7 Aug 2017

Forecast raises expected peak of building boom

2:20 pm on 7 August 2017

New Zealand's building boom is being predicted to last longer and peak higher, and the industry - already struggling with labour shortages - will have to find another 56,000 workers to keep up.

Highrise construction generic, multistory building generic, construction generic

Photo: 123RF

The government has released its latest construction pipeline report (PDF, 1.6MB), which forecasts the amount of construction work for the next six years.

Another 23 percent in construction value growth is forecast over the next four years, peaking at $42 billion in 2020.

Last year's report predicted a shallower peak in 2017 of $37bn.

The report said 200,000 homes would be built, with the boost in the number of new houses spreading to the regions, not just Auckland and Christchurch.

Geoff Hunt chairs the Construction Strategy Group and up until recently led major construction company Hawkins.

He said the numbers should give the government and industry the confidence to revamp the industry.

"If we could just get a 5 percent improvement in productivity, that's $1.5bn saved annually. And what does $1.5bn mean? What it means is we could actually deliver one more Waterview Tunnel project every year.

"So we'd like to see that investment in training upped and also procurement to become a much smarter process."

He said if the workload increased there would likely also be more interest from international design and building companies.

Issues around productivity, innovation and staffing were aired at a major construction conference last week, with a framework introduced by leaders for how to improve things.

Registered Master Builders head David Kelly said the positive outlook would give businesses confidence to actually invest in systems and people.

"One of the things that was discussed last week was investing in technology to help productivity.

"So I'm confident that businesses will look at this and say, 'Now's the opportunity to do something different because I've got a longer period of time where I can get the return on my investment.'"

However, with a mountain of work on the horizon, the industry is already struggling to find enough workers, especially those with specialist skills.

A parallel report into the future demand for construction workers forecasts demand will increase by 11 percent by 2022, with another 56,000 people needed.

Mr Kelly said having a figure would help with discussions with the government around immigration, "so that we get that right and employers are able to get the right people either through training New Zealanders or bringing people from outside where there are skills shortages".

Building and Construction Industry Training Organisation head Warwick Quinn said many of those would have to come from overseas or other relatively untapped labour pools.

"One of our biggest concerns is the fact that 15 years ago we had our lowest birth rate ever so we're entering a real skills shortage from a school-leavers perspective, right at the time when we need them the most... We're really entering a really tight market over the next four or five years."

Solutions such as trying to attract more women into the industry would have to be the focus alongside immigration, he said.

"We have to be quite creative in what we're doing and not try and do the same thing otherwise we will hit a barrier and it will choke our ability to respond to the skill shortage and as a result not build as many homes and buildings as we would normally have."

Building and Construction Minister Nick Smith said new trainees and migrants would be needed to meet the demand.

"Five years ago we were able to grow the construction sector by 20 percent for those first few years and that was because there was quite a lot of slack.

"Post-[Global Financial Crisis] the industry was not being fully utilised. The higher you go, the harder it is to get that next batch of growth. I'm confident that these numbers are do-able."

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