There is a lot of doom around the economic impacts of COVID-19. The facts show there will be a small decline in revenue in the plumbing industry to 2025 and there will be growth. Kathryn Kernohan investigates.
The COVID-19 pandemic and deteriorating demand for household maintenance and repair will see a 4 per cent decline in revenue for the plumbing industry Australia-wide, according to IBISWorld’s latest report.
“Like all industries, we have been impacted by COVID-19 and this report outlines a range of additional factors that have led to subdued revenue growth over the past five years.
IBISWorld constantly monitor the industry impacts of current events in real-time and have released the Plumbing Services in Australia report. The report said the decline is also due to the downward trend in non-building infrastructure projects.
“However, the plumbing services industry is essential and resilient, and we know that we will bounce back strongly with an expected improvement in household disposable income over the next five years and continued growth in the building construction market.”
Together, these factors mean that overall industry revenue is forecast to decline slightly, at an annualised 0.2% to $17.3 billion, over the five years to 2025. These predictions are aligned with a mid-year snapshot published by the Australian Bureau of Statistics, which found that 81,700 jobs in the construction sector had been lost between March and July. More than 50,000 of these were in Victoria and New South Wales. “The plumbing services industry plays a crucial role in the Australian economy, and employs more than 65,000 people,” says Master Plumbers CEO Peter Daly. 18 | Australian Plumbing Industry Magazine | Summer 2020
The report outlines key external drivers that have contributed to recent downward trends, including significant competition for contracts in the single-unit housing construction market. Additionally, a decline in non-essential household spending has weakened demand for maintenance and repair services as well as the purchase of fixtures and appliances such as ovens, gas central heating systems, hot water systems and bathroom fittings. It also explores the current and expected impact of COVID-19 on the industry, including a projected slump of investment in housing
and non-residential building construction, which is forecast to reduce demand for plumbing installation work during 2020-21. Approximately half of the industry’s revenue is derived from installing plumbing fixtures and fittings in new housing and non-residential buildings and as the report outlines, the pandemic is expected to discourage foreign investment in new projects and may diminish the capacity of local investors. New residential building activity such as the installation of plumbing fixtures (bathtubs, showers and toilets) and drainage and the installation of appliances (hot water systems, dishwashers, gas heaters and ovens) has always been the primary source of demand for plumbing services. The report warns that this reduced demand could lead to job losses and the closure of some firms. In more positive news, there is a projected increased demand in the non-residential building construction sector, in line with records levels of industry activity over recent years.
