Chapter 7 - Workforce and skills
Introduction
7.1
Construction and through-life support for naval vessels in today's advanced
technology era requires skilled labour in a range of specialised fields as well
as traditional trades. These include design, platform engineering and systems engineering,
integrated logistic support, hull and mechanical construction and module
fabrication and project management.[1]
Workforce availability and sustainability is fundamental to Australia's
capacity to build and support naval ships.
7.2
This chapter looks at workforce and skills issues for the naval
shipbuilding sector. The chapter discusses skilled labour shortages and the level
of employment demand generated by future naval shipbuilding projects. The
issues of competition for skilled labour within heavy industry, skills transfer
and workforce mobility are reviewed. The chapter then looks at capacity issues
relating to particular skill sets—the trades and the high end design, systems
integration and project management skills. The chapter assesses the AWD and LHD
programs as a case in point with regard to workforce capacity. Finally, the
chapter overviews government and industry initiatives to address skilled labour
shortages.
Skilled labour shortages
7.3
National skilled labour shortages and the potential impact of such
shortages on future labour force supply and productivity have been increasingly
recognised in recent years. In 2003, the Senate Employment, Workplace Relations
and Education References Committee conducted an inquiry into current and future
skills needs. The committee found:
The overarching message during the inquiry was the need to
recognise that Australia is facing a major skills formation challenge, both in
the immediate future and accelerating over the next two decades, due to the
combined effect of a shrinking cohort of young workforce entrants, a depleted
stock of skills in some key industries and occupations and the accelerating
need for new skills, flowing from technological and business process change.[2]
7.4
The Department of Employment and Workplace Relations (DEWR) has
responsibility for monitoring skills demand in Australia. DEWR defines skill
shortages as follows:
Skill shortages exist when employers are unable to fill or have
considerable difficulty in filling vacancies for an occupation,
or specialised skill needs within that occupation, at current levels of
remuneration and conditions of employment, and reasonably accessible location.[3]
7.5
DEWR has identified that all states are currently experiencing skills
shortages in a number of trade occupations relevant to naval shipbuilding,
including metal machinists, sheet metal workers and electricians.[4]
In addition, there are state-wide shortages in all but one or two states in several
other relevant engineering and electrical trades, including metal fitters,
metal fabricators and welders.[5]
7.6
Skills shortages in the engineering sector have been apparent for some
time. In 2001 the Engineering Working Group of the National Industry Skills
Initiative reported that:
High levels of shortage were identified across the three
engineering streams of mechanical, fabrication and electronic. Shortages are
particularly severe at the higher trade levels of electronic engineering, and
welding skills, tool making, and in computer aided design and machining, and in
the use of computer numerically controlled processes.[6]
7.7
Factors thought to influence engineering skills shortages included the:
- cyclical patterns of the main employing industries, such as
manufacturing, construction and transport sectors;
- pace of technological change, rendering some skills obsolete and
making others critical;
- changes in the sources of skilled labour, with privatisation of
public utilities reducing the traditional training ground and supply of skilled
engineering labour;
- high labour mobility, which can make it difficult for smaller
firms and trade exposed sectors to compete with the financial rewards offered
by larger firms. High labour mobility can also be a disincentive for firms to
invest in long-term training; and
- the ageing workforce, resulting from a decline in the number of
young people entering the engineering trades.[7]
7.8
Skills shortages are already affecting defence industry. A defence industry
survey undertaken in 2003 found that 40 per cent of businesses had been significantly
constrained by a shortage of senior managers, 58 per cent by a shortage of
professional staff, 48 per cent by a shortage of associate professionals and 67
per cent by a shortage of tradespeople.[8]
7.9
While the above survey indicated the extent of skills shortages
experienced by defence industry generally, it is difficult to gain a clear
assessment of the extent of direct skills shortages in naval shipbuilding. The
committee is cognisant that in a competitive tender environment, companies
would be reticent to disclose publicly any concerns about their ability to
attract and retain labour.
