concrete roof tile machine with the intention of competing with Monier in that state's housing market. But Amalco in the United States fell on hard times and needed to sell off some of its assets. Tipped off about this, Neal approached Mr Sykes, Amalco's chief executive, and negotiated to buy its Australian concrete products operations. At the time, Boral scarcely took into account the South Australian roof tile plant which was worth about a million dollars but wasn't working. Evan Evans was the manager of Hollostone in South Australia, and, once the takeover was complete and the problems with the machine came to Boral's attention, he was assigned to look into the tile plant. He reported back to Neal saying, 'I believe that the problems with this machine can be resolved. It will take me a year to get the tile plant working but I believe I can guarantee at the end of the year it will be profitable, and it will give Boral a good position in the roof tile market in South Australia, which Monier seems to have sewn up.' Neal asked what the exercise would cost. It was clear that the losses would be in the vicinity of $200,000. After some thought Neal replied, 'Well, we'll back you for a year and see what you can do.' Within the year Evans had the concrete roof tile machine modified and working. The plant was producing tiles and giving Monier some real competition in South Australia. It wasn't long before Boral had a sizeable share of the Adelaide roof tile market. About a year after the tile plant had been modified the engineer who had designed the roof tile machine came out from the United States and inspected his machines here. He called Neal when he was passing through Sydney to compliment Boral on the Adelaide operation, telling him that the machine there was working better than any others he had built. A year after Boral took over Amalco's Australian interests, one of the company's factories in California was losing money and they approached Boral to go in with them on a half-share basis. California Tile Inc. had two roof tile machines that were the same as those in the Hollostone factory. Neal, Evans and Peter McDonnell, Boral's commercial manager at the time, went over to inspect the operation. Evans advised them that the problems with the roof tile machines resembled the problems experienced at Hollostone. Boral acquired 55 per cent of California Tile Inc. in 1979, and this was the linchpin of Boral's expansion into the United States. Within a year, the business had turned around and the plant was operating at a profit. Boral bought the company outright from Amalco six months later. To this they added a new tile-making plant in San Antonio, Texas, and further consolidated in the United States by acquiring a third tile plant in California. When Boral expanded into the United States, the concrete roof tile business was relatively new in America because Americans had a tradition of using timber shakes or shingles. Particularly in California, a state subject to bush- fires, these represented a safety hazard. Shortly after Boral bought California Tiles Inc., timber shakes were outlawed in all new construction in that state and concrete tiles took a substantial share of the market. When Boral bought California Tiles Inc. outright in 1980, concrete tiles had only a 5 per cent share of the Californian roof tile market. They now account for 75 per cent. Almost overnight, Boral had become the second largest manufacturer of concrete roofing tiles in the United States. The investment had amounted to only a few million dollars and it was a relatively small market. Boral did not want a presence in the United States just for its own sake, and the board decided to allocate 10 per cent of the total group assets, roughly $50 million, to invest there further. |
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