A quick look at the construction sector

A quick look at the construction sector

No. new res consents per annum 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

Builds per 1,000 people 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00

Shortfall based on 6.58 builds per 1,000 population Short fall 25,000 20,000 15,000 10,000 5,000 0-5,000-10,000-15,000-20,000

Auckland Household Size Vs NZ 3.1 3.05 3 2.95 2.9 2.85 2.8 2.75 2.7 2.65 2.6 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Auckalnd NZ (ex Aklnd, Cnty)

Average House Size Driven by land cost 0.0 50.0 100.0 150.0 200.0 250.0 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Construction capacity The value of building work is at peak levels, and capacity utilisation is also near peak

National Construction Pipeline to 2022 Peak of $42 billion in 2020, 23% growth from 2016

Serious Gaps in the Regulatory Framework and a Lack of Building Systems Constrain Growth of 3 6 Storey Multiplex in NZ NZ 3604 Timber-frame buildings (1-2 Storey) No Code or Standards All Structural Materials (3-6 Storey) Specific Design Engineering Sign-off 6+ Storey We d love to build 5 story apartments but don t have the systems we need in NZ. We need more choice in cladding systems but the façade engineers are limited by the existing range. Fletcher Living Design Team Historically, NZ Building Systems Were Designed for Either End of the Spectrum Lack of Regulatory Requirements, Standards, Design and Tech Guides, and Building Systems for Multiplex Major Regulatory Concerns in Weather Tightness Risks a large source of multiplex building failures 1995-2010 Lack of Choice for Specifiers in NZ With Cladding Systems to Address Weather Tightness

And Emerging Construction Technologies Will Become More Commonplace (2027 Smart Building Site) Site Logistics Controller becomes flight control for all materials flowing on to and through the site BIM becomes the one source of the truth for every major project and project team with Virtual Reality supporting access Augmented Reality will support onsite quality installs such as a new type of steel frame Panels and pods arrive at the site for assembly of a new apartment. Pre-fab is now over 50% of major projects. A 3D Concrete printer starts on formwork for the park restroom Semi-Automated Mason brick robotics support construction of a fence Body Cams and Drones are commonplace keeping a real time watch over progress and site issues Exo-skeletons aid in trade productivity, lifting capacity and reductions in long term injuries

No of employees in construction firms 3% 0% 2% 0% 4% 0 1 5 26% 65% 6 9 10 19 20 49 50 99 100+

Growth in SMEs -specialisation 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2010 2011 2012 2013 2014 2015 Employer Self Employed

Very volatile: % change in NZ Res consents 40.00% 30.00% 20.00% 10.00% 0.00% 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017-10.00% -20.00% -30.00% -40.00%

Employment Cycle

Construction firms survival rates 90 Construction Survival Rates - Birth 2006 80 70 60 50 40 30 20 10 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

What about apprenticeships and the training issues we face?

NZ Births per 1,000: An ever shrinking pool of young prospects

SCHOOL STUDENTS PROFILE Auckland, Male and Chinese students are more open to a B&C career. Open School Students Closed School Students n=66 / 17% n=125 / 69% 74% 26% 30% 70% 3% 5% 9% 13% 16% 22% Attractiveness of a B&C Career Fantastic(7) 6 5 4 3 2 Terrible (1) 31% 45% 7% 46% 4% 48% 50% Wellington area12% Rest of South10% Auckland45% Rest of North 27% Christchurch Region (Canterbury) 6% NZ European / 62% Pakeha Total Pasifika 27% Chinese 17% Indian 6% Others 9% Wellington area14% Rest of South10% Auckland33% Rest of North 33% Christchurch Region (Canterbury) 10% NZ European / Pakeha 69% Total Pasifika 27% Chinese 5% Indian 5% Others 10% 7 2018Ipsos.

PERCEIVED ATTRACTIVENESS OF DIFFERENT INDUSTRIES Manufacturing / engineering & police / defence services are perceived as more attractive career options than B&C Terrible 2 3 4 5 6 Fantastic Mean score Health / Community / Sciences 10% 13% 17% 21% 16% 13% 10% 4.0 Business / Law / IT / Government 13% 14% 16% 18% 16% 12% 11% 3.9 Hospitality / Tourism / Recreation / Fitness 10% 14% 16% 24% 18% 12% 6% 3.9 Education / Teaching 14% 15% 17% 22% 18% 9% 5% 3.6 Manufacturing / Engineering 21% 18% 16% 18% 14% 8% 5% 3.3 Police & Defence Services 24% 17% 16% 17% 12% 9% 5% 3.2 Building & Construction 28% 20% 15% 15% 11% 7% 4% 3.0 Civil Construction 32% 22% 14% 14% 9% 6% 3% 2.8 Driving / Transport / Storage / Wholesale 28% 24% 17% 15% 9% 4%3% 2.8 Agri / Forestry / Mining / Fishing 30% 23% 16% 16% 9% 3%3% 2.7 24 2018Ipsos. QP1: Considering your personal interests and skills, how attractive do you think each industry shown below would be for you to have a careerin? Base: Total sample (n=993)

PERCEPTIONS OF QUALIFICATIONS Those closed to B&C careersregard Unsurprisingly, University degrees are perceived most favourably, but Apprenticeships are only slightly behind, and lead on employment University qualifications more favourably than Apprenticeships, despite rating them equally on employability. Mean score QCS6: There are many different ways to get the skills needed for a career. How well do you think each of the ways shown below performs in terms of prestige, earning potential, and usefulness? Base: Total sample (n=993)

ITF Berl

Training cycle 30 20 10 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Carpentry Economy -10 Trainees -20-30 -40

Consent/Trainee % change the lag effect : 18 24months 30 20 10 0-10 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Trainees Consent -20-30 -40

Number of apprentices in training 12000 10000 8000 6000 4000 2000 0 2013 2014 2015 2016 2017 2018

Withdrawal/churn rates all trades 2017

Women in trades (as at May 2018) BCITO has 322 women in training or 2.77% of trainees Require greater diversity

No. firms that train Only 10% of firms train at any one time Require greater alignment and flexibility within the training system

We think Review the industry training framework Flexible and responsive Greater specialisation (micro-credentials, flexible funding etc) Greater business alignment (opportunity with ITP / VET review?) Raise the profile of vocational learning Three free years tertiary Trades level 4 - entry level Bachelor degree 7? Better alignment Scotland/UK (Opportunity with NZQF review?)

We think Cut constraints on ITO training Lift prohibition on training (digital technology, employer partnering) Lift cap on levels 5/6 Allow graduate level apprenticeships (Scotland) (opportunity with ITP/VET review?) Introduce employer funding streams Industry levy (trial using building levy or JAVP ) Preserves industry contribution

We think Utilise Government policy incentives LBP scheme (qualification based licences only opportunity with LBP review) Procurement policies (central and local Govt) Better workforce planning Dedicated labour force unit for construction Labour Party s manifesto commitments National Construction Pipeline and Future Demand for Construction Workers

We think Build a more diverse workforce Maori and Pasifika trades training Asian ethnic groups Women 2.8% of trainees Ensure training/immigration alignment Safety valve not primary skills pathway Complementary and not competitive