Small businesses contribute more to construction industry profits 

Small construction businesses contributed more to construction industry operating profit in recent years than medium or large businesses, Stats NZ has revealed

The operating profit of small construction businesses (those with 1 to 19 employees) increased by $1.25bn between 2011 and 2019 to $1.97bn. In the same period, the operating profit of large businesses (100+ employees) increased by $273m to $728m.

“Before Covid-19, small businesses contributed 37% of the construction industry’s operating profit and accounted for around 40% of all construction businesses,” annual enterprise survey manager Melissa McKenzie said. Data post-Covid has not yet been released.

“In comparison, large businesses contributed 14% of the industry’s operating profit and accounted for less than 1% of construction businesses.”

The remaining 59% of construction business is accounted for by medium-size businesses (20-99 employees) and businesses with zero employees, including those with working owners, companies with contracted labour and passive investment businesses.

“Construction businesses experienced rising operating profits as earthquake rebuild activities in Canterbury and new work in Auckland boosted construction activity over the last decade,” Ms McKenzie said.

“Initially, small businesses experienced the largest growth in profitability, but in the past few years bigger construction businesses have led profitability growth.”

The number of small construction businesses has also grown, along with activity and profits, to over 26,000 businesses that employed around 90,000 people in 2019. In contrast, there were over 100 construction businesses with more than 100 employees that employed around 40,000 people in 2019.