The surge in activity in the non-residential building construction industry for the past five years is unlikely to slow down, according to the latest Construction Outlook survey May 2006 by Australian Industry – Australian Constructor Association.
The survey covered the responses of 100 companies employing almost 56,000 persons with combined turnover of $15.7 billion or approximately 25% of total industry activity.
According to the Construction Outlook, the value of work in Australia’s non-residential building construction industry is heading towards a record high over the next two years.
The survey has forecast the total value of engineering and commercial construction work will increase by 9.0% in 2006, followed by further growth of 6.9% in 2007 to $60.5 billion.
Total value of commercial construction is forecast to rise by 5.2% in 2006 and a further 1.4% in 2007, underpinned by strength in office building and industrial and bulky goods facilities.
Despite a tapering off in the rate of growth, total engineering construction turnover, by the private sector, will rise to a record level of $37.3 billion in 2007.
The sector will continue to be fuelled by the back of a buoyant resources sector, strong infrastructure investment and sustained economic growth.
According to the survey, due to continued strong demand for commodities, it is expected that mining and heavy industrial resource based construction will remain a major driver of growth. Mining sector work is forecast to expand strongly by 20.1% in 2006, and a further 10.1% in 2007.
ACA’s president Wal King AO said that the industry was facing major challenges in meeting the demand for new projects.
“There are a significant number of projects at the stage of advanced planning in energy, mining and minerals, particularly in the boom states of Queensland and Western Australia. The current level of commodity prices will ensure the sustainability of the project pipeline and this has been supported by continued growth in building and engineering work.
“While most major contractors have solid order books, they do have to manage the challenges of the rising cost of fuel, plant and equipment and labour,” he added.
Meanwhile the survey found demand pressure on labour inputs, materials and equipment remains.
Ai Group chief executive Heather Ridout said while the sector continued to go from strength to strength, the industry was suffering intensely from the skill shortages impacting on the economy more broadly.
“The fact that 80% of companies in the construction sector are reporting major or moderate difficulties in finding qualified labour highlights what has become a serious pressure point for the industry.
“This is a complex issue that extends from the professions to trade and sub-trade levels and will require the development of short, medium and long term strategies by the industry working with State and Federal Governments. It has implications for both the movement of skills within Australia and the broader issues of bolstering skilled migration programs to deal with short and medium term shortages,” she added.
In total, 80.4% of firms, down from 90.7% six months ago, reported either major 47.1% or moderate 33.3% difficulty in the recruitment of qualified labour.
This was followed by the sourcing of sub-contractors with 60.5%, down from 72.1%, citing either major 29.2% or moderate 31.3% difficulty.
Ridout said the baseline is that if the industry is to reach even greater heights there needs to be more investment in skills development.
“The findings of this survey are reinforced by a recently released report on project pressure points by ACA and Blake Dawson Waldron, Scope for Improvement, which pointed to the very real threat the shortage of skilled workers poses to the industry,” she added.
By Adam Parsons