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Growth in New Zealand’s Building Industry
In September 2017, some experts claimed New Zealand had reached “peak construction.” Although there continued to be demand for construction projects, capacity, cost and capital constraints were acting as caps. Yet, the industry itself is forecasting sustainable growth with 200,000 homes expected to be built over the next four years and over $5 billion invested in infrastructure from roads to ports to bicycle tracks.
However, the industry does have challenges. Traditionally, construction operated in a boom or bust cycle, but sustained demand over the next four years gives companies the opportunity to invest in ways to meet those challenges, creating doors for astute business people.
Need for More Workers
The biggest need for the construction industry is workers. The construction industry is the fifth largest sector in New Zealand by employment and a fifth of all new jobs are in the industry. Despite these already large numbers, the industry still needs an estimated 56,000 new workers over the next four years.
Companies that can help the industry meet these needs will have a steady market. The industry is expected to try to attract more women to the industry and would probably look favourably on a company that can help tap into this pool of potential labour.
The other possible source of new labour comes from overseas, but with upcoming changes to immigration, this may become difficult as well. Businesses that can help navigate the new legislation or take over the process fully may also be in high demand.
Specialist skills are in demand and hard to come by for some companies. Electricians, welders, pipefitters, roofers and others could find themselves with a thriving business doing contract work for the construction industry.
Management-level skills are also required. For example, new health and safety legislation has lead to a demand in OHS managers and consultants.
The industry is expected to invest in training in the coming years. Industry leaders are recommending an increase in the development of apprentices and encouraging existing workers to get training in the difficult to find trades. Enterprises that can teach these specialist skills or help facilitate apprenticeships have an opportunity to help the continued growth in the industry.
Innovation Creates Opportunity
Rather than finding new workers, the industry could instead find more efficiency. Smarter processes could see the same number of workers able to produce more buildings in less time. Experts point to a Chinese company that has erected a 57-storey tower in 19 days using prefabrication techniques.
Despite a perception of inertia in the industry, companies are aware that the only way they can continue to grow is with more workers or more productivity. With traditionally thin profit margins, most know an increase in efficiency can only benefit them.
Innovations are already being seen in robotics and prefabrication overseas and these could be brought to New Zealand either to supply the existing industry or as direct competition. Improvements in safety and procurement could also help the continued growth of construction.
Innovations in the way New Zealanders live could also help. Experts talk about creating denser, well-designed spaces, especially in cities such as Auckland. Large numbers of similar houses going up at once allow for economies of scale but don’t fit the current bespoke model of building.
Housing shortages and the need for improved infrastructure across New Zealand mean that the construction industry will only continue to grow as long as it has the capacity. Businesses that can help the industry increase capacity, through finding new workers or creating new innovations, will find success as New Zealand builds into the future.