The Australian Built Environment Sector 2023

 The economic role of construction and related industries

 

 

This post combines data from the annual Australian Bureau of Statistics publication Australian Industry for fifteen industries that have a direct relationship with construction and the built environment. These industries make up the Australian Built Environment Sector and in 2022-23 they employed 2.3 million people and produced $348 billion in output. The Built Environment Sector includes industries involved in construction of buildings and structures, management and maintenance of the built environment, suppliers of materials, manufacturers of machinery and components, and professional services providers. 

 

The analysis is based on Industry value added (IVA) and Industry employment (in June for each year). IVA is the estimate of an industry’s annual output and its contribution to gross domestic product (GDP), and is broadly the difference between total income and total expenses. IVA is given in current dollars in Australian Industry, therefore changes in IVA reflect changes in both prices paid for goods and services and the quantity of output.

 

Table 1. Built Environment Sector Contribution to the Australian Economy 2022-23

                                                                                     Employment               IVA $bn

Total Australian Built Environment Sector                  2,266,000                    348

Total Australian employment and GDP                      15,369,000                  2,564

BES Percent of total employment and GDP                14.7%                          13.6%

 Source: ABS 8155, ABS 5206, ABS 6202. 

 

The IVA of the fifteen industries contributed 13.6 percent to nominal Australian GDP in 2022-23, within their long-run range between 13 and 14 percent of GDP since 2006-07.  Over that period the BES share of total employment fluctuated between 14 and 16 percent of total employment, and was 14.7 percent in 2022-23.

 

 

Figure 1. Built Environment Sector Contribution to the Australian Economy 2007-2023

Source: ABS

 

 

 

 

The Built Environment Sector

 

Onsite construction work links suppliers of materials, machinery, equipment, products and components. Consultants provide design, engineering, cost planning and project management services. Once produced, buildings and structures need to be managed and maintained over their life cycle, work done by another group of related industries. The built environment also needs infrastructure and services like water, sewerage and waste disposal, provided by yet more industries. he collective significance of these industries is obscured by their diversity, ranging from architecture to waste disposal, and their geographic distribution. Of the fifteen industries included in the Australian BES, three are from Construction.

 

Table 2. Industries included in the Australian Built Environment Sector.

Supply industries	Demand industries	Maintenance industries
Non-metallic mining & quarrying	Residential property	Water, sewerage & drainage
Building construction	Non-residential property	Waste collection & disposal
Heavy and civil engineering	Real estate services	Building & industrial cleaning
Construction services		Building pest control services
Architectural services		Gardening services
Surveying & mapping services
Engineering design & consulting
Manufacturing industries

 

 

Comparing the shares of employment and IVA for each BES industry in Figures 2 and 3 shows Construction and Building services have smaller shares of IVA than employment and are more labour intensive, while Water and sewerage, Professional services and Property and real estate services have larger shares of IVA than employment and are relatively more capital intensive. 

 

 

Figure 2. Employment by industry 

Source: ABS.

 

Figure 3. Output by industry  

Source: ABS.

 

Since 2007 the combined share of BES employment for the three service industries of Property and real estate services, Professional services and Building services has increased from 34.2 percent to 36.1 percent, and their share of IVA increased from 33.7 to 38.5 percent. Manufacturing’s share of BES employment fell from 8.9 percent in 2007 to 6.5 percent in 2023, and the IVA share went from 10.7 to 6.3 percent. 

 

Missing from the industries included in the BES are transport and distribution. Materials, components and builders’ suppliers have to be supplied to site by the transport industry, and there are thousands of hardware stores and builders’ merchants that maintain stock, manage logistics and extend credit to customers. Like their contractor and subcontractor customers, much of the supply chain for building supplies and materials is highly fragmented. A further complication is manufacturers who not only sell to distributors like the hardware chains, but also sell direct or act as their own distributors. 

 

 

 

The Construction Industry is the Core of the Built Environment Sector

 

The Construction industry is divided into three sub-divisions: Building construction; Heavy and civil engineering construction; and Construction services (the trades). Of these, Construction services is by far the largest, employing 867,100 people in 2023 compared to 250,800 in Building and 142,400 in Engineering. In 2022-23, Construction accounted for 54.5 percent of BES employment, and that share has been between 54 and 55 percent since 2007. 

