The State of Our Built Future

Q&A with NZCB CEO Malcolm Fleming

Uncertainty about forward workloads and a lack of government direction regarding the future of vocational education and apprentice training; these are the two biggest challenges chief executive of New Zealand Certified Builders, Malcolm Fleming, believes Kiwi tradespeople face today. But with construction costs growing and regulations changing, his role oversees an extensive list of industry issues.

Addressing the Skills Shortage

The Construction Industry’s Skills Shortage

The construction industry is facing a significant skills shortage. How does NZCB think we can best attract and retain talent within the industry? “This is a cyclical issue that became particularly evident during the housing boom that followed COVID-19, a period that saw new building consent numbers rise above 40,000 on a 12-month average for the first time since the mid-1970s. “The peak occurred in 2022 when new residential building consents hit 50,000. The 2024 market is very different from what it was even 12 months ago, with skills shortages no longer the issue it was, as demand for those skills has reduced. “That said, NZCB is very focused on both attracting people to consider a carpentry apprenticeship and supporting those apprentices who are employed by our members.

NZCB Programmes to Address Skill Development

“We have two significant programmes of work:

1. The NZCB Apprentice Network, which welcomes apprentices into the NZCB community and supports them across their four-year apprenticeship.

2. A series of Carpentry Role workshops that set out a career pathway for newly graduated apprentices, which builds on their core skills to assist them growing competency in roles such as Leading Hand, Foreperson, and Site Manager. “Coming into the NZCB role, I was struck by a lack of career mapping and ongoing occupational skills development for carpenters post their apprenticeship training, something that our Carpentry Role programme addresses.”

Rising Construction Costs

Contributing Factors

What factors have caused construction costs to rise? “My view is that the current high cost of building is the most significant issue facing the construction industry. New Zealand’s isolation, our small market size, and the embedded risk aversion across Building Consent Authorities (BCAs), designers, and builders alike, all contribute to the high construction prices in our country.

Detailed Insights on Cost Factors

• “On the isolation front, disruptions to shipping lanes in the northern hemisphere (the Russia-Ukraine war restricting shipping on the Black Sea, Houthis attacks on shipping on the Red Sea, and climate-induced droughts impacting the Panama Canal) have added to the cost of bringing goods to New Zealand.
  
• “Our small market size does not make it attractive for international manufacturers of building products or systems to set up a distribution base here, particularly when they will have to compete head-to-head with well-established local players.
  
• “Our main issue is the risk aversion triangle, which sees none of the three main players in the building consent process (designers, builders, BCAs) wishing to take on risk, which translates to all parties staying with products and systems that are proven with good track records, and which are well supported locally.”

NZCB’s Solutions to Address Affordability

“As an association, NZCB is addressing affordability through its new range of Certified Plans that will be released in Q3 2024. “Designed by one of the country’s largest architectural practices, a small range of entry-level houses will utilise new building methodologies to reduce construction time and practice the maxim “less is more” by demonstrating that through smart design, New Zealanders can trim their floor plans significantly, which when cost per square metre is $5,000+, reducing the size of the homes we live in by 20 percent or more, translates to significant savings.

Regulatory Changes

Major Impacts

What are the biggest impacts of regulatory changes you’ve seen so far? “The most significant impact on the cost of building across the past year has been the implementation of H1 (increased energy efficiency standards since 1 May 2023) to the Building Code. This change has led to cost escalation in construction costs and accelerated the housing affordability issue.

The Role of MBIE

“The Ministry of Business, Innovation, and Employment (MBIE) has signalled that H1 is the first step in creating regulations that will enable the construction sector to play its part to ensure that New Zealand meets its Paris Accord commitment to reduce the country’s carbon emission levels by 50 per cent (from 2005 levels) by 2030.

Outlook for the Construction Industry

Current and Future Market Trends

What is your outlook for the New Zealand building industry over the next few years? “We are at the bottom of the current economic cycle, with high interest rates, reduced consumer spending, and now a fiscal belt-tightening by the government, flowing through to a 20 percent drop in new home building consents down to levels last seen two to three years prior to the pandemic.