New data reveals construction sector bosses are pessimistic about the future, but Housing and Urban Development Minister Phil Twyford says he has an ‘action plan’

New data reveals construction sector bosses are pessimistic about the future, but Housing and Urban Development Minister Phil Twyford says he has an ‘action plan’
Phil Twyford by Jacky Carpenter.

Minister of Housing and Urban Development Phil Twyford wants to abate the concerns of the construction sector by creating an “action plan” to address some of the industry's major issues.

This comes after a new survey of chief executives and senior managers revealed the scale of pessimism in the construction and related industries sector.

Asked if they agree that New Zealand’s economy had performed well over the past 12 months, 77% of respondents either agreed or strongly agreed.

But that figure falls to just 51% when industry leaders were asked about the coming year.

In terms of how well they see the building and construction sector performing currently, 42% say poor and 10% say terrible.

Just 19% say its performance is good.

“I’m surprised that one in five thought it was good,” Auckland University Director of Property Services Peter Fehl says.

Tony Doile, Managing Director of Armstrong Downes Commercial, says given the demise of three of New Zealand’s larger construction companies in the last few months, “I don’t think [the sector is] doing too well.”

But Twyford says he has a plan to help alleviate some of these concerns.

“I will be offering, on behalf of the Government, that we will sit down with them and work out an accord, a shared action plan to address the productivity, the skills and training issues, that the industry is asking us to work with them on.”

Twyford is due to make the announcement in his speech to the New Zealand Constructive Industry forum on Thursday afternoon. (See more from Twyford here).

But speaking to media before going into the House, Twyford outline a few details of the plan to reporters.

“It’s a commitment for this Government to work alongside industry; to do our bit and show leadership as a Government but to work alongside the industry to address the deep-rooted productivity problems that are such an issue for the industry.”

We want a seat at the table, Collins says

National’s Housing Spokeswoman Judith Collins says it’s “about time” Twyford sat down with industry leaders.

But she says Twyford needs to give National a seat at the table as well.

“We’re hearing from the sector that Labour has come in with Phil Twyford and cancelled a whole lot of construction projects, particularly around infrastructure.”

She says this has been “incredibly harmful” to the sector.”

The same survey reveals lack of skills within New Zealand as industry leaders’ biggest issue. This is followed by risk allocation in contracts and then the certainty of work.

“I honestly think our country has a real skills shortage in the construction industry, both residential and commercial and I just can’t see how we’re dealing with it,” says Southbase Construction Chief Executive Quin Henderson.

Twyford accepts that the construction sector has its issues, which he says are beset by low productivity.

But he says KiwiBuild is the answer to some of these problems.

“It’s a mass procurement programme, it’s an opportunity to fix some of these problems because of the scale of the work we’re going do.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Judith Collins is not doing her case for a seat at the table by bad mouthing Phil Twyford in the same sentence.

But is Twyford a "knight in shining armour " , or is he more like Ned Kelly ..........welded to a few rusty kerosene drums from the past ?

Twyford is not doing his cause any good either by talking!
Unfortunately for NZ he hasn’t got a clue about what he is talking about!
KiwiBore is just that and the COL is doing the building industry and other sectors major harm by their policies and this is going to continue to occur while they are in power.
They are out of their depth and anyone that doesn’t believe that is sadly deluded

10
up

Careful old man, you'll blow a valve. :)

fufu?

Here Here The Man 2. The COL does not like to be told the TRUTH

19
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https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=120...
"A young relative of mine recently applied for a building consent to construct a modest two-bedroom home of 65-70 square metres. It cost him $69,000 in council fees to get a building consent, which included $13,500 to connect to a water meter."

So now up to $1000/m² just to jump though council's hoops, which doesn't improve the house. 10 years ago you could build houses for that.

Almost all houses built 30 years back are still standing and functioning fine. So wind back regulation and consenting processes 20-30 years. Cost of remediation of small number of problems that crop up as result of less regulation of build process is vastly cheaper overall than huge industry of consultants, expensive mandatory design and analysis processes and cost plus council consenting depts that comes from trying to head off every low probability potential problem under their cost inflating cover-your-arse regime. It doesn't usefully improve house quality. Even leaky house problem was massively exacerbated by lawyers. Eliminating the lawyers with a policy of caveat emptor (on house owners) would have got the houses fixed at a small fraction of the cost (two homes I am personally aware of had remediation costs of $50-100k, and legal bills more than $300k each), though Porsche dealerships would have suffered.