7.10
Austal, which operates in a niche market and not in competition with the
major steel builders, did comment directly on the effect of skilled labour
shortages. Mr John Rothwell, Austal Ships' Executive Chairman, advised that the
shortage of skilled labour is the company's biggest challenge. Despite
committed endeavours, such as training programs, profit sharing and other
employee satisfaction programs, attrition remains a factor, with a staff turn
over rate of around 30 per cent.[9]
Mr Rothwell commented that the company would currently prefer to have
'an extra couple of hundred people' and that its ability to take on new
projects is restricted by workforce availability.[10]
Without a significant increase in the availability of skilled labour, Austal
considered that pressure on wages and continued loss of skilled labour may jeopardise
Australia's competitive advantage in aluminium shipbuilding.[11]
Naval shipbuilding—workforce demand
7.11
Defence has estimated the size of the expected workforce demand
resulting from its planned naval acquisition program. Figure 1 presents
Defence's estimates of the total workforce needed to support naval ship
construction, upgrade and in-service support for the period 2005 to 2025, if
all upcoming projects were managed in country.[12]
There is a sharp rise from 2008 to 2012, reflecting the additional workforce
needed for the AWD and Amphibious (LHD) and Afloat Support projects. According
to Defence's estimates, this increase in demand would require the naval
shipbuilding workforce to expand from around 3000 people in 2005 to a peak of
4700 in 2012, around a 57 per cent increase.[13]
7.12
Following a marked trough in demand around 2013 to 2016, a second rise
is projected for 2017 to 2022. While the current Defence Capability Plan
extends only to 2016, Defence anticipates that it will require a replacement
Frigate and Submarine program from about 2018 onwards and has included these
programs in the workforce estimates.[14]
Estimated total
workforce requirements, by skill sets.[15]
7.13
The coming demand for workers in the naval shipbuilding industry varies
across different skill sets. Defence estimates that the majority of the
workforce increase will be required in hull and mechanical construction and
module fabrication, with demand increasing from around 900 workers in 2005 to
around 2100 in 2011.[16]
Demand for designers is also projected to be significant, increasing from a
relatively small base of around 140 in 2005 to 490 in 2009.[17]
7.14
The predicted peaks and troughs in demand for naval shipbuilding workers
in the coming decades principally reflect peaks and troughs in major
construction and upgrade work. The requirement for construction and upgrade
workers is estimated to double over the five years from 2008 to 2012, with
commencement of construction of the AWDs and LHDs.[18]
The workforce required to provide in-service support to the RAN's fleet is
projected to remain relatively stable over time, at around 1700 to 2000 workers.[19]
In-service support for the submarines accounts for around two-thirds of this
workforce.
Sustainment workforce
7.15
Defence emphasised throughout the inquiry that, from its perspective,
the primary reason for an Australian naval shipbuilding industry is to ensure
that there is a sufficient indigenous capability to support the fleet through
life. To this end, Defence estimated the workforce needed to meet its
'sustainment requirements'. That is, the workforce required to 'maintain,
upgrade and modify the Naval Fleet to the required operational capability
levels'. Defence explained that the sustainment requirement includes 'all of
the in-service support workforce plus a proportion of the construction
workforce that will need to be retained and used to support the new ships once
they enter service and to address attrition within the in-service support
workforce'.[20]
7.16
Sustainment requirements vary across skill sets:
...only a proportion of the naval construction workforce needs to
transition into the in-service support workforce to meet operational
requirements. The proportion of skills to be transitioned depends on the nature
of the skills. System Engineering...and Platform Engineering...represent
specialist, high-end skill categories that are fundamental to retaining the
operational capability of the naval fleet. As such, Defence would seek to
retain a higher proportion of these skills. Design,...Integrated Logistic Support...and
Project Management/Planning,...whilst important skills, are not required for
sustainment purposes at the same proportions as the high-end specialist skills.
Hull and Mechanical Construction...and Subcontracted Module Fabrication Skills,
whilst critical for construction, are not required at high-levels for
in-service support and capability sustainment.[21]
7.17
Overall, Defence estimated that it needs only around two-thirds of the
total projected workforce to meet its ongoing sustainment needs. Therefore,
without further indigenous construction projects, Defence sustainment work is
unlikely to generate sufficient work for an expanded naval shipbuilding
workforce. This analysis is informative regarding Defence's aggregate, ongoing
workforce requirements and helps ensure that debate about workforce capacity is
not focussed only on the construction phase of major projects. However, sustainment
of the RAN's overall fleet capability will inevitably involve replacement
programs into the future. If any or all such construction work is to be
conducted in Australia, then the 'sustainment' level workforce will need to be
expanded again in time.
Other industry sectors—competition or support?
7.18
A range of skills used in the naval shipbuilding sector is also relevant
to other industry sectors. Therefore, the capacity of Australia's workforce for
naval shipbuilding cannot be viewed in isolation from other sectors. The
committee received different views about competition for skilled labour and
transferability of skills across sectors. Some witnesses suggested that
competition for labour resources might reduce Australia's capacity for naval
shipbuilding, while other witnesses considered that there was potential to draw
labour from other sectors of the economy to address peak periods of shipbuilding
demand.
