Updated: 10 hours ago
The number of people employed in construction is at record highs. In the ABS Labour Account for June 2023 there were 1,268,472 people employed, an increase of 135,693 people since 2018, the most recent peak in the volume of work done. There is only a weak relationship between changes in the volume of construction work done and the number of people employed in construction, as Figure 1 shows, employment typically rises or falls by one or two percent a year while the annual volume of work done has changed by more than five percent in nine of the 15 years between 2007 and 2022.
Figure 1. Construction work done and people employed
Note: The number of people employed includes all workers in June each year, and comes from ABS Australian Industry. The volume of work done is from the ABS chain volume Value of Construction Work Done, which is expenditure on construction adjusted for inflation.
Figure 1 also shows that, from 2007 to 2010, while the volume of work done was increasing the number of people employed barely changed (by 3,000 people). The 2011 bump in employment was due to increased Construction services employment in public building work done as part of the fiscal response to the financial crisis, and the following year employment fell by half the increase of 2011. The increase in work done in 2012 and 2013 was due to the doubling of Engineering work during the mining boom, which went from $76 billion in 2007 to $158bn in 2013, before falling below $100bn in 2017. The $94bn of engineering work done in 2022 was mainly infrastructure projects in transport and energy. The increase in Construction employment in 2017 and 2018 followed rising residential building, when employment in Construction services also began to increase, and in 2022 there was a total of 1,253,906 people employed in construction, an increase of 121,172 since 2018.
There have been significant changes in both employment and the volume of work done at the subsector level since 2011 that are not reflected in the industry’s total work done or total employment, and a more detailed picture emerges when construction employment in the three industry subsectors of Engineering, Building and Construction services is used, and construction work done is divided into engineering work and building work. There is a clear relationship between changes in engineering work done and Engineering employment, and in building work done and employment in Building. When the recent cycles in engineering and building construction are taken into account there are significant differences between the industry subsectors, and a comparison of changes in construction employment and work done since 2007 is below in Table 1, divided inro trough-to-peak and peak-to-2022 time periods. Between 2007 and 2022 the volume of engineering work done rose by 23 percent but the number of people employed by 51 percent and, for Building, work done rose by 36 percent and the number of people employed by 46 percent. Construction services employment rose by 26 percent, less than the 36 percent increase in building work done.
Table 1. Change in work done and employment 2007-2022
Note: Engineering employment and engineering construction. Building and Construction Services and building work done.
The long-run averages used in Table 2 take the volatility of the year-on-year changes in Figure 1 out, particularly for work done. At the industry level, the long-run relationship between the average of annual changes in employment and work done is actually stable, with the average smoothing the cyclic variability and the effect of very large projects on the volume of work commenced. Since 2007 the average annual change in work done is an increase of 2 percent, and for employment it is 1 percent. This similarity in the average percentage changes over time indicates that, over this period, the industry has turned inputs into buildings and structures using current production technology (machinery, materials, management etc.) at a high level of technical efficiency. However, there has been no significant change in work done per person employed since 2007 when it was $173,192 and 2022 with $177,446. At the top of the mining boom in 2013 work done per person was $245,353.
Table 2. Percent changes in work done and employment
Note: Engineering employment and engineering construction. Building and Construction Services and building work done.
Construction Services
The number of people employed in Construction services began to rise with increasing building work and the end of the mining boom. There were big jumps in 2018 and 2021 when residential building work was peaking in the recent cycle. In 2022 Construction services employment reached 854,000, an all-time high, despite the small decrease in the annual value of work done compared to 2018. Between 2013 and 2022 building work done increased by 25 percent and Construction services employment by 20 percent.
Figure 2. Construction services work done and people employed
The increase in Construction services employment followed rising residential building work, as Figure 3 shows. Construction services employment began to increase in 2016, and continued to rise as the level of building work done peaked then fell. This increase in employment while the value of work is falling implies decreasing industry efficiency, possibly due to the large number of new and inexperienced workers that entered the industry. However, there have been a number of factors that affected the volume of work since 2020, such as wet weather, the pandemic, interest rates, shortages, cost increases and other supply chain issues.
