Waikato Business News August/September 2021

WAIKATO BUSINESS NEWS August/September 2021
9
New Zealand construction industry
survey highlights suppliers under
pressure, gives recommendations for
a more sustainable future
Freight, price hikes and staff shortages
are concerns across the board, according
to the latest EBOSS 2021 Construction
Supply Chain Report which gives
fresh insights into the challenges our
construction industry is currently facing.
The Report, to more than
900 industry professionals,
surveyed 240
suppliers across major product
categories for residential
and commercial construction
on logistics, price impacts, the
sustainability of New Zealand’s
supply chain, operating in a
global market, and staffing.
The survey was conducted
by EBOSS, which works with
leading building product suppliers
to assist in material selection
by specifiers and is trusted
by 30,000 architects, designers,
builders, sub-trades, council
planners and engineers, supported
by BRANZ and funded
by the Building Research Levy.
The aim of the survey, carried
out in July, was to provide
data on the current and future
state of the building product
supply chain and help specifiers
and builders to better plan
ahead. It is the largest known
survey of the New Zealand construction
and building industry
to date, focused on the state of
the current product supply chain
to the construction industry – an
industry impactedby the challenges
posed by the Covid-19
pandemic.
The EBOSS 2021 Construction
Supply Chain Report Key
Findings:
• 8 out of 10 suppliers were
having issues supplying the
market.
• 90 percent of construction
products sold in New Zealand
are either imported
finished products or manufactured
locally from at least
some imported components.
• 91 percent of those who rely
on imports say they’re experiencing
issues supplying the
market, compared with just
58 percent for those wholly
reliant on domestic supply.
• 40 percent of suppliers don’t
have enough staff to meet
current demand and 56 percent
say they don’t have
enough staff to meet future
demand.
• 67 percent of suppliers surveyed
say the increased cost
of freight is their biggest
issue (regarding their ability
to supply their products),
followed by worldwide shipping
issues (65%), freight
lead times (65%) and delays
at NZ ports (62%).
• 94 percent report the cost to
buy materials from overseas
has increased in the past six
months (with freight and supply
cost increases) – 50 percent
say this has ‘increased
significantly’, 44 percent say
this has increased slightly.
84 percent expect prices to
increase over the next six
months (27% significantly,
57% slightly).
• 84 percent have increased
the cost to customers and
16 percent haven’t made
any changes to the cost to
customers. 79% expect further
increases to the cost to
consumers over the next 6
months.
“Those who work in the industry
have told us that freight
costs, particularly shipping,
have increased significantly
in the past six months – it is
common to hear of increases
of more than 100 percent,”
says EBOSS managing director
Matthew Duder. “Freight
issues are experienced by four
out of five suppliers. Suppliers
are constrained by the ongoing
impacts of Covid, and a demand
boom in both New Zealand and
around the world.”
The number of dwelling
consents in New Zealand are at
an all-time high, with BRANZ
forecasting new residential
building consents to stay at
record levels of more than
40,000 for the next four years,
but the problems around supply
and staffing may not meet this
growing demand.
EBOSS’ Report confirms the
construction industry is being
hit hard with ongoing price
increases, and delays in the
supply of products. Many suppliers
do not appear to be able
to pass the full cost of materials
and freight increases on to the
customer, meaning margins are
tight and businesses are taking
a hit.
“Builders would be very
brave to commit to new fixed
price build contracts with such
uncertainty on the future cost of
materials,” says Duder.
It’s estimated that more than
50 percent of all new dwelling
building sites (excluding
addition and renovation work)
will be able to start up again
as parts of the country shifts to
Level 3 today*.
However, the supply chain
out of Tāmaki Makaurau will be
extremely limited while the city
remains at Level 4, contributing
to almost certain delays across
the regions.
The EBOSS 2021 Construction
Supply Chain Report provides
considerations for better
outcomes for the industry, such
as increasing infrastructure at
all New Zealand ports, investment
in local manufacturing
and greater efficiency of local
councils to consent and inspect
building work.
With 40 percent of suppliers
surveyed saying they don’t have
enough staff to meet current
demand and 56 percent indicating
they don’t have enough
staff to meet future demand,
the Report recommends immigration
restrictions be eased for
skilled and required workers.
Recent increases in the minimum
wage and sick pay have
further impacted costs to supply
to the market.
The Report champions supporting
NZ-made initiatives and
calls for more support of the
manufacturing and construction
tech sector. The use of AI
Matt Duder, Managing Director, EBOSS
for project management and
design will give better tools for
forecasting and provide greater
lead times for the preparation
for materials.
“Our research shows what
we’ve been hearing for a while
Experience care as it
should be, experience
the Braemar way.
now – that change is needed
in the industry,” says Duder.
“We’re confident this data will
help specifiers and builders to
better plan ahead as the issues
around supply look to continue
for the next six months, at least.”
Economist confident
Waipā will weather the
latest lockdown storm
New Zealand’s latest
COVID-19 level four
lockdown isn’t all doom
and gloom for Waipā’s economy
according to one leading economist.
Principal economist at Infometrics,
Brad Olsen, presented
an update to Waipā District
Council on how the national and
local economy has fared after the
2020 lockdowns, and what can
be expected after the most recent.
“Waipā entered the latest
lockdown in a strong position.
2021 has seen a pretty good
run for the local economy and
although uncertainty continues
to exist, we’re confident it will
bounce back,” said Olsen.
Before the latest level four
lockdown, Waipā’s spending
had grown by 15 percent compared
with pre-pandemic 2019
levels. Waipā also saw continued
growth in the number of
residents in employment. Olsen
said Waipā gained momentum
after the last lockdown as locals
were focused on supporting
local business and spending their
money locally.
“If we want this momentum
to continue we will need to see
this local support again as we
come out of lockdown,” said
Olsen. Primary (agriculture),
construction and retail industries
were the major contributors
to Waipā’s strong economy.
Olsen added “Waipā has seen
more construction jobs being
filled, more houses being built
and more people moving to
the district. A booming construction
industry filters down
which has meant an increase in
retail spending.”
Nationally the economy will
continue to face challenges,
including labour and housing
shortages. Shipping freight costs
are expected to remain high for
the next 12-18 months which has
already impacted both import
and exports.
“There is also the risk of brain
drain as the impact of COVID-
19 lessen overseas making the
labour market tighter.”
After the 2020 lockdown,
spending activity in New Zealand
took three months to bounce
back, compared with China
which took eight.
“Globally, New Zealand has
been a leading light through
COVID-19.”
Olsen will now review the
economic assumptions used by
council in developing its 2021-
2031 Long Term Plan and present
back later in September.
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