Navigating hiring in the construction industry

According to Mike Blackburn, an advisor to the construction industry, building consents in Canterbury are not down as much as the rest of the country, (9% vs 16%) for the 12 months to May.

The market is certainly seeing a correction, he says, but he also knows a number of builders and sub-traders who are saying they’re still flat out.

At the same time, commercial construction has picked up over the past 12 months in Canterbury, which is good news for the sector.

In his view, the market has been oversupplied for some time with multi-unit residential construction in Canterbury. Making up around 67% of new residential construction last year, this sector is down by only a little over 4%.

The Selwyn district has been growing for the past couple of years due to strong internal migration, says the consultant. According to StatsNZ last year, Selwyn had a population growth of 5%, the largest in the country outside of Wānaka. Meanwhile, with net international migration up 78,000 in Aotearoa New Zealand for the 12 months to May.

These high net migration figures are a boom, compared to the average of 30,000, and they’ve turned around very quickly, says CoreLogic’s Kelvin Davidson. He expects immigrants will go to the main cities where jobs and family are.

And, typically, after around 18 months in the country, they want to buy a home, adds BRANZ’s Matthew Curtis. “We do assume a net additional demand for housing,” he adds.

Matthew says that throughout this slowing demand, the majority of house building companies have been relatively resilient so far.

Some house builders have closed regional franchises; but at the same time, “they’re negotiating more strictly with sub-contractors and telling them to be more realistic about what they’re charging for jobs,” he explains.

Ben Gibbens, Chief Operating Officer of Ockham Construction, part of Ockham, the Auckland apartment developer, says the boom of the last few years is significantly slowing - and he sees this affecting the construction workforce.

“With the increased interest rate there’s been a reduction in property sales which means the workload will lighten in construction and, as a result, more will be looking for work,” he predicts.

Ockham is still working through its pipeline of work, and while a couple of projects have gone on hold, it will continue with its plans for housing around Unitec and Pt Chevalier which it’s doing with Marutūāhu, a collective of Māori iwi from the Hauraki region.

“It’s still going to take us 10 plus years of work,” says the construction company COO.

There are positive stories to be told in the total construction sector too, according to those analysing the industry. The other two pillars of construction – non-residential construction and infrastructure –are both still growing. According to the National Construction Pipeline, infrastructure activity is forecast to increase steadily to $11.5 billion by 2027.

In 2021, infrastructure represented one-fifth of total building and construction activity and by the end of 2027 this is forecast to increase to over one-quarter of total building and construction activity.

Non-residential construction activity is, meanwhile, forecast to peak at $11.1 billion, up from $10.2 billion in 2021, then experience a modest fall to $10.7 billion by 2027.

“In the commercial construction sector, what’s great to see is that there are still projects like the IKEA store coming to Auckland, a big mall in Tauranga at Papamoa beach and there hospitals needing work in cities like Christchurch,” says the BRANZ analyst Matthew.

And as for office buildings, as employers seek to attract workers back to the office, they’re taking the best space they can afford.

“High grade office buildings are still not having trouble finding tenants,” Matthew adds.

So what does this all mean for the construction workforce? Should they be retraining, looking at transitioning to other sectors, or following projects around the country if that’s practical?

There are fewer roles available at the bottom end of the market, says Matthew. As construction activity is more constrained, it’s been about finding those more productive employees, he adds.

“With your junior or new entrants staff, you tend to be carrying them on projects, but as the market gets tighter …margins squeezed, [and] it’s difficult to carry those costs of less experienced staff members. Companies do need active, productive staff,” he explains.

Meanwhile, for those in the professional services, such as project managers and engineers, there still seems to be significant demand - though the senior BRANZ research analyst is keeping a close eye on this.

From an international perspective, Matthew is hearing that the Australian construction industry is actively targeting New Zealand workers, especially plumbers, carpenters and electricians rather than construction professionals.

“There’s a fair bit of construction work in Australia in residential housing, after flood damage and wildfires have taken out homes,” says Matthew.

Those working in construction recruitment are adjusting to the changing needs of their employer clients. Though Enterprise Recruitment & People’s General Manager, Kurt McInerney, says he’s not feeling pessimistic about the country’s construction jobs market.

His industry clients are cautiously optimistic. They’re not taking any giant leaps - it’s more about baby steps - but they’re still moving forward, he says.

