CAPACITY AND CAPABILITY REPORT 2018 CnC... · Manufacturer or Constructor of prefabricate components, panels , or complete houses. Others that do not directly use prefabricated components

CAPACITY AND CAPABILITY REPORT2018

In 2017, the construction industry represented 6% of New Zealand´s GDP. Most of the construction is done on site. However, the increase of construction demand driven by new policies like KiwiBuild presents new opportunities for manufactured, or prefabricated, construction.Statistics NZ’s Business Demography Statisticsshowed 333 businesses involved withprefabrication in New Zealand (according to the Classification Code Hierarchy ANZSIC). Most of the businesses are related with concrete products. However, the prefabricated metal businesses have had the highest growth (75%) since 2000. The purpose of this study is to determine the Prefab Market demand, assess the Capacity of the industry and find new financing mechanisms to increase Capability to deliver. The survey conducted by PrefabNZ includes 36 companies related to offsite construction in New Zealand. The survey included manufacturers of prefabricated components, panels, pods, or complete houses, construction companies and builders, companies that directly or indirectly use prefabricated pieces, and researchers. The data was collected online between December 2017 and January 2018. The results showed that the manufacturers surveyed represented 2% of the total construction GDP. New Zealand’s GDP as of September 2016 was NZD 235,945 Million and the construction sector represented NZD 14,937 Million.

Capacity + capab i lity r epo rtHow NZ’s prefab industry can deliver Kiwibuild

1 | A business or service entity operating in New Zealand. It can be a company, partnership, trust, estate, incorporated society, producer board, local or central government organisation, voluntary organisation or self-employed individual. Due to rounding, individual figures may not always sum to the stated total(s).

63 69 201

63 69 201

Prefabricated Metal Building

Manufacturing

Prefabricated Wooden Building

Manufacturing

Concrete Product Manufacturing

300

20172015

20162005

20002001

20022003

20042006

20072008

20092010

20112012

20132014

250

200

150

100

50

0

Prefabricated Metal Building MfgConcrete Product Mfg

Prefabricated Wooden Building Mfg

94% 6% 98% 2%

GDP Other Industries

GDP Construction

On-Site + O�site not Surveyed

O�site Manufacturers

Surveyed

94% 6% 98%2%

GDP Other Industries GDP

ConstructionOn-Site + Offsite

not SurveyedOffsite

Manufacturers Surveyed

Manufacturer or Constructor of prefabricate components, panels , or complete houses.

Others that do not directly use prefabricated components / panels / pods etc.

Others that plan to use prefabricated components / panels / pods etc.

Construction company / builder / contractor that uses, or plans to use, prefabricated pieces, but does not produce them for sale.

