Building firms 'losing revenue because of non-conforming products'

The widespread use of non-conforming products across the building and construction sector is creating problems for many companies.

This is according to new research by the Australian Industry Group (Ai Group), which highlighted several issues with products that fail to meet Australian or industry standards.

Chief executive of Ai Group Innes Willox said the problem poses "serious commercial challenges" and raises issues of safety and quality.

"An extremely large proportion (92 per cent) of companies responding to our survey reported non-conforming products in their supply chains," he explained.

"Almost half of businesses surveyed (45 per cent) reported lost revenue, reduced margins or lower employment numbers due to non-conforming products in the steel, electrical, glass and aluminium, and engineered wood sectors."

The Ai Group report, titled The Quest for a Level Playing Field, found non-conforming products fall down in a number of areas, including being not fit for their intended purpose, containing false or misleading claims, or being counterfeit.

Gaps in construction conformance framework

According to Mr Willox, there are gaps and weaknesses in the building construction conformance framework that were identified in the report.

"Non-conforming products are allowed onto the market due to inadequate surveillance, audit checks, testing, verification and enforcement," he explained.

The figures showed nearly half of respondents think market penetration for non-conforming products is between 11 per cent and 50 per cent.

Around 95 per cent of businesses working in the steel industry reported such products, while all respondents in the electrical sector claimed non-conforming products had penetrated the market, including generators and cables.
                                                               
More than seven in 10 electrical businesses said this had caused them to lose revenue, margins and employment numbers as a result.

However, there was little evidence to suggest that the paint industry was experiencing problems, with Ai Group claiming high brand loyalty made it difficult for new market entrants to establish a foothold.

There is also a widely embraced third-party certification - The Australian Paint Approval Scheme.

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