Do We Need a Construction Industry Strategy? 1

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Thursday, January 29th, 2015
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Industry activist David Chandler has been writing for more than a year about the need for an industry strategy.

His always interesting and often provocative blogs point to the need for a handful of things that need to be done to make the industry more productive and globally competitive.

Early in the life of the Abbott Government, Chandler argued that the Commonwealth and State Governments had a unique opportunity to “dramatically improve the productivity of the building and Construction industry” and lower its costs. He suggested that the then planned re-introduction of the Australian Building and Construction Commission could trigger the restoration of the rule of law on building sites and could, with expanded powers, make productivity trade-offs a pre-condition to consent to Enterprise Bargaining Agreements.

With that beginning, you might think he was about to pin all the ills of the industry on the unions, but Chandler has been around too long and is too smart to make that mistake. He goes on to point a number of areas where change is needed if Australia is to avoid the progress being made in other countries (including the UK, Malaysia and Singapore) from overtaking us. They include:

  • off-site industrialisation and reduction in the amount of on-site installation as a percentage of total cost
  • outdated procurement models, that fail to capitalise on the potential of Integrated Computer Technologies
  • productivity not being measured in ways that influence change and drive innovation
  • traditional trade and discipline demarcations that hinder more productive manufacture and installation

A key concern that runs through Chandler’s blogs, and is the constant in his call for a national strategy, is the growing reliance of the domestic industry on imported plants, equipment and materials. That concern is shared by growing numbers of practitioners who are experiencing the failure of due diligence systems to deliver the quality specified from overseas suppliers.

The industry and the Australasian Procurement and Construction Council addressed those issues with the publication last year of a guide to product quality. The work continues, led by the Australian Constructors Association and the Australian Industry Group, and has more recently been taken up by the Commonwealth Government.

Bob Baldwin, then the Parliamentary Secretary for industry, convened a roundtable of industry representatives in Canberra last November, and a response is expected this year. Hopefully, Baldwin’s successor in that role (Karen Andrews, an engineer with considerable industry experience) will continue to take up the challenge.

The thing we all want to avoid is the same fate as the manufacturing industry, particularly vehicle manufacture. There is no doubt that for many clients of the industry, off-site manufacture is part of the future – whether they call it modularisation or pre-fabrication – and unless the domestic market is able to compete with imports we might be facing a bleaker future than we have to.

The scale of the local market is dwarfed by many overseas suppliers, many of whose cost structures are much lower than ours. This is not suggest we need to match their living conditions – I don’t want my grandchildren to think the only jobs that they can aspire to are those of the low-paying menial variety.

We also face the caution with which many of the industry’s clients (including regular government clients) are approaching opportunities to drive change thorough Building Information Modelling and Project Team Integration, the subject of my last Sourceable column.

The question, though, is what can governments do to facilitate these changes, particularly given the low priority given to the industry by governments of all political persuasions? The days when each jurisdiction had a central agency staffed with people who understood the industry and had the experience to suggest policy, are long gone. The last time we had something vaguely looking like a comprehensive industry strategy was more than 20 years ago, developed by the Commonwealth’s sunset Construction Industry Development Agency that saw out its statutory three year life in 1995.

There are lessons to be drawn from the CIDA experience, chief amongst them the need for the industry to make the running on the agenda for change. Governments simply no longer have the skills or understanding of the industry and the big drivers that are changing it, to do anything but support sensible suggestions for change.

Government’s role should largely be that of a wise buyer – and that includes knowing what it does not know – and by encouraging the industry to be innovative and more productive. How it does that should be part of a wider conversation within the industry, and with its regular clients, to agree on what the strategic objectives are, and how clients and suppliers can work together to achieve them.

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  1. Andrew Ferris

    One of the key issues I believe is the importation of often inferior products, usually Chinese. As an example windows. There are many examples of non-compliant quality windows coming into the Country. If you are medium to large sized builder you need to investigate the cost savings to remain competitive and keep up with the 'others'. Meanwhile the smaller builders are getting left behind, not able to compete. As this practice spreads we are causing a big long term issue and will not have these smaller builders growing in size – not to mention the issues with the imported products themselves. This also flows onto other industries like cabinetmakers who are trying to compete with a chinese imported kitchen a third the price and are only completing on delivery times…