Australian Construction Productivity

Is the industry’s productivity as bad as claimed?

 

The Australian Bureau of Statistics publishes productivity measures for the whole economy, the Market Sector, and for the 16 industries that make up the Market Sector. Productivity is the ratio of output and inputs and is affected by innovation, research and development, education and training, the quality and age of the capital stock (of machinery, plant and equipment, buildings and structures), the rate of technological change and adoption of new technologies.  The effects of all these factors takes time, so productivity is a long-run measure that changes gradually. 

 

The post compares Construction productivity to the performance of the Market Sector. The data used is from the annual ABS Productivity Statistics release, which has data from 1994-95 to 2023-24 (the most recent release was February 2025). The ABS productivity indexes are based on 100 in 2022-23, however for this analysis they have been first rebased to 100 in 1994-95 to compare the long-run growth of Construction and Market Sector productivity, and then rebased at 100 in 2015-16 for comparing productivity in the short-run. 

 

Comparisons are made for labour productivity and multi-factor productivity (MFP) using both the hours worked and quality adjusted labour input measures. The quality adjusted labour input indexes take into account characteristics of the workforce like years of education, levels of training, industry of employment, age and sex. These quality adjusted measures reflect changes in the composition and skills of the workforce, and typically have a lower rate of growth than the hours worked measure. Capital productivity is also shown. 

 

As well as comparing the different measures of productivity for Construction and the Market Sector, there is data for the individual industries that shows Construction is in no way the worst performing industry, although it is far from the level of growth seen in the best performing industries.

 

 

Productivity Since 1995

 

The long-run performance of Construction includes a sharp rise during the mining boom between 2012 and 2015, followed by a gradual decline over the next few years as these major resource projects completed [1]. At the end of the mining boom productivity had fallen to around the level it was before the boom. This pattern was due to the large increase in Construction output during the mining boom because output included plant and equipment like the offshore drilling platforms and gas liquefaction plants, none of which involved much construction work and most of which was imported. Productivity increased because this statistical quirk increased output much more than employment and hours worked [1]. 

 

Labour Productivity

 

Starting with labour productivity over the long run since 1994-95, the difference between growth in the Market Sector and the lower productivity growth of the Construction industry is apparent in Figure 1. However, despite claims made that there has been no growth in Construction labour productivity, there has been an increase. Construction labour productivity has increased by 17% on an hours worked basis and 24% on the quality adjusted labour input basis which, although less than the Market Sector’s 64% and 41% respectively, is not nothing. 

 

Figure 1. Market Sector industries labour productivity

 

Source: ABS 5260. Gross value added per hour worked. Quali is the quality adjusted labour input measure. 

 

As Table 1 shows, since 1995 the three leading industries for hours worked labour productivity growth have been Agriculture, forestry and fishing 210%, Information media and telecommunications 228%, and Financial and insurance services 123%. The two industries with lower growth than Construction were Mining 6%, Electricity, gas, water 2%, and Administrative and support services had negative growth of -13%. 

 

For quality adjusted labour productivity, Construction had better growth than Rental, hiring and real estate services 4%, and there were three industries with negative growth: Mining -2%, Electricity, gas, water and waste -9%, and Administrative and support services -23%.

 

Table 1. Market Sector industries labour productivity change

 

Multi-factor Productivity 

 

The ratio of output to input of combined labour and capital is multi-factor productivity (MFP). For MFP the story is not as good as for labour productivity, because there has been only 1% growth in Construction hours worked MFP and a 3% fall in the quality adjusted measure.  Market Sector growth on the hours worked basis was 23% and on the quality adjusted labour input basis was 13%. After MFP rose and fell during the mining boom, instead of returning to the preboom level there was collapse in Construction MFP after 2015-16.

 

Figure 2. Market Sector industries multi-factor productivity

 

Source: ABS 5260. Gross value added per hour worked. Quali is the quality adjusted labour input measure. 

 

The 1% increase in Construction hours worked MFP is very small, but not the decline often claimed for the industry. Table 2 shows four industries had a fall in hours worked MFP since 1995:  Mining -28%, Electricity, gas, water -30%, Rental, hiring and real estate services -32%, and Administrative and support services -16%. The three high growth industries were: Agriculture, forestry and fishing 182%, Information media and telecommunications 64%, and Financial and insurance services 63%. 

