The COVID-19 pandemic has had a huge impact on the supply of imported building products in Australia.
One example is local EPS (Expanded Polystyrene) manufacturer Foamex which recently won a sizeable contract because its Chinese competitor couldn’t deliver in the required time frame.
Foamex general manager, Justin Kelsey, admits the Australian construction industry is very price-driven, but notes that the COVID-19 pandemic is shining a spotlight on the importance of having a trusted supply chain that can deliver on time.
“We originally quoted on a large project in Queensland to build a distribution centre for a major food retailer, and we didn’t win the job in the first instance,” Kelsey said. “But when they couldn’t get the overseas product in time, they came back to us and we’re now their supplier.
“This is a direct result of the COVID-19 pandemic but the issue is bigger than just the current situation.
“A lot of companies will be looking at their supply chain reliability as a result of the current crisis and we hope that we’ll gain more customers as a result.”
Since the COVID-19 pandemic began about six weeks ago, Foamex has experienced a spike in sales, from not only the construction industry but also for food packaging and medical supply packaging. To handle the extra work Foamex is employing more casual labour and increasing its capacity.
“The building and construction industry, in particular, is ramping up. We’re certainly quoting more, and delivering more,” he said.
“We expect there will be a slowdown in building, particularly the residential sector later this year due to unemployment rising and other knock-on effects from the COVID pandemic.
“There are lots of people talking about the Australian manufacturing sector and how we are too reliant on overseas manufacturing, particularly China, and perhaps this crisis will lead to some changes in the market.”
On a regional level a shift in manufacturing is already underway, according to JLL’s head of industrial for South East Asia, Stuart Ross.
He said manufacturing has moved from China to South East Asia and this is set to continue.
“Manufacturing wages in China are now more than three times those in Vietnam,” Ross said.
“It is the reason why companies such as Korean electronics giant Samsung have moved manufacturing from China to Vietnam.”