The attitudes of employers in the construction industry have changed in recent months, he notes. Whereas, when the country’s borders closed during the Covid-19 pandemic and there was a labour supply issue, construction employers would say they would train people - they just needed to get to the work.

“Now it’s not so much about taking people on and bringing them up to speed, it’s about: ‘We need to do our projects really well and deliver them on time. We need the skilled people to almost run a job and to have the experience already’,” explains Kurt.

And for labour coming from off-shore, the message is, these workers need higher skills than six months ago if they want to find work, adds Kurt.

As for juniors making their start in the construction industry, there are still opportunities for the right person at their level if they show they’re keen to develop and their expectations match their experience, he says.

The workforce seems to be on the move too. A growing number of construction workers may opt to follow work around the country as long as they’ve got somewhere to live in the regions, adds Kurt.

“It’s a great way to get ahead - to go into an area and be part of a landmark rebuild in the Hawke’s Bay for instance. Just like in Christchurch, it’s a bit of a legacy, where you can point back to that and progress your career.”

Might there be opportunities for those in the construction industry to transfer from residential to commercial projects? “There’s definitely a lot of opportunities for construction workers to go from residential to employers in commercial construction," Kurt says.

Employers would be looking at higher end skills from the residential property market, as these are definitely transferable skills.

“As long as the individual is realistic about their position in the market, it shouldn’t be a step back, but they might not get a pay rise,” he warns.

Senior lead consultant at Beyond Recruitment, Matt Shortt says he’s seeing a huge retraction in the design and build side of the residential housing market, but builders connected with public housing developments through a social housing sector are reasonably healthy. He’s optimistic about the ongoing activity in the commercial and infrastructure parts of the construction sector.

Civil projects will be the main driver of construction in hard hit regions like Gisborne and Hawke’s Bay, believes Matt. There’s a lot of roading and water projects and some housing being planned.

When it comes to experienced senior site manager roles in New Zealand, Matt says employers are always specific. ”They want someone who has built in the local market and understands the players, and what the environment is,” he explains. Often these roles will be headhunted.

At the junior levels, cadets, hiring is slow, says Matt. Across the board, site management and site supervisory roles at the $100,000 to $120,000 level are definitely down, he says. “Some candidates are off to Aussie, it’s definitely a movement but we’ve had a couple return who said the environment wasn’t right,” he says.

As for workers coming into Aotearoa New Zealand from overseas, they have filled a lot of gaps, for carpenters, for instance, in residential construction, says Robbie McIlraith, General Manager NZ of Stellar Recruitment.

He’s optimistic about the construction industry as a whole with plenty of work to do around the country. “The fundamentals are still there, activity is still at an all time high in the construction industry and in the Hawke’s Bay and the East Coast, there’s still heaps of work,” he says.

“The commercial construction still has plenty of work on, with projects like Dunedin hospital, the Christchurch stadium, Picton, there are heaps of projects,” adds Robbie.

And he’s keeping his eye on the allure of the Australia construction market for local workers who aren’t getting what they want here.

“We’re seeing a lot of inquiries coming in from Australia. It’s hot over there, it’s really buoyant in the commercial sector with big infrastructure projects, new mine developments.” And construction workers can earn around 25% or 30% more across the Tasman, he says.

Is the ever-evolving construction industry getting the skills it needs? The main training organisation for the construction trades, BCITO Te Pūkenga, which manages apprenticeships for the building and construction industry, is positive about prospects for its apprentices as they enter the workforce.

At the end of June 2023, BCITO Te Pūkenga had 18,908 apprentices training across 15 trades, up 36% from 13,900 apprentices in August 2020. The number of employers supporting apprentices also rose in the same period from 6,900 to 8,974. Carpentry is the most popular choice of trade, followed by painting and decorating and timber joinery.

Noting the comments from recruiters that employers want construction workers who can hit the ground running, Greg Durkin, acting Director of BCITO, says that the organisation’s apprentices are given the skills and knowledge to do just this, and can usually contribute immediately to the projects they’re put on.

While the training organisation is seeing some easing in the residential building sector, there’s still a strong pipeline of work for commercial construction, he says. And trade apprentices can work in either.

“Making the switch from residential to commercial construction isn’t difficult as residential apprentices are trained to be flexible and have a full complement of skills, which are used in the commercial construction sector, " says the director.

Greg also points out that the Government has extended the Apprentice Boost (a payment made to employers to help them take on new apprentices) to the end of 2024, which reduces the cost of training to employers and will ensure the industry has a strong pipeline of talent, he says.