The assertion that construction is backward and not innovative is false. We ask, compared to what? The answer: the other three goods-producing industries a) manufacturing, b) mining, oil and gas, and c) agriculture, fishing, and forestry (ABS 2024) - our industry ranks 2nd or 3rd in IP and innovation metrics of the four (Stevens and Smolders, 2023).
Below is a chart tracking KLEMS Multifactor Productivity (MFP) since the fiscal year 1990. The mining industry has declined while agriculture, fishing and forestry have increased (ABS 2024). There will be more later this year as we continue to examine and analyse the construction industry's dynamics.
Construction contractors have stable productivity and advancing innovation despite working in adverse conditions, such as the inability to sell our output when we want (we do not own the projects we build). Additionally, we suffer from chaotic work availability, hyper-competition, uneven mutual dependence, and unpredictable negotiating power (Stevens and Smolders, 2023). Previously, we have pointed out nine industry barriers, including client design of end product, single-digit margins, low single-digit market share of the industry leaders, fluid workforce dynamics (highest “lost last job” of all Australian sectors) and personal guarantees resulting in a high percentage of personal bankruptcy.
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