Building Sector Booms Overseas

If a boatload of timber is your idea of exports for the building and construction industry, then you need to take a closer look at this thriving sector. Adeline Teoh investigates direct and indirect opportunities that have come Australia’s way for major projects offshore

The term ‘building and construction’ brings to mind a worksite of men in hard hats and of large scrolls of paper, but the sector is a lot broader than those oversized paper sheets. Covering fields that you would expect, such as architecture, engineering, and trades like plumbing and electrical, the service aspect of the construction industry also receives environmental, technological, and consulting input in a variety of forms.

According to Tim Harcourt, chief economist at Austrade, the building and construction industry generates $48 billion a year and almost 10 percent of that is export—$3.7 billion for products and $720 million for services. However, he believes the service figure could be significantly understated because transactions are difficult to track. The official breakdown estimates that technical services such as project management, engineering and architectural services, contribute 80 percent to the export tally. “Construction services, at around $144 million, make up the remainder,” says Harcourt.

Building materials, such as timber and steel, and manufactured products such as water tanks, have provided steady income for exporters, outstripping wool and on par with wheat in terms of export value. Our biggest customers in this regard are the US and countries in the Asia-Pacific region such as New Zealand, China, South Korea, and Japan.

However, the past few years have seen a significant rise in the export value for building and construction services. This is due to a global increase in demand combined with Australia’s reputation for delivering projects successfully. Building services usually receive the most business from customers in South East Asia and the Middle East.

Austrade senior export adviser, Garry Mahlberg, says Australia is well positioned to increase building activity overseas due to a range of factors. “The combination of Australia’s high building standards, a highly educated population, and unique climate conditions has led to the development of products and services which Australia now supplies to the world,” he explains.

Even within the services sector, things are starting to change. Residential construction used to be the export breadwinner, but engineering contracts, consultancy work and project management are emerging as strong exports in their own right. “Firms such as Thiess, John Holland, Sinclair Knight Merz and Connell Wagner are all exporters,” says Mahlberg. “They provide a range of services such as project design and management and feasibility and environmental studies.”

A significant volume of service exports also comes from Australian construction contractors. “They have specialised skills and a reputation for quality, efficiency and ability to deliver on time. Well-known international construction companies include Leighton Holdings, Bovis Lend Lease, and Multiplex.”

The surge in demand from Australian construction services follows our success in the architectural realm. “Among the world’s 60 largest architect firms, there are seven Australian companies. Per capita, Australia has produced more global architectural players than the US, Canada, Germany, Japan, India, and China,” says Mahlberg.

He mentions the Watercube National Aquatics Centre, designed for the 2008 Beijing Olympics by PTW Architects, which has already become an icon before the main event. Constructions like the Watercube enhance Australia’s international reputation because both the structure and the event are famous.

Because of the relationship between different disciplines, success generally has a flow-on effect when one sector does well. For example, an architectural firm with a winning tender will subcontract different aspects of the project, from engineering and consultancy work, to the physical elements of construction such as building and interior design. Although Australian architects won’t necessarily use Australian products and services throughout the entire project, a company’s access to well-known architectural firms certainly has advantages. This method, called ‘piggybacking’, allows firms with an established reputation to help newer companies export their products and services and increase their international exposure.

Bill Mansell, managing director of roof specialist Chadwick Technology, says his company uses Australian products and services wherever possible. Even as subcontractors themselves, they have some influence over the products and services used.

“We’ve used CSR plasterboard throughout the interior lining on the Dubai International Air Terminal,” he recalls. “A lot of the steelwork is from BlueScope. Our fasteners—and fasteners are a major item on these jobs, they run into millions of dollars—came from a Victorian company, Powers Fasteners.”

Chadwick Technology also uses Australian services–for example, partnering with engineering company Taylor Thomson Whitting. “Because of our quality assurance requirements, everything has to be secondary checked and Taylor Thomson Whitting provide the service, so we provide a lot of work for them,” says Mansell. “We’ve also used the National Acoustic Laboratory for sound-testing, and the CSIRO.”

Projects on the ground also involve a number of Australian staff. Some countries have laws requiring foreign companies to derive a number of staff from the local employment pool, but Mansell’s management team is mainly comprised of Australians.