Industry Insiders

Industry insiders

We asked our insiders how the economy will shape the building industry in 2019 and about the impact on their businesses. We also discussed emerging technological trends and how our industry deals with mental health.

Author

Sarah O’Donovan

'While state and federal elections will occupy the attention of journalists and political commentators during 2019, others will focus on factors that influence our economy, our business operations and our client base.

So we’ve asked four industry leaders about their views on market conditions, their approach to change, how they’re adopting (or adapting to) technology and innovation, and their perspective on mental health in our industry and found a refreshingly honest perspective of what really matters in business, onsite and for our workforce. Their responses cover building, manufacturing and land development, and traverse regional and metropolitan operations.

Their views on access to finance, consumer confidence, industry trends and energy efficiency provide a mature and realistic outlook across the industry, reflecting a level of general optimism, despite the trying condition ahead.

With residential building activity tightening over 2019, albeit from four years of record commencements along the eastern seaboard, the changing conditions present both challenges and opportunities for members. From readjustment to expansion, their approach to business strategy in 2019 is quite varied.

Clearly, mental health is a priority for these industry leaders. They each acknowledge the importance of mental health in their workplace, have an acute awareness of its impact on individuals and others around them, and sponsor a work culture that promotes mental health awareness, openness and support. As Graham Walker stresses: ‘it is more than OK to seek help, it is vital and imperative’. And it’s OK for us to seek to help those around us who may benefit from our support.'

Graham Wolfe
HIA Managing Director

THE INSIDERS

Neil Gibson and Graham Walker
Neil Gibson, Chief operating officer, LIBERTY Steel and Graham Walker, Managing director, Combined Development Group
Allen Sammut and Hasan Sarac
Allen Sammut, Owner-builder, Sammut Developments and Hassan Sarac, Owner-builder, Sarac Homes

Our Future

Q: What do you expect will change for your business in 2019?

Hasan Sarac: I’d like to simplify and systemise our services and products, without compromising on quality and integrity, to develop a simple, practical, modern, and highly energy-efficient range of homes for the first- and second home buyer.

This is a market I’m expanding to cater to because housing affordability is one of the biggest and most influential changes affecting home buyers now and into the future. People are looking for a more affordable home so, as much as my clientele so far has been custom homes and I’ve enjoyed it, I’ll be producing more affordable homes as well to reach into a different market.

Allen Sammut: I believe 2019 will see both builders and developers taking stock and cleaning shop, with the current economic conditions allowing this to happen. The industry has seen a boom in work and with that comes a range of issues, whether with suppliers and contractors or otherwise, making it a very difficult time in the industry.

What we should see throughout 2019 is the readjustment back to normal which, in turn, should result in better deliverance. We are seeing vendors becoming more realistic and meeting market expectations, and I hope to see a stable year ahead.

Directly related to Sammut Developments, our business has moved into our newly completed Banc Development where we are located in the heritage portion of the Old Commonwealth Bank in Cronulla – an exciting move into an inspiring space.

Graham Walker: Credit availability will be the major issue facing our industry in regional areas in 2019. Bank finance for regional property development has been non-existent since 2012. Mortgage lending for our regional customers by the big four banks has been available, but increasingly it is becoming more difficult for them to obtain.

Uncertainty arising from changes to housing and taxation policies in the upcoming state and federal elections will have a significant impact on business confidence and market behaviour. Regional NSW doesn’t suffer the market volatility of the Sydney and Melbourne markets. The impacts of the proposed negative gearing and capital gains tax (CGT) changes will not initially be as pronounced regionally as is being predicted for metropolitan areas. However, over time these policies will have a negative impact on the supply of new rental accommodation in the larger regional cities that rely upon good quality rental accommodation for a transient workforce.

Neil Gibson: GFG Alliance’s LIBERTY Steel business and the environment in which we operate will continue to evolve and change at a fast pace in 2019. We are on a mission to invigorate metals manufacturing and engineering in Australia and around the world by using sustainable solutions, new technology, local resources and big thinking. During 2019 we will be gearing up to service the increasing pipeline of infrastructure projects across Australia, while continuing to pursue our sustainability agenda through transitioning our energy supply to include a greater proportion from renewable sources through GFG Alliance’s SIMEC Energy Australia.

The future for Australian manufacturing is set to differ markedly to the past as industry continues to undergo digital transformation and adopt new technologies, advanced automation, robotics, sensor technologies and data analytics.

'The banks seem to have concerns about lending money to areas outside of capital cities so it is possible that 2019 could be the year when mortgage support by the major banks for home buyers in regional NSW disappears completely. Such an action would be discriminatory and commercially unjustified. Not only would it penalise those living in regional areas, it would potentially decimate regional economies while destroying valued and quality local businesses. We are treading very cautiously on new developments as the impacts on regional Australia, of stricter lending criteria being imposed by the all banks in response to the findings arising from the Banking Royal Commission, are implemented.'

