Victoria Needs to Find its Mojo

Bowens has been a member of a hardware buying group since the early 1990s. In mid-May, for the first time in two and a half years, the suppliers and membership of Natbuild gathered in Brisbane. Beyond meeting new faces and reacquainting with many I have known for decades, I learned firsthand of the similar battles trade businesses around the country are dealing with. The contradiction of oversupply and stock outages is a constant from northern Queensland to Perth to Melbourne. Our customers require products A, B, and C while we buy products D, E & F. When some of the ABC’s finally become available, we grab them too, just in case. In many ways, Timber Merchants and Truss Plants are replicating the toilet paper fiasco confronted by the general population when lockdowns began. Nothing on the shelves, with plenty hoarded away.

Across Australia builders are being advised to order materials weeks, even months out. They don’t want to be caught short and merchant staff don’t want to disappoint. Just as it is with Bowens, Timber & Hardware stores in all states are filling their yards with unclaimed engineered floor systems, house lots of doors, fibre cement orders and a myriad of other products. None are easy to store for long periods, leading to inefficient trading environments. It is hard to blame our customers, for they are doing their best. Predicting what is wanted so far out isn’t easy, especially when most building sites continue to experience unexpected intrusions into construction schedules. What is legitimately expected to be required in 10 weeks is often not called upon until week 20. Trades are hard to coordinate due to illness and general availability, while supply lines are fractured. It’s a mess.

“Just as it is with Bowens, Timber & Hardware stores in all stores are filling their yards with unclaimed engineered floor systems, house lots of doors, fibre cement orders and a myriad of other products. None are easy to store for long periods, leading to inefficient trading environments.” 

The similarities are common in all corners of the country, with one difference. From the mouths of our suppliers, who travel the length and breadth of Australia, the people of Melbourne do not seem to have ‘bounced’ out of their covid malaise with the same spark as those in other parts. At the south-eastern tip of our mainland, it would appear people from our industry are more grim, short-tempered and unsettled than their interstate counterparts. I see it at Bowens, too.

Why Melbourne? All states have dealt with government-enforced restrictions, adjusted work arrangements, material shortages … etc. It is true, the heavy hand of authority lasted longer in Victoria, yet other markets have been required to take on additional impediments such as fires and floods. Whatever the reason, better judges than me are singling us out. In other places they speak of less challenging access to additional labour, improving transport options and, most importantly, brighter, happier faces.

This revelation has me thinking about how the New Year has begun. No longer are we caged animals, we’re allowed out, restrictions gone. We can eat, fly, and holiday. Crowds have returned to all venues and our kids are playing sport without impediment. We can stand while drinking beer at the pub and bar staff have removed their masks. The changes are significant when compared with the draconian measures enforced upon us for the better part of two years. Even so, I sense we have not yet found ‘normal’. It all seems to be a struggle; our virus hangover won’t be shaken.

For the Housing Industry, particularly our builders who are the stars of the show, a return to our past lives seems to be a long way off. The Master Builders Association says 98 per cent of its members are experiencing profit squeeze, or worse, as the price of steel, concrete, timber, doors and other construction materials soar. Delivery delays remain and a critical shortage of skilled trades people are compounding what is verging on a crisis.

As was reported in The Age on 1st May, “… a plea from the industry for a legal mechanism allowing home builders to pass on escalating material costs to customers who have signed fixed price contracts has been rejected by the state government … “

“… a plea from the industry for a legal mechanism allowing home builders to pass on escalating material costs to customers who have signed fixed price contracts has been rejected by the state government … ”.

The minister in charge did agree to establish a ‘residential construction costs’ working group. Sadly, it is not enough; changes are required now, or earlier. Many times over I have listened to builders describe the period we are living through as a ‘profitless boom’.

I love embedding a positive spin when writing in The Builders Bulletin. For the moment I am feeling a bit short on inspiration. We are all busy now, I’m not so confident in the medium to long-term. The Ukraine war is not good, pure and simple. For those living in the region or involved in the fighting, it is hard to think anything could be worse. While the consequences for us are not comparable, it needs to be pointed out, the war means less timber will be shipped to our shores (LVL in particular). I’d love to say something different, however I fear there is worse to come.

Interest rates are only moving in one direction, the price of building materials will not fall any time soon, shipping routes are becoming more congested, National Construction Code (NCC) changes are on their way and look likely to add complexity and cost. And those awful, fixed price contracts are here to stay. For those who have been able to negotiate a ‘costplus’ agreement or have owners willing to share at least some of the burden, the industry dips its lid. They are a minority.

Where we can, we must find scraps of good news. No more federal election hyperbole; this must be a good thing, right? The volume of people in our CBD, at airports and events is growing – surely this helps build a return to normal? Immigration numbers will swell. Holidays can be planned, friends can catch-up and Bowens has more pine to sell (despite some continuing concerns with supporting beams). I firmly believe a return to a life with colour, noise and positive distractions will assist in building energy for the time we need to spend at work.

Heads up, one and all. Any dark clouds won’t last forever, they will eventually blow away. When I next meet with my friends from interstate, I want to tell them Victoria is a powerhouse once more. Collectively, we can make it happen.