From Survey to Action: Understanding the Civil Construction Industry

Much has changed since we announced the findings of Teletrac Navman x Civil Contractors NZ 2022 Construction Industry Survey. We’re emerging from the grip of the pandemic, and New Zealand, like the rest of the world, faces economic uncertainty. We have had an extraordinary summer of major weather events which has put the country’s infrastructure under tremendous pressure.

As this year’s survey opens to the industry (you can have your say here) it’s a good time to look back on the state of civil construction just 12 months ago and explore what may impact this year’s findings.

Escalating costs and economic slowdown

Last year’s survey revealed that an overwhelming 90% of construction businesses were significantly impacted by cost escalation and supply chain issues. Today, the industry continues to grapple with these challenges. The Reserve Bank of New Zealand has raised the Official Cash Rate (OCR) to 5.5%, the highest level since December 2008. This move, coupled with rising interest rates and a whopping 7% inflation rate, has further strained the industry. The result is reduced consumer spending and council budgets under pressure affecting the demand for construction projects.

Industry outlook and the challenge of labour

In 2022, the survey indicated that 41% of respondents were confident in the industry’s outlook. Currently, New Zealand boasts a promising pipeline of infrastructure projects worth NZ$80 billion. Nevertheless, the scarcity of skilled labour poses a significant hurdle, more on that below. While there is still a considerable amount of work available, concerns about an anticipated slowdown persist, particularly among small operators uncertain about the future pipeline of projects.

Balancing risk and uncertainty

According to the 2022 survey, 71% of participants expressed a desire for a clearer pipeline of central and local government work. Today, managing risk has become even more urgent. The impact of climate change on businesses in New Zealand is no longer a looming threat; it is a harsh reality. Deadly storms and record-breaking rainfalls have intensified, causing significant damage and economic costs. These extreme weather events serve as wake-up calls, revealing our vulnerability and the need to reconsider our infrastructure. The whole industry must enhance its preparedness and resilience in the face of these climate-related challenges.

Although the recovery efforts from the Auckland floods and Cyclone Gabrielle are providing a boost for the construction sector, they add immediate pressure in terms of finding labour to repair damaged roads and railways. The industry must navigate the delicate balance between addressing short-term repair needs and fulfilling long-term project commitments.

Addressing skills shortages

One area of concern highlighted by the 2022 Construction Industry Survey is the persistent shortage of workers, with 87% of respondents indicating that they would hire immediately if the right skills were available. This shortage remains a significant hindrance to the industry’s growth. For instance, the lack of skilled engineers threatens Three Waters reforms. It has been estimated that an additional 1,500 engineers across various specialities will be needed each year just to keep pace with economic growth.

But why is it so challenging to find and retain labour? One of the biggest obstacles is the time and resources required to upskill and train workers. In the case of water engineers, specialised education or in-house training typically takes a minimum of one year. Other factors include complex, time-consuming overseas recruitment and immigration, brain drain due to attractive opportunities across the ditch or further abroad, and an increasingly competitive environment that makes it hard for construction companies to offer better pay and benefit packages.

Embracing technological advancements:

It’s apparent that New Zealand needs more workers and higher productivity to deliver the major infrastructure projects that are planned. Currently, there are 200,000 individuals employed in construction and infrastructure, and this number needs to grow by an additional 50,000 over the next few years.

To meet this demand and achieve higher productivity, New Zealand’s construction industry must harness technology-powered solutions. By leveraging automation, digital tools, and innovative processes, the industry can bridge the labour gap and optimise efficiency. Embracing these advancements not only addresses the immediate challenges but also positions the industry for sustainable growth in the face of uncertainty.

Looking ahead to the 2023 Construction Industry Survey

The 2023 Construction Industry Survey promises to deliver more actionable results. Beyond highlighting industry trends, the survey will provide insights to help construction companies overcome the challenges they face. With a focus on the upcoming election, the increasing frequency of extreme weather events, and the need for robust recovery plans, the survey findings will equip the civil construction industry with the knowledge it needs to navigate uncertainties and drive sustainable growth.

To understand the future challenges and opportunities, it is critically important for construction companies to contribute to the 2023 Construction Industry Survey. Your voice matters. By participating in the survey, you have a say in shaping the future of the industry, and become part of a collaborative effort to address critical issues and drive positive change. Take the survey here: https://t2.ktrmr.com/surveyw.aspx?I.project=WAD22C3&s=GEN24&id=1&chk=na&aar=1&rs=1&pid=auto.

The results of the 2023 Teletrac Navman CCNZ Construction Industry Survey will be released ahead of CCNZ’s annual conference which kicks off on 30 August in Auckland.