Steel industry urges Govt to build upward

AUCKLAND: The Government needs to find ways to encourage private sector construction of commercial buildings and offices if it wants to maintain employment in the sector, Steel Construction New Zealand says.

Infrastructure is a big focus of the Government’s efforts to accelerate ‘‘shovelready’’ projects to maintain construction activity to help the economy’s postCovid19 recovery.

While that initiative was applauded, the organisation said horizontal infrastructure — things like roads, bridges, water and rail — did not employ as many trades or as many workers as major vertical projects such as office blocks, hospitals and schools.

‘‘Eighty percent of the vertical sector is privately funded. While the Government can assist by prioritising schools and hospitals, unless it finds ways of stimulating private investment in the vertical construction sector, we will see a collapse of the sector and the loss of thousands of skilled jobs, as happened post the 1987 stock market crash,’’ the association said in a briefing paper to the Government.

The Government and Crown Infrastructure Partners — which has been tasked with identifying projects that can be kicked off immediately and within 12 months — understand the importance of residential and commercial building to the overall construction sector and the economy; Crown Infrastructure chairman Mark Binns has spoken of the potential to take over failed residential subdivision proposals, or unfinished commercial projects, where there is a longterm public benefit in doing so.

Steel Construction NZ chief executive Darren O’Riley said the structural steel sector his organisation represented had been travelling ‘‘extremely strongly’’ before the pandemic and government projections showed a solid programme of work out to 2023.

Most memberfirms were shut during lockdown and were now ‘‘reasonably busy’’, and work in progress was likely to last for the next four to eight weeks and possibly longer.

However, he said there was growing disquiet about the potential for major projects to be deferred or postponed. Talk in the wider construction industry was of up to 200 projects being at risk and his organisation was trying to test that..

He cited Auckland International Airport’s decision to halt all nonessential capital works and defer most of the $2 billion of capital works planned through to 2027 as an example.

The airport expected to spend only about $275 million completing airfield extensions, new roading and two warehouses already under construction through to December 2021. It spent $230 million on capex in the six months to December alone and had planned to spend as much as $550 million in the 12 months to June 30.

Mr O’Riley said the work the airport has deferred would have been worth about 350,000 hours of work for the steel industry alone.

Major projects — like the new hospital planned in Dunedin — had wider benefits beyond construction wages, he said.

Businesses in the area would also benefit from the extra demand for food, accommodation, petrol and entertainment that came with the workforce.

‘‘This project, valued at approximately $1 billion, is vital to the healthcare sector and, if the start date was brought forward, would create substantial employment opportunities for the region.’’ — BusinessDesk