The deepening coronavirus impact on industry supply chains is creating new opportunities for local businesses as companies search for alternatives to China-sourced products and start to rethink their dependence on Chinese imports.
Solos Glass, which processes glass that window fabricators turn into product for detached houses and medium-density apartment buildings, received a call a few weeks ago from an apartment builder worried about falling behind on its schedule.
“We had a builder come to us and say ‘We’ve got a project we need to complete’,” said Dean Haritos, the managing director of Solos Glass. “It was right in the middle of Lunar New Year and they were concerned about not being able to get product.”
Mr Haritos is now supplying up to 750 square metres of balustrades – the glass panels enclosing balconies on the builder’s Victorian apartment building – in a contract worth “multiple hundreds of thousand of dollars” to his company, owner of the former ASX-listed Flat Glass Industries.
For Solos Glass, the COVID-19 strain of the coronavirus is proving an opportunity as builders seek local alternatives to a supply chain that is highly dependent on materials imported from China. Inquiries jumped 30 per cent after the virus started dominating news headlines three weeks ago, and he thinks the extra orders will continue from builders anxious to keep to their projects on schedule.
“Without those balustrade panels in place, they won’t be able to complete and hand over the project,” Mr Haritos said.
Australia’s building industry imports more than 60 per cent of its annual $6 billion-worth of materials from China, according to the Australian Construction Industry Forum (ACIF) lobby group. Supply chain delays are deepening, as some builders who had previously warned their clients of potential delays are now taking the next step of asking for more time.
“Some builders and contractors are putting in requests for extensions of time for delays to their projects,” said ACIF chief executive James Cameron, without specifying which projects were affected.
“This is contractually not always easy as many contracts do not provide illness as a reason for a claim.”
Supply chain risks are not just limited to construction, however.
Industry Minister Karen Andrews will convene a meeting of industry associations in Sydney on Wednesday, which will include the Business Council of Australia, ACIF, Ai Group and Medicines Australia, to discuss the effects of supply chain disruption to a range of industries.
The risks for Australia’s construction workforce were broader-ranging than just to supply chains, Mr Cameron said.
“If the coronavirus takes hold in Australia, construction projects may be further affected with sick staff and others staying home due to fear of infection,” he said. “The construction industry labour force is highly integrated, and one missing link can mean that projects cannot continue.“
Mr Haritos said the supply-chain problems were now prompting a re-think by builders of how they sourced materials.
“People are now starting to say ‘What’s the real cost?’,” he said.
“When look at [the per-square-metre-cost] in isolation China can be more competitive, but when you add up the cost of delays, quality issues, of not being able to talk to someone locally and not necessarily having technical expertise to support you, it stars to change. The local supply chain comes into its own.”
Mr Haritos, whose company previously supplied glass to the now-defunct local automotive industry, said the increased focus on supply chains didn’t give local producers an easy run. They still had to be competitive, he said.
But Solos Glass, which operates plants in Moorebank outside Sydney as well as in outer Melbourne’s Dandenong and Geelong, was gearing up and could boost capacity to meet the ongoing increase in demand by as much as half by adding a third shift to its Geelong plant, he said.
“We’ve got some headroom,” he said.
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