7.19
Given identified skills shortages and the demand for skilled labour in
other industries such as mining, natural resources and construction, Defence
commented that there is a risk that industries within Australia will end up
competing for the limited skill sets available.[22]
Such competition may make it difficult to secure necessary labour and may drive
up wage rates, increasing the cost of construction projects. Defence also
indicated that the effect of a sustainable naval shipbuilding industry on other
sectors of the economy should be considered, particularly as the mining and
construction industries are 'currently managing projects that are key to the
wealth generation for Australia'.[23]
7.20
The Department of Industry, Tourism and Resources (DITR) analysed the
workforce requirements of offshore petroleum developments currently committed
or likely to proceed. DITR noted that the estimates were based on 'very
approximate data' and provided 'rough order of magnitude calculations'. The
results showed that the employment demand generated by offshore petroleum and
LNG projects is likely to peak slightly ahead of peak naval shipbuilding
demand. However, the employment demand created in the offshore resource sector was
estimated to be far greater than the demand generated by naval shipbuilding
projects. Upcoming shipbuilding projects were estimated to generate employment
demand in the order of several thousand workers overall. In contrast, DITR estimated
that the possible employment demand created by offshore resource projects may
peak at around ten thousand workers.[24]
7.21
Mr Ken Pettifer, Head of Manufacturing, Engineering and Construction
Division, DITR commented that:
Availability of skills is an issue that will have to be managed,
and there may be risks to the naval shipbuilding projects if all the possible
resource projects go ahead.[25]
7.22
Some sources suggested that naval shipbuilding construction, with peak
demands around 2009 to 2013, may coincide with a downturn in construction
activity in the resources sector. Mr Terence Booth of Challenger TAFE in Western
Australia and Mr Jamie Mackaway of the Western Australian Department of
Education and Training, advised the committee that demand for construction
workers within the resources sector had already reached a peak level.[26]
Mr Booth commented that many apprentices trained for the resources industry
may become available to the shipbuilding industry in the future.[27]
7.23
Tenix also said that the pressure of skills shortages was likely to
lessen:
One commonly held view is that the current shortage is largely
attributable to activities in the resource sector, especially in the construction
of new mines and so forth. Over the next five years or so much of that activity
will complete, and although there may still be a shortage of workers in Western
Australia, the magnitude of the shortage may shrink considerably.[28]
7.24
However, Mr John Rothwell, Executive Director of Austal, had a different
view:
Whilst the demand for resources continues to be what it is at
the moment—and it is difficult to see that slowing down although no-one can
really tell—it is almost certain that mining companies will find reasons to
develop mining sites and offshore gas facilities and of course oil will
continue to happen...[29]
7.25
A 2004 ACIL Tasman assessment of labour availability found that among
key occupations such as structural steel and welding trades, metal fitters and
machinists, electricians and engineering professionals, the workers in naval
shipbuilding form a small proportion of all workers in those occupations.[30]
Therefore there may be potential to draw labour resources from other sectors of
the economy into naval shipbuilding if required.
7.26
A later, 2006, ACIL Tasman report tempered these findings:
This is not to suggest that the impact of the proposed naval
shipbuilding program would not place a constraint on the supply of appropriate
skills. There will be geographic issues and naval specific training
requirements that may constrain supply in critical periods.
However the table suggests that, on the face of it, there is a
base resource of skills in the Australian workforce on which support for the
naval shipbuilding program could be drawn. The critical issues are whether the
available skills match the needs of naval shipbuilding, how those skills will
be mobilised, the nature of additional training that may be required and the
competing demand for those skills from other sectors of the economy. The last
issue will have implications for their cost.[31]
7.27
This report also stated:
While previous analysis indicates that the level of demand that
the naval shipbuilding program will generate for each relevant skill set is
small compared to total number of skills available, the strength and quality of
the available skills will continue to be an issue for policy makers and
industry.[32]
7.28
Several submitters argued that the naval shipbuilding industry was well
placed to secure labour resources, even in a competitive environment, with
attributes such as job security not always found in other sectors. Tenix
stated:
...many skilled workers—particularly older members of the trades,
who have family responsibilities—are often more inclined to seek out jobs that
offer permanence, stability and balanced quality of life rather than simply
following the highest wage. Long duration projects such as construction of
major naval vessels are ideally suited for those workers.[33]
7.29
Similarly, Thiess commented on the benefits provided by naval
shipbuilding employment:
Naval programs have lead times of at least 18 months to recruit,
train and grow a particular skill that can be used for several years on the
same program. That provides a stability of jobs unknown in the commercial
world. In addition, most jobs in the naval domain are to be provided in large
cities rather than in remote sites where most resource projects tend to be
constructed. A naval program therefore would be quite attractive to a work force
and their families who otherwise may be living/working in remote locations.[34]
7.30
The AMWU also commented on the attraction of stable employment, noting
that 'obtaining employment in a place like Williamstown and staying there for
10 years with good earnings, continuity and job security is what young
people are looking for'.[35]
7.31
In terms of future labour supply, Defence acknowledged that there is
some cross over to naval shipbuilding from trade workers in other sectors, but
commented on the difficulty of modelling cross industry impacts. Rear Admiral Trevor
Ruting told the committee:
What we predominantly rely on...is the industry, in their tender
responses, doing that detailed skills analysis and identifying what they
believe is the availability of skills particular to that geographic area and
their capability to deliver.[36]
7.32
It is therefore important for DMO to have the skills and industry
knowledge to realistically assess tenders, both in the context of labour supply
for specific projects and the wider labour demands occurring in the broader
heavy industry sector.
