Business

Picking up the hammers at Level 3

The construction industry hopes to return to its tools next week, but expect productivity to take a hit even if they work all through the night

Construction will soon be back to work but at a slower pace, industry players say. 

Civil Contractors NZ CEO Peter Silcock said the industry would start warming up its engine after Prime Minister Jacinda Ardern announced lockdown controls would soon ease to alert Level 3.

"We've always said to the Government you can't just flick a switch, we need some lead-in time," Silcock said.

Construction companies can start setting up worksites this week in preparation for a loosening of lockdown restrictions at 11.59pm on Monday next week.

People across the sector are optimistic most of those employed by the industry will be able to return to work under exhaustive protocols that emphasise social distancing and sanitation.

Naylor Love CEO Rick Herd highlighted the advantage of having an industry body - The Construction Accord - with a direct line to the Government.

He contrasted that with the treatment of other major industries that have faced abrupt rule changes and unclear advice during lockdown.

"We were fortunate to have the Construction Accord established, and the hospitality industry and the hotel association are probably not as cohesive an organisation," Herd said. 

"So we were in that position where we could respond very, very quickly and effectively to Government," he said.

Same workplace, but slower

Infrastructure Minister Shane Jones said productivity in construction would be poorer at every Covid-19 alert level, with fewer staff allowed on-site.

When workers return they'll find themselves in workspaces separated into different zones to keep staff apart, and with a heavy disinfection regime for equipment.

Registered Master Builders Association Chief Executive David Kelly said WorkSafe would enforce the new rules, but it was a “high trust” system that would mainly rely on self-policing.

"WorkSafe can't patrol every construction site along with every other business in New Zealand," Kelly said.

"The industry has to act responsibly. If we don't, then we endanger the industry and the Government will say 'well look, if we can't trust you, we'll go back into Level Four'." he said. 

Herd said all 150 of his company's projects would restart next Tuesday. Work on larger projects would resume by splitting shifts and having some work through the night.

That would cause issues with resource consents that restricted working hours. 

Silcock said discussions were taking place between local councils and Government on extending those hours to allow night work and more construction during winter.  

Councils have traditionally disallowed earthworks in the months between May and September because heavy rainfall could cause flooding and erosion. 

Jones said this issue had also been raised with the Infrastructure Industry Reference Group that will put forward suggestions on speeding up consenting processes.

"The councils themselves need to relax the rules," Jones said.

Getting back on track

There was a high level of anxiety within the industry about the need to make up for lost time.

Construction work was allowed under alert Level 4, but only for essential services like hospitals and prisons.

Silcock said the first financial crunch point for many companies would come in May.

That's when gaps in balance sheets would first be exposed.

Silcock said companies were paid this month for work completed last month, but no work in April meant there would be no money next month. 

Kelly said most residential businesses could handle six to eight weeks without work. 

"Anything beyond six to eight weeks, then it starts to become pretty tough," Kelly said. 

"They're anxious about it and they want to get their cashflows going, but in general I'm not hearing about a whole lot of businesses going under," he said.

Residential builders also needed to be prepared for a slowdown in housing construction, he said.

Herd said his major concern was what lay ahead over the next year.

"My concern is what is the pipeline of work going to look like?" Herd said.

He said 200 projects had been put on hold as a result of the shutdown. Projects associated with tourism, hospitality and universities had also been paused or cancelled.

Herd said some councils had also done the same with their own construction spends.

"Some have announced that they're canning all capital expenditure, which is the absolute wrong thing to do," Herd said.

"Some have indicated that they intend to continue to spend, if not spend more," he said.

"I think the Government will show some leadership there and have a higher level of expectation around local bodies that they will expect them to persist and start spending money."

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