Increasing Construction services employment in recent years is in part due to the increasing number of apprenticeships. The construction trades share of all apprenticeships rose from 12 percent in 2016 to 16 percent in 2022 and the number of people in-training in construction trades increased from 52,700 in 2016 to 70,300 in 2022, when the total number of trainees was 419,600, nearly half the number of people employed in Construction services.
Figure 3. Residential and non-residential building work done
What is surprising about Construction services employment is how loosely it is actually connected to changes in the level of work done, both to total construction work and to building work more specifically, where the relationship would be expected to be stronger. However, as Figure 4 shows, in most years there is little connection between changes in the volume of building work done and employment in Construction services, it increased in the last couple of years of the 2014-18 increase in residential building but not during the first few years of the upswing.
Figure 4. Annual change in Construction services employment
Engineering and Building Construction
The number of people employed in Engineering increased from 91,000 in 2007 to a peak of 160,000 in 2013, before falling to 110,000 in 2017 then recovering to 137,000 in 2022. Between 2007 and 2013 engineering work done increased by 107 percent and employment by 76 percent, accounting for the cyclic rise and fall in productivity discussed in the previous post.
Figure 5. Engineering work done and people employed
In Engineering, between 2007 and 2022 the annual percentage changes moved in the same direction and by similar amounts in many years, as Figure 6 shows. In some years the change in work done is 20 percent or more, due to the size of the largest projects, with frequent annual changes in employment of 10 percent.
Figure 6. Annual change in Engineering work done and employment
There is a similar story for Building work done and the number of people employed in Building construction. Over the recent building cycle, driven by residential building, between 2014 and 2018 the value of work done increased by 29 percent and the number of people employed rose by 27 percent. In 2022 the value of work done was slightly down on 2018, but employment had grown from 224,000 to 239,000 people.
Figure 7. Building work done and people employed
Between 2007 and 2022 the annual percentage changes moved by similar amounts in many years (e.g. 2015-20) but, as Figure 8 shows, in other years there is a lag between changes in building work done and employment. Over time periods longer than one year these annual variations become more closely aligned.
Figure 8. Annual change in building work done and employment
Conclusion
For the construction industry, changes in employment numbers have not been closely linked to changes in work done. Between 2007 and 2022 volume of construction work done peaked in 2014 and 2018, but it took until 2016 before employment started increasing. By 2022 the volume of work done had declined from 2018 but the number of people employed had increased to 1,229,000 people, mainly because of the number of new people in Construction services. The volume of work done after 2020 will also have been impacted by pandemic-era supply chain issues, wet weather, interest rates and cost increases, although the extent of the effect is unknown.
Figure 9. Australian construction work done and employment
Between 2007-22 an increase in construction work done generally required more people, but there has been great variation between the subsectors, with significant changes in both employment and the volume of work done at the subsector level that are not reflected in the industry’s total work done or total employment. There is a clear relationship between changes in engineering work done and changes in Engineering employment, and changes in work done and employment in Building.
Although the number of people employed in construction has been affected by the composition of work, the relationship is weaker for Construction services, where over twice as many people are employed as in Engineering and Building combined. Construction services employment barely changed during the 2010-14 mining boom increase in engineering work, and if building work done is used still shows a limited relationship between changes in employment and changes in work done. Employment rose as building work increased and residential building work peaked in 2018. In 2022 Construction services employment reached a record 854,000, despite a decrease in the volume of building work done.
For the industry subsectors Engineering and Building, annual increases and decreases in employment follow increases and decreases in work done. At this level, annual increases in work done and employment vary greatly over the period 2007 to 2022, but become more aligned over longer time periods. At the peak of their respective cycles, engineering in 2013 and building work done in 2018 had increased by a few percent more than the number of people employed in Engineering and Building respectively, but the changes were similar.
At the industry level, the long-run relationship between the average of annual changes in employment and work done is actually stable, with the average smoothing the cyclic variability and the effect of very large projects on the volume of work commenced. Since 2007 the average annual change in work done is an increase of 2 percent, and for employment it is 1 percent. This similarity in the average percentage changes over time indicates the industry broadly has turned inputs into buildings and structures using current production technology (machinery, materials, management etc.) at a high level of technical efficiency.
