While overall activity is set for modest growth, opportunities throughout the maintenance industry in Australia over the next five years are set to vary, a leading researcher says, with some sectors offering opportunities for significant growth but work set to drop back in others.
BIS Shrapnel researcher Adrian Hart said the overall dollar value of spending on maintenance of buildings and infrastructure would rise by an average annual rate of around two per cent in constant dollar terms over the next five years to go from around $40 billion now to around $43-$44 billion by 2019.
But he said this overall figure masked significant variation between sectors, with spending set to rise in some parts of the industry and fall back in others.
“When you look at the maintenance market, you find that some sectors are going to go ahead very quickly over the next five years whilst others are actually going backwards,” Hart said. “It’s those sectors (going backward) that will probably impact on the overall growth rate in the industry.”
In terms of civil infrastructure, resources will lead the way as the operations phase of the mining boom gets into full swing. Furthermore, plant and equipment coming online in places like Queensland and Western Australia following the building boom in mining and oil and gas needs to be maintained as production ramps up.
Related to this are ports, where a combination of exports from new mines and growing volumes on inbound merchandise amid a decline in local manufacturing will drive a requirement for significant volumes of work on existing facilities. There will also be considerable work on newer facilities built during the resource boom. This work will ensure channels remain dredged, cathodic protections remain in place and the marine environment does not come under attack.
In water and sewerage, meanwhile, an older asset base will largely need upgrading and older style concrete and steel pipes will need replacing.
In building services, much work will be required on healthcare facilities amid the demands of an aging population and the need to maintain newly built stock following the rise in built assets in this area. Retail and tourism will be further areas of activity, the latter requiring significant effort on repairs and upgrades as tourism numbers rebound after poor operating conditions led owners to cut back on spending over much of the past decade.
On the flip side, Hart said there are other sectors for which the outlook is less promising.
Aggregate levels of road maintenance will fall back significantly after huge amounts of work have been done in this area in Queensland following Cyclone Yasi in 2011 and as state and local governments across much of the country confront significant levels of fiscal pressure.
Less work will also be needed on telecommunications assets, meanwhile, as the roll-out of the NBN sees significant amounts of copper removed from the network.
Less work will be needed to maintain factories as sectors such as automotive manufacturing wind down.
Finally, maintenance spending will rise in electricity as newly built assets over the past decade need to be maintained, but the extent of any increase will be moderated by the fact that the network now has good quality generation and distribution networks at the same time as demand continues to drop back.
Hart said more research would be required before determining whether skills shortages are likely to emerge in some areas. He added, however, that while this was not likely to be a significant problem in the short term as many of the busiest sectors in this space such as mining and water will see skills freed up as levels of new construction drop back within their sector, problems could emerge further down the track as building work picks up.
“In many cases, we are seeing quite a significant pullback on the construction side in some of these sectors,” he said. “That is going to free up resources for people to be doing more maintenance work.”
“But down the track, the construction sector is not going to downturn forever, and we’ve got aging skills bases in many areas and we suspect that when the next construction upswing starts to come through – probably in another three to four years – we’ll be combining that with almost like a boom in maintenance.”
“All the new infrastructure we build has to be maintained and we are not necessarily planning for that. I don’t know of too many governments that are thinking about the skills sets that are going to be required that are going to handle both construction and maintenance.”