Graham Walker On Mortgage Lending In Regional Australia

Our clients

Q: What is the current state of the market in terms of client demand?

Hasan Sarac: We receive a range of enquiries but these are mostly around the custom home market as that has been a primary focus for many years. As such, we are very integrated in that area of the market where work is based on referrals from previous jobs.

What I’m hearing, both from being on Regional Executive Committees and from attending HIA Economics’ Industry Outlook Breakfasts, is that consumers are becoming much more price savvy. Clients want affordability and they are prioritising that as part of their research. I’m hoping I can also cater to that priority by adjusting my position as a builder in the market.

Allen Sammut: Clients today are very astute and with the abundance of stock and choice available our brand is becoming even more relevant. The market at present has a very negative sentiment, especially in off-the-plan sales, coupled with an overabundance of choice and tight lending criteria. This is why we try to offer a point of difference with all our projects, whether that be with design, inclusions or size.

We offer guaranteed completion of a quality product that we back with our name. The fact that we have won more than 30 major industry awards helps in giving clients the confidence in our product before the process has even begun. The clients and consumers of 2019 are switched on and we’re finding it’s crucial to show them we are competitive in a unique way.

Graham Walker: The vast majority of our clients are owner-occupiers. We anticipate that in the short-term the small number of investors in these markets will disappear due to the projected changes to negative gearing and CGT.

There is a major shortage of rental accommodation in both Wagga and Tamworth so we project that rents will rise on the back of diminished supply which will, in turn, fuel growth in the value of new and existing housing over the medium- to long-term.

Families from Sydney and Melbourne, with motivations to escape the financial pressures of a big mortgage and the pursuit of a better lifestyle, are partially driving growth in Wagga and Tamworth. However, as the value of property in Sydney and Melbourne declines, it is very likely that many families will defer that decision, slightly easing demand.

Neil Gibson: Client demand across our markets grew significantly last year and the outlook for 2019 remains positive. The RBA predicts Australia’s GDP growth to average 3 per cent during 2019 and unemployment to remain low.

While house prices have come off across Sydney and Melbourne in recent months, in the mid- to longer-term context they remain significantly higher than they were five years ago.

Although access to finance has tightened in the wake of the Banking Royal Commission, contributing to a contraction in activity across the construction industry over the past six months, the value of work in the pipeline of residential construction work yet to be done is double what it was ten years ago. This is supported by the number of residential commencements nearing 230,000 in FY18 – around 30,000 above the average of the previous five years.

Sammut Developments

'The GFG Alliance and LIBERTY Steel value the importance of industry skills and we are fostering them to enable our industries to flourish. LIBERTY Steel has active apprenticeship and graduate recruitment programs, with as many as 90 percent of apprentices successfully securing permanent trade positions within the organisation once their apprenticeship ends.'

Left: Photo courtesy Sammut Developments

Neil Gibson On Apprenticeships

Our direction

Q: How is technology changing the industry?

Hassan Sarac: I’m someone who’s very much about face-to-face communication and the personalised experience that comes with it in my work, however, I am quite impressed with 3D modelling of interiors and exteriors. It really helps with the visualisation of what we are going to build, allowing clients and trades to get a better perspective of what the final product will be. Technical advancement has made information very easily accessible onsite, but the flip side is that it seems to be incredibly distracting for some workers. Too often I hear head contractors complaining about workers and apprentices constantly on their phones, either on calls or social media. This definitely affects productivity and the quality of work being produced.

Allen Sammut: Technology is now a major part of our industry – that much is clear. Whether it is for the better or worse is debatable. We’re seeing an increase of technology uptake in home automation, and artificial intelligence is gaining momentum to the extent that it’s expected in all our projects. The homes of today are wired for the future, for expansion and for the evolving abilities of technology – though it almost seems impossible that homes could become any more accessible. Technology is also playing an important role in the construction and development arm. Whether it be for site specific tasks, payrolls or for searching possible locations for future projects, it has certainly helped to streamline and simplify the off-site tasks that come with running a business.

Graham Walker: The greatest technology change within our market has been NBN. The introduction of high-speed broadband to regional Australia has allowed traditional city dwellers to relocate to regional cities and to take their job with them. This has opened the way for population decentralisation and empowered families to choose lifestyle over mortgage stress. 

Automation is impacting trades with our heavy machinery controlled by satellite, so graders and scrapers do the fine levelling work via a control disc and the driver essentially watches it unfold. The operator’s skill set is not entirely lost though, because intervention to resolve the unexpected is often required.

