I believe that like all economic crises, some businesses will prosper and emerge from this COVID-19 crisis in a very strong financial position. In making this statement I want to acknowledge that unfortunately, many construction businesses will not have the ability to do the things I have identified in the above heading. This is because the financial fallout for them will be so severe, they must cease operations.
For businesses like this, I am truly sorry that they will not re-emerge on the other side of this crisis.
My following comments are directed to those construction businesses fortunate enough to have restructuring options so they can, if they choose, to exhibit energy, creativity, initiative, and innovation in their business’s operations.
I have not just come to this point of view.
I have written many previous articles where I appeal to construction business to take on innovation and creativity as the best means to grow their businesses in an environment where industry disruption is/will be the new norm. I must admit that in writing these articles, never did I envisage for one moment the scale of disruption this crisis will cause the industry. However, the fourth industrial revolution has been underway for years now, in the process significantly disrupting all industries.
In an article published 28 September 2018 entitled Disruption - more than just a buzzword, I stated:
“I am of the view that in the next 5–10 years the construction industry as we currently know it will not exist as a result of innovation-driven change and disruption. Unfortunately, I am very concerned that current contractors have not adequately prepared themselves for the threats and opportunities that such developments will present.”
There are 11 articles by me on the helix website where the words ‘innovation and disruption’ feature.
Helix legal has a history of showcasing industry innovation.
For several years we have run innovation events featuring new and exciting products and services.
Please check our website for updates on events of this nature we will be running in 2020.
Businesses who embrace innovation will achieve market benefits.
Back in August 2018, I wrote a ‘tongue in cheek’ article entitled “Global Construction giant AIXI posts after tax profit of $1 trillion for 2038 FY” where I fictitiously reported that because local contractors were ‘asleep at the wheel’ when AIXI entered the Australian market in 2018:
“for the third straight year global construction giant AIXI dominated the Australian and Asian residential and non residential markets, recording an after tax profit of $1 trillion and in the process performing 50% of all construction work of this nature in Australia and Asia.”
The above article was an attempt to generate a conversation with current contractors and about future industry disruption.
In this article I developed a scenario, namely:
“From a humble start in a small factory in Cairns in 2018 to the companies present 200 acre location at a massive technology and manufacturing hub located between Port Douglas and Cairns where they employ 300,000 highly trained and well paid staff working shifts 24 hours a day, the company is presently focused on delivering state of the art off site prefab manufacturing and 10D printing residential living options, with an ongoing commitment to reinvest 10% of after tax earnings into R&D.
“We choose our current business site because it was near the Port of Cairns and adjacent to a huge wind farm that guaranteed us cheap but reliable electricity, something we had to have for our prefab manufacturing and 3D printing operations. Also we were very conscious of the then upcoming roll out of the 5G mobile network technology (fibre optic to the phone) and all the wonderful business opportunities it presented” said CC.
The decision by AIXI to financially commit so strongly to R&D is perhaps the one thing above all else that has contributed to its stunning growth and profitability.
“In 2020 we established the AIXI University nearby our present business location with a sole charter of undertaking construction industry R&D and developing “future fit” training outcomes for our workforce. Never in our wildest dreams could be have imagined such benefits to our business by so heavily investing at the front end of our business and benefiting in so many ways at the backend of the business. It has proven to be the perfect business ecosystem for us”.”
I have heard commentators, covering a wide range of industries, argue that this crisis will at least provide an opportunity to ‘reset’ business models. For example, in relating to various sporting businesses, I have lost count of the number of times I have heard commentators say that at least now a ‘root and branch’ review can be undertaken of operations, with all reform options on the table. The ‘blank canvas’ strategy.
When I hear comments like this, I absolutely despair. Why has it taken such a horrific health and economic crisis for people to commence discussing the need for businesses to exhibit energy, creativity, initiative, and innovation in 2020?
I am also of the view that some businesses, where the owners or company directors have an appetite for risk, and they take professional advice, can emerge out of this crisis in a stronger financial position. The Australian government is providing cash flow support for businesses. The Queensland government is also doing likewise.
I canvased this possibility in my previous article entitled ‘In the midst of every crisis, lies great opportunity’.
In a Facebook live event at 4 PM on Wednesday 29 April 2020, Janelle Kerrisk and I will be discussing all things relating to innovation and disruption of the construction industry, with a focus on this crisis. Please join us for an interesting and informative discussion. Click here to view the event.
Not intended as legal advice. Read full disclaimer.