[+] Out of the Box: Developers Dig Deep to Solve Labour Shortages

In a factory in Laverton, Victoria, there is the usual noise on the usual factory floor and the usual faces in the usual safety gear. But what they are building is somewhat unusual: bathroom, laundry and kitchen pods. This is Hickory Group’s venture, a company called, appropriately, SYNC. It was started several years ago and that move is now paying off in the post-pandemic economic climate as developers face a seemingly ever-increasing lack of labour. During the past two years, the construction industry has all but been brought to its knees. From wild weather to war overseas, a long, inadequately addressed skills shortage to Covid rippling through the workforce, companies have struggled to find labour, deliver on time and keep costs from escalating. Many have folded , by choice or otherwise. The knock-on effect for developers has been huge—projects brought to a halt, others sold, others completed at a loss—and many future projects slow to start. Developer Deicorp notes that the labour shortages mean increased competition for key workers. “For Deicorp, the impacts have been in both the quantity of people available for work and the levels of experience of those working,” Deicorp’s construction and development executive Andrew Coleman says. “We’re not just competing for labour, but also for experienced and qualified tradespeople. “Consequently, we are seeing increasing labour costs contributing to the overall increase in project costs.” ▲ The demise of Probuild has been among the most high-profile collapses in the sector, post-pandemic. There have been multiple and repeated calls for more investment in training and migration policy changes to help resolve the skills shortage. “Deicorp supports increases in migration of skilled labour, but importantly, of training programs within Australia,” Coleman says. “There needs to be a strong emphasis on trade training and apprenticeship programs to bridge the gaps in skills that will support our industry moving forward.” But this is a potential long term solution, not one that can help a developer who is making a difficult decision right now. So, what do you do when the financial feasibility of taking on a building contract means you face potential timeline and cost blowouts? You could opt to wait it out. You could opt to exit the project. Or you could pivot. Scuttle sideways. Circumnavigate the problem. Get ahead of the game. And look to a company like SYNC. SYNC has manufactured around 20,000 pods during the past eight years. Working in a factory rather than on site allows them to employ more people more safely and avoid labour shortages. “The shift work promotes flexibility, encouraging parents returning to work, and the controlled factory environment reduces safety hazards, meaning the work is better suited for a wider range of employees,” SYNC chief executive Alf Costanzo says. ▲ Workers putting together pods on the SYNC factory floor. “By expanding this pool of potential employees, SYNC has more options to source staff at a time when labour shortages in the construction industry are at an all-time high, while also providing employment to a diverse range of individuals.” It means that Hickory and other developers that use SYNC’s pods can cut on-site construction times massively—pods are craned in and assembled in a matter of minutes, decreasing the amount of time workers are needed on-site, helping to alleviate labour shortage issues. SYNC’s pods have been used in Iwan Sunito’s Crown Construction Group’s Infinity by Crown and Waterfall projects at Waterloo, NSW; in South Yarra’s Ovolo Hotel; and in government projects including the Department of Defence’s upgrades on RAAF bases. Back to the future with prefab The idea is, of course, not new and Mirvac and Hickory have been using prefabrication for years. Singapore too has used prefabrication to combat labour shortages to overcome the rising costs of foreign labour. Prefabrication provides other benefits—less construction waste, projects delivered faster, better safety, the ability to employ a wider range of people, less handling and less worry about weather affecting the site. The Modular Building Institute predicts that within the next five years prefabrication could account for nearly 10 per cent, or $15 billion, of the Australian construction industry. Mirvac is currently trialling prefabricated pods and components—trials at its George Cove Residences in south-west Sydney found that prefabrication reduced construction time to lock-up stage by 54 per cent, overall construction time by 30 per cent and construction waste on-site by 60 per cent from 10.7 tonnes on average to 4 tonnes. It’s a key part of Mirvac’s strategy to send zero construction waste to landfill by 2030. Manual lifting instances dropped by 9600 lifts due to cranes lifting 191 tonnes of material into place for the first 16 homes, significantly reducing injury risks. Prefabricated bathroom pods were the standout, reducing on-site time building out a traditional bathroom from 14 weeks to just 15 minutes to crane it into place. ▲ A render of of one of Powerhouse Homes’ prefabricated modular homes. “Building quality homes faster means we can minimise the impact of inclement weather, supply chain constraints and labour shortages, produce less waste and reduce safety risks for our teams,” Mirvac head of residential Stuart Penklis says. It means a savings not just for the developer but also the buyer. “Reducing construction duration by 30 per cent also provides significant potential cost savings to our customers on expenses such as rent while they are waiting for their new home to be finished,” Penklis says. Mirvac has so far used prefabricated components, such as structural walls and floors, across more than 200 projects in NSW and Victoria. Bigger than pods It doesn’t stop at pods. Waco Tao runs Powerhouse Homes, a company developing housing using prefabricated modules. “In 2009, in the early days, when we first launched, it was based on shipping container modification,” Tao says. The system has since evolved with Powerhouse Homes now also offering flat pack panels. The available modules begin at the size of shipping containers and are fully reusable and recyclable. “All of this is aimed at reducing the construction costs and speeding up the process,” Tao says. “We know building a house in Australia takes awfully long time to do.” Powerhouse Homes has so far used the modules to build a home in Mascot, NSW. ▲ A crane lifts a prefabricated module into place for a two-storey house build. “The fundamentals are exactly the same,” Tao says. “It’s all based on prefabrication which gets done in the factory as much as possible. “On-site work is reduced or mitigated in order to create time and it is cost efficient.” And it pays off. “When we started off, we aimed for a reduction of 15 per cent in construction costs and with the rising costs in recent months or year, that gap is bigger.” Tao says. “I think today we would be looking at a 30 per cent reduction in costs at least.” Using actual shipping containers comes with a risk as there is a hazardous chemical used in their construction so Powerhouse Homes has opted to retain the containers’ aesthetic but use different materials such as cross-laminated timber. “All of the systems we have created are designed to deliver three things: speed, cost savings and sustainability,” Tao says. “So our homes are actually recycled and reused almost to 100 per cent.” But it remains hard to convince banks to finance projects involving prefabrication. “We do everything all at once today, and then in eight weeks the whole house arrives—and the banks cannot understand that,” Tao says. As well, the more traditional take on prefabricated structures, albeit with modern sensibilities and materials, are on the rise with a slew of Australia companies offering factory-built solutions for a range of needs, from domestic housing to institutional buildings, such as schools, and more. ▲ Local materials, including native grasses, can be used in 3D-printed construction. This structure was created in Germany by builders PERI GmbH and designer MENSE-KORTE ingenieure+architekten. Other solutions exist—but they may not be accessible for everyone. In April this year, Aria Property Group announced that it had employed former Condev staff and, to finish a project, started its own construction arm: Riviere Constructions. The developer declined to comment further for this story. And 3D printing structures in the ascendancy for everything from homes to possible bases on the Moon and Mars. The Dubbo council in NSW is among those to signal they’ll 3D print a project in the next few months, while developer Fortex is working with COBOD to import and distribute 3D printers in Australia, and local company Contour 3D printed a poolhouse for the TV show The Block. As the crisis continues, it seems clear other developers will follow suit and explore alternatives to traditional building methods, materials and use of labour. But perhaps some of the out-of-the-box solutions developers are looking for are on a factory floor—in a box of their own. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Out of the Box: Developers Dig Deep to Solve Labour Shortages

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