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Chris Richardson predicts there will be opportunities for the quarry industry to capitalise on the housing construction boom but prospects in commercial construction will not be so strong.
Chris Richardson predicts there will be opportunities for the quarry industry to capitalise on the housing construction boom but prospects in commercial construction will not be so strong.

Planning for a new wave of construction opportunities

Although Australia is currently undergoing a difficult economic transition, Chris Richardson assured delegates at CMIC14 that there were still opportunities ahead. Stephanie Chan spoke to him about the key areas the quarry industry will need to capitalise on to thrive in the new construction boom.

Chris Richardson, a partner at economic consulting firm Deloitte Access Economics, painted CMIC14 attendees a picture of a changing Australia driven by the maturation of Asia’s economic boom.

He explained that while mining and resources had previously dominated the last boom, the next wave of sectoral opportunities would revolve around “the Fantastic Five”: gas, agribusiness, international education, tourism and wealth management.

It is no secret that the economic shift away from mining has had a significant impact upon the construction industry.

According to the Australian Performance of Construction Index released by the Australian Industry Group and the Housing Industry Association, the engineering construction sector has been in a state of contraction since January this year, with the September 2014 report marking the ninth consecutive month of falling new orders. This lack of activity was largely attributed to the “winding down in resource-related construction”.

Richardson’s comments to Quarry were consistent with these findings. “To the extent that some quarry products – particularly basic products – have been feeding into resource and mining-related construction, by and large, those opportunities will be shrinking, not just in the next 12 months, but arguably over the next three or four years,” he said.

Analysts have speculated that the numerous infrastructure commitments made in recent state and federal budgets could help “fill the gap” left by this reduction in resources construction activity. However, Richardson simply commented that the funding was “good news – it’s not huge news”.

“The actual extra dollars are welcome,” he said, “but they are not massive. It’s certainly not enough to fill the pothole from the mining boom alone.”

While forecasting the likely continued decline of mining-related construction activity, Richardson stated the outlook for housing construction over the next couple of years was “quite bright”, adding, “There are opportunities in commercial construction as well, though not as strong growth-wise as in housing.”

Richardson highlighted that sectoral strength changes would also become evident across the states. New South Wales, Western Australia and Queensland, in particular, would likely fare well from the housing construction boom, while activity in Victoria – which Richardson said had built too many apartments – would likely slow down in the medium term.

The best way to thrive in the new construction boom, Richardson advised, was to prepare for these economic shifts. “Overall demand will not be a particular problem – it’s the patterns of demand,” he stated.

Richardson recommended that quarry operators thoroughly consider the significant changes that would be occurring in the different parts of the construction sector and “plan ahead”.

“Thinking about who your customers are and whether they’re in parts of the sector that are growing or shrinking will be extremely important,” he explained. “Housing uses different quarry products to other elements of construction too, so it’s not just thinking about your customers but your product base as well.” 

Tuesday, 23 October, 2018 04:32pm
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