 

However, over time the Construction share of BES IVA has been gradually falling, from 50.3 percent in 2007 to 46.9 percent in 2023. The share of BES employment is higher than the share of IVA, mainly due to the labour-intensive nature and lower productivity of Construction Services, where the share of Construction employment is much larger than the share of Construction IVA. Within Construction, internal dynamics have seen the employment and IVA shares of Construction services decline since 2007.

 

In 2007 Construction services accounted for 74 percent of Construction employment and 67 percent of IVA, and in 2023 these shares were 69 percent of Construction employment and 60 percent of Construction IVA. In 2007 the share of Building was 21 percent of Construction IVA and 17 percent of employment, and in 2023 these were 23 percent of IVA and 20 percent of employment. For Engineering, in 2007 the share was 12 percent of Construction IVA and 9 percent of employment, in 2023 the shares were 17 percent of IVA and 11 percent of employment. 

 

The much larger share of IVA than employment for Engineering reflects the higher capital intensity of engineering work with its extensive use of heavy machinery like excavators and road making equipment. Although to a lesser extent than Engineering, this is also the case for Building because the use of cranes and other equipment makes it more capital intensive than Construction services, where hand tools are used. 

 

 

Figure 4. Building, Engineering and Construction services shares of employment 

Source: ABS.

 

 

BES Manufacturing

 

In Australian Industry data for Manufacturing is provided at the level of industry class, where broad categories like Wood products or Metal manufacturing are divided into specific industries based on their products. At that level it is possible to identify seventeen manufacturing industries that are primarily associated with the built environment. For industries like Concrete products, Clay bricks or Structural aluminium inclusion is straightforward. 

 

However, some industries will supply others outside the BES. Therefore, BES manufacturing data requires some give and take, so industries like Textile floor coverings (employs 1,622) and Reconstituted wood products (chipboard and particleboard manufacturing, employs 2,222) are excluded, while Mining and construction machinery (employs 9,556) is included. 

 

In 2023 there were 147,776 people employed in construction related manufacturing industries. As Table 3 shows, the three largest industries are Wooden structural fitting and components with 27,908 employees, Structural steel fabricating with 21,521 employed, and Architectural aluminium products with 16,703. There are several industries that employ around 10,00 people, including Other structural metal products, Glass and glass products and Ready-mixed concrete. At the other end of the scale Veneer and plywood, Clay bricks, Plaster products, and Metal roof and guttering each employed less than 2,000 people. 

 

 

Table 3. Built Environment manufacturing industries: persons employed 2023

 Prefabricated wooden building manufacturing                     1,412

Wooden structural fitting and components                           27,908

Veneer and plywood manufacturing                                      1,268

Paint and coatings manufacturing                                         7,128

Glass and glass product manufacturing                                 9,374

Clay brick manufacturing                                                        1,310

Cement and lime manufacturing                                            4,204

Plaster product manufacturing                                              1,435

Ready-mixed concrete manufacturing                                   9,213

Concrete product manufacturing                                           8,133

Structural steel fabricating                                                     21,521

Prefabricated metal building manufacturing                         8,636

Architectural aluminium product manufacturing                  16,703

Metal roof and guttering manufacturing                               2,162

Other structural metal product manufacturing                     10,315

Fixed space heating, cooling and ventilation equip.              5,488

Mining and construction machinery manufacturing              9,556

Total Built Environment Sector                                              147,766

 Source: ABS.

 

 

Figure 5. Australian Built Environment Sector manufacturing industries 

Source: ABS. Includes construction related industries.

 

Since 2007 the share of BES Manufacturing in total manufacturing IVA has risen from 15 percent to 16 percent in 2023. The large increases in 2022 and 2023were due to the rise in input costs, as prices for materials and labour increased by around 40 percent. 

