New Zealand construction industry survey highlights suppliers under pressure, makes recommendations for a more sustainable future
The EBOSS 2021 Construction Supply Chain Report gives new insight into the challenges New Zealand’s construction industry is currently facing – with freight, price hikes and staff shortages, concerns shared at all levels.
The report, released yesterday to more than 900 industry professionals, interviewed 240 suppliers in key categories of products for residential and commercial construction on logistics, price impacts, supply chain sustainability. New Zealand, operating in a global market and staffing.
The survey was conducted by EBOSS, which works with major construction product suppliers to assist with material selection by specifiers and is endorsed by 30,000 architects, designers, builders, contractors, municipal 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 construction products supply chain and to help specifiers and builders better plan ahead. .
This is the largest survey known to date of the construction and building industry in New Zealand, focusing on the state of the current supply chain of products for the construction industry – an industry affected by the challenges posed by the Covid-19 pandemic.
Key Findings from the EBOSS 2021 Construction Supply Chain Report:
- 8 out of 10 suppliers encountered difficulties in supplying the market.
- 90% of construction products sold in New Zealand are either imported finished products or made locally from at least some imported components.
- 91% of those who depend on imports report having problems supplying the market, compared to only 58% of those who depend entirely on domestic supplies.
- 40% of suppliers do not have enough staff to meet current demand and 56% say they do not have enough staff to meet future demand
- 67% of suppliers surveyed say increasing freight cost is their biggest problem (in terms of their ability to deliver their products), followed by worldwide shipping issues (65%), delivery times freight (65%) and delays at New Zealand ports (62%).
- 94% say the cost of purchasing materials from abroad has increased in the past 6 months (including increases in transportation and procurement costs) – 50% say it has “increased significantly”, 44 % say it has increased slightly. 84% expect prices to increase over the next six months (27% significantly, 57% slightly).
- 84% increased cost to customers and 16% made no change in cost to customers. 79% expect further cost increases for consumers over the next 6 months.
“Those who work in the industry have told us that freight costs, especially shipping, have increased dramatically over the past six months. “Freight problems are encountered by four out of five suppliers. Suppliers are constrained by the continued impacts of Covid and a boom in demand in New Zealand and around the world. “
New Zealand housing permits hit record highs, with BRNZ forecasting new residential building permits to remain at record highs of over 40,000 over the next four years, but supply and demand issues staff may not meet this growing demand. .
The EBOSS report confirms that the construction industry is hit hard by continued price increases and delays in product delivery. Many suppliers do not appear to be able to pass the full cost of materials and freight increases on to the customer, which means margins are tight and businesses are suffering.
“Builders would be very courageous to enter into new fixed-price construction contracts with such uncertainty about the future cost of materials,” said Duder.
It is estimated that more than 50% of all new housing construction sites (excluding expansion and renovation works) will be able to restart as parts of the country move to level 3 today *.
However, the supply chain from Tāmaki Makaurau will be extremely limited as long as the city remains at level 4, contributing to almost some delays in the regions.
The EBOSS 2021 Construction Supply Chain Report provides considerations for better outcomes for the industry, such as increasing infrastructure in all New Zealand ports, investing in local manufacturing and more high efficiency of local councils in authorizing and inspecting construction works.
With 40% of vendors surveyed saying they don’t have enough staff to meet current demand and 56% saying they don’t have enough staff to meet future demand, the report recommends easing immigration restrictions for skilled and required workers. Recent increases in minimum wages and sickness benefits have had an additional impact on the costs of supplying the market.
The report calls for support for initiatives made in New Zealand and calls for increased support for the manufacturing and construction technology sector. Using AI for project management and design will provide better forecasting tools and longer lead times for material preparation.
“Our research shows what we’ve been hearing for some time now: Change is needed in the industry,” says Duder. “We are confident this data will help specifiers and builders better plan ahead as supply issues appear to continue for at least the next six months.”
Read the full report: https://www.eboss.co.nz/supply-chain-report-2021/background
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