Also get rid of reserve contributions and extortionate services connection fees. Recover that through general rates - would help to bring house prices down by reducing costs of new build.

Hear, hear, but LG have become so accustomed to these revenue streams that they are not about to change without a legislative 2x4 upside their heads.

Thing about these revenues is that they parent up to 'Other Income', not 'Rates Required'. So just letting Rates Required take the hit is gonna be instantly visible to ratepayers, Councillors, Mayors and the result of That is electoral mayhem and Revolting Peasants. So it ain't gonna happen....

Reserve contributions used to be 7% of the land area handed over or 7% of the value of the land being subdivided paid over. A decent analysis now will show its much less in most cases I suspect.

Development contributions are user pays for the network upgrades not just the physical connections. You can only connect so many more houses before the pipe is too small and the plant at the end cant cope. The payments share those costs rather than lump the whole lot on the next person to join after the capacity is gone.

I do wonder if the very people that are pro user pays generally are also to be opposed to user pays as soon as it applies to them.

We could switch back systems where everyone pays I guess. No development contributions and put everyone rates up instead. I wonder what the rates rises would be and how palatable that would end up being.

Thanks for sharing Foyle. It is madness how council costs have been shifted off ratepayers and onto new builds. If it were generated through land taxes it would actually incentivise more development instead of less.

There is also the issue of the council having financial responsibility for construction flaws passed off onto them. This is socialising the cost of private sector greed. So now the council consenting, monitoring and regulations have to be far more stingent. I think it's time to put leaky building costs responsibility back onto the involved parties including the purchaser. It's up to the end buyer to do their due diligence and it might actually encourage them to spend a little more of what they save on reduced council costs on the quality of the building instead. Too often they choose the cheapest tenderer rather than the best. Excessive up front consenting and infrastructure connection charges are forcing clients to either abandon developments or half ass their projects. It's also adding incentive to just sit on the land awaiting capital gains.

Bring back land taxes to fund council and government and all your wildest dreams will come true.

House buyers and builders should simply have the option of one-time buying insurance against construction defects. Effectively an optional warrantee that the purchaser or vendor can choose whether they want or not. Would likely only cost less than $10k for conservatively constructed homes, far less than current consenting and inspection processes. Builders reputations would start to be more important again too.

This fellow needs to come down to earth, he thinks he can magically fix everything .............even .Dynamo would be amazed if he could pull it all off

If KB goes the way a few of us have been urging for - oh - well over a decade or so - it will be robots, CNC, factories, cranes and CAD-to-machine direct comms. There's very little labour, a whole lotta capex, an extremely high cognitive level needed for the gear, the logistics, the finances and cash flows, and the PM.

That leaves fairly much zero opportunity for yer average Northland dropout to 'upskill' - imagine letting 'em loose on programming a $2m CNC router after the standard six-week introductory course and the obligatory Monday drug test....

Commercial construction is where the sorts of skills PT is talking about could be needed, but that sector is circling the bowl if the industry is to be believed....

PT will keep shaking the pom-poms, but the financiers, the engineers, and the robots will actually determine outcomes....

That's funny, idiotic and discriminatory in one. How could you fail to understand the operation of CNC machines, There are human operators at many stages and they don't need expensive long training or special skills. The operator often needs no more of 5 min training. 1 insert blank, 2 press start, 3 safety, 4 remove piece. Which is why they often bring them out for fair days for the kids to play with by doing & seeing their own designs run. It is a machine a child can operate and with automated coding a child can draw on a tablet & watch their design manufactured. CNC machines are explicitly designed to not need operator skills to run but need operator oversight and end assembly & logistics. They are not set with a new program each time, that is the part which has been automated away for decades. Even the code itself can be automated now so having someone literally write a program is old school. Even just importing design files can produce your needed machine program and it is often done once for literally hundreds of thousands of runs. Even Fisher and Paykel have moved far beyond that but guess what they still need human checks and operators. But the operators no longer need any engineering skills at all. Any Jonny from the street will do.

Building a house is not the same as standard manufacturing. IF you think you can get away with just CNC & CAD you are doing it wrong and your "house" i.e. shell will sit in a lot connected to nothing. Look at Telsa. From starting from the point of "we'll automate everything" they had to * that by having many machine operators and still had huge errors and delays due to automation failures. Most the largest long term vehicle manufacturers still have significant stages that are primarily human based for that reason. It is expensive & inefficient to not have humans with the multiple cases & tasks that can not be described in code. It is cheaper to employ retirees than it is to buy multiple robots that need to be constantly upgraded and have in addition a few engineers around for maintenance & programming alone. Seriously check out the pricing for the equipment. I have worked across several different manufacturing environments with different industries. None have needed specially skilled operators that could not be easily trained and the engineers were the ones in the back office touching up their design files & admin. (Admittedly we did have a few interns to run around taking test & QA measurements for us).

