Despite a swathe of media stories ringing its death knell, the Australian construction industry has built itself back into a position of strength, according to a new report from inventory management software provider Unleashed.
Construction has seen off a prolonged period of supply chain issues, over-stocking and labour force problems, to come out stronger than ever.
Its business health score came out to 76 out of 100, the fourth highest of any of the 19 industries surveyed in the report.
The Manufacturing Health Index determines industry fitness on a scale of 0-100 for small to medium sized manufacturers throughout New Zealand, Australia, and the United Kingdom.
The index is calculated using a combination of sales, expenditure and overall efficiency metrics, analysing 2658 manufacturers across 16 different industry categories.
On the whole, Australian manufacturers have a level of 63 out of 100, as the country as a whole bounced back from pandemic woes, improving their supply chain management, and overall profitability.
The optimism in building and construction is largely based on improving overall profitability, though the industry continues to struggle with overstocking, up to $309,713 from $297,508 in Q3 2022.
The fact that with the added difficulties presented by construction’s difficult supply chain, and high cost of labour, it has managed to outstrip the Australian average speaks to the drive and determination of the industry.
Unleashed Head of Product Jarrod Adam said: “If you were going off of the news alone, you would probably think the construction industry was on its last legs. The truth is, as always, in the numbers.
“Australian construction is the fourth highest performing industry, and is far above the country average of 64.
“This success is despite facing various headwinds including pressure from overseas manufacturing, market consolidation, and tightening pockets, but it’s showing that it’s remaining resilient, despite it all.”
The haves and the have-nots in Australian manufacturing
Despite a positive overall score, Q3 2023 has been a case of the haves and the have nots in Australian manufacturing, where the majority of the 16 sectors studied are either doing poorly, or doing very well.
Nine out of the 16 industries scored 39 or below, and the remaining seven registered a health score of 57 or better.
Further, only Beverages (57) registered within the 40-60 range, compared to NZ and the UK, which had six each in the middle range.
The secondary concern for the broader Australian manufacturing industry is the high levels of overstock — calculated by Unleashed in terms of inventory in excess to the needs of a business.
Unlike NZ which is gradually reducing the amount of excess inventory on its books, Australian manufacturers have seen these numbers rise since last year, up to an average of $259,390, from $244,205 in 2022.
Australian food & beverage doing far better than NZ
Beverages, which have been shrouded in the gloomy predictions of a ‘craft beer recession’ in recent months, have proved resilient, scoring 57. Further down the aisle in food, things are less rosy at 31, but not dire.
Overall, the overstock is down across both sectors over the past year, reducing from $69,239 to $59,623 in beverages, and $286,005 to $224,025 in food.
By contrast, New Zealand’s struggling beverage and food industries are on the ropes, scoring just 2 and 1 out of 100 respectively.
Aussie manufacturers in an overall strong position heading into 2024
Despite the large spectrum of healthy positions within Australia’s manufacturing industry, as a whole the compass appears to be pointing in the right direction.
This sentiment is particularly evident in the perfect 100 point bill of health given to the Industrial Machinery, Raw Material and Equipment and Automotive and Automotive Supplies, which have found ways to navigate a complex economic environment and maximise operational efficiency.
