New Zealand’s Civil Construction Industry Confronts Economic Headwinds, Survey Finds

AUCKLAND, 14 August 2024: The 2024 Construction Industry Survey, an annual collaboration between vehicle and asset management provider Teletrac Navman and industry association Civil Contractors New Zealand (CCNZ), reveals a civil construction sector in crisis, resulting from a lack of work in the market.

The results of the first survey since the 2023 election paints a landscape of uncertainty, driven by a dramatic increase in the lack of work and a decline in confidence regarding future pipelines and revenue.

Rising work shortages and compliance issues

The survey highlights a severe shortage of work in the current civil construction market, with 64 percent of businesses report this to be the main issue they face, a sharp rise from 29 percent in 2023.

Additionally, 57 percent of businesses face difficulties with local and central government procurement guidelines and work consent conditions, up from 36 percent last year.

Supply chain disruptions continue to strain businesses, with 71 percent citing rising compliance costs and 64 percent reporting project cost overruns. These factors contribute to a challenging operational environment that impacts overall industry performance.

Alan Pollard, CEO of CCNZ, says the industry’s landscape has dramatically changed in the past 12 months, with an acute shortage of work now being the primary challenge civil construction businesses face.

“If we conducted the survey again today, the response would be even more dire. Right now, I am fielding daily emails from our members, who are deeply concerned that their businesses may not survive.

“I can’t stress enough the importance of a well-defined, committed, and funded pipeline of work. The government needs to act quickly to restore business confidence. Promises alone won’t get things built.

“Only a committed and adequately funded programme of work will give businesses the assurance they need to invest in the people and technology required to get infrastructure works done,” says Pollard.

Revenue growth and industry confidence slump

Only 37 percent of surveyed businesses expect any revenue growth in 2024, a significant decrease from 47 percent in 2023. Confidence in the industry’s outlook has plummeted, with only 20 percent of businesses feeling optimistic about the future, while confidence in the ability to overcome challenges has declined from 62 percent in 2023 to 57 percent in 2024.

Confidence in the future pipeline of civil construction work is also bleak, with only 21 percent expressing confidence, down from 28 percent in 2023. On a slightly positive note, confidence in New Zealand’s infrastructure’s ability to handle climate change impacts has improved from 7 percent in 2023 to 13 percent in 2024.

Construction industry faces downsizing

The survey also reveals a noticeable softening in labour demand. A nationwide shortage of skilled workers has been the most significant issue in each previous edition since the Construction Industry Survey began in 2017. But that is not the case in this year’s results.

Only 39 percent of businesses expect an additional requirement for staff, down from 54 percent in 2023. This trend of downsizing reflects the industry’s response to economic conditions and operational uncertainties and the amount of forward work currently available.

Pollard says shedding staff is a tough decision for many companies.

“Given the amount of long-term infrastructure work projected, this is a poor time for the industry to down-size, but the current market means many companies are currently left with little choice,” he says.

Technology empowers businesses to win more work

Technology remains critical to enhancing efficiency and project outcomes. Key technologies such as fleet management (77 percent) and machine control (63 percent) are well-integrated on-site. Businesses are increasingly prioritising technology, with almost 2 in 5 organisations (39 percent) now mandating specific technologies for bidding on projects, up from 27 percent in 2023. Nearly two-thirds of businesses (62 percent) emphasise the importance of onsite technology for securing contracts.

Jim French, Construction Industry Specialist at Teletrac Navman, says that the trends we’re observing in New Zealand’s construction sector are reflective of global challenges.

“In this environment of uncertainty, businesses must proactively accelerate their digital adoption to stay competitive. Advanced technologies such as fleet management, machine control, health and safety monitoring software are crucial allies – as they increase the chance of securing contracts and planning for the future,” he says.

Solutions: Strategic focus on technology and diversity

Addressing the current challenges requires strategic focus. A clearer pipeline of government projects is essential, with 56 percent of respondents anticipating positive impacts from such clarity. Embracing diversity initiatives is also crucial, as 61 percent of professionals believe diversity positively affects productivity.

Although areas like business intelligence and cost management are still underutilised, adoption rates are increasing. Cost management technology usage has risen to 67 percent in 2024, up from 59 percent in 2023, and location tracking has jumped to 72 percent in 2024 from 53 percent in 2023. This growing adoption demonstrates a proactive approach to improving operational efficiency and securing competitive advantages among businesses.

Exploring sustainable energy solutions, such as hydrogen, is also gaining traction. Over a quarter (26 percent) are exploring hydrogen as a future energy source, aligning with broader sustainability goals and preparing for a multi-energy future within the industry.

The results of the survey and the civil construction industry’s response to these challenges will be further discussed by a panel of senior construction industry leaders at The Civil Contractors Conference in Invercargill on 14 August.

