Construction Industry Analysis in Australia

INDUSTRY OVERVIEW

3.1 Industry Overview, Products & Services, Revenue, and Subdivisions

Construction is a mature, fragmented, and competitive industry. Its operations and economic cycles are well established, with only medium levels of disruption through technological advances over time. After agriculture, it is Australia’s most fragmented industry, with approximately 340,000 competing enterprises employing an estimated 1,020,000 people in 2011-12 (Appendix 1). The majority of businesses are sole traders and small-scale contracting firms with less than five employees; only about 2% of construction firms employ over 20 people. This high degree of industry fragmentation is further illustrated in figure 1: the combined market share of the 4 leading construction firms is low compared with other industries, at less than 8% (IBISWorld).

Figure 1: Total Construction Industry Market Share of the 4 Leading Firms

Source: IBISWorld Industry Report E.

Construction industry products and services include the construction of buildings (commercial, industrial, residential), heavy industry construction, infrastructure (roads, railroads, aerodromes, irrigation, harbour and river works), utilities (water, gas, sewerage, drainage, mains, electricity, transmission lines and towers, pipelines), oil refineries, civil engineering projects, and on-site assembly of prefabricated buildings (IBISWorld).

In 2011-12 the industry attracted revenues of $255.0bn across multiple subdivisions, the 16 largest of which are illustrated in Figure 2. Within these subdivisions, the majority of enterprises specialize; for each of the subdivisions highlighted in blue, even amongst the leading firms per subdivision, few are active or competitive across other subdivisions.

Figure 2: Share of $255.0bn 2011-12 Revenue by Construction Industry Subdivisions...