Long-Term Approach Needed For Building Construction Skills
The New Zealand Government has tasked the NZ Infrastructure Commission with developing a National Infrastructure Plan. The challenge for the government and its advisors is to consider not only the need for the prioritising and imminent release of those projects, but also to develop a longer-term sequencing of the work. This must be done in a way which enables the participants (and potential entrants) to build much needed confidence and to grow a sustainable skills base which can become a source of strength and pride for the industry. Readers will recall that, only three years ago, participants in New Zealand’s steel industry were contending with the delivery of multiple, concurrent and major infrastructure projects. This placed significant pressure on labour and resources, with many participants struggling to attract workers with the required skills to meet the demand. One of the country’s largest fabricators blamed the government for overcooking the market with too many projects.
The demand highlighted critical skills gaps existing in the industry, such as steel fixers, welders and engineers, which created an escalation of labour and construction costs. At the time, 90% of construction companies experienced moderate to severe shortages in the necessary trades skills. The rising cost of and delays to infrastructure projects created a headache for the government inheriting a portfolio of overrun projects in flight. Construction Sector Accord transformation director, Dean Kimpton, noted at the time that the only way through the problem was “…to build confidence that projects would happen, so companies would invest in people and technology”. He added: “The sector is a confidence sector”.
The painful lessons learned during that period are still fresh in the mind of an industry about to need critical fabrication and construction skills. The sector, however, is being challenged as key employers grapple with the consequences for their talent pool of a starkly depleted project pipeline. Some are shedding resources and offering redundancies. Uncertainty over available local work and softer wage conditions also mean that Australia’s invitation to New Zealand engineers and construction resources has created a further risk to the availability of sufficient skills and resources to meet future planned project demands. With approximately $116 billion worth of future funded projects being planned over the coming years, opportunities for the steel industry are emerging. These projects will create attractive and meaningful career experiences and will offer healthy competition against the lure of offshore work. New Zealand must, however, navigate the risk that the depleted pipeline of infrastructure work over the prior two years will result in sequencing issues of upcoming major projects in a manner similar to the “catch-up” in work post Covid19.
This is why the results of the National Infrastructure Plan for New Zealand will be so important. The long-term planning and sustainability of the pipeline is necessary to meet the interests of a population seeking greater certainty and control of building and construction costs. While enhanced immigration settings will provide assistance to some companies in obtaining offshore labour to meet key peaks in the release of projects, it is in the interests of all stakeholders to grow New Zealand’s fourth largest employment sector into a strong local talent base that transcends election cycles.
As if to highlight how essential a broadly-skilled construction sector is to New Zealand´s future, figures revealed on August 1 by Stats NZ show there were 33,979 new homes consented in Aotearoa New Zealand in the year ended June 2025. This is up 1.0% compared with the year ended June 2024. “This is the first time in two years that we have recorded annual growth in the number of new homes consented,” said Michelle Feyen, economic indicators spokesperson at Stats NZ. The increase was largely due to a 6.3% rise in stand-alone house consents, reaching 15,858. In contrast, consents for multi-unit homes fell 3.2% to 18,121 in the year ended June 2025. Auckland consented 14,295 new homes in the year to June 2025, up 3.2%. “It’s the first time since early 2023 that Auckland’s annual consent numbers have increased,” Feyen said. “As the country’s largest region, this rise played a key role in the overall increase in home consents for the year.” Meanwhile, Otago saw the fastest growth, with 2,637 new homes consented, up 48% compared with the previous year.
Finally, news from Fletcher Building. On July 22, the company announced that, given the inbound interest received and following completion of its strategic review, it has commenced exploring potential divestment options in relation to its Construction Division and its Higgins, Brian Perry Civil and Fletcher Construction Major Projects business units, including the appointment of financial advisers. Managing Director and Chief Executive Officer, Andrew Reding, noted: “Given the quality and strong recent performance of our construction businesses, and the role they will play in New Zealand’s growing infrastructure pipeline, we were not surprised to receive inbound interest for them, which has motivated us to test whether there are attractive divestment options. No decision has been made to sell at this time, and we will carefully consider the value of any options presented from this process before deciding whether to move ahead”. Fletcher said that further updates will be provided as required in accordance with the company’s disclosure obligations. Talk of possible divestments was followed a few days later by news from the credit rating agency, Moody’s Ratings. After a periodic review, it said Fletcher Building´s Baa3 credit rating with stable outlook would remain unchanged.
* This month´s New Zealand News was authored by Peter Ensor, GM Wire/Reinforcing and CFDL at Steel & Tube NZ.