Transferability of skills
7.33
In the context of competition for skilled labour resources,
transferability of skills between heavy engineering sectors is an important
consideration. Many witnesses were confident that naval shipbuilding workers
could transition to other sectors in periods of low demand. Challenger TAFE
representatives commented that the apprentices and trainees being trained for
the naval shipbuilding sector in Western Australia, would be equally employable
in commercial shipbuilding and other heavy construction.[37]
Thiess stated:
...the 2 naval programs represent only a small fraction of the
trades people required. Therefore, at the end of the programs, they can be
employed in the mineral resource sector or other industries, keeping the skills
fully utilised until the next shipbuilding program or until another peak linked
to a major refit is reached.[38]
7.34
There was more debate regarding the ease of transition into naval
shipbuilding from other industry sectors. The committee heard that the skill
requirements for naval shipbuilding are not always directly transferable from
other industries. Complex defence industry construction may require further
upskilling through external courses and practical on the job training. As
discussed in chapter 2, in many areas military standards are higher than for
commercial production and it can take many years to develop a detailed
knowledge of naval shipbuilding rules and standards.
7.35
A Defence Industry Survey in 2003 found that among companies doing
business for Defence, defence-specific knowledge and skills were important,
particularly for professional staff. Respondents estimated that, on average,
eleven months were needed to train senior managers in required defence-specific
skills, eight months were needed to train professionals and five months for
associate professionals and tradespeople.[39]
7.36
Mr Booth, of Challenger TAFE, considered that while there was much
similarity in the skills required across industries, some of the higher end specialisations
within the defence industry (such as weapons systems) were relatively unique.
Challenger TAFE representatives considered that industry partnerships are
critical to ensuring transferability of skills. This might involve industry
personnel coming into the training system to provide training and also
lecturers going out into the industry. Austal Ships and Woodside were given as
examples where industry personnel are active in providing training.[40]
Workforce mobility—geographic
issues
7.37
While many witnesses were of the view that the shortage of skilled
labour for upcoming naval ship programs is manageable and relatively small on a
national basis, some expressed reservations about the ability of the industry
to secure labour in the required locations. For example, Mr Geoff Smith,
Director at ADI commented:
Analysis shows that the added demand on the skilled workforce
for both AWD and LHD projects is one per cent of the available skilled
workforce in critical trades. Therefore, perhaps the issue is more to do with
transportability. Many skilled workers with established homes and families seem
disinclined to relocate across the nation, despite high wages for what may be a
spike in infrastructure construction work.[41]
7.38
Defence commented that the national assessment of labour shortages was
somewhat outdated:
...when we had a look at the skills issues 18 months to two years
ago, there was an expectation that you would have the capacity, for example, in
Western Australia to move people from the east coast to the west. The recent
data I have is that that is significantly harder now as a result of some of the
housing prices—the increases that have occurred recently in Western Australia.
Tenix was expecting to be able to move people from its Williamstown operation
across to its Western Australian operation, but people are less willing to do
that and, if they are, they have to do it at a significant premium. These
things are very fluid, and it depends on individuals and their personal
financial circumstances.[42]
7.39
The Hon Andre Haermeyer, Victorian Minister for Manufacturing and
Export, Minister for Financial Services and Minister for Small Business,
commented on the costs of mobilising labour:
Sometimes the workforce is extremely reluctant to move and
sometimes they will not move, so there is a cost associated with building up
the skills that are required. And there is a cost associated with the
alternative of attracting the workforce to a different location.[43]
7.40
Major General Haddad, Strategic Adviser, Victorian Department of Industry
and Regional Development, considered that workers will not necessarily move to
work on naval shipbuilding projects, if their skills can be used locally in
other sectors.
...the workforce is very mobile here in Melbourne and Victoria
because of the choices available to it. So my judgement would be that it is
most unlikely that those workers would go to South Australia from Victoria to
do work because they will find other opportunities here because of existing
shortfalls.[44]
7.41
The AMWU noted that industry has never had trouble attracting people to
shipbuilding because of the job security provided by the length of the
projects. Mr Pat Johnston, National Organiser, considered that the majority of
the workforce would move from the east coast to South Australia if offered good
earnings and stable employment. However, industry should not rely on moving an
established workforce:
I think the attractiveness of these projects will be there for
employees and skilled employees. But those people who are domiciled already in
Williamstown I do not think would go to Western Australia for a shipbuilding
project. Some would—maybe the younger and the more mobile—but certainly for
people who are entrenched in their own area I believe it is just too big an
ask.[45]
7.42
Overall, the Victorian Government considered that labour shortages for
naval shipbuilding could be met with proper planning as to where the work
occurs.[46]
While a large core of skilled workers is inevitably required at prime
shipbuilding sites, modern shipbuilding techniques such as modular construction
(discussed in chapters 2 and 6) enable work to be geographically distributed
and to some extent mitigate the need for mass labour mobility.