 

Construction, however, was one of five industries with negative quality adjusted labour input MFP growth, although at -3% it had a much smaller decline than the other industries of Mining -31%, Electricity, gas, water and waste -33%, Rental, hiring and real estate services -36%, and Administrative and support services -25%. This raises the question of why Construction is singled out as the problem industry. 

 

Table 2. Market Sector industries multi-factor productivity change

 

Capital Productivity

 

Capital productivity has been falling for both the Market Sector and Construction since the early 2000s.  This is a complex measure, because estimating the stock of capital requires an estimate of annual capital investment and a depreciation rate to account for declining efficiency of the existing stock due to use and age. Although Construction capital productivity peaked in the mid 2000s and declined during the mining boom, the post-boom fall in MFP was due to the sharp decline in capital productivity, because since then labour productivity was more or less flat but capital productivity was falling. As Figure 3 shows the Market Sector also had declining capital productivity, but after 2015-16 the decline in Construction capital productivity was much worse. 

 

Figure 3. Market Sector industries capital productivity 

 

Source: ABS 5260. 

 

What these long run graphs show is that there was a downward shift in Construction productivity around 2015, when both MFP and capital productivity went into significant decline. Up until then Construction productivity had been similar to Market Sector productivity for MFP, but after 2015 the Market Sector and Construction industry measures diverged. The next section looks at productivity over the short run since that divergence.

 

Productivity Since 2015-16

 

Labour Productivity

 

Labour productivity in the short run since 2015-16 has a distinctive and interesting pattern. The hours worked measure has fallen 4% from 100 to 96 but the quality adjusted labour input measure has increased by 6% from 100 to 106, and was in fact higher then both Market Sector measures in 2023-24. The increase in the Quali index occurred in the 2019-20 year with a big jump from 95 to 104, and there has been a gradual increase in the years since. 

 

Figure 4. Market Sector industries labour productivity 

 

Source: ABS 5260. Gross value added per hour worked. Quali is the quality adjusted labour input measure. 

 

The increase in the Construction quality adjusted labour input measure index will be the result of changes in the composition of employment, with the combined share of Professionals and managers increasing from 15% to 18% between 2019 and 2020, and peaking at 19% in 2022. Figure 5 shows the share of Professionals increased from 4% to 6% in 2020, and for Managers the share rose rom 10% to 12% in 2020 and was 13% from 2021 to 2023. In 2024 Technicians and trades workers were 50% of Construction employment, and Machinery operators another 6%, and their combined shares in total Construction employment have decreased by 3% since 2016. The share of Clerical and administrative workers has also declined, by 0.6%. Therefore, since 2016 the overall makeup of Construction workforce has become more skilled and qualified, raising the quality adjusted labour input measures [2]. 

 

Figure 5. Share of total Construction employment

 

Source: ABS 6291

 

Between 2016 and 2024 there were large differences in the productivity performance of the 16 Market Sector industries. As Table 3 shows, on the labour productivity hours worked basis there were two industries with high growth: Agriculture, forestry and fishing 44%, and Information media and telecommunications 40%. Four industries had growth between 10 and 20%, and five had growth less than 10%. Construction -4% was one of five industries with negative growth, the others were Mining -15%, Manufacturing -4%, Electricity, gas, water and waste -15%, and Financial and insurance services -4%.

 

On a quality adjusted basis Construction was the only industry to improve on the hours worked measure, all other industries had slightly lower quality adjusted labour input growth than hours worked. The other four industries with negative hours worked labour productivity again had negative quality adjusted labour input labour productivity growth. There were only six industries with better quality adjusted labour productivity growth than Construction’s 6%: Agriculture, forestry and fishing 41%, Wholesale trade 7%, Accommodation and food services 8%, Information media and telecommunications 33%, Professional, technical and scientific services 14% and Administrative and support services 12%.

