This is a famous quote by Albert Einstein which I have recently reflected on when thinking about the prospects of businesses surviving a recession in Australia, the first for 28 years, as a result of the government having to introduce COVID-19 health measures.
My thoughts in this context have heavily focused on the construction industry.
In framing this conversation for contractors, I have reflected as to whether some good can come out of this crisis. I have read many articles and papers on what the Australian economy/business environment may look like on the other side of this crisis.
COVID-19 disruption is extensive and widespread.
A quick scan of the papers (21.4.2020) reveals the extent of economic disruption occurring right now in Australia. In no order, I noted:
- Changes to IR laws. (workplace)
- The role of the future fund. (independent sovereign wealth fund)
- Big fall in house prices and starts.
- Mirvac (developer) preserves cash to take advantage of weakened property market.
- Local company enjoying boom setting up remote managed teleworking.
- Zoom video conferencing security concerns addressed.
- Most hated seat (middle) disappearing in planes.
- Workers shun job flexibility.
- Virgin airlines in voluntary administration.
- Interior design changes.
Focus on the construction industry.
My previous 7 articles centred around challenges and problems contractors are encountering right now in terms of struggling to remain solvent and regulatory issues they are facing.
I put these issues at the forefront of contractors and regulators thinking because there must be a clear path forward for contractors to survive today if they want to be working tomorrow.
However, assuming contractors manage to get through these immediate businesses and regulatory hurdles, then they must focus on what to do to flourish in a post-COVID-19 world.
Contractors must embrace change.
Contractors must embrace change and accept a level of disruption to their operations on a scale many have never previously contemplated. I was of this view before this crisis, but this is now vital given the magnitude of this recession.
I have written several previous articles on how contractors should be adopting innovation-driven changes prior to this COVID-19 crisis. In an article dated 22 January 2019 and entitled Innovation advances and ‘impact investments’ converge to disrupt the Construction Industry, I stated:
“In my view current industry participants must embrace innovation advancements and adopt new construction methods and techniques with a view to delivering new, sustainable, efficient, affordable and uniquely purpose built outcomes for domestic and commercial owners if they wish to survive and indeed flourish.
There are plenty of examples where participants in other industries or services have been swept away in a wave of innovation and changing consumer demands and expectations.”
Fast forward to where we are today, and it appears that this COVID-19 crisis has now resulted in more contractors accepting the need to change or perish.
In this regard, I refer readers to an excellent post-COVID-19 survey of the construction industry by BDO where if there is a silver lining to the current health and economic crisis we are all currently enduring, it would appear that the need to change is increasingly being accepted by contractors.
In an article introducing the survey results, it is stated:
“Ironically, the term ‘disruption’ has been part of the business world rhetoric for almost a decade – particularly around technology being the biggest disruptor of our time. It’s a term which became so ubiquitous and overused, that for many industries – particularly those who were built on solid historical foundations – was nothing more than white noise.
Yet, the force and speed at which this virus has spread, has meant that changing workforces, the uptake of technology and shifting work practices are now being implemented by the construction sector, resulting in greater efficiencies and happier workforces.
It was refreshing to talk to several Australian large constructors as part of the BDO Construction Survey 2020. These operators see COVID-19 as a game changer. When faced with the ‘adapt or die’ scenario, the construction industry overall, is taking it in their stride. Those who I interviewed state, that now is time to make significant changes to work practices, technology and to rethink their office spaces.
It is though construction operators are using the environment as a trigger to reinvigorate their business and question long held business methodologies, to move to a new level of operating. We are seeing companies in the construction industry making the most of the restrictions set by government policy and social distancing.”
A word of caution…
The issue for existing contractors running businesses is that in the first instance, they must decide whether they are up for accepting the need to innovate and change. Obviously, the contractors that participated in the BDO survey were motivated to do so.
However, I must point out that the industry is dominated by older contractors. In a report compiled by CSQ and the CSIRO entitled ‘Are you ready for change?’ it is indicated that there are 71,000 businesses of all types operating in the Queensland industry. Elsewhere in this report, it is stated:
“According to the Queensland Building and Construction Commission (QBCC), in 2014 the median age of licenced bricklayers was 52 years and builders was 53 years, while carpenters were among the youngest with a median age of 35 years.”
I have been unable to find any more recent statistics in this regard. However, I do not believe that the situation would have changed to any great extent, but I am happy to be corrected.
If these older contractors are up for the difficult task in restructuring their businesses, then I absolutely applaud them for having a crack.
‘In the midst of every crisis, lies great opportunity’. I sincerely hope this is the case for all contractors that are committed to flourishing in a post COVID-19 environment.Not intended as legal advice. Read full disclaimer.