Your understanding of manufacturing robotics is unsurprisingly limited. I thoroughly recommend you look at a few manufacturing facilities, even many NZ ones have open days and walking around them you may notice something... the staff, (most of them do not have degrees or long term training). However these days manufacturing is primarily overseas so that perhaps explains the ignorance of the different processes. But don't worry there are more in depth documentaries that can accurately show all the stages including operation, QA, logistics and assembly, some really nice ones that include tidbits like manufacture of aircraft turbines which involve more fine tuned tolerances & metallurgy. House prefabs are there but no automation will get it to site & hook up the services, no automation will assemble custom designs without any human inspection & QA. It is in part one of the few things well known in the industry. Programs are as fallible as the programmers. Also robot suppliers are a stingy lot that restrict the right to repair and are ready to deprecate services & maintenance at a moments notice while pushing the next expensive model.

Good comment pacifica.

I usually agree with Waymad but even I found his comment somewhat objectionable. I'm pretty sure automated facilities can only do a fraction of the amount needed to make a house livable and those that design the machinery are not the ones that operate them. The whole point of robotics is to make things much easier to build, once it has been calibrated a human need only push a few buttons, stand back and observe.

The idea that a livable house sitting on a section connected to services can be built entirely using robotics or 3D printing is pretty unrealistic.

The govt to address productivity issues... that’s a good one coming from the least productive and most destructive vocation ever.

Watch, Wait, and don't Worry ....
RH PT will solve the problem with an " Accord " and a good dose of morphine.

Heck Eco, he thinks an accord is a model by Honda.

Twatford should henceforth refer to it as a plan rather than an action plan. Agree with Ludwig above. Politicians are a waste of oxygen.

http://www.sharechat.co.nz/article/618ff3af/more-ambition-needed-to-lift...
" He cited the role that Crown Infrastructure Partners – the renamed manager of the Crown’s ultra-fast broadband roll-out – can play in funding initial infrastructure at bulk scale so that developers can deliver more homes quicker and also benefit from the lower costs of doing so.

In return for CIP funding, Twyford said developers agree to register a security over their land which is handed down to individual home owners. This security requires the developer, and eventually the home owner, to pay a small annual infrastructure payment to CIP over the life of the assets.

“Because of the quality security of these Infrastructure Payments, CIP is able to raise highly competitive long-term financing from the private sector and this flows on to an overall efficient funding pipeline,” Twyford said in notes for his speech.
“We see the CIP as the start of our journey into alternative financing.”

In simple words, the buyer of new houses or KB will be tied down with a long term Infrastructure cost which will not make these houses any cheaper than elsewhere - swapping chairs on the Titanic ?

Sad sad sad I think this guy had really good intentions but the reality of being in Government and achieving results is another thing !

Phil the tool man Twyford is good with rhetoric but action needs realism. Sad for all those 35000 plus hopefuls hanging on his words waiting for his rhetoric to materialise.

Sadly could not even agree with you on the “good” at rhetoric. This identity is an academic, a consummate academic. Works from a room without windows, Does not comprehend the difference of “noise” as to when not in in government as opposed to being in government. Still suppose at least academic and rhetoric rhyme.

Labour will remove the Auckland urban growth boundary and free up density controls. This will give Auckland more options to grow, as well as stopping landbankers profiteering and holding up development. - Labour.org.nz

Phil Twyford wants to reduce construction costs and instill confidence in the construction industry.

Easy.

I wonder if the external auditors of Fletchers had reported the inadequacy of contract loss provisions in August 2017 with a qualified audit opinion on their 2016/17 accounts whether this would have sheeted the responsibility where it belongs with the previous government. We now know this is one of many issues inherited by the new government to clean up. Hopefully the FMA will comment on this matter in its 2018 annual report

PT is so funny. Almost as much fun as listening to Peters. The big boy contractors as saying it is very risky quoting on a low cost project. Yet PT's KB projects are just that. Fixed low prices in order to deliver cheap houses to the peasants. Any contractor foolish enough to waste their time and money on a KB project is almost guaranteed to go bust.