Steel industry cautious on new Christchurch investment fund

1 September 2015

Release date: September 2015

New Zealand’s structural steel industry says the recent announcement of a planned new investment fund for the Christchurch rebuild is good news for the city, however it remains to be seen whether it will end up costing Kiwis their jobs.

Steel Construction New Zealand Manager Alistair Fussell says he welcomes initiatives which help deliver the high-quality building and infrastructure projects needed to rebuild Christchurch.

“On the face of it, it is good news for Christchurch, especially if it helps speed up development. But we’re reserving judgement until more is known about the downstream effects of this agreement between Guoxin International and Christchurch City Council.

“Our main concern is that importing capital, materials and skills from overseas could lead to the loss of local jobs – not just in the structural steel industry, but right across the building supply chain.”

There is a proven economic case for awarding tenders to local suppliers, says Mr Fussell.

“A New Zealand fabrication firm recently bid for a structural steel contract worth $34 million. However, keeping it local would attract an additional GDP contribution of $14.1 million – an economic multiplier of 1.4 – as well as a tax contribution of $3.3 million.

“There’s a significant economic uplift when local materials and labour are used. We have more than enough capacity in the local industry to deliver the structural steel volumes required to rebuild Christchurch, so we’re saying let’s think about the consequences very carefully,” says Mr Fussell.

Christchurch City Council’s procurement policy states that tendering processes for public projects must be equitable and transparent. Mr Fussell says while the policy does provide some comfort, it remained to be seen how closely the Council would adhere to its own rules with respect to the Guoxin International fund.

“We certainly hope the Council follows its key procurement policy principles, including value for money (focusing on the total cost of ownership over the life of a project, and not on the lowest upfront cost); local supply (giving local suppliers fair and full opportunity to tender, and take benefits to the local economy into account); and sustainability (balancing the delivery of economic, environmental, social and cultural outcomes),” he says.

Steel Construction New Zealand will be discussing its concerns directly with Christchurch City Council and CERA, as well as with other industry stakeholders.