 

 

Macroeconomic Role 

 

The Australian BES has a significant macroeconomic role, firstly as a major source of employment, and second through the strong backward linkages in the supply chain to local manufacturing industries and materials suppliers. The effectiveness of economic policy often relies on the timing and extent of the BES response to changes in policy settings, seen in the 6.2 percent rebound of construction employment after the pandemic in 2020. 

 

Two other examples are the BES response to increased government expenditures in the fiscal policy response to the global financial crisis in 2008, and the increase in residential building from monetary policy loosening as interest rates were lowered to cushion the transition after the end of the mining boom in 2014.

 

During the financial crisis following the collapse of the US sub-prime mortgage market in 2008, there was a rapid and large increase in Commonwealth government expenditure on building work over 2009 and 2010, focused on schools. This fiscal policy stimulus was intended to maintain employment and economic activity at a time when the economy was slowing after the rate of GDP growth in 2010 dropped to half the rate of 2009. The increase in public expenditure led to an increase in BES employment of 5.3 percent, from 1,834,000 in 2010 to 1,932,000 in 2011. 

 

After 2016, as Engineering construction work dropped from the record highs of the mining boom between 2013 and 2015, the Reserve bank of Australia lowered interest rates to boost other parts of the economy. The subsequent increase in residential building work during the apartment boom between 2016 and 2019 prevented a recession during the transition period after mining investment was no longer driving growth. That increase in residential building led to an increase in BES employment of 6.7 percent, from 1,918,000 in 2016 to 2,046,000 in 2019.

 

Figure 6. Australian Built Environment Sector employment 

Source: ABS.

 

 

Conclusion

 

When a dense network of many different firms from different industries are too geographically distributed to be a cluster, they are an economic sector.  There is no specific definition of an industrial sector, as it is a broad collection of firms with one or more common characteristics, like ‘agriculture’ or ‘the business sector’, though firms in these sectors come from many different industries. This is also the case with the diverse collection of firms and industries involved in constructing and maintaining the built environment.

 

There are fifteen industries with data available from the annual ABS publication Australian Industry that can be classified as contributing to the built environment. The industries included in the Australian Built Environment Sector form one of the largest and most important industrial sectors in the economy. The BES includes industries involved in construction of buildings and structures, maintenance of the built environment, and related suppliers of materials and professional services. The collective significance of these industries is obscured by their diversity, ranging from architecture to waste disposal, and their geographic distribution. Viewing them as an industrial sector provides perspective on their role and significance in the economy.

 

The analysis is based on Industry value added (IVA) and Industry employment. In 2022-23, the BES employed 2.3 million people and produced $348 billion in output, their IVA contributed 13.6 percent to nominal Australian GDP and their share of total employment was 14.7 percent. The construction industry is the core of the sector, making up 55 percent of BES employment, and 47 percent of BES IVA. Seventeen manufacturing industries are included in the Australian Built Environment Sector, and in 2023 there were 147,776 people employed in these construction related manufacturing industries.

 

The Australian Built Environment Sector has a significant macroeconomic role as a major source of employment, and through its links in the supply chain to local manufacturing and materials suppliers. The effectiveness of economic policy often relies on the BES response to changes in policy settings, like the 6.2 percent rebound of construction employment after the pandemic in 2020. Two other examples were BES employment growth in response to increased government expenditures in the fiscal policy response to the global financial crisis in 2009, and to the increase in residential building from monetary policy loosening as interest rates were lowered to cushion the transition after the end of the mining boom in 2014.

 

In the same way Manufacturing is not itself an industry, but a collection of industries that make up an industrial sector of the economy where firms have similarities in products and processes, industries that contribute to the construction and maintenance of the built environment can also be collected and their contribution to output and employment measured. The economic role of the BES is important and better data on its structure and role can contribute to policy decisions that significantly affect both its own performance and macroeconomic outcomes.

 

 

MMC in Australia: State of Play 2024

Recent data on offsite manufacturing and modern methods of construction

 

The Australian Bureau of Statistics annual Australian Industry data is now available for the 2022-23 financial year. This data includes output as Industry value added (IVA, in current dollars for the financial year) and employment in June for industries and their sub-divisions. For manufacturing the data is more detailed with output and employment at the level of industry class.

