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Australia's AEC industry - a view of recovery

Author: Will Noble

Will Noble - General Manager at Total SynergyWhat should we believe about the AEC industry’s economic outlook when we read the media — are things on-the-up? Are we about to disappear into a post-resource boom recession? Are we simply destined to bumble along in what the press would have us believe is a perpetual slump?

If you have visited the US, UK or Europe in the past 12 months you’ll know where I'm coming from when I say, "live it up, people"! In Australia, we don't know how good we’ve got it — an economy that has avoided recession; a resources boom that, while it may not have been booming in the past year, is still banging; and the residual effects of government making infrastructure investment at federal and state level — we’ve got it pretty bloody good.

I’m fortunate to spend my days talking with the principals of Australia's leading firms of architects, engineers, surveyors, planners and landscape architects. This gives me a uniquely holistic perspective on the health of our industry. All the signs are we're on a moderate, but steady, road to recovery, echoed by senior industry figures.

In a recent conversation, Hames Sharley executive chairman William Hames said there was definitely an increase in business in all states and territories.

“Positive times are ahead for the professionals adept at recognising market opportunities… and no longer restricted to the resource states,” he said.

The 2012/13 financial year isn't going to set any records for market performance, but it is certainly better than the previous year, as a recent article in the Sydney Morning Herald indicates.

Looking to the future, we should perhaps take our cues from what's happening at the top end of town right now. Domestically the ASX200 has remained above the 4600 threshold of recovery for more than a quarter - and continues to improve, currently above 5000 [at time of publishing]. The Dow Jones also shows sustained growth, while better than expected results from the UK should begin to deliver confidence for the Euro zone.

A senior credit executive at one of the ‘big four’ banks said: “The markets performing well is typically a precursor to improved confidence, which in turn will increase developers’ ability to meet lending criteria through a higher proportion of presold space or units.”

The way the media reports on our sector has a profound effect on sentiment, which I find unfortunate if you consider that reading the Herald Sun, Sydney Morning Herald, Advertiser, West Australian or Courier Mail, the industry is presented through a local lens. Those reading the Financial Review or The Australian are getting a national and international outlook - but the cynic in me says these views are those of a journalist writing from within a generic bubble, not able to provide sector-specific commentary, insight or value.

I'm no economist, but I have worked with small and medium businesses all my professional life; I can tell a thriving firm from a struggling one and believe our own sales performance (which includes hundreds of sites across every state and territory of this country) is a pretty good barometer for the economic health of the AEC sector. In which case, things are on the up.

The architecture, engineering and design practices we see that stand out are firms not only with a commitment to design, but ones that invest in process, drive efficiency, build effective distribution channels and focus on profitability. These same practices hold service, design and innovation central to their corporate vision (though not mutually exclusive). These are the practices that see abundance in the market and are thriving.

What is encouraging to me is the number of practices I talk to that have taken these quieter times to apply themselves to pro-bono work by way of building-out competency, while also looking inward to ensure that as the market recovers they have maximum capacity to deliver what matters - design.

A significant number of clients are getting set for the prospect of the ‘Asian Century’ by establishing beachheads in South East Asia and China. Not big firms – ambitious, agile teams taking the set-up and experience of their Australian operations and dropping a reduced-scale facsimile into places like Hong Kong, Shanghai, Beijing, Singapore and Hanoi. These firms are taking advantage of the ability to operate on a distributed basis thanks to innovative cloud-based infrastructure and collaboration tools.

Practices that have been keeping fit and match-ready, continuing to invest in competency, capacity and flexibility, are those we will see catching the first waves of a fast-paced recovery. These practices will lead the field in 2014 and beyond.

Will Noble graduated from Plymouth School of Architecture, UK, under Professor Adrian Gale. He has worked in digital industries across web and business management systems and now heads the ANZ distribution business of leading AEC practice management consulting and software company Total Synergy.

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