The 2026 Joinery Squeeze: How Australian Cabinet Makers Can Protect Their Margins

Australian construction costs are rising again

The latest Australian Bureau of Statistics Producer Price Index data shows renewed pressure on construction costs. In the June quarter of 2026:

• Input prices to house construction increased 2.1% during the quarter.
• Input prices were 3.8% higher than a year earlier.
• Building construction output prices increased 4.9% over the year.
• House construction output prices increased 5.9% over the year.
• Road freight transport prices increased sharply during the quarter, driven by higher fuel costs.

The ABS attributed the increase in house-construction inputs to factors including raw-material prices, freight, fuel and supply-chain disruption. Aluminium, steel, electrical equipment, copper, PVC and transport costs were among the areas facing pressure.

For cabinet makers, the exact material basket is different from that of a home builder, but the underlying issue is familiar. A joinery quote may include board and sheet materials, decorative panels, timber and veneer, benchtops, hinges and drawer systems, handles and accessories, fasteners, adhesives, lighting and electrical components, delivery charges, subcontractors and installation labour.

A relatively small increase across several of those categories can materially change the final cost of a project. If those changes are not reflected in the selling price, the workshop absorbs them.

The quoting window has become more important

Consider a kitchen quoted at $30,000. When the estimator prepared the quote, the business expected:

The expected gross margin on the job is approximately 26.7%. Now imagine that between quoting, approval, production and installation:

• Materials and hardware cost $1,300 more than expected.
• Workshop labour runs $1,200 over budget.
• An incorrect panel requires remanufacturing.
• An additional site visit adds $500.
• Freight and subcontractor costs increase by $500.
• Several smaller unplanned costs add another $1,000.

The actual job cost is now approximately $26,500. Gross profit falls from $8,000 to $3,500. The customer still paid $30,000. The workshop still completed the job. Revenue still looks healthy. But more than half of the expected gross profit has disappeared.

This is why relying only on sales figures can give a misleading picture of business performance.

Demand has not disappeared

The pressure on margins does not mean there is no work available. Housing and renovation demand continues to create opportunities for cabinet makers. Housing Industry Association data released in June 2026 showed that the value of alterations and additions approved during the latest three-month period was 14% higher than the same period a year earlier.

HIA has also noted that many households are choosing to renovate existing homes rather than move, particularly where land and replacement housing are expensive. That matters for the cabinet-making industry because renovations frequently create demand for kitchens, walk-in robes, vanities, laundries, entertainment units, home offices, built-in storage, custom furniture and replacement cabinetry.

In 2025 alone, HIA reported that council-approved renovation work increased 5.3% to $14.3 billion.

There is therefore a genuine opportunity for cabinet and joinery businesses. The challenge is capturing that demand without allowing higher costs and operational inefficiencies to consume the profit.

Skilled labour remains a constraint

The construction industry's workforce problem has not disappeared either. Master Builders Australia reported in June 2026 that around 20,000 construction industry vacancies remained unfilled, while apprentice numbers in training had fallen to a five-year low. The Australian Bureau of Statistics has also continued to identify skilled-labour availability as a factor contributing to higher building costs.

Cabinet making itself is a specialised trade. Jobs and Skills Australia reports approximately 30,500 cabinetmakers nationally. Around 93% work full-time, with full-time cabinetmakers averaging approximately 43 hours per week.

For workshop owners, labour shortages create more than a recruitment problem. They create a productivity problem. When experienced people are difficult to find, a business cannot simply add another qualified cabinetmaker every time its order book becomes busy. Instead, the existing team needs to spend more of its time on productive work, which makes avoidable administrative tasks increasingly expensive. Examples include:

• Entering the same project information into several systems
• Searching through emails for approved drawings
• Manually checking whether materials have been ordered
• Calling suppliers repeatedly for order updates
• Re-entering quote information when a job goes into production
• Searching the workshop for missing stock
• Discovering shortages only when production starts
• Rebuilding panels because an old drawing was used
• Sending installers to site without complete information
• Reconstructing job costs after completion

None of these activities directly creates the cabinetry the customer is paying for. As labour becomes more valuable, reducing this type of friction becomes increasingly important.

More revenue does not automatically create more profit

This is one of the most important lessons for cabinet-making businesses in the current market. Imagine two workshops.

