Rheem upgrades manufacturing facility following deregulation

Rheem Australia, a leading producer of water heaters, has unveiled its newly upgraded manufacturing facility in Rydalmere, Sydney. The $40 million factory upgrade was opened on 13 December by Minister for the Environment and Energy Josh Frydenberg.

“Rheem’s investment in the facility, which encompasses state-of-the-art manufacturing equipment and a new research and development laboratory, was only possible because of our strong belief in Australian manufacturing and design, coupled with the deregulation program spearheaded by the Hon Josh Frydenberg,” said Rheem COO Chris Taylor.

“Between 2007 and 2012, Rheem faced an almost constant barrage of government regulatory proposals that impacted its water heater business. At one stage, proposals for change were arriving at the rate of once every six weeks.”

Taylor points to a now abandoned regulatory proposal to ban electric water heaters, a technology that is used in more than half of Australian homes and which forms the backbone of Rheem’s manufacturing operations, as the peak of the regulatory ‘overreach’.

Rheem had been developing plans to upgrade its local operations to better compete with rising imports, but the regulatory environment made committing to the plan almost impossible. “We diverted a huge amount of resources to deal with regulatory issues; resources that could have been better spent on improving our global competitiveness,” said Taylor.

In 2013, the cycle of constantly changing regulatory proposals stopped. According to Taylor, “The deregulation program initiated by Minister Frydenberg changed not only the process of regulatory development, but also the culture that drove it. As a result, a productive and consultative approach between industry and regulators has replaced the adversarial relationship that had existed previously.

“The ‘clean air’ that deregulation provided has been transformational for Rheem. Not only has it enabled us to refocus on core value-adding activities such as innovation, it has also allowed us to reaffirm our commitment to Australian manufacturing and providing local jobs.”

With increased certainty regarding the future regulatory environment, Rheem has, over the past three years, proceeded with a massive capital commitment in the local water heater manufacturing industry. This investment includes:

• major site improvements;
• significant expenditure on a new cylinder manufacturing line, integrating state-of-the-art welding and enamelling technologies, enabling improved safety, quality and line speeds;
• significant expenditure on a new furnace and conveying system, enabling Rheem to increase manufacturing output and product quality, while reducing energy usage and the associated greenhouse gas impacts;
• significant expenditure on jacket-making equipment to improve assembly safety, quality and line speeds;
• a new R&D laboratory and testing facility.
   

“Rheem is testament to the huge, positive impact that a collaborative approach between industry and regulators can have,” said Taylor. “Ongoing discussions and briefings with both sides of politics give us hope that all legislators now understand the benefits that flow from having a considered approach to regulation.”