 

Table 3. Market Sector industries labour productivity change

 

Multi-factor Productivity 

 

The MFP indexes for Construction do not show the same pattern as labour productivity. Both the hours worked and the quality adjusted indexes have fallen since 2016 and have closely followed each other down, ending at 92 and 91 respectively in 2024. However, the Market Sector has not performed particularly well, with the quality index only increasing to 101 and the hours worked index increasing to 104. 

 

Figure 6. Multi-factor productivity

 

Source: ABS 5260. Gross value added per hour worked. Quali is the quality adjusted labour input measure. 

 

MFP growth since 2016 is similar to labour productivity with a couple of exceptions. Table 4 shows on the hours worked measure only Agriculture, forestry and fishing 44% had high growth, and there were three industries above 10%. Five industries had negative growth: Construction -8%, Mining -3%, Manufacturing -1%, Electricity, gas, water and waste -15%, and Arts and recreation services -1%. Again, the growth in the quality adjusted labour input measure was lower than for hours worked, with Construction -9% one of eight industries with declining productivity, including Mining -3%, Manufacturing -3%, Electricity, gas, water and waste -16%. Transport, postal and warehousing -3%, Rental, hiring and real estate services -1%, and Arts and recreation services -3%. 

 

Table 4. Market Sector industries multi-factor productivity change

 

Capital Productivity

 

The performance of capital productivity has been particularly poor for construction, falling from 100 to 85 between 2016 and 2024, while the market sector index barely increased and ended at 103.

 

Figure 7. Capital productivity

 

Source: ABS 5260. 

 

Misunderstanding Productivity

 

There are two common misunderstandings about Construction productivity. One is that increasing offsite manufacturing and use of modern methods of construction like prefabrication and modular buildings will increase measured Construction productivity. It will not, because that work will be included by the ABS in the Manufacturing industry subdivisions of Prefabricated steel and timber buildings, Concrete products, and Structural steel. In fact, one reason for the lack of growth in measured Construction productivity has been the gradual but continual shift to more prefabrication and offsite manufacture. 

 

A second misconception is that improving Construction productivity will somehow decrease the cost and increase the number of dwellings being built. This mistakes new construction for the market for housing, where in the short-run price is determined by the interplay of demand and an inelastic supply of new dwellings due to limited industry capacity to build and lengthy approval times. Increasing onsite productivity might decrease the time to complete a build but will have a marginal effect on the total cost of delivery, and the number of dwellings built is determined by project feasibility (i.e. the profitability of development) at any one time. Improving Construction productivity might help, but on its own cannot and will not solve the housing crisis. 

 

Conclusion

 

That the Construction industry has had no or negative productivity growth for the last few decades has been repeated so many times by so many commentators it has become an accepted fact about the industry. There are, however, four different measures of productivity, and commentators can focus on those that support their claims, and productivity growth rates vary considerably over different time periods, allowing selective choosing of comparisons. 

 

The four productivity measures are labour productivity on an hours worked basis or quality adjusted labour input basis, and multi-factor productivity (MFP includes the capital stock) also on an hours worked basis or quality adjusted labour input basis. The ABS productivity statistics for the Market sector go back to 1994-95, and this analysis has been for two periods, the long-run from1994-95 to 2023-24 (the latest data) and the short-run period of 2015-16 to 2023-24, chosen because 2015-16 was the end of the rapid rise and fall in Construction productivity during the mining boom. 

 

When the productivity of Construction is compared to the Market sector, despite claims that there has been no growth in Construction labour productivity, there has been an increase. Since 1994-95 Construction labour productivity has increased by 17% on an hours worked basis and 24% on the quality adjusted labour input basis which, although less than the Market Sector’s 64% and 41% respectively, is not nothing. Construction is in no way the worst performing industry, although it is far from the level of growth seen in the best performing industries.

 

In Australia there is a wide difference between a group of high productivity growth industries and a group of low or negative productivity growth industries. On the hours worked measure for labour productivity, since 1994-95 there were three high growth industries, and ehree industries with lower growth than Construction. For quality adjusted labour productivity, Construction had better growth than Rental, hiring and real estate services’ 4%, and there were three industries with negative growth. 