The significant regional change will be power supply. The solar industry is ramping up in response to surging power bills and I think, given the historic speed of change in this sector, 30 years’ time from now we will look back in bemusement at the old roof panel technology and marvel at the new power solutions.

Innovation never rests and technology keeps expanding. The only certainty today is that obsolescence is guaranteed if technology can deliver reliable, sustainable and affordable solutions.

Neil Gibson: Industry 4.0 – the fourth industrial revolution – has and will continue to significantly change industry, the way we work, live and do things. Digital transformation, data and information management is a critical one for me working across a complex supply chain. Transparency of information across the supply chain to ensure quality and compliance is critical to the safety of our employees, customers and the public.

LIBERTY Steel, in partnership with GS1 Australia, has standardised product identification and scanning process to significantly improve productivity and customer outcomes. An example is a 10-minute reduction in truck turnaround times at our warehouse, and receipt of goods, inventory management and product traceability have dramatically improved. I see further opportunities for digitisation and transparency of information across our full supply chain right, from the source of raw materials to where the finished product is constructed onsite.

LIBERTY Steel

'The future is bright for employment in Australian manufacturing. The skills the industry is going to need in the future are markedly different to the past. Advances in technology, automation, robotics and data analytics will create new and different pathways for careers into the future.'

Neil Gibson On Manufacturing’s Employment Future

Our people

How well do you feel the building and construction industry handles mental health?

Hassan Sarac: I am aware there is support out there for those in our industry, but unfortunately I don’t believe others are aware or talking about it enough. 
Among both the young and the old, whether they’re struggling in business or in life generally, there’s been a definite increase in depression in the industry. 

I think it’s easy to assume people know about the services available to them but they often don’t, particularly if they aren’t a member of an association like HIA that promotes Beyond Blue services. Continuing the push to increase awareness of available information and services is important to help those in need.

Allen Sammut: We’ve been fortunate enough in our business that we haven’t had any concerns with mental health in the workplace. We pride ourselves on operating with a healthy and open environment that is positive and encouraging for all. We promote strong relationships, encouraging all our contractors and suppliers to use our association in business together to strengthen their market position, which we believe instills a valuable sense of trust in us as a part of their support network, professionally and personally.

Graham Walker: Greater awareness has been achieved in part by the courage and resolve of an increasing number of high profile and respected people being prepared to discuss and share their experience. This has prompted community discussion and led to greater understanding that has prioritised our mental wellbeing as vital as our physical health. That discussion has been heard by our industry.

HIA through its Charitable Foundation certainly has drawn attention to the need for action, as have a number of other groups who run support programs. As an industry, we are focusing more on mental health, but as ever there is more needed to be done.

I would be surprised if we are at world’s best practice but equally disappointed if we were less effective than any other comparative Australian industry sector.
That the industry is prepared to talk about it and address it is very positive. That support structures are appearing is encouraging. Let us keep up the good work to ensure that a culture of acceptance and support for all our family, friends, and very importantly our workmates, becomes the norm by which we operate.

Neil Gibson: The building and construction industry is significantly impacted by mental health and is in many aspects leading the way in improving the mental health and wellbeing of its workforce. Organisations, such as MATES in Construction (MIC) – a charity focused on reducing the high level of suicide and improving the mental health and wellbeing of the construction industry workforce – are critical to raising awareness and breaking the stigma of asking for help. 

Shockingly, every year 190 Australians working in the construction industry take their own lives – this means we lose a construction worker every second day to suicide. Suicide is the leading cause of death in Australian men aged 15 to 44. Our young construction workers are well over twice as likely to take their own lives as other young Australian men.

At LIBERTY Steel we regard the mental health, wellbeing and safety of our team as central to the success of our business which is why ‘Family’ is one of our core values. MIC training has been rolled out across many of our businesses and we had more than 100 sites participating in RU OK Day last year. 

Culture of support

'Mental health has been a major hidden issue for our society for a very long time. Our perception of mental health has slowly changed to the point that we understand that it is both debilitating and an extremely serious health challenge. As a society, we need to address the triggers, which range across all facets of our lives. Financial stress through work pressure and relationship breakdown can all contribute in some part, as do many other factors. Each individual is unique, as are the pressures they confront. As an industry, we need to develop a culture of support and understanding within our workforce that it is more than OK to seek help, it is vital and imperative.'

Graham Walker On Mental Health

For more information on our 2019 industry insiders:

LIBERTY steel

Combined Development Group

Sammut Developments

Sarac Homes

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Industry insiders

We asked our insiders how the economy will shape the building industry in 2018 and about the impact on their business. We also chatted about emerging trends and technologies and the effect they will have.

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