Workshop B produces $300,000 less revenue but generates $65,000 more gross profit. The example is simplified, but the principle is important. A business that understands its costs can sometimes create a better result without dramatically increasing the number of jobs moving through the factory. That is especially important when labour and production capacity are already constrained.

Instead of asking only "How do we win more jobs?", workshop owners should also be asking "Which jobs make us money, which jobs do not, and why?"

Quoting accuracy is becoming a competitive advantage

Traditional quoting processes often depend heavily on estimator experience. Experienced estimators remain extremely valuable, but relying on memory alone becomes risky when input prices change regularly.

A more resilient quoting process should understand the components behind the selling price. For example, the cost of a cabinet could include sheet material usage, edging, hinges, drawer runners, handles, hardware, machining, assembly labour, finishing, delivery, installation, waste allowance, overheads and target margin.

When these inputs are structured, a material-price change can flow into future quotes more quickly. That reduces the chance of repeatedly quoting jobs using outdated assumptions. It also helps management understand why one product, room type or project category performs differently from another.

Waste deserves more attention

Material waste is unavoidable in cabinet making. Uncontrolled waste is not. Sheet optimisation, damaged materials, incorrect cuts, design changes, manufacturing errors and leftover stock can all affect job profitability. The problem is that waste often disappears into general workshop expenses.

Suppose a project was estimated to require $8,000 of board and hardware. The purchasing team ultimately spends $9,200. Without detailed job costing, management may know that material spending is high across the business but not understand which job caused the variance or why.

A better process compares estimated material cost against actual material cost at project level. If the difference is significant, the business can investigate. Was the original take-off incorrect? Did supplier pricing change? Was extra material required because of damage? Was a customer variation missed? Were additional cabinets added without updating the quote? Was stock allocated to the wrong job?

That information turns a cost overrun into something the business can learn from.

Purchasing has a direct relationship with margin

Purchasing is sometimes treated as an administrative function. In reality, it has a direct impact on job profitability and production efficiency. Poor purchasing visibility can lead to duplicate orders, emergency supplier runs, express freight, production delays, excess stock, missing hardware, incorrect quantities, and materials arriving too early or too late.

A workshop may save $150 by negotiating a better material price and then lose $400 because missing hardware forces another delivery and delays installation. The full purchasing process therefore matters. A connected workflow should make it clear:

1. What material the job requires.
2. What is already available in stock.
3. What still needs to be ordered.
4. Which supplier will provide it.
5. Whether a purchase order has been sent.
6. Whether the supplier has confirmed it.
7. What has been delivered.
8. What remains outstanding.
9. Which job the cost belongs to.

The goal is not simply to create purchase orders faster. The goal is to prevent purchasing uncertainty from becoming production cost.

Inventory is working capital

Another area becoming more important is inventory control. For many cabinet makers, inventory sits somewhere between two extremes. Too little stock creates shortages and interruptions. Too much stock ties up cash and consumes workshop space.

The ideal level depends on the business, supplier lead times and the materials being stocked. Common consumables may justify minimum stock levels. Project-specific decorative board may be better purchased against confirmed work. Expensive hardware may need different controls again.

The important point is visibility. A business should be able to determine what it has, where it is, what is reserved for existing jobs, what is available for new jobs, what is already on order, and what is running low.

Without that information, purchasing becomes reactive. Reactive purchasing usually costs more.

Variations are another common margin leak

Custom joinery changes. Customers change colours. Builders alter dimensions. Site conditions change. Architects issue revised drawings. Additional cabinetry gets requested. Individually, these changes may appear small. Across a full project, they can become expensive.

The risk appears when the operational change happens but the commercial change does not. Production builds the extra cabinet. Purchasing orders the extra hardware. Installers spend another two hours on site. But nobody updates the customer price.

A strong variation process should connect the change to both cost and revenue. Every meaningful variation should answer: what changed, who approved it, what additional material is required, what additional labour is required, does the completion date change, what should the customer be charged, and has the variation been accepted?

The objective is not to charge customers for every minor inconvenience. It is to stop substantial scope changes from becoming invisible costs.

Rework is expensive because you pay twice

Rework has a particularly damaging effect on margin. If a panel is manufactured incorrectly, the business may need to pay for the original material, the replacement material, machine time, additional labour, disposal, production rescheduling, possible freight, another site visit and installation delays.