 

For MFP the story is not as good, because since 1994-95 there was only 1% growth in Construction hours worked MFP. That 1% increase in Construction hours worked MFP is very small, but not a decline. Market Sector growth on the hours worked basis was 23%, and on the quality adjusted measure Market Sector growth was 13%. On the hours worked basis there were three high growth industries, and four industries had a decline. Construction was one of five industries with negative quality adjusted labour MFP growth, although at -3% it had a much smaller decline than Mining -31%, Electricity, gas, water and waste -33%, Rental, hiring and real estate services -36%, and Administrative and support services -25%. This raises the question of why Construction is singled out as the problem industry. 

 

Construction capital productivity peaked in the mid 2000s and falling MFP was due to this decline in capital productivity. The Market Sector also had declining capital productivity, but there was a downward shift in Construction productivity around 2015, when both MFP and capital productivity went into significant decline and the Market Sector and Construction industry measures diverged.

 

There is a notable difference between the quality adjusted labour input measures and the hours worked measures for Construction labour productivity since 2015-16, because the hours worked measure has fallen 4% but the quality adjusted labour input measure has increased by 6%. The increase in the Construction quality adjusted labour input measure index will mainly be the result of changes in the composition of employment, with the combined share of Professionals and Managers increasing from 15% to 19% in 2022. The Construction workforce has become more skilled and qualified, raising the quality adjusted labour input measures.

 

Between 2016 and 2024 on the labour productivity hours worked basis there were two high growth industries, four industries had growth between 10 and 20%, and five with growth less than 10%. Construction -4% was one of five industries with negative growth, the others were Mining -15%, Manufacturing -4%, Electricity, gas, water and waste -15%, and Financial and insurance services -4%. On a quality adjusted basis Construction was the only industry to improve on the hours worked measure, and there were only six industries with better quality adjusted labour productivity growth than Construction’s 6%.

 

For MFP growth since 2016 on the hours worked measure only Agriculture, forestry and fishing had high growth, and there were three industries above 10%. Five industries had negative growth: Construction -8%, Mining -3%, Manufacturing -1%, and Electricity, gas, water and waste -15%. Again, the growth in the quality adjusted labour input measure was lower than for hours worked, with Construction -9% one of eight industries with declining productivity, including Mining -3%, Manufacturing -3%, and Electricity, gas, water and waste -16%.

 

Clearly, Construction is far from the worst performing industry, which raises the question of why it is so often singled out for low productivity growth. There were only six industries with better quality adjusted labour productivity growth than Construction. And are industries that have had declining productivity like Mining or Electricity, gas, water and waste not important? Should their productivity performance not be scrutinised? 

 

Maybe Construction could do better, but there have only been a few high growth industries in Australia over recent decades. Construction is one of a group of low growth industries, and compared to those industries its performance has been much better in both the long and the short-run. Instead of complaining about low productivity growth, attention should be focused on addressing the issues that have negatively affected Construction productivity, such as the number of micro and small firms, lack of standardisation of structural elements, the low level of investment in software and capital stock, state based occupational licensing and building codes, procurement methods, financing and project management, and education and training systems [3].

 

 

[1] See The long cycle in Australian construction productivity

 

[2] See The changing composition of construction employment

 

[3] See Housing productivity report a missed opportunity

Australian Manufacturing of Prefabricated Buildings and Construction Products

 The extent of prefabrication used in Australian construction is unknown and unknowable

 

 

The Australian construction industry is supplied by an extensive manufacturing base that includes a wide and varied range of industries, producing machinery and equipment as well as materials like bricks, glass, concrete, steel and wood. In 2021-22 there were 133,216 people employed in construction related manufacturing in Australia.

 

The Australian Bureau of Statistics also includes prefabricated buildings in manufacturing, however, the data is limited to the relatively small number of firms that classify themselves as prefab manufacturers, and misses offsite work by firms that may be classified as building or trade contractors, architectural or engineering practices, or work done inhouse in other industries like tourism and aged care.  