 

There are 12 construction related manufacturing industry classes, such as those producing paint, cement and structural steel. Two of those classes are Prefabricated wooden structures and Prefabricated metal buildings, and this post first presents the data for those industry classes up to 2023. However, as well as manufacturing, other industries involved in offsite manufacturing (OSM) are construction, design services and business services. Therefore, the second part of the post collects recent information on prefabricated and modular building at the state level to get a wider view on current industry trends, with a focus on prefabricated buildings recently delivered for State Governments, typically under a modern methods of construction (MMC) policy. The third section looks at possible actions by government and industry that would increase the use of MMC in Australia. 

 

The ABS data is limited to the relatively small number of firms that classify themselves as prefabricated building manufacturers, and thus excludes offsite work by firms that are classified as building or trade contractors (e.g. Hickory Building Group), architectural (e.g. Dimension X) or engineering (e.g. James Energies) practices. It also excludes OSM done inhouse by other industries like hotels for tourism, student housing, manufactured housing estates, retirement and aged care accommodation. 

 

Therefore, unfortunately, the actual extent and depth of prefabrication and OSM used in Australian construction cannot not found from ABS data. The lack of accurate and up to date 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. Because OSM and prefabrication have an important role to play in increasing housing completions, particularly social housing, and addressing the industry challenges of sustainability, productivity and skills this gap also has important policy implications. 

 

 

Prefabricated Wooden Structures and Prefabricated Metal Buildings

 

In June 2023 total employment in the two industry classes was 10,048. The great majority are employed in Prefabricated metal building with 8,636 people, compared to Prefabricated wooden building with 1,412. However, since 2015 employment in Prefabricated wooden building has doubled, increasing by 102%, while Prefabricated metal building employment increased by 59%. While these employment figures are fully representative of the industry, they may be the one of the best indicators available for the growth of OSM in Australia. 

 

Figure 1. Employment in prefabricated building

Source: ABS.

 

When Prefabricated metal building and Prefabricated wooden building are combined, their percentage in IVA and employment of total construction related manufacturing has been gradually increasing since 2018. As Figure 2 shows, IVA growth dipped in 2017 and 2018 and employment was the same in 2016 and 2017. From 2018 to 2023 there was continual year on year increases in the shares of IVA and employment. Although not spectacular, this growth is indicative of wider industry growth.  

 

Figure 2. Prefabricated building manufacturing industry share

Source: ABS.

 

There are other, much larger, ABS construction related manufacturing industry classes that produce building components with some unknown proportion of OSM and prefabrication in their output. These other industry classes include Wooden structural fittings and components (employs 27,908 people), Concrete products (employs 8,133 people), Structural steel fabricating (employs 21,521 people), and Architectural aluminium products (employs 16,703 people). 

 

Measured as IVA per person employed (in current dollars), the productivity of the prefabricated building industries is higher other wood and metal manufacturing industries. As Figure 3 shows, Prefabricated wooden building has 60% more IVA per person than Wooden structural fittings and components, and 40% more than Veneer and plywood manufacturing (employs 1,268 people).

 

Figure 3. Wood product manufacturing productivity

Source: ABS. IVA in current dollars. 

 

There is a similar story for metal products, in Figure 4. Prefabricated metal building has 45% more IVA per person than Architectural aluminium products and around 11% more than both Structural steel and Metal roof and guttering manufacturing (employs 4,162 people). 

 

Figure 4. Metal products manufacturing productivity

Source: ABS. IVA in current dollars. 

 

 

Queensland

 

QBuild’s modern methods of construction (MMC) program is building homes in a factory at Eagle Farm in Brisbane, opened in 2022. There is also a Rapid Accommodation and Apprentice Centre that provides training.A second, smaller RAAC operates at Zillmere. A third factory and RAAC in Cairns will open in mid-2024. There are 11 industry partners: Ausco, Fleetwood, Hutchies Modular, Modscape, Blok Modular, Eco Cottages, James Engineering, ModnPods, Saltair Modular, Volo Modular, and WestBuilt Homes. 