The customer generally pays once. The workshop may effectively perform part of the work twice. This is why tracking rework matters. If the same type of issue appears repeatedly, management needs enough information to identify the pattern — for example, incorrect site measurement, an outdated drawing, incorrect edge specification, a supplier defect, a programming error, a production mistake, installation damage, or a customer change.

Once the cause is visible, the process can be improved. Without data, the problem simply appears as another busy week in the workshop.

The industry is moving toward connected operations

Many cabinet-making businesses have grown using a combination of spreadsheets, paper job folders, email, accounting software, CAD or design software, supplier websites, shared drives, whiteboards and messaging apps. Each tool may work well individually. The problem appears as the business grows and information becomes fragmented.

A quote is in one system. Purchase orders are somewhere else. Drawings are stored in a folder. Production status is on a whiteboard. Installation photos are in a group chat. Invoices are in the accounting system. Job costs are reconstructed later in a spreadsheet.

This fragmentation makes it difficult to answer basic operational questions quickly — has this job been approved, which drawing is current, have all materials been ordered, what has already arrived, is anything preventing production, which jobs are ready for installation, how much have we spent on this project, is the project still within budget, and what margin are we expecting now?

The opportunity for software is not digitisation for its own sake. It is creating one operational flow from enquiry through to completion.

What should cabinet makers focus on in 2026?

Businesses do not need to transform everything at once. A good starting point is improving visibility in the areas that directly affect margin.

1. Review material prices regularly

Frequently used board, hardware and supplier pricing should be reviewed on a schedule. High-volatility items may need more frequent updates.

2. Know the expected margin before accepting a job

A quote should provide more than a selling price. It should provide an expected cost and expected margin.

3. Compare estimate versus actual

After a project progresses, compare estimated materials vs actual materials, estimated labour vs actual labour, estimated subcontractors vs actual subcontractors, estimated installation vs actual installation, and expected gross profit vs current or final gross profit.

4. Capture variations immediately

Do not leave variation reconciliation until the end of the project. Record the change while everyone still understands what happened.

5. Connect purchasing to projects

Every significant purchase should have a clear relationship to a job, stock requirement or business expense.

6. Track rework

Record enough information to identify repeated causes. The purpose is process improvement, not blame.

7. Create a single operational view

Owners and managers should be able to see the status of active jobs without collecting information from five different people and systems.

Five numbers worth watching every month

For a cabinet-making business, a complicated dashboard is not always necessary. Start with five useful indicators.

Tracking these consistently can reveal more about the health of a workshop than revenue alone.

What the next few years could look like

Australia still needs substantial housing construction, while renovation demand remains important. For cabinet makers, that creates a positive long-term demand environment. However, demand does not remove the industry's operational challenges. Material prices can move. Freight can move. Labour remains difficult to secure. Customers compare prices closely. Construction programs change. Supplier lead times change.

As a result, businesses with better operational visibility have an advantage. The successful workshop of the next few years is unlikely to be the one with the most spreadsheets, the most paperwork or even necessarily the most jobs.

It will be the workshop that can answer, in near real time: What are we building? What do we need? What has it cost us? What still needs to happen? Are we making the margin we expected?

Protecting margin starts with visibility

Australian cabinet makers cannot control every external cost. They cannot control fuel prices, international supply chains, the construction cycle or the availability of skilled trades.

They can control how quickly their business reacts. They can improve quoting. They can track purchasing. They can manage inventory. They can record variations. They can measure rework. They can compare estimated and actual costs. And they can give the people running the workshop better information before a margin problem becomes visible in the bank account.

In a market where costs can change quickly, operational visibility is no longer just an administrative improvement. It is part of protecting profitability.

How CabiPro fits into this shift

CabiPro is being built specifically for Australian cabinet-making and joinery businesses that want to connect the operational side of their workshop. Instead of treating clients, leads, quotes, projects, materials, purchasing, inventory, production and installation as separate processes, CabiPro brings them into a connected workflow.

The objective is straightforward: give cabinet makers a clearer view of what is happening across each job and reduce the amount of information being lost between quoting, purchasing, the workshop and installation.

When market conditions become harder, knowing your numbers becomes more valuable. Learn more about CabiPro.

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