Recent global events are significantly impacting all businesses, but Australia’s construction and manufacturing industry appears particularly hard hit and is struggling to manage the volatility. Companies have collapsed, prices continue to rise, and skilled labour and materials are in short supply. The price increases that manufacturers face is cascading through the supply chain and impacting the end consumer.
Trends we are noticing include:
- Transport and supply chain challenges – terminal and port congestions causing excessive delays, which are not expected to ease in the near future.
- Increased fuel and AdBlue prices along with driver shortages is putting additional pressure on stock access.
- Customers are becoming more selective about what projects they are pursuing.
- Project procurement is commencing almost 12 months earlier to allow time to gather supplies and place orders.
- Contractors are scrambling to get hold of all supplies for future projects before their competitors. This has increased warehouse construction and rentals where these contractors are stockpiling supplies.
- Increased level of research into alternative materials.
- Collaboration between stakeholders to share the project vision and form a heathy supply of reliable resources.
- Demand for skilled workers – construction is in grave demand for skilled trades to guarantee projects are completed on time, budget, and in a compliant manner.
- Sourcing of materials closer to home to reduce reliance on importing.
Product suppliers within the industry are contending with aggressive cost pressures associated with the price of aluminium. This has been driven by several factors:
- High global demand for aluminium – a result of government efforts to kick-start economies post-COVID. International aluminium stocks are now at critically low levels.
- Increasing input costs – energy costs are about 35% of the cost of manufacturing aluminium. Europe and China have seen significant increases in the cost of energy.
- Reduced global production – several European and Chinese manufacturers have shut down, making them net importers of aluminium after having been a net exporter for decades.
- Ukraine crisis – Russia is the third largest aluminium producing country, so the overall sanctions are impacting their ability to do business with other nations, driving up aluminium and energy costs.
Aluminium pricing has increased considerably since 1 Jan 2022, and unfortunately there appears to be little to prevent ongoing price volatility caused by these drivers.
In light of price pressures, some contractors are opting for on-site painted fibre cement. While it helps to achieve a cost saving, this is an enormous compromise on the aesthetic and performance of the facade. There are many other cost-effective alternatives available.
Explore Fairviews wide range of aluminium and non-aluminium, compliant products.