However, over the last few years the total volume of work done has been falling but employment has increased, which may in part be because many of these new employees have been replacing experienced workers retiring in their 60s. In 2022 there were 130,000 more people (19 percent) in Construction services than in 2016, and over that period employment also increased in Engineering (by 15,000) and Building (by 31,000). Construction employment has been growing strongly for several years, with increasing numbers of apprenticeships and graduates entering the industry, perhaps attracted by the very significant pipeline of major projects that will, in turn, require retention of these workers.
An increase in employment while the volume of work done is falling implies decreasing industry efficiency, and since 2016 work done has declined by 4 percent while employment has increased by 17 percent. The number of new, inexperienced workers in the industry may be one of the causes of the widening gap between changes in work done and employment since 2020. Labour hoarding during a downturn in the volume of work done due to external factors may also have played a role, as firms retain workers in expectation of future work and potential labour shortages.
In recent years the annual volume of construction work done has been around $220bn. With many major projects still in the planning stage and higher interest rates leading to cancellation or postponement of some projects, building approvals are trending lower and the volume of work done may fall in the short-term. The mismatch between growing employment and a flat or falling volume of work done suggests the industry might have substantial unused capacity at the same time as commencing projects becomes increasingly difficult.
Over the last 15 years, Construction productivity in Australia has gone through a long cycle and ended up more or less where it began. The Australian Bureau of Statistics Construction labour productivity index rose from 92.88 in 2006-07 to 95.36 in 2010-111, before rapidly increasing to 115.94 in 2013-14, then falling to 99.1 in 2021-22. What explains the 10 year cycle between 2011 and 2021?
Productivity estimates require both a measure of labour inputs, such as hours worked or people employed, and a measure of output, called Industry value added (IVA, the difference between total revenue and total costs). IVA is then adjusted for changes in prices of materials and labour to estimate Gross value added (GVA) using price indexes. The ABS has a Construction industry labour productivity index, but does not have separate indexes for the different construction industry sectors.
However, using GVA data, estimates of productivity for the industry sectors of Engineering construction, Building construction and Construction services can be found. The GVA data comes from the ABS National Accounts (chain volume measures of economic activity). The number of people employed includes all workers in June each year, and comes from ABS Australian Industry. The construction work done data is from the ABS chain volume Value of Construction Work Done, which is expenditure on construction adjusted for inflation.
GVA per person employed is a useful proxy for industry productivity. As a combination of real output and employment, GVA per person employed looks like a measure of productivity and, while not precise, it is indicative of industry trends. As a measure of productivity, annual GVA per person employed follows a similar path to the ABS productivity index, which uses the number of hours worked for labour input. If output is increasing faster than employment, labour productivity will also increase.
In Figure 1 Construction GVA per person employed in thousands of dollars per person is compared to the ABS labour productivity index for Construction from their Estimates of Industry Multifactor Productivity. There is a good match between the two because they both use industry GVA for output and are both based on the 2020-21 year, although the long cycle between 2011 and 2021 is more pronounced in the GVA per person data. The ABS labour productivity index is 2020-21 = 100, and went from 92.88 in 2006-07 to 115.94 in 2013-14 before falling to 99.1 in 2021-22.
Figure 1. Construction Gross Value Added per Person Employed and Labour Productivity
In Figure 2 the Value of construction work done is shown with GVA per person employed, and there is a clear relationship between the two. Over the 15 year period Construction work done peaked twice, first in 2014 during the mining boom and then in 2018 with new infrastructure projects. Construction GVA per person followed a similar trend to the rises and falls in work done.
Figure 2. Gross Value Added per Person Employed and Construction Work Done
Significantly, Figure 2 shows GVA per person employed also peaked in 2014 as it followed changes in work done. Productivity increased when construction was rising after 2011 during the mining boom, and then decreased as the mining boom ended. The first stage of this long-run cycle of increasing construction work done and GVA per person employed in construction was entirely due to the large number of large, capital intensive resource projects completed during the mining boom between 2011 and 2017, followed by transport and energy sectors commencing in the second stage from 2018.
Engineering Construction
The mining boom started in the 2000s but took off after 2010 with many large energy and resource projects. As Figure 3 shows, the value of Engineering work done doubled between 2007 and 2013, and as it did Engineering GVA per person employed increased by around 20%. Engineering GVA per person followed the rise and fall and subsequent fall in the value of work done, and is now well below the peak years. The value of Engineering work done includes associated expenditure on machinery and equipment, so a lot of the increase was due to the capital investment required for the LNG plants, offshore platforms, railways and new mines constructed. .
