Government's 'shovel-ready' projects won't save construction industry, expert says

The Government's "shovel-ready" projects are not ready enough to save the construction industry, AUT construction management professor John Tookey says.

On Wednesday, the country's biggest construction company, Fletcher Building, announced it was culling about 1000 jobs in New Zealand and a further 500 in Australia - about 10 per cent of its workforce across all its businesses.

Earlier this week the Government said it would announce which major "shovel ready" infrastructure projects would receive its fast-track funding "within weeks".

While Fletcher Building had put forth a number of projects for consideration, Tookey said this wouldn't necessarily save jobs in the industry.

"Unfortunately what tends to happen with 'shovel ready' projects is that infrastructure projects use large numbers of machines, not people," Tookey said.

"These don't get spooled up to full operational capacity very easily. You might see a gap of three to six months before they're rolled out."

Fletcher Building chief executive Ross Taylor said its infrastructure business was estimated to decline by 10 per cent in 2021 then grow steadily.

Earlier this week the Government said it would announce which major "shovel ready" infrastructure projects would receive its fast-track funding “within weeks”.

Earlier this week the Government said it would announce which major "shovel ready" infrastructure projects would receive its fast-track funding "within weeks".


Its New Zealand businesses were currently trading at around 80 per cent of forecasted revenues in May, while Australia operated at about 90 per cent.

Fletcher Building suffered a roughly $55 million loss in April in New Zealand and roughly broke even in Australia.

Tookey said Fletcher Building's redundancies were a significant blow to the economy, but an inevitable result of Covid-19.

"Fletcher is the bellwether of the building industry in New Zealand. Its health is the industry's health, its problems are the industry's problems," he said.

"They've seen a contraction in their order as you'd expect. Projects get delayed, cancelled, deferred.

"They're downsizing accordingly and this exercise will save Fletcher's a lot of money."

Forsyth Barr investment analyst David Price said the economy had been sluggish before the Covid-19 alert level 4 lockdown, which had made it even more difficult for businesses to operate post-lockdown.

"Fletcher Building's plans will only have a knock-on effect on other businesses. We're likely to see more restructures as we come out of the lockdown levels," Price said.

"While we've been in our bubble we've been in a state of suspended animation. Now that we're out of our cocoons we'll see how the businesses are going to adapt and survive," Price said.




Article supplied by Anuja Nadkarni at STUFF

https://www.stuff.co.nz/business/121580620/governments-shovelready-projects-wont-save-construction-industry-expert-says



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