Construction Supply Chain Feels Knock-on Effect of Chinese Factory Shutdowns

According to the Australian Financial Review, delays on imported goods from China due to the outbreak of coronavirus could impact Australian construction companies with an expected 20% increase in costs.

Michael Bleby reported factory shutdowns as a result of the virus – which were initiated on top of scheduled closures for the Lunar New Year – mean those that import structural steel, joinery and other materials could be left waiting up to six weeks. 

Chinese imports can amount to as much as 20 per cent of total costs on a single build, meaning any delays can have a significant impact on build times.

Builders are required to alert clients and investors of impending risks, including delays to supply chain. 

Chief executive of Built, Brett Mason, was quoted by the AFR saying the Sydney contractor had notified clients of the delays.

“A lot of contractors are notifying clients of potential delays. We’re obliged under contract to give notice of any potential delay. We’ve been complying with our contractual obligations.”

Master Builders Victoria chief executive Rebecca Casson said “some concerns have been raised by our members about the impact of coronavirus on the building supply chain.”

RLB director Domenic Schiafone said a number of notices of delay had also been issued for high-profile projects in Melbourne’s CBD.

“There is talk of two or three more which could land over the next week or so,” Schiafone said.

“To date, the delay has been specifically on joinery from China due to the country’s factory shutdowns and shipping delays, but more trades could be very well affected if it continues.”

Bleby noted a number of Tier-1 Melbourne builders were hesitant to disclose whether they had issued notices of delay. 

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