Construction workers in Australia have been badly affected and they are struggling to prevent spending from being passed on to their customers.
The top five issues, traders say, are skyrocketing material costs, congested supply chains, rising gasoline and vehicle prices, difficulty hiring workers and excessive wages.
According to research by the job site Hipages, 85% of tradespeople have increased their costs in the past year, with more than half having been forced to do so in the past three months.
With lumber prices up at least 20% and metal prices up 15% in recent years, workers said raw materials were the main driver of rising costs.
This crisis is fueled by a global supply chain crisis and a severe post-pandemic labor shortage, which is driving up the cost of renovations and building new homes.
Geelong carpenter Donald Conway has named material costs as the main obstacle to lowering his quotes.
“For us, the cost of materials over the last four to five months has had the biggest impact,” Conway said.
“Costs have risen in everything from fuel to flooding in Queensland affecting the supply of certain types of timber.
“With lumber going up even $2 per linear yard, a decking project can start to add up quickly.”
Justin Tanios, director of Levelline Renovations & Plumbing in Sydney, said that with the cost of raw materials soaring, he was doing everything possible not to pass them on.
“While most people understand the cost pressures quite well, there are people who are not in a position to pay higher prices,” Tanios said.
THE FIVE FACTORS MAKING LIFE HARD FOR TRADIES
1) Increased material costs
2) Strangled supply chains
3) Rising fuel and vehicle prices
4) Difficulty finding staff
5) High salaries
One strategy he had adopted was to only take jobs within a local 15-20 km radius.
“Working locally helps reduce costs such as fuel, tolls and car maintenance,” Tanios said.
Mr Conway said he adopted a similar strategy for his Doncon Carpentry business, which the 24-year-old launched two years ago.
“At first I tried not to raise the prices because I really felt for anyone who worked hard to save up for an exciting new home improvement project, only to have it taken away from them due to circumstances beyond their control. will,” he said. .
“However, when I started losing money on jobs, I realized I had to raise the prices just because that’s what the job is worth now.”
“To counter this, I have been more selective about the jobs I take and have focused on those closer to home in Geelong.
“Personally, the most important thing throughout this period has been honesty.
“If I needed to raise prices, I always tried to do the right thing for my customers and be transparent about the reasoning behind it.”
Hipages’ chief customer officer, Stuart Tucker, said it was difficult to stay afloat without passing additional costs on to customers.
“What we need to remember is that so many trades are small business operators,” he said.
“They’re trying to manage their cash flow, they’re trying to manage their costs, their revenues, they’re juggling their customers and their jobs, so they have a lot on their plate during this tough time.”
The Hipages Tradie Trends Report 2022 found that even for businesses that had raised prices, a third were still absorbing costs due to the bloated environment, while 60% were just keeping pace with cost increases.
Traders said they were trying to cap price increases at 10%.
In a worrying future, young people seem to bear some of the brunt of cost reduction, with 27% of companies saying they had to lay off an apprentice for price reasons.
Mr Tucker said those dreaming of renovating or wanting to do major work should plan ahead to get the best deal.
“The lesson for landlords is not to leave jobs to the last minute,” he said.
“Engage tradespeople early and give them enough notice so they can plan the work and have time to offset some of those costs and get into the supply chain early to order the materials needed.”
Mr Tanios said the Covid period had actually seen a boom in home improvement.
“We have seen the demand for trades soar, with many people postponing their vacations abroad and opting instead to invest in their homes and in projects such as bathroom renovations,” he said. declared.
“I have never been so busy at work as this year. I even had to expand my team to meet the level of demand.
“Right now we’re booked until August, whereas three years ago I would never turn down a job.”
The 2022 Hipages Tradie Trends report found that more than a third of homeowners surveyed intended to spend more than $5,000 on renovations or repairs in the next six months.
Reflecting these cost-conscious times, the majority of these said they were planning for economic modifications such as solar power and lighting or water conservation.
Over 1,000 owners and 500 business owners or decision makers nationwide were interviewed for the HiPages report.