 

Therefore, the actual extent and depth of prefabrication used in Australian construction is unknown, and with the data available is largely unknowable. With offsite manufacturing in general, and prefabrication in particular, seen as important to addressing the industry challenges of sustainability, productivity and skills, the lack of data on how many and what type of prefabricated buildings and components are produced each year in Australia is a significant gap in knowledge and understanding of the industry.

 

This research starts with the ABS Manufacturing industry data. It then looks at their estimates of the number of dwellings on manufactured home estates and the effects of misclassification on those estimates. The next question addressed is the number and type of firms producing prefabricated buildings. 

 

 

Construction Related Manufacturing

 

Australian Manufacturing is divided by the ABS into 19 subdivisions, with the subdivisions made up of groups of firms classified by similarities in their products or processes into classes. The ABS gives an industry class an ANZSIC four digit number, and that level of detail allows an estimate of the employment and output of construction related manufacturing to be made. The data comes from the ABS annual publication Australian Industry.

 

The largest of the relevant classes are for widely used materials like wood, concrete, steel and glass. Other classes include manufactured products like plaster and ventilation systems. Table 1 shows the industry classes identified as directly contributing to new construction, with the number of people employed in June, and in Table 2 their output as Industry value added (IVA) in current dollars. Figure 1 shows the totals.

 

Figure 1. Total employment and output

 

In 2021-22 construction related manufacturing was 16% of total manufacturing IVA and employment, having increased from 15% in 2014-15.

 

Firms self-select the ANZSIC industry code used to classify them into an industry class. Some building companies like Sekisui Australia, Hickory and Hutchinson have offsite facilities but are not manufacturers. A smaller builder that does some modular or offsite construction might be classed as a building contractor or a construction trade such as Carpentry services. Prefabricated buildings produced inhouse by an organisation in an industry like transport, tourism or retirement villages will not be included in manufacturing. 

 

Therefore, there is some give and take as regards to what is included in and excluded from these industries, an outcome of the ANZSIC classification system. Some building products are not included, like floorboards, carpets and insulation, because they belong to larger product groups and can’t be separated in the data. On the other hand, industries included here like Glass products and Paint and coatings supply a range of other industries besides construction.  

 

The four largest manufacturing industries supplying construction add up to nearly 75,000 people employed producing over $8 billion in added value in 2021-22, in Table 3. 

 

Prefabricated Buildings and Concrete

 

There are two industries producing prefabricated buildings, of wood and metal respectively. These have grown significantly since 2014, although the big jump in IVA in 2022 may be revised in next year’s release. Nearly 10,000 people produce wood and steel prefabricated buildings. The ABS does not have data on what types of buildings are produced (i.e. residential, commercial, institutional etc.). Wooden building prefab is a very small industry, in 2021-22 total income was only $688 million and IVA was $251mn, compared to prefab steel building with income of $3.5 billion and an IVA over $1.1bn. 

 

Concrete product manufacturing employed 7,670 people, a substantial industry that produces pots and bricks, but also prefabricated elements and buildings. The precast concrete industry is highly concentrated, with six major firms (ADBRI, Brickworks, CSR, CTC Precast, James Hardie, Holcim) and a large number of small and medium size firms around the country. 

 

The combined total of offsite construction in 2021-22 was over 17,000 people employed and an IVA of $2.4 billion. 

 

 

The share of wood and steel prefabricated buildings in total construction related manufacturing (in Figure 2) increased by nearly half between 2014-15 and 2021-22. This may be the strongest signal in this data of the uptake of modern methods of construction and increasing use of offsite construction. 

 

Figure 2. Wood and steel building’s share of total construction related manufacturing

 

 

How Many Manufactured Homes?

 

The 2021 ABS Housing Census dwelling location data includes manufactured home estates and long term residents in caravan parks, and there were over 10,000 of these manufactured houses in Australia, and another 2,000 townhouses and apartments (Table 5). Unfortunately, the 2016 Census housing data did not include this category. The ABS had a separate category for Retirement villages in the 2021 Census, with over 200,000 dwellings included. An unknown proportion of those retirement villages are manufactured housing. 

