The recent lockdown has certainly been a challenge for the Auckland construction industry – like many others, our business suffered a huge drop in revenue as we put down our tools and watched job sites sit quietly across the city in Alert Level 4 for five weeks.
While I sat waiting to get back to work, there was comfort in knowing that with significant workloads on projects across the greater region, there will be more than a few opportunities for all of us to recover lost ground.
But how will we recover? And what can we expect from the next 12 months?
I wanted to reach out to others in our industry to get their view on things, so we ran our first Auckland Construction Business Sentiment Industry Survey. We reached out to customers and contacts from across Tamaki Makaurau, including people from all roles and business sizes, to find out their views on the future of business in our industry.
While we didn't gather a large enough sample to make any scientific claims, from a total of 30 respondents we were able to pull the following thoughts:
Nearly 60% of respondents believed that things will remain the same, while a quarter of people thought things will improve and 15% that conditions will deteriorate.
While some respondents were more optimistic than others, the general consensus was that things will continue much along with the current trend. The next few months are looking busy with upcoming work and it looks like both my peers and I agree that the industry as a whole has enough going on to withstand any major upsets.
Over 90% of respondents thought that the situation for their business would remain the same or get better. Note: given the context of when the survey was taken, ‘remain the same’ refers to trading under Alert L3 conditions.
Interestingly, respondents are more confident about the outlook for their business than the outlook for the industry in general. 50% of respondents thought their businesses would improve while only 25% thought that the market would improve.
With the level four lockdown now lifted, the three biggest factors we see currently at play for the industry are:
Large projects are making good progress at Level 3, but they do so at a slightly reduced pace with the introduction of new health & safety procedures on social distancing and vaccination requirements. As leaders grapple with Alert Level changes, there's no denying that the additional resources required to mitigate risk in COVID-19 environments are costly in both time and money.
Healthy-looking pipelines are a confidence booster. However, the industry is thinking a lot about inflation risks caused by bottlenecks in the supply chain - creating more costs, fixed prices and additional steps in the tender process. Equipt, for example, has been directly affected by this with longer lead times for new machinery purchasing and increased shipping costs.
We believe that local businesses have enough confidence in the next 6 months that their leaders aren't worried about the short-term impact of the lockdown. Rather, the current most common strain seems to come from the additional administrative work that a lockdown brings and any uncertainty looks to be from a fear of what's to come, rather than what we're seeing today.
And amongst all these challenges, we're met with positive news.
The obstacles that these unprecedented times pose are the very things making us better. We're thinking differently, pushing new ideas, and taking a harder stance on true sustainability. Our people upskilling and our methods of design and strategy are changing in exciting ways.
Here in Auckland, we are seeing innovation every day. For example, we are fielding more inquiries for excavators with machine control. This can help reduce labour requirements as you don't need an extra person helping with setting out. We have also recently been onsite at a project we the contractors are employing a remote-controlled robotic rock breaker for demolition work. A win for safety and productivity.
The ingenuity that we see in our industry is inspiring. With so many great minds here to contribute to its success, I find it hard to be pessimistic for long and instead find myself excited for the future.
We plan on running another confidence survey in Q1 2022, once everyone gets back from a well-deserved summer holiday. Personally, I'm already looking forward to diving in, getting more respondents and getting a greater depth of analysis on the results.
In the meantime, if you would like to chat with me about the survey or any of our market intel – please feel free to send me an email at Michael@equipt.co.nz and we can book in a Zoom.
We hope you enjoy our findings and would like to thank our respondents again for their valuable time.
If you would like to be included in the next survey as a participant, please sign up here.