7.43
Defence cautioned against assuming that construction work can be
distributed to a large number of regions. Mr Warren King, DMO's Air Warfare
Destroyer Project Manager, commented that while distributing module fabrication
work has economic benefits and can help maintain the skill base across the
nation, using too many sites can erode the economic gains because there is
'just too much management and too much distribution'. Research conducted in the
UK indicated that economically, around three sites was the optimal number for
module fabrication work.[47]
7.44
The South Australian government proposed that centralising naval
shipbuilding around a hub in South Australia would enable the development and
short-term expansion of the industry base, without the challenges of regional
distribution:
If there was felt to be a need to maintain two shipbuilders, this
could be achieved at a single site where maximum use could be made of common
infrastructure and skills base.[48]
7.45
Geography and labour mobility issues were also raised in relation to
repair and maintenance work. Both Tenix and the Victorian government commented
on Defence's policy of repairing and maintaining naval ships near the home port,
at Fleet Base East in New South Wales or Fleet Base West in Western Australia.
The Victorian government considered that this policy will effectively exclude
Victorian based yards from repair and maintenance contracts.[49]
Tenix stated:
Our experience is that it is difficult to manage workforce
issues in this very important part of our business [repair and maintenance] because
of the geographic sequence in which Defence awards R&M [repair and
maintenance] contracts. For most of the last year, our facility in Henderson
operated at a high tempo of activity due to the large volume of R&M
contracts awarded for ships home-ported at Fleet Base West. As a consequence,
we were able to recruit and retain a highly skilled workforce in Henderson to
perform naval repairs. However, for the next twelve months, nearly all R&M
contracts planned by Defence will be for ships home-ported at Fleet Base East.
This means we will have skilled R&M workers in Western Australia next year
but little or no work for them; and concurrently we will have to scramble to
assemble an R&M workforce for the Sydney region.[50]
7.46
Defence on the other hand commented on the geographic flexibility of the
repair and maintenance sector, with some items of equipment being able to be
removed for repair at various locations and in other cases the labour force
being mobile. Defence acknowledged that continuity of work was a relevant
factor:
Items that are repaired in the ship are done at each of those
east and west coast locations and the skill base either moves to those
particular locations because that is where the work is, or is able to be
recruited from the local industry base. Because we have now built up a fair
degree of continuity of work in our east and west coast repair and maintenance
industries, they are able to cope with the workloads in those two geographic
locations and are able to maintain our ships appropriately there.[51]
7.47
Even so, the comments of Tenix indicate that sensible planning can
assist industry to better manage work plans.
Skill sets
7.48
As noted above, naval shipbuilding requires skills across a wide range
of areas and the predicted demand for workers varies across different skill
sets. The following sections review some of the workforce and skills issues
raised in relation to particular skill sets.
Trade skills sets
7.49
According to Defence, the majority of the increased workforce that would
be required to deliver its naval shipbuilding program within Australia is in
hull and mechanical construction and module fabrication.[52]
These fields are reliant on skilled tradespeople and, as noted previously,
there are currently national skills shortages in a number of trade occupations.
7.50
Apprenticeships and traineeships are an important source of skilled
trade labour and several witnesses expressed confidence in the ability of the
training sector to provide sufficient skilled workers to meet the peak demands
of the naval shipbuilding program.[53]
Challenger TAFE representatives described recent growth in apprenticeships and
traineeships in Western Australia. Significantly, a state government target of
30 000 apprentices and trainees in training by 2009 had been met four
years ahead of schedule. Much of this growth had been in areas critical to the
shipbuilding industry, including trades such as metal fabrication, fitting and
turning and welding.[54]
7.51
The committee was advised that the overall drop out rate for trade
apprentices is around 30 per cent.[55]
Representatives of Challenger TAFE in Western Australia described some of the
strategies they are employing to reduce attrition, including a support network
of field officers to work with apprentices and employers. The committee heard
that the highest apprenticeship drop out rates occur in the first few months of
an apprenticeship.[56]
Solutions therefore need to look at career information and decision making for
those entering apprenticeships, not only supporting people once they are
undertaking a trade qualification.
7.52
Other witnesses discussed the need for not only increased numbers of
workers qualified in relevant trades, but also the need for specific skills
relevant to the industry. Mr John Rothwell, Executive Chairman of Austal Ships,
commented that 'people need the practical, hands-on experience within the
industry in addition to what they learn at TAFE'.[57]
Mr Rothwell also commented that there are limits to the number of apprentices
a company can take on, given the need to have tradesmen to supervise
apprentices.