Auckland

Christchurch

Hamilton

Napier / Hastings

Rotorua

Wellington

Whangarei

TaurangaOther

0-5 Employees

21-100 Employees

6-20 Employees

+100 Employees

N/A

26%

6%6%

6%

3%

3%

3%

3%3%

21%

26%

30%

29%

29%

9%

54%19%

24%

Auckland

Christchurch

Hamilton

Napier / Hastings

Rotorua

Wellington

Whangarei

Tauranga

Other

Prefabrication industry size

Source: StatsNZ

63 69 201

63 69 201


Manufacturing


Manufacturing


300

20172015

20162005

20002001

20022003

20042006

20072008

20092010

20112012

20132014

250

200

150

100

50

0



94% 6% 98% 2%


GDP Construction



Surveyed

94% 6% 98%2%



not SurveyedOffsite






Auckland

Christchurch

Hamilton

Napier / Hastings

Rotorua

Wellington

Whangarei

TaurangaOther

0-5 Employees

21-100 Employees

6-20 Employees

+100 Employees

N/A

26%

6%6%

6%

3%

3%

3%

3%3%

21%

26%

30%

29%

29%

9%

54%19%

24%

Auckland

Christchurch

Hamilton

Napier / Hastings

Rotorua

Wellington

Whangarei

Tauranga

Other

Number of businesses in the prefab industry

Source: StatsNZ

63 69 201

63 69 201


Manufacturing


Manufacturing


300

20172015

20162005

20002001

20022003

20042006

20072008

20092010

20112012

20132014

250

200

150

100

50

0



94% 6% 98% 2%


GDP Construction



Surveyed

94% 6% 98%2%



not SurveyedOffsite






Auckland

Christchurch

Hamilton

Napier / Hastings

Rotorua

Wellington

Whangarei

TaurangaOther

0-5 Employees

21-100 Employees

6-20 Employees

+100 Employees

N/A

26%

6%6%

6%

3%

3%

3%

3%3%

21%

26%

30%

29%

29%

9%

54%19%

24%

Auckland

Christchurch

Hamilton

Napier / Hastings

Rotorua

Wellington

Whangarei

Tauranga

Other

Source: StatsNZ + PrefabNZ

Construction Industry in New Zealand

Su rvey m eth o d

Su rveyi n g pr efab co m pan i es

The survey objective is to establish the Capacity and Capability of the offsite construction industry in New Zealand. The survey had three sections. The first part aimed to measure the market size. This includes an estimation of offsite construction revenues and quantity of components, panels, pods and complete buildings manufactured.The second part was to determine the installed and used capacity. This helps us to understand how much the industry can grow with the actual capacity and the investment required to face a higher demand, such as that under KiwiBuild. Finally, the last section was looking for new ideas to finance offsite construction. Answers from offsite and on site manufacturers, builders, government institutions and researchers were included. Companies of different sizes from all over New Zealand were included. More than half the companies surveyed had less than 20 employees and 88% have less than 100 employees.

Surveyed Companies by Location

Surveyed Companies by Main Activity

Size of Surveyed Companies by Employees

Auckland

Christchurch

Hamilton

Napier / Hastings

Rotorua

Wellington

Whangarei

TaurangaOther

26%

6%6%

6%

3%

3%3%

21%

26%

3%

54%19%

24%



Others that plan to use prefabricated compo-nents / panels / pods etc.


0-5 Employees

21-100 Employees

6-20 Employees

+100 Employees

N/A

3%

30%

29%

29%

9%

Auckland

Christchurch

Hamilton

Napier / Hastings

Rotorua

Wellington

Whangarei

TaurangaOther

26%

6%6%

6%

3%

3%3%

21%

26%

3%

54%19%

24%





0-5 Employees

21-100 Employees

6-20 Employees

+100 Employees

N/A

3%

30%

29%

29%

9%

Auckland

Christchurch

Hamilton

Napier / Hastings

Rotorua

Wellington

Whangarei

TaurangaOther

26%

6%6%

6%

3%

3%3%

21%

26%

3%

54%19%

24%





0-5 Employees

21-100 Employees

6-20 Employees

+100 Employees

N/A

3%

30%

29%

29%

9%

15.3% 16.1% 15.6%

17%

16%

15%

14%

13%

12%

11%

10%2017 Next 3 years

(NO Kiwibuild)Next 3 years

under Kiwibuild

3000

Component Panel Pods Complete Building

2500

2000

1500

1000

500

0

2016 2017 Next 3 years (NO Kiwibuild)

Next 3 years under Kiwibuild


+ distruptors

Off-site Time

On-Site Time

onsite timetime

36%

64%

25%

75%

20%

80%

More than half of the prefab manufacturers and constructors surveyed reported they built on site and offsite. Currently, on average 64% of the revenue comes from offsite construction. However, they forecast that in the next 3 years (by 2020) the use of offsite building will increase, representing on average of 75% of their income. Furthermore, with a higher increase of the demand due to new policies like KiwiBuild, offsite construction will represent up to 80%. The manufacturers surveyed forecast a substantial rise in their offsite revenue for the next 3 years. This high increase is driven mainly by making complete buildings and panels due to the increase in the forecasted demand supported by KiwiBuild. Furthermore, there are several large companies (Disruptors*) that are not currently producing but are planning to manufacture complete buildings. This could have a big effect on the industry and change the construction dynamic in New Zealand. The current Operating Margin of manufacturers is on average 15%. The forecast margin with KiwiBuild is lower than without it. According to the survey some companies are willing to drop their margins between 3%-5% to deliver at scale.

*The disruptors are 3 large companiesthat will produce around 6,500.

