How the Supply Chain is Affecting the Building Industry in New Zealand (and What it Means for Your Kitchen Project)
How the Supply Chain is Affecting the Building Industry in New Zealand (and What it Means for Your Kitchen Project)
The supply chain disruptions here in New Zealand and around the globe have been well documented and reported on throughout the press. We thought it would be helpful to share our experience as well.
At Archant, we’re proud of our collaboration with our international suppliers to ensure great stock levels in New Zealand. These supply local builders, joiners, architects, cabinet makers and more.
By working with contacts across the entire supply chain, we have a unique and deep understanding of what’s happening in the industry today.
So, how is the supply chain affecting the building industry in 2022?
For starters, the building industry is still experiencing sizable labour shortages. When you couple this with market uncertainty resulting from the war in Ukraine and the global pandemic, it certainly causes concern. Yet not all the news is bad. In fact, there’s reason to be optimistic when looking ahead.
Recent data shows how the desire to build new homes in New Zealand is stronger than ever. Stats NZ reported that:
- The number of new homes consented in the year ended February 2022 reached a new annual record of 49,733, up 25 per cent compared with the same period in 2021.
- Building statistics manager Michael Heslop said “Before 2021, the highest number of new homes consented was 40,025 in the year ended February 1974. February 2022’s record is almost 10,000 higher.”
Another report from CoreLogic confirmed a “record high of almost 50,000 dwellings built in the 12 months from February 2021 to February 2022.” Most experts agree the reason for this surge is first time home buyers who recognise the potential for quick capital gain.
Meeting the Demand, Rising Costs and Delays
One of the challenges of this increased popularity is in meeting the demand in a timely fashion. Currently, the trade and supply of materials are slowed by the global unrest, rising inflation, transport, and fuel prices. As a result, it’s become increasingly difficult to keep up with this high level of output.
This added cost is being passed on to consumers, and in many cases, has made it unaffordable for clients to move forward with their projects.
Add to that a plethora of delays with land titles and processing from local councils, and the whole system is slowed dramatically. In some areas, new development titles are delayed up to one and even two years. Ultimately this bottleneck of consent makes it harder for building companies to manage projects efficiently.
This additional processing time can affect the bank’s decisions with approvals that sometimes expire and need to be reapplied for. As such, many financial advisers recommend that buyers limit their spending and increase savings to be in the best position to move forward.
Troubles with Timber
One notable cause for concern in the building industry is the shortage of timber materials. The effect on supply and demand from this scarcity along with a decrease in labour availability has created frustration for suppliers, builders, subcontractors, and manufacturers.
There is debate about the cause of log shortages. Some say it’s due to the increase in new homes being built, while others argue it’s caused by exports being too high. Either way, it has made for added complications, especially with new residential home builds.
Shortages of Plasterboard
GIB is the largest plasterboard provider in New Zealand. They too are experiencing disruption and a slow down of production. In a statement from the company, their general manager David Thomas explains that “as New Zealand continues to build at a record pace, the high levels of demand for plasterboard continue to exceed their production capacity.”
He goes on to say, “We are very conscious that this situation is challenging for the industry and want to reassure you that we are doing as much as we can to maximise supply.” They are currently building a new facility in Tauranga to help boost production in 2023.
Archant Proactively Planning for Success
Planning for increased costs and project delays is a critical part of the equation of any successful new project. At Archant, we are open and transparent about our processes.
Ongoing shipping delays have also required us to hold 35% more stock to ensure we maintain our high level of service and supply. As a proactive measure, we have committed to building a new warehouse which will enable us to double our storage capacity in early 2023.
Providing both residential and commercial fit-outs across New Zealand, our track record of completed work speaks for itself. Archant Fabrication is successful in part by the proactive steps we take to satisfy our client’s needs. Our job is not done until our client’s expectations are met and exceeded.
We are committed to providing every customer with timely, efficient service and the professional approach they deserve. You can expect friendly and open communication with the Archant team as we work with clients directly. This measured approach has earned Archant its reputation as a world-class organisation.
Where Do We Go from Here?
In a recent NZ Herald article “BuildLink general manager Simon Burden said he did not think much could be done about the shortages other than different parts of the supply chain communicating clearly with one another to manage expectations.”
While we agree with the need for good communication, we also feel more can still be done to recover well from these unprecedented times.
The key here is for companies to be forward-thinking. This will lessen the impact of this global challenge on businesses and customers alike.
Rather than sitting back and reacting to the challenges, a more proactive approach is essential. Companies with leadership that take action and plan for change will be more resilient in this economic climate.
Part of the Solution
At Archant, the entire staff is engaged in problem-solving and planning sessions. The team also undergoes ongoing training to further develop innovative ideas and a better way forward. By learning from this current situation, we’ve gained valuable experience on how to best serve our customers without interruption.
We also feel it’s of vital importance to maintain good working relationships with other individuals and organisations in the industry. Having people to depend on in the supply chain makes for a stronger and more stable environment for all involved.