7.53
The distinction between aggregate numbers of trade workers and the
availability of specific skills was also canvassed under the government's National
Skills Initiative by the Engineering Working Group. The group found that among
engineering firms experiencing skills shortages, nearly two-thirds reported a
general lack of people with the requisite trade qualifications. However, some
40 per cent reported that 'the shortage was more related to an inability to
find people with specific skills required by the enterprise within the
occupational area'.[58]
7.54
While much evidence to the inquiry focussed on potential labour
shortages, naval shipbuilding can also provide a catalyst for skills
development. The AMWU argued:
A sustainable naval shipbuilding industry with regular contracts
will be part of the solution to the skills shortages. If it is decided to
purchase vessels offshore, not only will we lose the skills to provide through
life support to the vessels, we will lose a valuable skills base for the wider
economy.[59]
7.55
The AMWU was of the view that employers have been remiss in providing
training and apprenticeships over the last 15 years, and that current demand is
generating change.[60]
Mr Pat Johnston, National Organiser, commented:
In relation to the skills issue, I do not think anybody should
get spooked about a shortage of skills. Skill shortages have always been
cyclical. We are seeing a boom in the mining industry and a demand for a lot of
skills. The skills needed previously—say, in the last five years—are now coming
on stream and they are in high demand. All the manufacturing and heavy engineering
companies are now starting to take on apprentices. They recognise that in the
future they are going to need higher skills, so there is a very distinct
movement towards retraining.[61]
7.56
Evidence from ADI supported the assertion that apprenticeship training
has gathered greater focus in recent years:
At Garden Island we have apprenticeship programs, which we
recommenced about four years ago. When ADI was a corporatised activity, it
tended not to focus so much on those for a number of years. However, certainly
now, as a privatised ADI, we see investment in our people as being fundamental
to our success. We are attempting to grow our own, so to speak, and are
investing a significant amount of our budget into doing that. We are not
sitting back waiting to be spoon-fed qualified people; we are trying to grow
our own, nurture our own and improve our own.[62]
7.57
Mr Martin Edwards, General Manager ASC Shipbuilding, described the
training ASC is planning for the AWD project:
There will certainly be a large focus on apprentices. The TAFE
system will be used for the base training of apprentices. The maritime skills
centre will be used for a lot of upskilling and very specialised ship training
associated with the project.[63]
7.58
The committee welcomes initiatives from the private sector to recruit
and train apprentices. Skills development should be one of the broader outcomes
generated by the significant government investment made in naval acquisitions.
Again, this is an area where public-private partnering would be beneficial.
High-end skill sets
7.59
The committee was informed that the complexity and sophistication of
naval shipbuilding is predominantly related to design, installation and
integration of ships' systems, rather than construction of the hull and
structure.[64]
In particular, the increasing use of modular technology requires high order integration
engineering skills.[65]
In Defence's view, these skills are the most critical to develop and retain in
order to ensure ongoing support and self-sustainability of the fleet:
The more important capabilities that are required to flow on
from construction into support are associated with the ability to adapt the
design and integrate new systems and the ability to support complex unique
systems. The competencies of fabrication and fitout associated with
shipbuilding are less critical.[66]
7.60
ASC Pty Ltd commented that high order engineering skills are
particularly critical in the complex start-up design to production phase, which
occurs only once per ship class program. This phase is significant to the
overall cost effectiveness of the program, as it sets the foundations for later
build, system integration, test and evaluation phases.[67]
Without consistent demand, these skill sets can be lost:
A key characteristic of cost-effective and successful
shipbuilding programs is that there is ongoing scope to exercise and mature
these critical high-end engineering skills so that they are available to be
applied to the next shipbuilding program.[68]
7.61
The committee heard that retention of workers with these high-end
technical skills is as much about the nature of the work, as remuneration and
other benefits. Representatives of Nautronix Ltd, an SME involved in the
defence and offshore oil and gas industries, commented that having a strong
research and development component and plenty of stimulating work was essential
for attracting and retaining skilled staff.[69]
Mr Michael Gallagher, Nautronix CEO, cautioned 'Be in no doubt: engineers
love interesting work and they are going to go where that interesting work is'.[70]
ASC commented that even within a relatively large shipbuilding program, 'these
skills can atrophy if not further exercised'.[71]
7.62
As such, development work and not only maintenance and support work may
be required to retain these skill sets in Australia. The South Australian government
commented:
...there is no doubt that challenging technical work, well beyond
just routine maintenance, is required to retain a technically competent,
motivated and productive workforce.[72]
7.63
This view was also evident during committee members' visit to the U.S.
Mr Mark Russell, head of Engineering at Raytheon Integrated Defence
Systems, commented that challenging, interesting work is the key to retention.
He noted that for engineers, enjoying the work that they do and working in a
good team was often more of an incentive than monetary considerations. Mr Russell
commented that a culture of interesting, challenging work in a stimulating team
environment would need to be cultivated for Australia's AWD project in order to
retain skilled staff.
