Industry feels impact of fuel uncertainty

Two-thirds of builders said suppliers have already increased their pricing or introduced surcharges related to fuel uncertainty. Yet over 60% of builders are still absorbing the price increases.

 

A nationwide survey by Combined Building Supplies Co-operative (CBS) showed the nation’s builders are feeling the pressure of the fuel crisis.

 

84% of CBS respondents felt a moderate to significant impact from fuel price increases in just the past month.

 

“This isn’t coming — it’s already here,” says CBS CEO Carl Taylor. He says costs are rising fast, and builders are the ones wearing it.

 

“It’s not just fuel — it’s everything that moves because of it.”

 

Builders locked in on fixed-price contracts are now being hit with rising costs and cannot recover, Taylor says.

 

Survey respondents said this could push companies already on the edge into liquidation. “Projects that were priced months ago are now at serious risk,” one respondent said.

 

“Businesses priced tight to win work simply won’t have the margin to cover these increases,” said another.

 

Taylor says the industry is now entering a familiar yet dangerous cycle, and that the broader impact could be significant.

 

“Costs are building quickly. Builders absorb it, margins disappear, and eventually it flows through into higher prices.”

 

Taylor says the industry starts to hesitate, with clients pausing projects, pricing harder to lock in, and confidence dropping.

 

“Fixed-price contracts and rising fuel costs don’t mix — and right now, that pressure is landing squarely on builders.”

 

CBS warns that continued fuel volatility could undo the recent signs of stability in the construction sector.

 

“We were starting to see some balance return. This risks pushing the industry back into a tougher position.”

The ongoing fuel crisis threatens to slow down or stop infrastructure projects nationwide.

 

Infrastructure NZ warns that the economic consequences are set to be “significant and long-lasting”.

 

Chief executive Nick Leggett says fuel response settings must be designed to keep the economy moving.

 

“We need to keep building,” Leggett says. “Infrastructure is not discretionary; it is fundamental to New Zealand’s economic resilience. Halting projects now would only deepen the future economic impact of the fuel disruption and delay recovery.”

 

Global supply chain volatility is already impacting the infrastructure sector, pushing up the cost of diesel, freight, shipping, and petroleum-based materials like bitumen and plastics. While these pressures are significant, they should not be used to justify delaying or stopping projects that have already been funded.

 

“The biggest risk is that policy settings could unintentionally slow down or defer projects that are already underway. That will cost us jobs, productivity and capacity of the infrastructure sector to continue to deliver in the immediate and long-term,” Leggett says.

 

He adds that inconsistent, stop-start investment creates inefficiencies, increases costs, and erodes confidence across the industry.

 

Leggett points to Treasury data showing there is room within the capital programme to absorb short-term cost increases, arguing the priority should be maintaining a steady pipeline of work rather than adding further disruption.

 

He emphasises that a clear commitment from the Government to continue funding projects is essential. Without that certainty, contractors may scale back activity to manage risk, and once skills and capacity leave the sector, they are costly and difficult to rebuild.

 

More broadly, continued infrastructure investment is vital for supporting employment, sustaining industry capability, and underpinning a productive economy.