Vertical construction warrants equal consideration from Government

3 May 2020

Vertical construction warrants equal consideration from Government

As the Government reviews submissions for “shovel-ready” projects with the aim of stimulating the construction industry, its workforce and the economy, there needs to be urgent consideration of vertical construction protects alongside horizontal infrastructure.

Our New Zealand structural steel industry is grateful to the Government for the financial support it has provided in the form of the wage subsidy scheme, which has allowed our fabricator members to retain their staff during lockdown and remain ready for when the construction industry fired up again this week under Level 3.

Commercial construction is and will continue to be severely affected by COVID-19 with many construction projects put on hold or cancelled. While the wage subsidy has helped in the short term, the much-needed greater support will come from the Government’s initiatives to assist in getting ‘shovel- and hammer-ready’ projects started.

The real issue at hand is the lack of focus on ‘vertical construction’

The Government has publicly committed to actively supporting infrastructure and construction with additional funds, regulatory and policy change, and prioritisation. This is being done to support the economy, especially employment.

In considering the prioritisation and funding of projects, and the objective of shoring up employment, the Government should take account of the fact that vertical shovel-ready projects are typically more trades-intensive and have higher employment levels than that of horizontal infrastructure.

New Zealand’s construction industry employs almost 170,000 people, split across both vertical and horizontal infrastructure projects. While we applaud the Government’s intention to fire up the construction sector to support New Zealand’s economic recovery, it needs to consider vertical shovel-ready projects equally alongside horizontal infrastructure work – prioritising on sector over the other means that a large proportion of that significant workforce would remain unemployed.

Future-focused vertical construction projects add long-term value

Examples include public projects like schools, hospitals and stadia. Dunedin Hospital is a good example, which we understand is to start in the next couple of years. This project, valued at approximately $1b, is vital to the healthcare sector and, if the start date was brought forward, would create substantial employment opportunities for the region.

However, 80% 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. For example, the proposed bu now terminated Auckland International Airport works equated to approximately 350,000 manhours for our steel industry alone.

Vertical construction projects like these create much greater employment opportunity than similar value horizontal infrastructure works and warrant equal attention.

By Frank Van Schaijik
Chair of Steel Construction New Zealand and Managing Director of John Jones Steel

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