Impact of COVID-19 on the China-Australia Construction Supply Chain

The Australian construction industry has historically imported building materials from Europe, US and Japan but more recently seen dramatic increases in imports from Asia. The construction industry is heavily reliant on imports of building materials such as steel, windows, joinery, tiles, float glass and curtain walls from its top trading partner, China. The supply of these building materials was disrupted amid the confusion in response to the initial spread of the COVID virus in China leading to widespread lockdowns and the temporary closure of manufacturing plants. By March 2020, the virus has spread by infected international travelers across the globe bringing numerous cases into Australia. This study aims to examine the impact of COVID on the supply of building materials from China to Australia specifically focusing on the state of Victoria. The objectives of this study are to map out the risks that have crystalised on the China-Australia construction supply chain; examine the impact of upstream disruption in China on downstream activities; and assess how the timing of local pandemic outbreak impacts supply chain performance. Using procurement data from a residential builder, we observed disruption of production, delay, increase of shipping costs and loss from foreign exchange. The delay was up to two weeks due to the shutdown of manufacturing plants in China during the early stages of the pandemic. When the first wave of infections spread into Australia, its impact on the building and construction industry was minimal. The greater impact occurred when limits were placed on site workers during second wave of infections which desynchronised the Australian and Chinese sides of the supply chain. The builder experienced additional two-weeks delay on small scale residential projects and four-weeks delay on a large-scale residential project. These findings may assist the industry to find ways to manage future risk of disruptions to their supply chains.