Epidemic could hit construction sector supply chain

The coronavirus outbreak is a major concern for the Australian construction industry, building boss Scott Hutchinson has warned.

Hutchinson Builders chairman Scott Hutchinson. Picture: Glenn Hunt.

The coronavirus outbreak is a major concern for the Australian construction industry, building boss Scott Hutchinson has warned, with blockages to the Chinese supply-chain likely to cause delays and cost increases.

The Hutchinson Builders chairman said the company was facing delays on at least five of its projects if the Chinese trade and travel restrictions are not lifted in the next month. The situation will only worsen if the epidemic stretches into April.

“It is really highlighting our industry’s reliance on China,” Mr Hutchison told The Australian. “But it could be a lot worse.

“If we can’t get building products out of China, we don’t know what we will do. We will have to look locally but it will be difficult.”

High-rise developers are likely to be significantly affected as access to building facades stalls in light of shipping delays and travel bans implemented to slow the spread of the virus, called COVID-19.

Trade and tourism will be two of the biggest industries struck down by the virus, according to a recent report from Moody’s Investors Service. The Asia-Pacific will likely feel the biggest impact from on supply-chain disruptions.

“Our baseline assumption is that the economic effects of the coronavirus outbreak will continue for a number of weeks before tailing off and allowing normal economic activity to resume,” Moody’s Christian de Guzman said.

“We have lowered our China growth forecast to 5.2 per cent for 2020 from 5.8 per cent previously, reflecting a severe but short-lived economic impact, with knock-on effects for economies across the region.”

Chief forecaster for the Australian Construction Industry Forum and economist at global consultancy FTI Consulting, Kerry Barwise, expects a pick-up once the virus is contained to be quite swift, likening a swift economic upsurge to what followed the SARS outbreak in the early 2000s.

“Depending on how this (COVID-19) works out healthwise, in the past we have seen the global economy quickly move on and that experience says it will probably happen again,” Mr Barwise said.

“If they get back to business in China, we will get back to business here.”

Residential buildings are unlikely to face the same delays, with many of the fundamental materials, like timber and bricks, produced locally. Peter Langfelder, the director of leading home builder Metricon, said the company was on track to deliver the 5000 homes currently in its pipeline. No delays in supply or materials are anticipated.

MACKENZIE SCOTT