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Australian plumbing and water flow solutions manufacturer Reliance Worldwide Corporation (ASX: RWC) has announced it will close its brass casting, forging and machining operations at Moorabbin and Braeside in Melbourne as part of a broader rationalisation of its manufacturing footprint.
The closure, which will trigger a one-off net charge of US$100 million to US$110 million in FY26, is expected to deliver an annual EBITDA uplift of US$9 million by the end of FY27 as the company shifts production of brass components to lower-cost facilities and accelerates its transition toward stainless steel and engineered polymer products.
About 85 employees at its Melbourne sites will be affected by the shutdown, which will also include "additional smaller sites".
"These closures follow a sustained reduction in brass production volumes at the Melbourne facilities over recent years, such that it is no longer economically viable to continue these operations," says the company.
The move comes as Reliance Worldwide pushes to eliminate its exposure to US tariffs on China-sourced goods, a strategy flagged as far back as May 2025 when the company outlined plans to reduce China-sourced cost of goods sold for its US business to zero.
The company says the decline in brass volumes reflects investment in RWC’s Alabama facility in the US to automate the assembly of its SharkBite Max brass push-to-connect (PTC) fittings.
"This has enabled production to be undertaken closer to end markets in North America, resulting in a significant reduction in volumes sourced from Australia," says the company.
"The design of SharkBite Max enables a 20 per cent reduction in the amount of brass per fitting."
The move has also been triggered by the transition in 2025 from manufacturing brass SharkBite PTC components in Melbourne for the Asia-Pacific region to sourcing from third party vendors in Asia.
"Looking ahead, RWC expects its overall brass requirements to decline further as it progresses its strategy to replace brass with stainless steel across key product ranges," says the company.
Of the US$100 million to US$110 million in one-off charges triggered by the closures, RWC says only around US$5 million represents a cash outflow, covering redundancy payments and property exit costs.
The remainder comprises US$25 million in tangible asset write-downs and US$70 million to US$80 million in intangible asset and goodwill impairment.
The closures will substantially reduce intercompany revenue within Reliance Worldwide's APAC segment, which generated about US$38 million in intercompany sales in FY25 from the Melbourne brass operations.
The company expects an adverse US$9 million EBITDA impact on the APAC division, more than offset by US$18 million in benefits flowing to the Americas region as it sources components more cheaply.
Reliance Worldwide has been actively diversifying its supply chain away from China since US tariffs began escalating.
China-sourced cost of goods sold was on track to fall about 30 per cent from FY24 levels to around US$80 million in FY25, down from a peak of US$160 million.
The company's stated goal is to reduce tariff-impacted China sourcing for the US market to zero by the end of FY26 or FY27.
The tariff backdrop has weighed heavily on earnings. The company guided to a US$25 million to US$30 million tariff impact for FY26, confirming in an April trading update this year that the hit was tracking at the lower end of that range.
Residual tariff impact in FY27 is expected to narrow to US$5 million to US$7 million as supply chain restructuring takes full effect.
The Melbourne closures add to what Reliance Worldwide's chief executive Heath Sharp described in February as a "particularly challenging" first half, marked by US tariff disruption and weak end markets across key geographies.
First-half adjusted EBITDA fell 22.5 per cent to US$111.4 million, while net sales declined 4.6 per cent to US$645.4 million.
Sharp said at the half-year results that the company was "well positioned to benefit from a volume upturn" despite the near-term headwinds, pointing to the supply chain diversification program and product innovation pipeline as key strategic levers.
The rationalisation also reflects broader input cost pressures facing manufacturers with exposure to copper and brass.
The US imposed a 50 per cent Section 232 tariff on semi-finished copper products from August 2025, adding further incentive for Reliance Worldwide to accelerate its shift from brass fittings toward stainless steel and engineered polymer alternatives across its SharkBite and other product lines.
Shares in RWC were trading 4 per cent lower at $3.52 at 11.35am (AEST).
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