Construction Sector Feeling Shockwaves from War in Ukraine – UW GROUP

Construction Sector Feeling Shockwaves from War in Ukraine

Russia’s invasion of Ukraine is triggering turmoil in Australia’s already constrained construction sector, adding to woes that include labour shortages, rising inflation and supply chain issues.

Master Builders has confirmed that timber from Russia and neighbouring Belarus accounts for a portion of Australia’s overall lumber imports with the local industry relying on laminated beams used as structural supports in new home construction from that region. 

Last year, Australia imported $80-million worth of wood products from Russia and $2.6 million from the Ukraine. Most of the imports related to builders’ wooden posts and beams—structural elements of housing construction. 

One Ukrainian firm known in the Australian sector is the family-owned and operated company Heluz, which has been operating in Kyiv manufacturing bricks, lintels, chimneys and ceiling systems since 1876. 

Sanctions are adding to the war’s disruption to actual supply. Wesfarmers-owned retailer Bunnings ordered suppliers to stop buying “conflict timber” from Russia in March, adding its influence to global sanctions. This is in line with the company’s timber policy. 

At the time, Bunnings warned of a shortage of supply on top of existing constraints, particularly of composite laminated veneer lumber, in the coming months. 

Increasing costs in building materials are weighing heavily on builders. 

The war is directly responsible for timber shortages, with 60 per cent of the world’s supply of engineered wood product known as LVL (laminated veneer lumber) coming from the Ukraine, First Place Building Company’s Mark Vujovich says. 

“Right off the bat, as soon as the conflict started in Ukraine, it was like everything stopped,” he says.

“We copped a 35 per cent increase in costs pretty much on day one. We are hearing forecasts of that increasing by another 20 or 25 per cent”.

Official figures show that the cost of building a new home rose by 20 per cent in 2021 due to material shortages, including timber, disrupted supply chains and demand for skilled tradespeople. 

But it seems certain that is only the start, with costs set to rise further due to a 35 per cent tariff increase on imports from Russia imposed by the federal government. 

Builders have been pushed to the wall, some saying that if the situation doesn’t change, they would have to consider leaving the industry. 


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