Fight Australia Labor Costs with China Modular Construction

Australia Unskilled Union Construction Workers Make More Than Bankers, Engineers, and Police. But No Worries, China Modular Construction Offers a Solution. 

It seems laughable, but after looking into the wild wages paid to Australia union construction workers, I realized that these construction workers are the only ones laughing…all the way to the bank. For the last five years, Australian construction laborer’s wages have risen 6% annually, while the wholesale price of the buildings they construct have only risen 3.1% annually. This discrepancy is choking out the construction industry’s profit margins, yielding some of the lowest profit margins across all industries in Australia. The impact has resulted in construction companies having almost highest corporate distress rates, only out beat by SME startups.

The productivity of construction labor has only increased 0.8% in the past five years, inflating labor to 23% of total construction costs.

Ok, so productivity and value inflation aren’t keeping pace with labor wages. Fortunately, there is a solution – Capitalize on premium China Modular Construction technology that utilizes less Australian construction worker labor. And for those not under the thumb of Unions, consider temporary China migrant workers for on-site assembly.

Little Hero is a Nonda Katsalidis designed retail and residential development in the heart of Melbourne’s CBD. This boutique laneway development consists of 63 one- and two-bedroom city apartments and duplex penthouse residences. A cornerstone of the re-development of this emerging laneway, the new residences sit atop seven new up-market retail shops, cafes, and restaurants. Utilising a China modular construction steel container system and a parallel on- and off-site construction program, the 8 storey building was erected in 4 weeks. Start-to-finish, construction was completed in 9 months. Estimated total cost of construction was 27.4 million AUD. Modular container construction reduced construction time by more than 6 months, compared with a conventional build, and saved an estimated $4.2 million AUD in construction labor costs, or 15% of the total project cost.

What About Non-Union Construction?

China sourced modular and prefab construction projects, that do not fall under union labor laws, opens up even greater cost saving potential. Because not only can developers, construction companies, and anyone interested in building reduce local labor usage due to the quick completion of parallel on- and off-site construction projects, but local labor can be further eliminated by employing Chinese temporary migrant labor for the assembly of the structure in Australia.

A non-union construction worker’s average hourly wage is around $25 AUD per hour.

A China manufacturer worker’s average hourly wage is around $3.50 AUD per hour.

I’ve written about this project before, and I’m going to use it as an example again because it’s my favorite China sourced luxury prefab house built in Australia. This 5 bedroom, 5 bath, indoor gym, wine cellar, 5 car basement garage, 650 m2 light gage steel house was manufactured in Shanghai, China over a 60 day period. Total on-site construction lasted a mere 100 days. Besides the fact that the structure only cost $847 AUD per finished square meter (this included interior finishings). Where it gets really interesting is the 21 working days and 4 Chinese migrant workers being paid $175 to $202 AUD per day to complete onsite construction. All things factored, including China factory and on-site labor, the estimated savings on labor alone for this house was $206,806 AUD against traditional construction labor costs, that’s an 81% labor cost savings.

Total estimated cost of construction for this house was $500,000 AUD, the estimated sale price was 5 million AUD. *Total construction estimate does not include land purchase, demolition of the previous house, taxes, etc.