Figure 3. Gross Value Added per Person Employed and Engineering Work Done
Building Construction and Construction Services
Using Australian Industry employment data, GVA per person employed can also be found for both Building construction and Construction services as well as Engineering. Here a slight decline in Building has been offset by a small rise in Construction services GVA per person over the 15 years, as GVA per person since 2006-07 in Building has declined slightly, from $179,000 to $148,000 in 2021-22, while it increased for Construction services, from $84,000 to $102,000. As shown in Figure 4, the level of GVA per person in Construction services is around two-thirds of the level for Building construction, because Construction services are generally labour intensive and will therefore have a lower value of output per person.
The range in output per person employed between Engineering, Building and Construction services reflects the differences in capital requirements of these three sectors, and expenditure on purchases of software, equipment and machinery by firms in the three sectors. The higher the capital requirements, or capital intensity, of an industry, the higher the level of output per person employed is expected to be, because workers with more capital are more productive. Both excavators and shovels require one operator, but the former shifts more soil.
Figure 4. GVA per Person Employed in Engineering, Building and Construction Services
The strong relationship between the value of Engineering work done and GVA per person seen in Engineering is not found for Building and the value of Building work done. Despite the increase in the value of Building work done after 2014 there was no increase in GVA per person, rather there was a slight decline as residential building increased during the transition after the mining boom, as shown in Figure 5. This may also be an indicator of increased use of prefabrication and offsite manufacturing reducing the value added of onsite work, but we have no reliable data on that.
Figure 5. Gross Value Added per Person Employed and Building Work Done
For Construction Services there is real GVA but not real work done data, so total construction work done is used in Figure 6, as the trades work across Building and Engineering. Here, GVA per person does increase as work increases, but peaks in 2016 and then falls away. The number of people employed increased from 723,000 in 2015-16 to 854,000 in 2020-21, and may have contributed to the fall in GVA per person if that increase included many new workers with little experience and limited skills. There was a particularly big increase in employment in 2020-21, when over 60,000 more people were employed in Construction services, and employment grew much faster than work done. As a result, GVA per person dropped by $8,000 before recovering in 2021-22.
Figure 6. Gross Value Added per Person Employed and Total Construction Work Done
Conclusion
Over the last 15 years, construction productivity in Australia has gone through a long cycle and ended up more or less where it began. Rising from $115,000 per person employed in 2007 to $149,000 in 2014, an increase of 29%, GVA per person employed then started falling and was back to $125,000 per person in 2022.
This long cycle in Australian construction productivity followed changes in the value of Engineering work done. Productivity increased as Engineering construction rose after 2011, and then decreased as the mining boom ended. This long-run cycle in construction productivity was entirely due to the capital intensive resource projects completed between 2011 and 2017 by Engineering construction, where the machinery and equipment required for LNG plants, offshore platforms and new mines is included in the value of work done. This greatly increased the value of work done, but much of the increase was therefore not invested directly in construction work.
The strong relationship between changes in the value of work done and GVA per person seen in Engineering is not found for Building construction or Construction services. The higher capital intensity of Engineering work appears to lift GVA per person with increasing work done, as more expenditure on machinery and equipment is included in this sector compared to building.
Despite the increase in the value of building work done after 2014 there was no increase in Building GVA per person, rather there was a slight decline. For Construction services, GVA per person did increase to 2016 as construction work done increased, before falling away as the number of people employed increased faster than the value of work done.
What can be taken from this episode? Firstly, over 15 years there has been little change in overall construction labour productivity and, unlike Engineering, for Building and Construction services increasing work done has seen productivity fall slightly since 2014 as employment increased faster than output. Second, the lack of any real trend in construction productivity, despite changes in output and a continual increase in the number of people employed, suggests the industry is at the limits of efficiency, based on current technology. As output increases the number of people also increases, often a bit more than output but sometimes slightly less, so GVA per person is not improving. Therefore the industry may be somewhere close to the efficiency frontier in delivering projects, but there is no trend at either the industry or sector level of increasing productivity.
Updated: Jul 8
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. In 2021-22 construction related manufacturing was 16% of total manufacturing IVA and employment, having increased from 15%
Figure 1. Total employment and output
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 in-house 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 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 has in 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.