The 2024 Construction Industry Survey is available for download here.

An interactive dashboard of key findings can be viewed here.

Notes:

2024 Construction Industry Survey Key Findings

Confidence and industry outlook

• Confidence in the industry’s outlook has plummeted, with just 20 percent expressing confidence in the current industry outlook, down from 50 percent in 2021, 41 percent in 2022, and 34 percent in 2023.
• Confidence in the future pipeline of civil construction work has diminished, decreasing from 39 percent in 2022 to 28 percent in 2023 and just 21 percent in 2024.
• In 2024, only 37 percent of businesses expect revenue growth, a significant drop from 47 percent in 2023, 52 percent in 2022, and 55 percent in 2021.
• The ability to withstand changes and overcome challenges has also declined, with confidence falling from 62 percent in 2023 to 57 percent in 2024.
• Confidence regarding New Zealand's infrastructure's ability to cope with climate change, rising from 7 percent in 2023 to 13 percent in 2024.

Industry challenges

• The construction industry is facing a severe lack of work, with 64 percent of businesses reporting this issue in 2024, a sharp increase from 29 percent in 2023.
• Difficulties with local and central government procurement guidelines and work consent conditions affect 57 percent of businesses, up from 36 percent in 2023.
• Rising compliance costs, such as temporary traffic management and health and safety protocols, impact 71 percent of businesses, while 64 percent report project cost overruns.

Labour trend

• Labour demand has softened noticeably over the past three years. Only 39 percent of businesses expect staff growth in 2024, a decline from 54 percent in 2023 and 63 percent in 2022.
• 12 percent of businesses anticipate reducing their staff numbers in 2024, up from 9 percent in 2023 and 3 percent in 2022.

Technology

• Advanced technologies play a significant role in enhancing efficiency and project outcomes. Fleet management (77 percent) and machine control (63 percent) are widely used onsite.
• Business intelligence and cost management technologies are seeing increased adoption rates. Cost management technology usage has risen to 67 percent in 2024, up from 59 percent in 2023, and location tracking has jumped to 72 percent in 2024 from 53 percent in 2023.

Solutions

• A clear pipeline of government projects is vital, with 56 percent of industry stakeholders anticipating positive impacts over the next three years.
• 61 percent of professionals believe diversity positively impacts productivity. Businesses expecting revenue growth place particular emphasis on diversity, with 36 percent considering it very important for improving productivity and workforce dynamics.
• Investing in advanced technologies and increasing technology adoption are the keys for future growth and competitiveness. Almost 2 in 5 organisations (39 percent) now mandate specific technologies for bidding on projects, up from 27 percent in 2023 and 23 percent in 2022.
• Nearly two-thirds of businesses (62 percent) highlight the importance of onsite technology for winning work, up from 52 percent in 2023 and 50 percent in 2022.
• Exploring future energy trends is also a growing focus, with 26 percent of businesses looking to use hydrogen.

Survey methodology

The 2024 Construction Industry Survey is an online survey that polled 226 civil construction professionals representing a range of roles, business sizes and regions across New Zealand from 24 May to 21 June 2024. All survey respondents were stakeholders in a range of businesses working to construct Kiwi roads, water and energy networks, broadband and other infrastructure networks. The survey was commissioned by Teletrac Navman and Civil Contractors New Zealand and produced by research firm Camorra. The margin of error for the sample is + or – 5-6 percent.

About Teletrac Navman

Teletrac Navman’s goal is to empower the industries that transform and sustain our futures with simple and intelligent solutions that enhance the efficiency, safety, and sustainability of their operation. As a connected mobility platform for industries that manage vehicle and equipment assets, Teletrac Navman simplifies the complex so that its customers can transform the way they work through cloud-based solutions that leverage AI to unlock the power of operational insight. Teletrac Navman manages more than 700,000 vehicles and assets around the world. The company operates globally, with offices worldwide and headquarters in Northbrook, IL.

Teletrac Navman is a Vontier company.

About Vontier

Vontier (NYSE: VNT) is a global industrial technology company uniting productivity, automation and multi-energy technologies to meet the needs of a rapidly evolving, more connected mobility ecosystem. Leveraging leading market positions, decades of domain expertise and unparalleled portfolio breadth, Vontier enables the way the world moves – delivering smart, safe and sustainable solutions to our customers and the planet. Vontier has a culture of continuous improvement and innovation built upon the foundation of the Vontier Business System and embraced by colleagues worldwide. 

About Civil Contractors New Zealand

Founded in 1944, Civil Contractors New Zealand represents the interests and aspirations of more than 850 member organisations and businesses.

These members are responsible for the physical construction of NZ’s transport, water, energy and other civil infrastructure networks. Members include large, medium-sized, and small businesses in civil engineering, construction and general contracting, and associate members who provide valuable products, support and services to contractor members.

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