What do you see as the challenges for the construction industry currently?
We’re in a highly risky environment, as demonstrated by the large number of insolvencies we have seen interstate. The problem is definitely not lack of work. Whether it’s residential or commercial, new builds, renovations, high end or the first home buyer market everyone is flat out. The challenge for the industry is managing the shortages and sharp price increases that are creating a “profitless boom”.
Pricing jobs has been the most challenging we have seen in decades. Everybody in the media is talking about inflation but our industry has been seeing it first hand for the past couple of years. There hasn’t been higher material price escalation in more than 40 years and that’s smashing profit margins. In addition, if you can’t get materials delivered in a timely fashion that hurts your cash flow. I believe we’re still some time away from things stabilising.
We’re also experiencing a severe skills shortage. The number of people employed in construction in South Australia is close to the highest on record, but the daily feedback from our members is how hard it is to find quality site managers, project managers, contract administrations, safety managers, trades and more. The only way to address this challenge is to boost skilled migration whilst getting more South Australians qualified through apprenticeships and tertiary qualifications, but that will take some time. At Master Builders SA we’ve currently got about 20 positions for first year apprentices we are trying to fill.
How do you see a 5-day work week working for the construction industry and where would we see the most significant changes if this were to be adopted?
There are many in the industry who would love to see a 5-day work week but this would need to be client driven as the pressure to complete jobs as soon as possible is often immense.
Construction is an industry that rewards hard work but money isn’t everything in life. There needs to be more research on both the commercial impact and mental health benefits of a five day week. Master Builders SA would like the State Government to follow the lead of the NSW Government and ask for builders to submit tenders based on five and six day schedules. In the absence of convincing evidence it will be difficult to get private clients on board.
Can you tell us a bit more about the MBA Born to Build program and how this will assist in addressing the skills shortage?
Born to Build is an influence program designed to encourage more South Australians to learn a trade. Master Builders SA is receiving $1 million over the next four years from the Malinauskas Government to deliver this program. Our field officers will be on the road visiting schools, sporting clubs, career nights, expos and more promoting the benefits of being a tradie. Kids need role models and heavily involved in Born to Build will be the many Master Builders members who started out as tradies and have gone on to run some of the most well-known businesses in the state. There’s still this outdated view that being a tradie is second class. It really is ridiculous. Perhaps seeing some of the cars and boats being driven around by current and former tradies would give those critics a reality check!
Master Builders SA employs about 170 apprentices through our Group Training Organisation and we’re proud of our industry-leading completion rate. We know how to get South Australians to complete their apprenticeship, we just need to get more people in the front door. Women only make up about 1% of tradies and a female Born to Build field officer will have the specific task of increasing female participation. We have massive skills shortages but we are only tapping into half our potential workforce.
How do you think the introduction of rise and fall clauses into Government contracts will help the industry overall in SA?
Master Builders SA has worked closely with the State Government to get rise and fall to apply to DIT jobs from 1 August. This will also apply to current tenders and existing contracts dating back to 1 January 2022.
Credit to Minister Tom Koutsantonis and DIT Chief Executive Jon Whelan who listened to our feedback and proposed solution. It is very difficult to price jobs in the current inflationary environment. Hopefully rise and fall will reduce the risk of insolvencies and be adopted by the private sector.