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Australia’s home construction boom sparks serious shortages in building materials

March 1, 2022
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Why this is important to Wisconsin businesses: Wisconsin exporters of building and construction materials, equipment and machinery could fill some of the gaps.

Home construction in Australia has soared in the past year as a result of the COVID-19 pandemic.

As more Australians worked from home because of pandemic restrictions, many decided to build new homes in rural areas. Construction starts of single-family homes jumped 31.3% in 2021 from 2020 levels, according to Australia’s Housing Industry Association. While the 2022 rise is expected to be smaller, it’s still projected to be 11.4% above the average annual increase over the past decade.

Australians also have spent $37.5 billion AUD ($27.3 billion USD) on home renovations.

The downside is that the building boom’s heightened demand for timber, steel and other construction materials has created the worst shortage Australia has seen in 40 years. Australians have paid higher prices and have been forced to endure longer waiting periods to get their homes built.

Meanwhile, suppliers are struggling. Timber sources are consolidating; the number of smaller companies has dwindled as the big businesses have nearly doubled in size.

A $300 million AUD ($220 million USD) program to encourage owners, developers and builders to use lower-carbon engineered wood products in their projects was announced in February 2022, and that could further drive local demand for timber.

The large companies also are calling for industry reform to improve cost efficiency at the forestry level. They are pushing for the development for hardwood lumber mills, which currently account for only 18% of total sawlogs being processed. This would drive capital expenditures on machinery that would be used in the new mills—if the Australian government will support the effort.

So far, the government has pledged $86 million AUD ($62 million USD) worth of grants for future plantings, but in the meantime, Australia will need to continue to depend on imported resources to help cover the gap.

Australian suppliers are assessing long-term strategies for diversifying their sources for building materials such as timber and steel. John Halkett, general manager of the Australian Timber Importers Federation, said Australia is looking to establish a supply source for timber products in North America or Europe. Suppliers also are considering imports from China. Camille Batiste, senior vice president of global supply chain and procurement at Archer Daniels Midland, said, “We need to build a supply chain that can also receive material from other places. We just need to always have multiple sources.”

With Wisconsin’s strong timber industry, companies in the state could take advantage of opportunities to create export agreements with Australian partners—as long as their products meet Australia’s biosecurity and building products codes.

Exporters of manufacturing machinery or tech-related solutions for the timber industry could also find market opportunities in Australia if they offer more efficient costs, reliability and innovation.

 

 

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