Shovel ready not so job friendly

The Government’s ‘‘shovel ready’’ projects will not be enough to save the building industry, a construction management expert says.

On Wednesday the country’s biggest construction company, Fletcher Building, announced it was culling about 10 per cent of its workforce across all its businesses, including 1000 jobs in New Zealand and a further 500 in Australia.

Earlier this week the Government said it would announce which major ‘‘shovel ready’’ infrastructure projects would receive fast-track funding ‘‘within weeks’’.

Fletcher Building had put forth a number of projects for consideration. However, AUT University construction management Professor John Tookey said this wouldn’t necessarily save jobs.

‘‘Unfortunately what tends to happen with ‘shovel ready’ projects is that infrastructure projects use large numbers of machines, not people. These don’t get spooled up to full operational capacity very easily. You might see a gap of three to six months before they’re rolled out,’’ he said.

Fletcher Building chief executive Ross Taylor said its infrastructure business was estimated to decline by 10 per cent in 2021 and then grow steadily.

The company’s New Zealand businesses were currently trading at about 80 per cent of forecast revenues in May, while Australia operated at about 90 per cent.

Fletcher Building suffered a loss of about $55 million in April in New Zealand and roughly broke even in Australia.

Tookey said Fletcher Building’s redundancies were a significant blow to the economy, but an inevitable result of Covid-19.

Forsyth Barr investment analyst

‘‘Fletcher is the bellwether of the building industry in New Zealand. Its health is the industry’s health; its problems are the industry’s problems.’’

Forsyth Barr investment analyst David Price said the economy had been sluggish before the Covid-19 alert level 4 lockdown, which had made it even more difficult for businesses to operate after the lockdown.

‘‘Fletcher Building’s plans will only have a knock-on effect on other businesses,’’ Price said.

‘‘We’re likely to see more restructures as we come out of the lockdown levels.

‘‘While we’ve been in our bubble we’ve been in a state of suspended animation. Now that we’re out of our cocoons we’ll see how the businesses are going to adapt and survive.’’

‘‘We’re likely to see more restructures as we come out of the lockdown levels.’’ David Price