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How industry is managing materials for construction spike

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The Australian construction sector has a healthy growth period ahead of it, according to industry leaders at the Commonwealth Bank’s Building through the Pandemic webinar.

Despite building approvals dropping more than 23 per cent from March to September this year, the 12 months to September have still seen a rise of 12 per cent, according to the Australian Bureau of Statistics.

The Commonwealth Bank’s head of Australian economics Gareth Aird said government stimulus had been integral for the construction sector.

“HomeBuilder has been incredibly successful in boosting commencements for new detached dwellings,” Aird said at the webinar.

“Renovation activity is very strong and the pipeline of work to come is very deep.”

A number of leaders in the construction sector, including Bunnings, Metricon, and GWA Group cited unprecedented lead times as the biggest concern over the past 12 months.

GWA chief financial officer Patrick Gibson said a number of measures were taken to ensure the growing construction pipeline was matched with enough materials.

“For us it hasn’t been a capacity shortage, it’s been disruption in freight and international availability of containers,” Gibson said at the webinar.

“Typically, from us ordering a product to receiving it would be about 12 weeks. Today that supply chain is 20 weeks-plus.

“We’ve had to take actions to order much earlier, to increase safety stocks and work on substituting products.”

The Commonwealth Bank webinar followed the release of the monthly Australian Performance of Construction Index (PCI) earlier in November.

The PCI showed a strong rebound in October after weaker mid-year results, with overall building activity jumping 15.4 points to a score of 65.2 – where scores above 50 indicate growth.

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