Photo: Floating excavator over the Whanganui River.
Jim French, Construction Industry Specialist at Teletrac Navman.
As someone deeply involved in the construction sector, I’ve seen the highs and lows of the industry that serves as the backbone of a modern economy.
The 2024 Construction Industry Survey, a collaboration between Teletrac Navman and Civil Contractors New Zealand shows our civil construction sector is facing significant challenges. Here’s my take on what’s happening and what needs to be done.
A call for strategic clarity
Work shortages are now a major issue, affecting 64 percent of businesses, a sharp jump from 29 percent. Compliance with government guidelines is also tougher, with 57 percent of businesses struggling with procurement and work consent, up from 36 percent. Supply chain disruptions are a big problem too, with 71 percent of businesses facing rising compliance costs and 64 percent experiencing project cost overruns.
These statistics reflect a broader global issue within the construction industry. The situation in New Zealand mirrors the challenges faced by construction sectors worldwide, as we all navigate similar infrastructures, materials and guidelines.
Against this backdrop, revenue growth expectations have dimmed significantly. Only 37 percent of businesses anticipate revenue growth in 2024, down from 47 percent. Confidence in the future is also low, with just 20 percent of businesses feeling optimistic. To counteract this decline, the sector urgently needs a more robust pipeline of projects and clearer governmental support.
The Government’s decision to cancel projects like Three Waters and Light Rail has left many contractors urgently seeking new work opportunities. Given that 10 percent of our workforce is employed in the infrastructure sector, uncertainty could mean losing skilled people to overseas opportunities. Immediate stimulus is needed to sustain the industry and restore confidence amid significant project delays.
Contractors are resilient, but the current challenges are significant. Many are downsizing due to a lack of work, uncertainty around future projects, and rising costs. Only 39 percent of businesses expect to grow their staff, down from 54 percent, while 12 percent of businesses anticipate reducing their workforce, compared to 9 percent.
This trend of downsizing is a direct response to economic conditions and operational uncertainties. It impacts not just businesses but also the livelihoods of countless workers and their families, with businesses hesitating to invest in new hires amid an unpredictable future.
Technology as a game-changer
Technology is no longer just a competitive edge in the construction industry – it’s essential for survival. Nearly 40 percent of organisations now require specific technologies for project bids, a significant increase from 27 percent. Almost two-thirds (62 percent) of businesses see onsite technology as crucial for securing contracts.
Businesses that have embraced advanced technologies like fleet management and health and safety monitoring software are better equipped to navigate current challenges and seize new opportunities. The data is clear: integrating technology helps firms stay ahead.
While many companies are adapting, some remain reluctant to abandon traditional methods. These firms will continue operating as they always have, but over time, they risk falling behind competitors who have embraced new technologies. The shift to automation – through AI, robotics, cloud computing and sensors – is a transformation that promises greater efficiency and resilience.
The rise in adoption of business intelligence and cost management technologies reflects this change. Cost management technology usage increased to 67 percent in 2024 from 59 percent, and location tracking surged to 72 percent from 53 percent. This growing trend highlights a proactive approach to enhancing efficiency and securing a competitive edge.
Skills and diversity for resilience
Lastly, let’s focus on the human element. Our industry’s future hinges on the ability to attract and retain talent.
A resilient sector needs a skilled workforce, and diversity is crucial for driving innovation and productivity. With 61 percent of professionals acknowledging the benefits of diversity, broadening our talent pool and fostering inclusive workplaces is essential. Expanding training programmes, prioritising a healthy work-life balance and welcoming skilled migrants are all critical steps toward strengthening our workforce.
We’re in a tough spot right now, but my experience in this sector has shown that a strategic approach – leveraging technology, committing to sustainability, and investing in our people – can lead to a more robust and forward-looking industry.
The Construction Industry Survey offers the insights we need to navigate this transformation. Our actions today will shape the strength of a more innovative and inclusive industry, ready to meet the demands of tomorrow.
Parting words from Jeremy Sole- a final column