 

The ABS website explains their methods:

Dwelling location data was recorded by ABS Address Canvassing Officers in the lead up to the 2016 Census as a once-off part of establishing the Address Register as a mail-out frame for designated areas. Dwelling location was also verified or collected by ABS Field Officers during the 2016 and 2021 Census collection periods.

 

In rare cases, an establishment may fall into more than one category of dwelling location, such as a retirement village that contains manufactured homes, or a residential park that is made up of a mixture of caravans and manufactured homes. However, a dwelling can only be allocated to a single category and in these cases a determination was made during Census processing of the most appropriate category for the dwellings in question. 

 

And therein lies the problem, manufactured homes that are not on an estate but within a retirement village. Research on ABS data on retirement villages and manufactured housing estates (MHEs) by Lois Towart found that compared to the 2016 Census “the 2021 Census is significantly more accurate in identifying and recording retirement villages. The issue is the numbers of caravan parks and MHEs that are recorded as retirement villages. This overstates both the size of the sector and the population.” 

 

In her study of 112 retirement villages and 101 caravan parks and MHEs in the Central Coast, Newcastle and Hunter regions in NSW, individual properties were reconciled with small area (SA1) ABS Census data for the 2021 Census. “These are retiree destinations with large numbers of retirement villages and MHEs operated as retirement living’ and “examination of classification by the ABS demonstrates that for the 2021 Census when the dwelling location for caravan parks, MHEs and retirement villages is combined, then the total population is relatively accurate. The inaccuracy is the recording of caravan parks and MHEs as retirement villages.” 

 

How large is this problem? The Census data in Towart’s research has the total number of people living in retirement villages in 2011, 2016 and 2021 as 154,579, then 205,709, and in 2021 249,262. That increase of almost 100,000 people implies at least another 50,000 dwellings, and probably more than 60,000 given the age of this population. An unknown number of those new dwellings were prefabricated. 

 

Some retirement village operators offer sites for relocatable homes, but these will not be classified as MHEs. The construction methods some others use will be based on prefabricated pods and modules, probably sourced locally from a small company. Much of this offsite production might be done by firms not classified as manufacturing buildings. 

 

 

How Many Producers of Prefabricated Buildings Are There?

 

The membership directory of prefabAus lists 9 companies as ‘end-to-end modular’ builders, and there are a dozen other member companies that produce prefabricated buildings or modules. Adding results from other web searches gives a list of 39 companies:

Anchor Homes

Archiblox 

Arkit

Ausco Modular Construction 

Black Diamond Modular Buildings

Carbonlite

Cubehaus

Ecoshelta

Ecoliv buildings

Ehabitat

Fairweather Homes 

Fleetwood Australia

Harwyn

Hickory Group

Hutchinson Builders

Hunter Valley Modular Homes

Habitech Systems

Intermode

K.L. Modular Systems 

Landmark Products 

Maap House

Marathon Modular

Mode Homes

Modscape

Parkwood

Prebuilt Commercial

Pretect

PT Blink

Shawood by Sekisui House

Spanbilt Pty Limited

Strine Environments 

Strongbuild Manufacturing

Sumitomo Forestry Australia

Swan Hill Engineering

Uniplan Group

Valley Workshop 

Volo Modular

XLam

Zen Architects

 

In this (undoubtedly) incomplete list there are substantial companies like Ausco, Modscape and Prebuilt, but many are small firms. Several are engineering and architectural practices that would not be classified as manufacturers. Included are large building contractors like Hickory and Hutchinson, developers like Sekisui and Parkwood, and corporates like Strongbuild and Sumitomo. XLam manufactures cross laminated timber, PT Blink has a design for manufacture and assembly (DfMA) platform. There are also firms that specialise in prefab school buildings, like Marathon, Pretect and Harwyn.

 

Overall it looks like a fragmented market with a few major firms and a large number of small producers, specialised by type of material and type of building produced. Because of transport costs and marketing reach, many producers would be expected to be local and focus on a region. 

 

The diversity of firms in this list highlights the difficulty the ABS would face in measuring the prefabricated building industry. As well as manufacturing, other ANZSIC industries they come from are construction, professional services and business services. With the ABS moving away from surveys to digital data, this sort of detailed data spread across a number of industries is hard to collect. Then there is the question of defining what is prefab and modular construction, which would be needed to organise any data collected and estimate how much is being produced. 

