Hills gives Woolworths rights to produce Hoist and other home products

ADELAIDE company Hills has shed its most recognisable products - including the iconic Hills Hoist - as it undergoes a huge transformation.

27/05/2000 PIRATE: Lance Hill (l) at his Hills Hoist factory in Adelaide circa 1946. 1940s historical

HISTORIC South Australian company Hills will no longer make the Hoist as it completes a transformation from assembly-line manufacturer to a hi-tech electronics, communications and healthcare product developer.

Hills will no longer make or sell the clotheslines, laundry and gardening products that made it famous.

It has signed a deal with retailer Woolworths which will take over the manufacture, marketing and sales of 240 Hills household goods in exchange for a royalty stream.

“It was a tough decision because the brand is inextricably linked to those products,” Hills managing director Ted Pretty said.

However, that line of goods had not made acceptable profits for many years.

Instead Hills wants to concentrate on making lucrative lines of electronics, security and home automation goods and services.

“We’ve got to think about what’s going to be produced here tomorrow,” Mr Pretty said.

Hills started making the Hoist 70 years ago and it is estimated to have a place in about 7.5 million Australian homes. For the past two years, Hills has been named the most trusted iconic household brand in a Readers Digest survey.

Hills ceased onshore manufacture of hoists and other products several years ago but contracted out the work to factories in China and other countries.

It conducted research and development work here.

The Hills research team, along with some people working directly on the business, will be transferred to Woolworths.

A few others will be absorbed into other parts of Hills and “a handful” offered redundancies, Mr Pretty said.

Members of the families which founded Hills and the board “understood what we’re doing and are positive about it”, Mr Pretty said.

Their chief concern had been over retaining the integrity of the Hills brand name and ensuring the deal only involved licensing, not a full sale.

“We’re not selling the Hoist,” Mr Pretty said.

“Effectively what we’ve done is take a link out of the supply chain.”

Instead of Hills placing an order in China, organising transport, warehousing and distribution to retail stores, Woolworths will do that all itself directly and pay Hills a royalty. The deal will last for a minimum seven years and can be renewed to 19 years.

Details on the financial impact expected on Hills will be revealed in February but the sharemarket responded with a 5 per cent lift in the share price to $1.25.

Mr Pretty said there would be two streams of royalties — one for existing products and one for new products yet to be invented which would use the Hills brand name.

A committee formed from the two companies will manage the brand and royalties.

Woolworths will take over guarantee obligations and sell spare parts through its Woolworths, Big W, Masters and Home Timber and Hardware chains.

It also will sell Hills home products to other retailers if they wanted them although Mr Pretty said at least one Woolworths competitor had decided to stop sales.

Hills is in the process of shifting its SA headquarters and innovation centres from Port Rd to the Flinders University building in the Tonsley precinct.

It wants to be closer to researchers in health and aged care and electronics.

If it succeeds in winning automotive transformation funding from state and federal governments, Hills intends to build its own space, probably at Tonsley.