Construction facing worst materials crisis in almost a half century

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BRICKS, timber, steel, tiles, vinyl, glass and aluminium are just some materials Australia’s construction industry are having trouble sourcing as global supply chain issues and the unprecedented demand for work created by low interest rates and the HomeBuilder scheme have left the sector facing its worst materials shortage in over 40 years, which is increasing costs and pushing out lead times by up to 18 months.

Environmental factors such as extreme rainfall and flash flooding across regions such as Queensland have impacted suppliers’ ability to transport materials around the country.

The Housing Industry Association there will be more than 143,700 new builds this year, and a healthy volume of new detached home sales is still entering the pipeline six months since the end of HomeBuilder.

Scott Brumfield, construction manager at Australian owned and operated construction group Hansen Yuncken, said “we now have a crisis on our hands” due to delays in sourcing materials being exacerbated by COVID-19 among other factors.

“Steel prices have risen by 15% which is a significant increase when you’re talking about large-scale, multimillion dollar projects, with lead times taking up to 18 months,” he said.

“In terms of our large-scale projects like Adelaide’s SkyCity casino expansion, which used 2,200 tonnes of steel, and the redevelopment of Adelaide’s Her Majesty’s Theatre, which used 950 tonnes, the rising price of steel has significantly lifted overall project costs.”

Hansen Yuncken was able to carry out the project while remaining under budget by incorporating “shop drawings”, or design intent plans, as early as possible to try and give clients an idea of costings and timings to the best of our ability.

“It is almost inevitable this will be an ongoing issue so addressing it now will actually benefit the industry, and therefore Australia’s economy, long term,” Brumfield said.

According to the most recent Australian Industry Group/Housing Industry Association’s latest Performance of Construction Index, a volume of new orders in October added to the already healthy pipeline of building and construction activity and will further stretch capacity limits and re-expose underlying shortages of skilled labour in many occupations over coming months.

Input prices are also being placed under upward pressure by localised shortages and global supply chain disruption, and builders reporting very high prices from both suppliers and importers.

“Australia’s best insurance is providing support for local capacity of steel production which the federal and state governments have been doing well to promote – more efforts toward supporting local producers would certainly help,” Brumfield said.

Max Baroni, operations manager at Hansen Yuncken, said the crisis has piled on to existing challenges faced by the industry as a result of COVID-19.

“Even before the national timber and steel shortage, there were massive delays in sourcing materials like tiles, vinyl, glass and aluminium due to pandemic-related backlogs,” he said, “and the origin doesn’t discriminate”.

Sourcing bricks from Spain took about nine months longer than usual, while tiles that were meant to come from Dubai were unavailable, forcing a change of design and need to source locally-made tiles instead.

Sourcing from several suppliers instead of one has also helped alleviate the issue, with some being able to break up bulk orders “to tide us over”.

Hansen Yuncken recently completed the construction of Anglicare Minto retirement village, and the Q Building at University of Newcastle’s Honeysuckle City Campus, which involved a façade consisting of 113.4 tonnes of timber.

The Q Building opened its doors to students in July 2021 after a total of 24 container loads of timber and accessories were sourced and mass timber elements completed ahead of schedule.

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