 

The government’s Homes for Queenslanders initiative aims to deliver 53,500 new social homes by 2046, with more than 100 modular homes built in 2023 and more than 150 homes expected by mid-2024.  The June 2024 budget includes $2.8 billion for up to 600 modular homes in 2024-25, and the medium term goal is to increase social housing production to 2,000 homes by 2027-28, a goal that puts Queensland at the front of housing policy in Australia. 

 

In Hervey Bay, 11 Volo Modular homes manufactured at Volo’s Yatala facility were delivered over two days in November 2023. Volo is also producing seven homes to go to Eidsvold. Also in Hervey Bay, a modular 24-bed medical ward is expected to be completed by the end of 2024 as part of the expansion of the hospital. In Gladstone, six two-bedroom modular homes constructed in Hutchinson Builders’ Toowoomba factory have been completed. 

 

New South Wales

 

In May the NSW Government and the Building 4.0 CRC committed $2 million each to developing and testing prototypes of medium-density social housing projects that incorporate MMC.

 

In May forestry company Pentarch group invested in Green Timber technology (GTT), a modular builder fabricating a timber kit of parts of walls, roofs and floors that is setting up a new factory in Orange. GTT has been prequalified for the School Infrastructure NSW scheme that uses a standardised design for buildings. 

 

Through Homes NSW the Government opened an offsite procurement list in April as part of a $10 million MMC development programme. The procurement list covers 3D primary structural systems (volumetric or modular), 2D primary structural systems (kit-of-parts), additive manufacturing, and non-structural assemblies and sub-assemblies like floor and wall cassettes and kitchen and bathroom pods. Applications are to include a description of ‘how your business contributes to the skills development of the MMC workforce, and the NSW Government’s skills and training policy’.

 

The Manufacturing for Schools program incorporates prefabricated elements to deliver new and upgraded school buildings for School Infrastructure NSW. In February the APP Group was awarded the Manufacturing Partner contract, responsible for connecting the supply chain to deliver the ‘kit of parts’, with partners including Lipman, Ark, MBM, WSP, Woods Bagot, Bennett and Trimble, Richard Crookes Constructions, and Roberts Co.

 

In November 2023 a modular construction taskforce was set up, with representatives from PreFab Aus, Shelter NSW, Community Housing Industry Association, Local Government NSW, Property Council of Australia, Government Architects, Industry suppliers and union representatives. alongside people with lived experience of social housing. In the 2023-24 NSW budget $10 million was allocated to new social housing supply and innovative solutions to get people off the social housing waitlist. 

 

Victoria

 

Melbourne-based Modscape opened a new Modbotics division in a 20,000 square metre facility in Essendon Fields in May 2024, after a two year installation and commissioning period. Modbotics was established to manufacture open and closed walls, passive house walls, and floor and roof cassettes, using a Randeck Robotics production system. Randeck are a leading provider of automated production systems and equipment for prefabricated house production. 

 

In March 2024 Homes Victoria announced an Expression of Interest for supply of 250 modular homes in Regional Victoria as part of the Modern Methods of Construction (Modular) Regional Victoria project, aimed at supporting the provision of social housing in the region. The project aims to deliver the homes by no later than 2026-27, with a phased delivery program expected. The Office of Projects Victoria's goal is for all projects to use offsite construction techniques where feasible and efficient. 

 

The first of 25 dwellings for the Homes Victoria and Haven Home Safe social housing project in Horsham, Victoria, built by modular builder, ARKIt, arrived on March 29. The tender process involved both traditional and modular builders, and the ARKit proposal, including all site and civil works, was approximately 8% lower in cost.

 

In what was the Ford factory in Geelong, Cross Laminated Offsite Solutions (CLOS) is installing an automated production line to produce modular and flat-pack buildings. Their Homag-Weinmann panelised manufacturing wall line can cut a kit of parts for a modular home in a single day or a three-storey townhouse in three days. Homag is a leading automation and timber frame construction company. CLOS have partnered with Geelong’s Gordon TAFE for a Construction Pathways Program, a course for new workers. However, on May 28 CLOS announced it was going into ‘voluntary administration to restructure and stabilise the business and seek investment for future growth’. More capital is needed because of the cost of establishing the new factory. CLOS claims it has a significant order book of future work. 

