3 Impacts COVID-19 is Having on Australian Construction

Australia’s construction industry is the largest non-service related industry in the country, contributing $134.2 billion annually to the economy. And with the number of construction projects increasing 2% every quarter the sector only continues to grow.

But due to the recent pandemic the world over is facing, we can expect that the entire industry is feeling its effects – from disruptions within the supply chain to the impact it will have on employees and job security.

First and foremost are the rising concerns for the health and safety of those employed in this sector. 1.1 million Australians find work in the construction industry in many different capacities. 

And because the industry continues to expand into other sectors such as technology, this pandemic affects a lot of people. With the lack or slow down of work, the industry is also seeing a threat to job security. 

Many industry leaders are already reducing staff numbers, looking to save as much money as they can in the short-term. As a result, employee well-being has been compromised, and not just their physical wellness but as well as their mental health.

The industry already accounts for high risks in mental health as construction workers are more than twice as likely to commit suicide as other people in Australia and 21% of workers are shown to have mental health conditions. 

With these facts in mind it becomes increasingly important for employers to understand and support their employees, especially during times like these. 

With all the anxiety and worry of the unknown, there’s a potential that financing may dry up for new jobs and owners may table current projects until the uncertainty of this global pandemic passes. 

Pullbacks in construction financing are already being seen. Lenders, too, are worried about material delays that might slow existing projects.  

If necessary, some owners may be exercising their contractual rights to terminate or suspend projects (partially or fully) in light of these issues in order to mitigate the near-certain adverse economic impacts.

Over the past three decades, supply chains have become increasingly global. There is more than likely going to be a shortage of building materials coupled with the delays in manufacture, as most products for Australia’s construction sites are supplied from heavily impacted parts of China. 

Although some factories in China are slowly reopening, we can still expect delays due to the impending travel restrictions that are very much still in place. Shortages are already being felt by the industry, particularly in relation to products from China including taps, valves, glass, nails, bolts, iron and steel. 

However, this is also an upside for local manufacturers here in Australia, as many materials can and are still being produced locally. But with this is the expectation that we’re going to see higher prices for materials and labour. 

The COVID-19 pandemic has been a wake-up call to many and leaves us realising the complex interdependencies in our supply chains and has prompted many managers to consider taking the necessary steps to improve their resilience from future shocks.

Nevertheless, now is the time for the construction industry to prepare for the virus’ impact, even though much still remains to be seen. Planning, collaboration and leadership for the industry is urgently needed to mitigate the very real possibilities that threaten the construction industry, a major driver of the Australian economy.

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