Building industry workers hit hard by Australia’s construction crisis

Australian construction workers have been severely impacted, and they are finding it difficult to keep expenses from being passed on to their clients.

Five primary issues, according to tradespeople, are spiraling material costs, congested supply chains, rising gasoline and vehicle prices, trouble hiring workers, and excessive pay.

According to a research by the employment website Hipages, 85% of tradesmen have raised costs in the past year, with more than half being obliged to do so in the last three months.

With timber prices up by at least 20 per cent and metal prices rising 15 per cent in the past years, workers said raw materials are the major factor pushing up costs.

Feeding this is a global supply chain crisis, and a severe labour shortage post-pandemic, raising the cost of renovations and new home builds.

Geelong-based carpenter Donald Conway says he is doing his best to hold his prices down but the skyrocketing price of basic materials is hitting is his bottom lineJustin Tanios, from Sydney, said most of his customers were understanding of the price pressures on tradies but not everyone could afford to pay for hikes

Geelong carpenter Donald Conway nominated material costs as the major hurdle to keeping his quotes down.

‘For us, the cost of materials in the past four to five months has had the biggest impact,’ Mr Conway said.

‘The costs have been rising across the board from fuel to the flooding in Queensland affecting supply of certain types of timber.

‘With timber going up even by say $2 per linear metre, a decking project can start to really add up quickly.’

Justin Tanios, Director of Levelline Renovations & Plumbing in Sydney, said with the cost of raw materials going ‘through the roof’ he was making every effort not to pass those on.

Mr Tanios said a strategy he was using to keep costs down was to only do jobs in a 15-20km local radius

‘While most people are pretty understanding of the cost pressures, there are people who aren’t in a position to pay higher prices,’ Mr Tanios said.

THE FIVE FACTORS MAKING LIFE HARD FOR TRADIES

1) Rising material costs

2) Choked supply chains

3) Fuel and vehicle price hikes

4) Difficulty finding staff

5) High wages

One strategy he had adopted was only taking jobs in a 15-20km local radius.

‘Working local helps to keep down costs like fuel, tolls and car maintenance,’ Mr Tanios said.

Mr Conway said he had adopted a similar strategy for his business from Doncon Carpentry, which the 24-year-old started two years ago.

‘At first, I tried not to put prices up, as I really felt for anyone who worked hard to save for an exciting new home improvement project, only to have that taken out from under them due to circumstances beyond their control,’ he said.

‘However, when I started losing money on jobs, I realised that I needed to raise prices simply because that is what the work is now worth.

‘To counter this, I’ve been more selective about the jobs that I take on and focused on those closer to home in Geelong.

‘Personally, the most important thing throughout this time has been honesty.

‘If I have needed to put up prices, I’ve always strived to do the right thing by my customers and be transparent about the reasoning behind it.’

Over the past year 85 per cent of tradies have increased prices with more than half forced to do so in the past three months, a report found

Hipages Chief Customer Officer Stuart Tucker said it was a difficult time to stay afloat while not passing extra costs onto customers.

‘What we need to remember is that so many tradies are small business operators,’ he said.

‘They are trying to manage their cash flow, they are trying to manage their costs, their revenue, juggling their customers and jobs, so they’ve got a lot on their plate during this difficult time.’

The hipages Tradie Trends Report 2022 found that even for those tradies who had increased prices a third were still absorbing costs due to the inflated environment while 60 per cent they only keeping pace with cost increases.

Tradespeople said they were trying to cap price increases at 10 per cent.

In a worrying future sign its the young who appear to be shouldering some of the brunt of cost cutting with 27 per cent of businesses reporting having to let go of an apprentice for affordability reasons.

Despite rising prices a third of homeowners are planning to do works over $5000 on their homes in the next six months, according to a survey

Mr Tucker said that those dreaming of renovating or wanting major jobs done needed to plan ahead to get the best deal.

‘The lesson for homeowners is don’t leave jobs to the last minute,’ he said.

‘Engage tradies early and give them plenty of notice so they can plan the job and have time to offset some of those costs and access the supply chain early to order those materials needed.’

Mr Tanios said the Covid period had actually seen a boom in home improvement.

‘We’ve seen demand for tradies skyrocket, with many people putting off overseas holidays and choosing to invest in their homes and projects like bathroom renovations instead,’ he said.

‘I’ve never been busier at work than this year. I’ve even had to expand my team to cater to the level of demand.

‘Right now, we’re booked out until August, whereas three years ago I would never be turning down a job.’

The Hipages Tradie Trends Report 2022 found that over a over a third of homeowners they surveyed intended to spend over $5000 on renovations or repairs in the next six months.

Reflecting these cost conscious times the majority of those said they were planning money-saving alterations such as solar power and lighting or water conservation.

Over 1000 homeowners and 500 tradie business owners or decisionmakers nationwide were surveyed for the HiPages report.