 

South Australia

 

Timberlink’s new cross-laminated timber (CLT) and glue-laminated timber (GLT) manufacturing plant in Tarpeena, South Australia, opened in February. The NeXTimber facility is Australia’s only combined CLT and GLT radiata pine mass timber facility, integrated with a structural timber manufacturing plant. Capable of producing CLT panels up to 16 metres long and 3.5 metres wide, and GLT beams up to 12 metres long, the project was supported by a $2 million grant from the South Australian government under the Strategic Business Round 2020 of the Regional Growth Fund. 

 

Fusco Constructions is building a modular construction factory of 4,000m2 at Tonsley Innovation District, a former Mitsubishi car manufacturing site. Fusco Constructions was a plumbing business that expanded into civil, commercial and development projects, and now modular construction.

 

Western Australia

 

The Western Australian government took delivery of 19 new social homes in Hamilton Hill, Western Australia in April. The 19 homes were manufactured by Perth-based panelised timber specialist manufacturer, OFFSITE.  Their manufacturing process uses Homag-Weinmann timber processing machinery with an integrated ‘digital twin’ software solution by hsbcad that connects the process, from design through to manufacturing and assembly.

 

Ausco Modular is delivering a $15 million double-storey school building in Kwinana, Western Australia. The modular school building is part of their Progress-ED range, developed by in-house engineers and designers. In March the WA government announced Highgate Primary School will receive a similar two-storey building. Budgeted at $12 million, the building will be constructed using the MMC methods demonstrated with the Kwinana project. 

Tasmania

 

Property developer David Marriner currently owns a factory in Brighton producing concrete segments for Tasmania’s Bridgewater Bridge. Upon the bridge’s completion, he intends converting the factory into an automated facility capable of producing precast panels for 1,700 houses annually. The conversion of the factory will require investment of approximately $30 million, and Marriner is not seeking government funding for the conversion but is looking for government support in housing orders to ensure a stable financial base for the factory. 

 

Bridges

 

Australian company InQuik has built over 200 bridges using a modular system with prefabricated formwork trays with reinforcing steel that are placed onsite and filled with concrete, reducing construction time. The formwork is made from Magnelis, a corrosion-resistant material from ArcelorMittal Europe, and remains in place after concrete is poured. The system has now been used in the United States, where a 9-metre-long, 8-metre-wide bridge in, Eau Claire County, Wisconsin, was completed in a month, compared to three-to-four-months for a traditional bridge.

 

Mass timber

 

In May Cedar Pacific, an Australian property investment firm, and Sumitomo Forestry Co., a Japanese forestry and wood management firm, entered a strategic partnership to develop a $1.2 billion portfolio of build-to-rent apartments, in Australia and New Zealand using mass timber buildings. Sumitomo Forestry will acquire just under 50% equity in the BTR projects, starting with a $375 million development in Brisbane. The joint venture has a pipeline of projects in Melbourne, Canberra, Brisbane, and Auckland. 

 

What Could the Commonwealth Government Do? 

 

In March 2024 Building Ministers ‘agreed to work together to cut red tape and enable further expansion and growth in Australia’s prefabricated and modular construction industry.’ The Australian Building Codes Board is to ‘work closely with industry bodies and jurisdictions to reduce barriers’. The next Building Ministers meeting is in June. 

 

The Commonwealth Government is responsible for the National Construction Code and the Building Code of Australia. Revising and updating these is a slow, consultative process from initial proposal through technical advice, impact analysis, comment and review, and the process would be speeded up with more resources. These would allow the Australian Building Codes Board to develop performance standards for prefabrication and modular construction for inclusion in the NCC, and Standards Australia to review relevant standards and develop a set of ‘deemed to satisfy’ construction solutions for prefabrication and modular construction. A set of standards for MMC would be the basis for a quality assurance scheme like the UK‘s Buildoffsite Property Assurance Scheme (BOPAS) discussed below. 

