What role should imports play in Australia’s housing future?

Part Two of Built Offsite’s series on Australia’s housing and manufacturing future examines whether imported systems can help increase housing supply without weakening the industrial capability Australia may need for decades to come. (main image: 5North’s KUKA robotic framing line at its advanced manufacturing facility in Edinburgh, South Australia, as the company prepares to use automation and precision manufacturing to support prefabricated housing delivery. Credit Image 5North.)

Australia is unlikely to solve its housing shortage using domestic manufacturing alone.

The construction industry already depends on imported materials, machinery, technology and components, and increasing housing production quickly will almost certainly require greater use of international supply chains.

But as Australia moves towards more industrialised forms of construction, that dependence raises a larger question.

What exactly should Australia be importing?

There is a considerable difference between importing robotics for an Australian factory, importing specialist components that cannot economically be produced here, and importing an almost complete building.

All three may increase housing capacity. Their longer-term consequences for Australian manufacturing are very different.

That distinction sits at the centre of the responses to Part Two of Built Offsite’s Building Australia’s Housing and Manufacturing Future series.

Associate Professor Ehsan Noroozinejad of Western Sydney University argues that the debate is too often reduced to a choice between local and imported production.

“Imports should have a place in Australia’s housing future, but they should be used with purpose. The question is not ‘local or imported?’ The better question is: what should Australia buy from overseas now, what should we make here, and what capability do we want to hold in ten years?”

That longer time horizon changes the equation.

Australia does not need to manufacture every technology used in construction. Overseas production machinery, robotics, software and specialist components could all accelerate the development of local industrialised construction.

Noroozinejad argues that complete imported modules may also have a role where housing is required urgently, particularly in remote locations or following natural disasters.

The question is what happens next.

Does imported technology become part of an Australian production system, or does Australia increasingly import the production itself?

Where imports add capability
Pryda Engineering and Builder Solutions Manager Adam Dawson draws a similar distinction.

“It would be naive to think that we can accelerate housing delivery through sovereign capacity alone.”

Australia’s manufacturers already depend on internationally sourced equipment and products, and Dawson sees strategic imports as one way of overcoming supply constraints while improving local productivity.

But he also sees a point at which the relationship begins to change.

“Imported components are most valuable where they complement local manufacturing rather than replace it.”

That is arguably the more useful dividing line.

An imported machine installed in an Australian factory can increase domestic capacity. A specialist component incorporated into an Australian-manufactured wall, roof or structural system may do the same.

Importing substantially complete buildings can still address an immediate housing shortage, but it potentially transfers a much larger share of the economic activity offshore.

Even then, the distinction is not always straightforward.

Jan Lienemann’s Zen Haus Group provides an example of how international manufacturing can sit inside an otherwise largely Australian delivery model.

Its panelised systems are manufactured in Europe, but the homes are adapted to Australian requirements and delivered through local design, engineering and construction teams.

“The manufacturing may happen offshore, but a significant part of every project remains local. Australian architects, engineers, certifiers, builders and trades are involved in the design, approvals, site works, installation, services, finishes and long-term delivery of the home.”

In that model, overseas manufacturing does not remove the Australian construction industry from the project. It changes where particular parts of the process occur.

Lienemann argues that imports can be particularly useful where Australian suppliers cannot yet provide sufficient capacity, speed or specialised expertise.

And he does not see international competition as something domestic manufacturers should necessarily be protected from.

“Local manufacturers should be able to compete on quality, service, innovation, speed and local knowledge. International suppliers should have to prove that their systems are compliant, reliable and properly supported in Australia.”

The phrase properly supported in Australia is important.

The further manufacturing moves offshore, the more important the systems around the product become.

A building may leave a factory substantially complete, but responsibility for certification, installation, insurance, maintenance and defects does not disappear when it crosses the Australian border.

Dawson cautions that the apparent price advantage of an imported product can quickly change if those issues have not been resolved.

Compliance, warranty support, product traceability and logistics need to be considered alongside the purchase price, while Australia still requires the people capable of assembling, inspecting, maintaining and rectifying the finished building.

Where the risk begins
Structural engineer and DfMA specialist Simon McCarthy of Systemised Design Group takes that concern further.

He argues that imported systems should be assessed through DfMA and Australian compliance requirements before manufacturing begins.

“Most importantly, if imported components do not comply, they can’t be insured.”

That risk becomes particularly significant with industrialised construction because much of the value is created before the product reaches the building site.

Discovering a compliance problem after a shipment of conventional building products arrives is one problem. Discovering the same issue after dozens of substantially complete modules have been manufactured offshore is potentially far more consequential.

McCarthy therefore wants Australia to know much more about what is entering the country.

He proposes a registration system for imported building components, comparing it with the way imported vehicles are tracked. Such a system, he argues, could help identify compliant supply chains while also providing visibility over how rapidly Australia’s dependence on overseas manufacturing is changing.

His preference is not to exclude overseas manufacturers but, where possible, to draw them into the Australian manufacturing economy.

“Ideally, international companies should consider setting up factories in Australia.”

That would represent a different kind of import: technology, capital and manufacturing expertise rather than simply finished production.

It also points to the broader industrial question sitting behind the immediate housing debate.

If Australia needs significantly more industrialised construction capacity, should government policy simply seek that capacity wherever it can be found, or should some of the demand be used to encourage manufacturing investment here?

HIA Chief Executive Industry and Policy Simon Croft cautions against turning that question into an argument for closing the Australian market.

Imported products are already embedded throughout residential construction, and international supply chains bring competition, choice and access to technologies that may not be available locally.

Where domestic supply is constrained, restricting those products could increase costs and make housing delivery harder.

The stronger objective, in Croft’s view, is to create Australian manufacturers capable of competing with them.

“The most sustainable manufacturing sectors are those that are globally competitive and capable of exporting their expertise beyond domestic markets.”

That also places a limit on how far industrial policy should be allowed to influence housing procurement.

Employment, skills development, technology transfer and supply-chain resilience all have value, Croft argues, but measures designed to support Australian manufacturing cannot lose sight of the cost of the homes themselves.

The result is not a particularly neat policy answer.

Nor should it be.

The strongest case for imports is precisely that Australia cannot efficiently manufacture everything it needs. International supply can bring technology, capacity and competition into the market faster than domestic industry could develop them independently.

The strongest argument for local manufacturing is equally practical.

Once production capability has disappeared offshore, rebuilding it is difficult. Skills disappear with factories. Supply chains fragment. Engineering and manufacturing knowledge are lost. Future projects then become increasingly dependent on the same overseas capacity that initially filled a temporary shortage.

Noroozinejad argues that this is why procurement should look beyond the initial transaction.

Transport, exchange-rate movements, storage, certification, defects, insurance, warranties, maintenance and replacement parts all influence the real cost of an imported system.

So do factors that rarely appear in the price of an individual dwelling: employment, technical skills, tax revenue and the knowledge remaining in Australia after the homes have been delivered.

Seen that way, the question is not whether Australia should import housing.

It already does, in countless forms, and will almost certainly import more as it attempts to increase supply.

The more consequential question is whether those imports become part of a stronger Australian industrialised construction sector or gradually become a substitute for developing one.

Australia’s housing shortage may be immediate.

The manufacturing system created in response to it could be with us much longer.