 

 

Deloitte 2023 Industry Survey 

 

Another piece of information comes from the Deloitte Access Economics 2023 State of Digital Adoption in Construction Report, which found 34% of the 229 firms in their survey used prefab and modular construction. The survey sample was from Australia (132), Singapore (38 firms) and Japan (59 firms), and the firms were from Building and construction (144), Architecture (86), Engineering (79) and Other (65). 

 

The survey ranked 16 digital technologies with BIM, construction management cloud software and drones used by around 40% of firm the leaders, followed by prefab and modular where, of the 229 firms, 34% are using it already and 28% are planning to in the future. The remaining 38% are not intending to use it. 

 

That means 76 of the 229 firms use prefab, and its possible that many of them are in the Building and construction category, which would mean up to half of the 144 firms in that category are using prefab and modular. An unknown proportion of those firms are Japanese and Singaporean, where the use of prefab and modular has been supported by government policy and is more extensive than in Australia. 

 

The report included a few more data points:

·      ‘Larger businesses in the survey used significantly more technologies on average, with businesses that have more than 500 employees using an average of seven different technologies, compared with four technologies for those with fewer than 500 employees.’  

·      Businesses used five of the 16 technologies on average, and about 10% were using more than ten different technologies.

·      Newer businesses are investing in new technologies, with ‘businesses less than 10 years old investing 80% more than those in operation for 20 years or more.’

 

The survey does not allow much beyond reinforcing the generalisation that large companies, particularly building contractors, are more likely to be using prefab and modular construction. 

 

 

Conclusion

 

Construction related manufacturing is a significant part of Australian manufacturing, and its share of total manufacturing employment and IVA has increased from 15% in 2014-15 to 16% in 2021-22. There are 17 ANZSIC industry classes included in construction related manufacturing, using data from the Australian Bureau of Statistics annual publication Australian Industry.  

 

The two industry classes for prefabricated buildings are relatively small, but have had rapid recent growth. The share of the combined wood and metal prefabricated building classes in total construction related manufacturing increased by nearly half between 2014-15 and 2021-22. However, wooden building prefab is a very small industry, employing 1,253 people in 2021-21, compared to prefab metal building with 8,144 people employed. The ABS does not have data on what types of buildings are produced (i.e. residential, commercial, mining, institutional etc.). 

 

The ABS 2021 Housing Census found 10,000 manufactured houses in Australia, and another 2,000 townhouses and apartments . This does not include the 200,000 dwellings ABS has in a separate category for Retirement villages. An unknown proportion of those retirement villages are manufactured housing. 

 

The ABS data also does not include offsite work done by firms classified as building or trade contractors, architectural or engineering practices, or work done inhouse in industries like transport, tourism and aged care. The problem the ABS would have measuring the prefabricated building industry is that the ANZSIC industries firms involved come from include manufacturing, construction, professional services and business services, and this sort of detailed data spread across different industries is hard to collect.

 

A list of 39 firms producing prefab and modular buildings was compiled from prefabAUS members and web pages. This appears to be a market with few major firms and a large number of small local producers, specialised by type of material and type of building produced. The industries they come from include engineering and architectural practices, building contractors, and corporates, and any modules or buildings these firms produce will not be found in the ABS manufacturing statistics. This is not a criticism of the ABS, it is an outcome of the classification system used internationally for industry data. 

 

The extent and scale of prefabrication used in Australian construction is unknown, and currently is unknowable. Based on available evidence it is mainly used in specific sectors like the mining industry, education, low cost housing, aged care and retirement villages. There is no evidence that it is cost competitive with conventional construction methods for the great majority of projects. This may be because prefab is a developing industry, or because economies of scale are not as great as expected. 

 

With offsite manufacturing in general, and prefabrication in particular, being seen as important to addressing the industry challenges of sustainability, productivity and skills, this lack of data is regrettable, and the lack of data on how many and what type of prefabricated buildings and components are produced each year in Australia is a problem if an objective of industry policy is to increase the use of prefab and modular construction.