At its conclusion in early 2007 the Steel – Framing the Futureproject findings, addressing the multi-storey building sector, had the unmistakeable ring of a call for industry reform. Robust investigation of the status of the steel construction industry over two and a half years had revealed a sector that was well behind its counterparts in the US, UK and New Zealand, with dwindling skills and average capabilities.
To contrast the Australian industry’s status quo with, for example, the UK, is to understand that ignoring the call for reform signals the nation’s divestment of what could be a thriving, innovative industry with export potential.
The Steel-Framed Building Sector of Australia’s construction industry has strategic importance to the nation’s economic health. The Warren Centre observed that unit cost of steel fabrication in developed countries and certain specialised industries was dropping in real terms, which did not appear to be so in Australia. There has also been a progressive loss of steel framing usage for multi-storey building framing to the pre-stressed concrete sector. Why was this happening, what were the implications and what could be done about it?
Contact with the wide spectrum of parties constituting the steel supply chain disclosed an overly complex system with generally poor take-up of technology.
Tried and proven, readily available technology, comprising 3D documentation, digital data transfer, automated fabricating systems incorporating component marking, plasma and laser cutting, notching, bevelling, drilling, beam fabrication, robotic part identification, positioning and welding was not being taken up as widely as Australia’s overseas counterpart industries. Furthermore this technology was now more user friendly and lower priced.
While the amount of imported fabricated steel for building construction is small, it is increasing and the importation of fabricated steel for energy and resources projects is significant. When Australia’s market slackens, overseas competitors will still be there, keener than before.
To better understand the problem, analyse and formulate solutions, a case study approach was adopted. This brought together the diversified group of value chain contributors consisting of engineers, architects, fabricators, detailers, quantity surveyors, steel suppliers, builders, project managers, developers and property owners. The plan in essence applies the Centre’s model, whereby active participants in a particular industry come together, to understand a problem and to formulate strategies for change. The ownership of ideas for change rest with those in the industry thus facilitating implementation.
AUSTRALIAN STEEL FABRICATING INDUSTRY
The Australian industry proved to be too diverse, presenting too many activities to study as a whole. It was decided to focus on the multi-storey building sector as it had lost greatest market share in the past 30 years to PT concrete and there were lessons to be learnt from this competitor industry. Furthermore this sector was relatively stable in comparison with mining and resources. There was therefore a better chance that knowledge gained would survive the ebb and flow of the economy.
- AusIndustry’s Industry Co-operative Innovation Program
- BlueScope Steel Limited
- OneSteel Limited
THE HARD WORK
Case study subject material was selected comprising 12 buildings,11 of which were either under construction or recently completed. They were located in Sydney, Melbourne, Adelaide, Brisbane and Dubai and study working sessions were held in Melbourne, Adelaide and Sydney.
Part way through the study sessions an interactive facilitated group working session determined that the five ‘Root Causes’ of the industry’s dilemma were highlighted:
- Leadership – too few dominant leaders
- Costing – lack of reliable costing data
- Value Chain Complexity – rationalisation & single point responsibility
- Relative Value Proposition- poor presentational skills
- Technology – slow take up, proven performance
Sustainability and in particular building owners increasing awareness of the need for demonstrable green star rating for new buildings was identified as an issue requiring a strong commitment from the steel producers. It is pleasing to see since completion of the project that the steel industry has established, through the Australian Steel Institute, an active working committee to give priority to this matter.
Five issues groups with appropriate coverage of project participants from the steel supply chain were formed in Sydney and Melbourne to seek solutions overcoming the root causes of the industry’s poor performance. Following further group sessions, an industry survey of software systems and learned contribution addressing specialist aspects of the value chain such as fire engineering and 3D modelling, the thrust of the project narrowed down to:
- Communication – articulate steel framing’s strong value proposition
- Collaboration – develop relationships and collaborative models within the value chain
- Capability – continuous improvement, adopt proven technology, automation and management systems
The project concluded that a strong steel-framed construction value chain is essential for an innovative competitive construction industry, and the business case for radical change has never been more apparent.
While there are many model forms on which to execute change, the recommended STEELWORK CONTRACTING MODEL is a strong starting template for change. This model consolidates the value chain, giving a single point of responsibility, reducing risk and retaining experience and innovative processes within the steelwork contracting entity. Whether this model is formulated by consolidating all key members of the value chain within the one organisation or whether it is done by collaboration, alliancing or the partnering of various combinations of key value chain members, will emerge as a characteristic of the particular Steelwork Contracting brand. Suffice it to say that the Steelwork Contractor must have strong leadership, entering the project early with a well articulated value proposition.
During the project it became clear some members of the steel-framed construction value chain were addressing a number of the issues identified and were initiating plans for change. Companies such as Sebastian Engineering, BlueScope Lysaght’s Design and Construction, Epic Steel and Alfasi have entered or will be entering the field. BlueScope has adopted a model based strongly on technical and organisational strengths with major outsourcing and single point of responsibility. This entity is now undertaking its second major project in the Sydney CBD, the first having started part way through the Steel project. While the project team is not claiming to have been the sole catalyst for the BlueScope initiative, the feedback generated from owners and developers during the course of the project, supporting the Steelwork Contracting Model, has unquestionably endorsed this change.
During the project sustainability was also identified as an issue requiring a strong commitment from the steel producers. The steel industry has now established, through the Australian Steel Institute, an active working committee to give priority to this matter.
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The project findings, addressing the multi-storey building sector, have the unmistakeable ring of a call for industry reform. Robust investigation of the status of the steel construction industry over two and a half years has revealed a sector that is well behind its counterparts in the US, UK and New Zealand, with dwindling skills and average capabilities. To contrast the Australian industry’s status quo with, for example, the UK, is to understand that ignoring the call for reform signals the nation’s divestment of what could be a thriving, innovative industry with export potential.
The report covers skills analysis, industry analysis (including a comparison between Australia and the UK), alternatives, project management issues, sustainability and recommendations.
This project has received most significant funding from the Industry Cooperative Innovation Program managed by AusIndustry by way of a consortium “Beyond Two: Framing the Future” led by Evans & Peck with the following membership:
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