Australian Construction Industry Forum (ACIF) forecasts released this week show fundamental structural change in the economy having a major impact on employment in the construction sector.
According to the forecasts, engineering construction, largely driven by mining and gas developments as well as their associated rail, port, pipeline and road infrastructure, has overtaken residential building as the most important source of work and jobs for the construction industry.
Activity in the non-residential building sector, smashed by the GFC in 2008, is unlikely to recover to pre-GFC activity levels for several years, with this sector’s long term share of GDP trending down for the foreseeable future. Major cities show little signs of short term recovery, except Brisbane and Perth, where vacancy rates and rental growth are offering opportunities for new CBD office building development.
Such conditions are leaving builders, trades and others in the metropolitan areas under huge pressure to find work, and tender prices for commercial building work across the country are falling. In Sydney alone, the spread of tender prices is around 25 per cent to 30 per cent, a clear indication of the catastrophic state of mind of builders as they struggle to win work to keep their doors open.
“The impact of this degree of change in our economy is having upon jobs is plain,” says Peter Barda, executive director of the construction industry representative body Australian Construction Industry Forum.
“Businesses are not taking on apprentices in the numbers that they used to, leaving no one to train the thousands of young Australians wanting to join the industry. The long term impact on the skills and labour within our industry will be significant.”
“Those who have looked to commercial building for work are struggling, and will need to look to engineering construction, if they can, to keep their doors open.”
“An entire generation of trades people who have earned a living from building offices, schools, shopping centres, and factories, are having to look for work elsewhere.”
The ACIF Forecasts show fundamental changes in work patterns for the industry. Long term, engineering construction is expected to more than double its previous long term share of GDP, while non-residential building (office, retail, industrial, education, health, etc) is declining as a share of GDP.
There is some good news in that residential building will regain momentum in the medium term as it strives to meet the backlog of housing demand, estimated by the National Housing Supply Council at more than 210,000 dwellings.
ACIF Forecasts bi-annual update was released at ACIF Briefing events held around the country in April. Commentary and data will be available online at www.acif.com.au after 16 April 2012.
