By Alan Pollard, CEO, CCNZ
I recall a line from an old Kiwi movie: “There is one thing for sure in this world, and that is doubt.” We can wake up every morning uncertain about what awaits us today.
The industry has experienced very tough times over the past couple of years but toward the end of last year and early this year, we began to see signs of recovery as work came to market.
Then, on 28 February, the United States and Israel launched coordinated, large-scale airstrikes across Iran, and the world order was turned upside down.
It is incredibly frustrating that geopolitical events on the other side of the world that we didn’t sign up for can have such a profound effect on our everyday lives. And there is no end in sight, no sign of either side choosing diplomacy over military action.
I have often said to my team that the ultimate test of the value of CCNZ membership is not necessarily evident in how we respond to business as usual, but in how we respond in a crisis. The current fuel disruption has the potential to develop into a crisis if sense doesn’t prevail soon.
This is where the work we have done over the past couple of years to strongly position Civil Contractors New Zealand as the voice of the civil construction sector pays dividends. I can confidently say that CCNZ is seen as a respected, reliable, trusted, and credible partner, and this is evident in the views and input from CCNZ now being sought by government and officials on matters that are important to contractors.
This ensures we have the relationships that can make a difference in times of instability.
In the current context, CCNZ was invited to join a group convened by MBIE to consider fuel security and supply. This group meets three times a week, giving us access to up-to-date intelligence and an opportunity to feed industry intelligence back into the decision-making process.
The Association will issue updates as information comes to hand. We have provided members with links to regularly updated fuel supply and pricing information via the MBIE and Commerce Commission websites. We have provided some initial contractual guidance from our core associate, Dentons.
We’ve shared intelligence from the MBIE meetings that’s relevant to our members. In all cases, if members feel there are gaps in the information you are receiving, or that it isn’t hitting the mark, please tell us what you are missing or what can be improved. This situation is evolving rapidly, and it changes daily. We will do all we can to provide members with information as quickly as possible.
As mentioned, it is important we share information with the government about market behaviours in response to the fuel disruption. The government is concerned that any market reactions are proportionate, rational, and reasonable. Apart from the obvious price observations from the regions, we are starting to hear of the consequences of the fuel price escalation across the broader economy.
We have heard of suppliers starting to offer prices for goods or products that are only guaranteed for a limited time (examples we have heard range from 14 to 30 days), making tendering for work very difficult. Some contractors have had their regular fuel deliveries arbitrarily reduced, and others have met resistance from clients when raising price escalation in contract discussions. Fuel thefts are
on the rise (the MBIE group has heard that this is
happening across many other sectors i.e., petrol stations, farms and rural businesses, etc).
It would be helpful for members to advise us of any behaviour that is not “normal”, and in particular, provide examples of unreasonable or unacceptable behaviour.
Although I’m sure the situation will have changed between the time I write this and when you read it, there is little doubt that there is no quick solution to this geopolitical mess. Even if the war were to end tomorrow, rebuilding critical production infrastructure damaged by missile strikes, regaining confidence in the maritime insurance market, and reopening shipping lanes would take considerable time (potentially years) to return to normal.
The government is taking this very seriously, with five senior ministers forming an oversight group (the Ministerial Economic Security and Supply Chains Group) which is briefed daily by officials.
Our country has a national fuel plan that is activated at times like this. The plan includes a tiered system with four escalation levels that describe how the government will respond if the situation worsens (think Covid response levels).
Officials are currently working with the ministers to determine which events or developments would trigger a movement between levels.
As we learn more about the response plans, we will share it with members. We will do as much preparation as possible to provide proactive guidance to members in the event of a movement between levels.
If members have any questions or concerns, please contact your CCNZ regional manager, Fraser May, or me. We will do our best to address those in this ever-evolving situation.