Job cuts ripple through construction sector

Job cuts are beginning to sharpen across the construction industry, with a growing number of major contractors scaling back staffing as workloads tighten, project pipelines slow, and economic conditions remain uncertain.

 

Downer has confirmed staff reductions as part of an operational reset in response to softer demand. It’s confirmed more than 70 roles of its Canterbury workforce will be axed.

 

The move is understood to reflect reduced forward work volumes and increased competition for maintenance and infrastructure contracts.

 

The Downer announcement sits within a wider pattern emerging across the sector, where both national and regional contractors are reassessing workforce levels after several years of volatile conditions.

 

Industry commentators say the adjustment is being driven less by a single shock and more by a sustained slowdown in new project commencements, particularly in residential construction and some commercial developments.

 

The latest NZIER quarterly business opinion survey confirmed the broader picture; the building sector is the most downbeat. A net 28% of firms expect the economy to deteriorate further, pricing power and profits are down, and construction demand is weakening.

 

Architects’ workload within their own practices also signals softer construction demand ahead. They are anticipating a smaller pipeline of work across residential, commercial, and government projects over both the next year and the following 12 to 24 months.

 

At the same time, rising construction costs, driven by higher global fuel price volatility and ongoing supply chain disruptions, are expected to dampen enthusiasm for new development projects.

 

By contrast, manufacturing remains the most positive sector in the survey. A net 34% of manufacturers expect general economic conditions to improve in the months ahead. This optimism has been supported by stronger export demand in the March quarter.

 

However, despite easing cost and pricing pressures, manufacturers still reported a decline in profitability over the period.

 

 

Christchurch-based Leighs Construction has also proposed a restructure that could affect about 50 roles, according to recent reports. Like Downer and the wider industry sentiment, Leighs have been operating in a tighter environment, with contractors across the South Island facing increasing pressure from rising input costs, delayed developments, and a more cautious investment climate.

 

While not all firms have announced formal redundancies, industry sources indicate a broader trend of reduced hiring, natural attrition, and project-based workforce scaling rather than long-term employment growth.

 

The slowdown is being reflected in national construction indicators. Building activity has eased from post-pandemic peaks, developers face higher financing costs, and a growing number of projects have been delayed or restructured rather than proceeding as originally planned.

 

In Canterbury, the effects are particularly visible as large-scale post-earthquake rebuild activity continues to wind down. With fewer anchor projects entering the pipeline, contractors are competing more aggressively for remaining infrastructure and maintenance work, placing further pressure on margins and staffing decisions.

 

Economic conditions are adding to the strain. Elevated interest rates over recent years have cooled demand across the housing market, while broader global uncertainty has made large capital investment decisions more cautious.

 

Construction firms are reporting increased difficulty in forecasting workloads beyond the short term, which is contributing to more conservative employment strategies. A June 2025 survey found a notable share of construction businesses don’t see a workload beyond a year; that time is nearly here.

 

“Forward work remains a concern for construction business leaders,” said the BDO New Zealand construction sector report. “Just 41% of survey respondents have sufficient confirmed work beyond 12 months, a slight decline from 2024, and more than a quarter only have enough work to cover the next six months or less.”

 

The message from Nick Innes-Jones, BDO Construction Sector Leader, still rings true. “With tough economic conditions and an unsteady forward work position, achieving growth has been challenging for much of the construction sector recently – but there are signs of foundations being laid for future growth.”

 

Despite the current downturn, industry participants maintain that demand for construction services has not disappeared, but rather shifted into a slower cycle.

 

Infrastructure investment, particularly in transport and water projects, is expected to provide longer-term stability. However, the timing of that recovery remains uncertain, and many firms are prioritising cost control in the meantime.