7.64
Defence acknowledged that existing labour capacity was a result of
skills developed through past build projects. Mr Warren King notably remarked:
...we would not embark on the AWD program as a nation today if it
had not been for all the skill sets that have been built up and which are
broadly retained in the industry base as a result of Collins, Anzacs and
minehunters.[73]
7.65
The committee emphasises that today's naval shipbuilding workforce
capacity in Australia reflects the significant government investment made in
past build programs. In turn, local construction of currently planned projects
is an investment in the skills resources needed for the future.
Design skills
7.66
While Australia largely sources its ship designs from overseas,[74]
there was general agreement that it is important for Australia to retain an
element of design capability. These skills enable designs to be tailored to
Defence specific requirements, facilitate modifications during the building of
the ship and are integral to ongoing support, maintenance and upgrade work.[75]
Design skills are also critical for economic productivity:
...strong design engineering capabilities permit the shipbuilder
to plan with far greater efficiency and production/construction arrangements,
materials selection, workforce skills requirements and matters that bear on the
through-life support of the vessels. Possessing these high-end design
engineering skills is essential for a shipbuilder to optimise production
efficiencies.[76]
7.67
The Submarine Institute of Australia commented on the importance of
nurturing design skills for ongoing maintenance and repair:
A design and construction capability is a huge benefit when
modifying ships and submarines and in carrying out unusual repairs, such as hull
cracks...and repairs to power generation equipment.
Even more important is to have the industry continually engaged
so that in the unfortunate but potential event of battle damage or accidental
damage, major repairs can be conducted expeditiously within country; design
experience is especially important in this case.[77]
7.68
Recognising the challenges associated with sustaining an indigenous
design capacity in Australia, ThyssenKrupp Marine Systems Australia advocated a
single Naval Design Bureau for all aspects of naval design work in Australia.
ThyssenKrupp emphasised the importance of planning, consistent workload and
nurturing the capabilities developed through previous ship builds.[78]
Mr Peter Hatcher, CEO, commented that a competitive approach was not
appropriate for design work:
Design is all about knowledge. It relies entirely on putting
together a significant team of very experienced or experienced design engineers
working within an organisation, with a disciplined process and with access to
the right sort of information on standards and materials. Such systems are very
difficult to build and maintain and they are very susceptible to eroding their
capability very quickly. As I said before, without a guaranteed workload or an
assured workload, the capability rapidly disappears. In principle, I suppose
there is no difference between design and production, because we could say the
same things about production, but in my experience it is easier to put together
a production capability. It is easier to move individual people from one
production facility to another, to establish, if you like, greenfield sites for
production. It is very hard, I believe, to do that for design.[79]
7.69
Engineers Australia commented that, while cost effective, buying
overseas designs reduces the learning opportunities for Australian engineers,
technicians and research staff:
... the more the Australian Department of Defence buys ship
designs and weapon systems from overseas, the less self-reliant we become as a
nation in terms of technical capability.[80]
7.70
Australia needs high-end design capacity not only for self reliance, but
to be able to interact effectively and knowledgably in the global market. The
Royal Institute of Naval Architects noted that, given the highly specialised
nature of naval ship design, many projects around the world are internationally
collaborative. Australian shipbuilding projects enable Australian designers to
both contribute to, and learn from, such collaboration:
Australia has considerable opportunity to make a contribution to
that process by bringing what are considerable talents in this country to that
process. By being involved in a project like the air warfare destroyer—and
indeed the Collins class submarine—we develop our own skills in specialised
areas which we can then contribute to others and, by the same token, sustain
the skills that we need in-country.[81]
7.71
Gibbs & Cox Australia explained that it was able to take advantage
of design skills in both Australia and the U.S.:
We are currently employing Australians who have specialist
skills and who are riding off those skills of previous programs. Many of our
new employees coming from Australia have a long heritage of involvement in
Anzac programs, minehunter programs and even US programs...So there is talent
here in Australia that should be corralled and used to the benefit of Australia,
the government and then possibly export ability. In addition, we are
supplementing those staff with US citizens who are then transferring to Gibbs
and Cox Australia, and they will act as mentors, teaching the new employees the
design techniques that we employ within the US company to meet the US Navy’s
need. That means we are growing a capability not in isolation from but in
parallel with the growth of capability in the USN.[82]
7.72
The committee heard from the Australian Maritime College that Australia's
capacity for innovation in the high-end skills areas such as design is
dependent on research and development. Developing these skills is important not
only for project delivery, but for initial planning. Dr Brandner, a Research
Leader at the College said:
...research needs to be done well ahead of the development of the
platform; it should not be after a contract has been left, it should be much
earlier. They are strategic studies, concept studies, where decisions should be
made well ahead of the final bid. Then we are more informed as a buyer, because
there is more debate and more discussion before the design is approaching the
tender stage, and we are better able to deal with overseas allies, if you like,
or collaborators such as the US if we have more of a knowledge base. So it is
about investment in the future, I would argue. If the platform is being built,
it is too late.[83]
7.73
Defence concurred that there can be a stronger tie between design and
system knowledge when a ship is built in Australia. However, Defence did not
see Australian builds as essential for ensuring ongoing vessel support.[84]
Defence considered that the necessary design skills could be developed and
retained in Australia as part of the acquisition process, without original ship
design occurring here:
Approximately 2% of the acquisition cost relates to Australian
industry engagement in design activities. This percentage allows for sufficient
transfer of design skills to ensure that Australia retains the skills to meet
follow-on through life support requirements provided that such access and
involvement in the detailed or production design is provided to Australians.[85]
7.74
Even with sufficient design skills transfer, an important criterion for
efficient through-life support when vessels and systems are not designed in Australia
is that adequate access is obtained to relevant intellectual property and
design rights. This issue is discussed in the next chapter of the report.