 

What Could State Governments Do?

 

State governments could identify unused land or repurpose appropriate sites for housing development with MMC. By specifying the use of prefabrication, modular construction or 3D concrete printing these developments would be demonstration projects for MMC. Access to data on costs of construction for different versions of MMC for researchers should be a contract condition so a credible evaluation of comparable delivery costs can be published. There are also Commonwealth Government sites this applies to.

 

Technology and training centres like the Queensland RAAC can be established to produce social housing or essential worker housing. A version of this model could also be used for training workers and producing indigenous housing in regional areas. 

 

Institutional projects like hospitals and schools can be built with prefabrication and modular construction, the NSW Schools Infrastructure program is a model for this. Again, these can be used as demonstration projects and data on costs and defects should be published for the finance and insurance industries to assess risk associated with MMC.

 

What Could Industry do?

 

The UK Buildoffsite Property Assurance Scheme (BOPAS) was developed to address the risks associated with MMC. It provides firms independent third party accreditation to industry standards and allows access to mortgage financing and insurance for MMC projects. The scheme was developed by MMC industry association Buildoffsite with insurance companies and finance industry associations input, and started in 2013. A similar certification scheme is needed for Australian MMC producers.

 

 

Conclusion

 

The scale and extent of offsite manufacturing and MMC in Australia is not well defined at present. There are many producers, ranging from large contractors like Hutchinson to architectural practices like Dimension X. New factories are being set up in 2024 in NSW and South Australia by builders and contractors, and by government in Queensland. How many producers there are and what type of prefabricated and modular construction (volumetric, panelised, pods etc.) they are producing is not known.

 

That is because ABS industry data 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 hotels for tourism, student housing, manufactured housing estates, retirement and aged care accommodation. The ABS problem in measuring the prefabricated building industry is that the industries firms involved come from include manufacturing, construction, professional and design services, and this sort of detailed data spread across different industries is hard for the ABS to collect.

 

With OSM and prefabrication being seen as important to addressing the industry challenges of providing affordable housing and improving sustainability, productivity and skills, this lack of data is regrettable. The lack of data on how many and what type of prefabricated and modular 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. 

 

Nevertheless, there is good evidence that MMC is growing strongly in Australia, both from the ABS data and from reports from industry. State governments have started sponsoring prefabricated and modular buildings, although some of these programs are small scale, toe in the water trials where a few buildings have been procured for regional centres. On the other hand, the NSW schools program and Queensland’s housing policy are major policy commitments to MMC. Some state government owned sites should be used for housing developments specifying MMC for demonstration projects, and researchers given access to cost data for evaluation and credible comparisons. 

 

Queensland is leading in promoting MMC. Qbuild has established three factories and training centres, and produced over 100 houses in the last year. There are 11 industry partners in the Homes for Queenslanders MMC program, which has the goal of delivering 53,500 houses by 2034 through a combination of contractor and government production, and the 2024 state budget has funding for 600 prefabricated houses.

 

Timberlink’s new cross-laminated timber (CLT) and glue-laminated timber (GLT) factory in South Australia joins Xlam in NSW and Cusp in Tasmania as Australian manufacturers. There is also Crosslam Australia manufacturing CLT panels in Perth and Hyne Timber in NSW making GLT beams. The number of high-rise buildings using mass timber is growing with current projects like student accommodation for La Trobe University and the T3 office block in Melbourne, residential tower C6 in Perth, Atlassian’s new Sydney headquarters (the world’s tallest hybrid timber tower), the Sydney Fish markets, and Cedar Pacific’s build-to-rent development in Brisbane.

 

At the May Building Ministers meeting enabling growth of MMC was agreed. The Commonwealth Government should increase the resources available to the Australian Building Codes Board to develop performance standards for prefabrication and modular construction for inclusion in the Construction Code, and to Standards Australia to review relevant standards and develop a set of ‘deemed to satisfy’ standards for MMC. These would be the basis for an Australian quality assurance scheme like the UK ‘s Buildoffsite Property Assurance Scheme.