I n d ustry data

Pr efab mar ket size

15.3% 16.1% 15.6%

17%

16%

15%

14%

13%

12%

11%



under Kiwibuild

3000


2500

2000

1500

1000

500

0




+ distruptors

Off-site Time

On-Site Time

onsite timetime

36%

64%

25%

75%

20%

80%

Current Source of Income Forecast Source of Income - Next 3 Years

Forecast Source of Income - Next 3 Years with Kiwibuild

15.3% 16.1% 15.6%

17%

16%

15%

14%

13%

12%

11%



under Kiwibuild

3000


2500

2000

1500

1000

500

0




+ distruptors

Off-site Time

On-Site Time

onsite timetime

36%

64%

25%

75%

20%

80%

Historic and Forecast Annual Revenue by Prefabricated Piece ($M)

Operating Margin Averages

20000 4000 6000 8000 10000

20000 4000 6000 8000 10000

New Capacity (Investment Plan)Current Used Capacity Current Extra Installed Capacity

Scaled New Installed Capacity


Distrupters New Capacity

Current Used Capacity

New Capacity (Investment Plan)

Current Extra Installed Capacity


Avaliable Capacity

Used Capacity

Survey Results

Statistic Scaling

23%

77%

21%

79%

44%

56%

29%

71 %

Component Capacity

PanelsCapacity

PodsCapacity

Complete BuildingsCapacity

1,000

2,000 - 3,000

20000 4000 6000 8000 10000

20000 4000 6000 8000 10000









Avaliable Capacity

Used Capacity

Survey Results

Statistic Scaling

23%

77%

21%

79%

44%

56%

29%

71 %

Component Capacity

PanelsCapacity

PodsCapacity


1,000

2,000 - 3,000

The prefab industry is composed of companies that manufacture components, panels, pods and/or complete buildings. According to the survey answers of 20 manufacturers, the current production of components and complete buildings uses more than 50% of the total installed capacity (57% and 77% respectively). In the case of panels and pods there is more current available capacity (79% and 71% respectively). The current capacity of producing complete buildings is around 1,200 per year (survey). Using statistics (scaling), we estimate that the NZ complete building manufacture industry could currently build 3,000 to 4,000 houses per year. To face the increasing demand for housing, companies plan to invest between 1%-19% of their revenues, with a median of 8%. New market participants will increase the capacity of the industry, mainly in the complete buildings division. Companies have investment plans (survey) that suggest the capacity in 2020 will more than double to reach 2,300 houses per year. This amount corresponds only to 8 companies that successfully filled in the survey. Moreover, new market participants (disruptors) are forecast to produce 6,400 houses in 2020. This represents a total future installed capacity (in the next 3 years) of 8,700 houses per year, according to the survey results. Without disruptors and scaling the survey results, a total of 7,000 homes could be delivered each year from 2020 if the wider Prefab industry capacity scales up at 90% (as survey recipients have indicated they will do) over the next three years. With smaller samples, the available Capacity in components is 6,000 units and will increase 24% in the next 3 years. In panels the available capacity is 100,000 and the forecast is 122,000. The capacity in pods is 2,400 and is projected to increase 27% in 2020.

Capacity + capab i lity

Pr efab I n d ustry capacity

Survey Results Scaled

Future Complete Building Capacity

Future Complete Building Capacity Scaled

20000 4000 6000 8000 10000

20000 4000 6000 8000 10000









Avaliable Capacity

Used Capacity

Survey Results

Statistic Scaling

23%

77%

21%

79%

44%

56%

29%

71 %

Component Capacity

PanelsCapacity

PodsCapacity


1,000

2,000 - 3,000

Capacity of Type

Component

Pod

Panel

Complete Building

Avaliable Capacity

Used Capacity

The current available Capacity estimated of NZ Complete Building Manufacturers is between 3,000 and 4,000 houses per year.

Survey Results

Statistic Scaling

Data were collected through a survey to PrefabNZ members. Responses were taken in good faith. Due process has been followed, but the researchers did not endeavour to validate or otherwise corroborate the responses. PrefabNZ makes no guarantee of the accuracy or completeness of the responses, and does not accept any liability for any errors.

D isclai m er

Documents

CAPACITY AND CAPABILITY REPORT 2018 CnC... · Manufacturer or Constructor of prefabricate components, panels , or complete houses. Others that do not directly use prefabricated components