Find opportunities and fight for them | Where is the hope for New Zealand’s construction industry?

As the country enters lockdown, New Zealand’s construction industry faces a crisis. How can it minimise losses, retain its workforce and work together through this turbulent period? In a recent interview with English-language media, New Zealand Chinese Building Industry Association president Frank Xu proposed measures to help save the industry, outlined some of the association’s efforts and discussed the potential impact of China’s economic recovery on New Zealand construction.

                                                                        Frank Xu

Xu said: “If the New Zealand Government acts quickly, there is reason to believe China’s economic recovery will bring hope to New Zealand’s construction industry.”

The full interview follows:

“Swift government policy action could offer a glimmer of hope for New Zealand’s construction industry.”

Frank Xu, president of the non-profit New Zealand Chinese Building Industry Association, says many key indicators show China’s manufacturing sector is gradually recovering from the coronavirus pandemic. This offers hope for New Zealand construction and development companies, provided the New Zealand Government moves quickly to introduce policies protecting the industry.

Xu believes the New Zealand Government should urgently introduce measures in two areas for consideration by the recently established infrastructure industry expert group:

1. Allow some construction sites that meet health and safety requirements to reopen, and allow financial institutions to provide bridging finance to construction companies, helping the industry retain its workforce and engage contractors.
2. Review and amend overseas investment policy so the industry can benefit from domestic and international economic stimulus packages.

Xu said: “I can see a glimmer of hope, but without government action, many New Zealand construction companies will face bankruptcy. Establishing the infrastructure industry expert group is an excellent step, but the greatest support the New Zealand Government can offer now is to Allow some sites to reopen, allow bridging finance and reconsider overseas investment policy to let foreign capital in. This would help create jobs and tax revenue, balance debt and save the industry.

“The New Zealand Chinese Building Industry Association is actively working to advance this process in two ways:

• We have launched an industry survey to identify problems and possible solutions.
• We are developing health operating procedures for the COVID-19 pandemic, including the documentation and equipment needed to resume work at alert level 4.

“Reports of China’s gradual recovery are appearing in media around the world. Britain’s The Guardian reported that, as businesses resumed operations, China’s composite PMI, or purchasing managers’ index—an economic indicator tracking activity in service businesses and factories to reflect current economic trends—rose within a month from its record low in February of 28.9 to 53, exceeding many economists’ expectations. China’s manufacturing PMI rose in March to 52 (compared with February at 35.7), while its services PMI rose to 52.3 (compared with February at 29.6).”

Xu commented: “China is gradually regaining confidence as its economy returns to 80% of its pre-outbreak level. Air freight may still face considerable challenges over the coming months, but sea freight volumes at Chinese ports are returning to normal.

“Some major New Zealand construction companies had already sourced several months’ worth of raw materials, such as steel and concrete, from China. This is their usual response to the annual economic slowdown over Chinese New Year. However, some projects will be affected as those stocks run out.

“As China’s economy recovers, current trends suggest its logistics should return to normal by the end of April, meaning they will be back up to speed by the time New Zealand’s market emerges from lockdown. Supply chain problems outside China may persist for longer, but we should learn from Chinese suppliers. Businesses need to communicate with suppliers, understand how they operate and develop supply chain contingency plans based on identifiable risks.”

Xu believes the overarching questions remain how quickly New Zealand can return to normal after the initial lockdown, and how broader changes in the macroeconomic environment will affect construction businesses.

“The construction industry’s economic fundamentals will remain strong, and may become stronger. The imbalance between supply and demand in Auckland’s housing market will persist over the long term. The Reserve Bank of New Zealand has cut the OCR to a record low, and the Government has announced a major infrastructure stimulus package, with more stimulus plans to come.”

“Although understanding and predicting the direction of the economy or construction industry is difficult in such turbulent times, one thing is clear: Challenging times create heroes. Businesses need to be more alert to opportunities and fight for them.” Xu concluded.

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The New Zealand Chinese Building Industry Association (NZCBIA) is a non-profit professional organisation. It represents businesses and professionals across New Zealand’s construction industry, as well as Kiwi businesses and professionals with close working relationships with China’s construction industry. NZCBIA focuses on providing members with resources and pathways to take their businesses and/or careers to the next level, and offers a platform to strengthen their voice within New Zealand’s Chinese building industry and the wider community. NZCBIA’s vision is to improve the prospects of New Zealand’s construction industry as a whole by enhancing the reputation of Chinese businesses and industry professionals and promoting good practice. Our mission is to provide a central information hub connecting government, local authorities, construction industry organisations, and businesses and professionals in New Zealand’s Chinese building industry.