By Jayden Mellsop, General Manager, Eastbridge

As Aotearoa New Zealand’s construction market continues to navigate economic uncertainty, the steel infrastructure sector is facing mounting pressure from softening demand, tightening margins and rising compliance costs – sparking a rethink into how projects are procured, delivered and managed.

Aotearoa New Zealand’s steel infrastructure sector is navigating another challenging period. Across the wider construction industry, including structural steel fabrication and bridge construction, the market is best described as both ‘choppy’ and ‘scrappy’.

Following the post-pandemic surge in activity, many fabricators expanded capacity to meet demand. Since then, however, the market has cooled sharply. Few companies have avoided some form of restructuring or downsizing as workloads have softened and margins tightened.

Private sector demand remains fairly anaemic. Developers are delaying investment decisions amid inflationary pressure, economic uncertainty, and cautious sentiment ahead of the election cycle. As a result, many businesses are relying more heavily than ever on public sector projects to sustain cash flow and maintain continuity of work.

With subdued demand from the top and inflationary cost pressures pushing up from the bottom, it’s no secret that margins are getting squeezed.

This environment has intensified competitive pressure. Across the industry, tenders increasingly include at least one heavily discounted submission – the so-called ‘low ball’ bid. While attractive on paper, these bids often carry significant delivery risk.

For principals and asset owners, the temptation to ‘take the savings and manage the risk’ can be understandable in a constrained fiscal environment. Yet experience repeatedly demonstrates that unsustainably low pricing rarely ends well. When a contractor becomes financially distressed midway through delivery, everyone suffers – particularly the client.

Procurement decisions should probe beyond headline price. Clients should seek assurance that specialist suppliers possess both the financial resilience and operational capability to successfully deliver the works. This need not require intrusive financial disclosure or expensive audits. In many cases, a written statement from a company’s accountant or banking partner confirming solvency and delivery capability can provide an appropriate level of confidence. Reputable businesses with strong balance sheets won’t have any issue providing this assurance in order to secure quality projects.

The rising cost of compliance

Alongside commercial pressure, steel fabricators are facing rapidly increasing compliance obligations. Independent testing, verification and third-party inspection requirements have become commonplace across many project specifications.

On high-risk or critical infrastructure projects, this level of scrutiny is entirely appropriate; however, the industry should question whether blanket application across all projects is always justified, particularly when significant additional cost is imposed without a proportional reduction in risk.

More than a decade ago, industry body Steel Construction New Zealand introduced the Steel Fabrication Certification scheme. The industry-led certification framework aligns fabricator capability with construction consequence classes, providing an independently audited benchmark for quality systems, processes and competency.

The scheme’s Level 1–4 ratings directly align with construction categories defined under AS/NZS 5131, the joint Australian and New Zealand standard that defines the best-practice requirements for the fabrication and erection of structural steelwork. Annual audits ensure that fabricators are not only maintaining quality systems on paper, but embedding quality culture into daily operations.

Where a certified fabricator is engaged, principals and consultants should ask whether additional layers of independent verification are truly necessary for every aspect of delivery. Important questions include:

• What is the actual risk profile of the works?
• Is an appropriately certified fabricator already specified in the procurement documentation?
• What additional cost will independent verification add?
• Does the verification requirement materially improve project outcomes?

In an environment where infrastructure funding is increasingly constrained, balancing assurance with efficiency is becoming critically important.

Understanding modern steel fabrication processes

For those outside the sector, the sophistication of modern steel fabrication is often underestimated.

Today’s fabrication process begins with detailed design drawings being translated into highly coordinated 3D digital models and workshop drawings. These models provide substantial value across the project life cycle, enabling stakeholders to identify clashes, coordinate interfaces and visualise complex structures before fabrication begins.

From the digital model, Computer Numerical Control data is extracted directly to automated processing equipment. Modern machinery can cut, drill, cope, and prepare components with extraordinary accuracy and efficiency, often completing multiple operations simultaneously.

These systems represent major capital investment. Advanced processing lines, robotic coping machines, and automated welding systems can cost millions of dollars and require sustained throughput to justify investment; however, they also dramatically improve productivity, repeatability and quality.

Once processed, individual components are assembled into larger fabricated sections, followed by weld off.

Automation is increasingly supporting these activities through robotic welding systems that improve consistency and deposition rates while reducing the potential for human error.

Fabrication does not end at welding. Heat input from welding can significantly distort steel sections, requiring further geometric checks and corrective straightening to ensure assemblies remain within tolerance.

Protective coatings are then applied through painted systems, thermal metal spray, galvanising or, increasingly, weathering steel solutions. Weathering steel has become particularly popular in bridge infrastructure due to its reduced maintenance requirements and distinctive appearance. Following surface preparation, the steel develops a stable oxide patina that protects the underlying material from further corrosion.

Transport and installation represent another specialised component of the supply chain. Bridge assemblies are typically fabricated to the maximum transportable dimensions in order to minimise site connections and installation time. In New Zealand, moving oversized steel assemblies often requires highly specialised transport equipment worth well over $1 million, capable of navigating difficult terrain and constrained road networks.

Once onsite, skilled riggers and crane operators complete erection activities, with bolted connections generally preferred over site welding due to speed, cost, and safety advantages.

A couple of aspects within fabrication shops that are little understood by those outside the industry is the cost of handling and change management. Every time a part is picked up, moved and put down again, inefficiency is introduced. Implementing changes to the design midway through fabrication, or the late addition of some temporary works fixtures, can cause havoc to the flow within a shop. Taking a part backwards into the process to a previous step can disrupt the whole flow of upstream and downstream activities where factories’ specific resource zones are allocated work packages on a shift-to-shift basis, planned days, if not weeks, in advance.

Rushing a project to the start line of fabrication to ‘get the clock ticking on the lead time’ without proper planning ends up being counter-intuitive. It’s much better to take some extra time to get the finer details sorted before fabrication commences than figuring out how to incorporate them on the way through.

Building better industry understanding

As sectors of the industry become increasingly specialised, the age-old divide between design, construction and manufacturing teams is exacerbated, as we know less about the intricacies of the other teams’ specialist work.

Understanding and respecting the individual pressures faced by consultants, contractors, fabricators and site teams as we all work together towards a joint project is essential to successful outcomes.

Some of the most valuable professional development opportunities come from spending time on ‘the other side’ of the industry. Early in my own career, I benefited enormously from a secondment into a design consultancy after several years in site construction.

For graduate engineers and emerging professionals, I strongly encourage seeking opportunities outside your immediate discipline – whether that means moving from consulting into construction, from site delivery into design, or downstream into fabrication and manufacturing environments. Six to 18 months spent working in another part of the industry can provide invaluable perspective that will shape an entire career.

At a time when businesses in Aotearoa New Zealand are focused on a ‘back to basics’ approach, our industry needs more than technical expertise alone; pragmatism must prevail over box ticking and systems for the sake of systems.