Systems integration
7.75
As discussed in chapter 2, the quest for naval capability advancement
means that naval vessels have increasingly sophisticated weapons, sensor and
communication systems. Systems integration skills, which ensure that all
components of the systems work together and work with the ship platform, are
therefore essential to a modern naval shipbuilding capacity.
7.76
Raytheon Australia commented on the difficulty of generating such systems
integration capacity, emphasising the importance of knowledge transfer:
Systems integration is complex, there are not books on the
subject and the capability is acquired through experience and working with
those who have acquired the capability through experience.[86]
7.77
In Raytheon Australia's view, systems integration is an area where local
subsidiaries of international companies can make a substantial knowledge and
skills contribution:
We are proud of the fact that the company is staffed entirely by
Australians, over three quarters of whom are engineers and technicians.
However, a key to Raytheon's success and growth in Australia has been the
ability and willingness of our parent company to strengthen the capability of
its local subsidiary by transferring technology, knowledge, skills and
processes.[87]
7.78
A review of the defence industry by ACIL Tasman in 2004 also concluded
that systems integration capacity should be viewed in an international context:
....innovation in military systems integration depends much more
on how effectively specific institutions—be they government laboratories,
companies or universities—interact in a collective system of knowledge creation
and use that has both domestic and overseas dimensions.[88]
7.79
The review pointed to the need to balance both international input and
local capacity:
For the foreseeable future, Australian-based subsidiaries of US
firms will remain key means by which Australia obtains US technology of
critical strategic and commercial importance. Australian access to this
technology is highly conditional, however...Hence such access as we have does not
obviate the need to maintain a local capacity to integrate systems—both locally
developed and imported—in configurations suited to Australian requirements.[89]
7.80
The importance and scarcity of high quality systems integration skills
highlights that Australia's skills capacity cannot be assessed in isolation.
Networks and business relationships which facilitate knowledge and skills
transfer from international leaders are also important. The committee considers
it important that such networks are used effectively, not only as a source of
services and information, but to contribute to Australia's knowledge and skills
base.
Project management skills
7.81
As discussed in chapters 3 and 4, Australia's naval shipbuilding history
has seen the delivery of large, complex and technically difficult projects to
varying degrees of success. Project management has always been key to
successful and efficient naval shipbuilding and with the advent of modular
build processes, evolving advanced open architecture systems and increased
reliance on global alliances, project management skills have become only more
critical.
7.82
ThyssenKrupp Marine Systems Australia considered that the 'greatest risk
to complex warship construction lies in inadequate management systems and
inexperienced engineering management'.[90]
ADI commented that to deliver a 'fully integrated package of capabilities, the
core competencies of a successful prime tenderer must now be prime contracting,
project leadership and project management'.[91]
Mr Smith, Director, Naval Sales and Marketing, explained:
Project management delivers the ability to ensure that schedules
are developed and managed, costs are controlled, risks are identified and
mitigated, resources are available when and as required, subcontractors are
managed, overseas technologies are introduced and management tools are current
and are applied.[92]
7.83
In Defence's view, the availability of high-end management skills is
currently a 'major weakness' in the shipbuilding industry, with management
teams 'relatively thinly resourced to take on the major projects foreshadowed
by Government'.[93]
Defence observed that in the past there has been a high level of transition of
management teams between construction projects that would not be possible in
future years given the schedule of parallel and overlapping projects.[94]
7.84
The committee notes this concern and accepts that high-level,
experienced project management is critical for the successful delivery of
complex naval ship projects.
The AWD and LHD builds
7.85
Issues relating to the Australian workforce's capacity for naval
shipbuilding coalesced in debates about the industry's capacity to deliver both
the AWD and LHD projects. Defence questioned, from a workforce perspective,
whether it was feasible or necessary to construct both the AWDs and the
Amphibious ships in Australia. Others were confident that the industry could
meet the skills challenges associated with both builds.[95]
7.86
In a Profile of the Australian Defence Industry produced in 2004,
ACIL Tasman commented on the possible implications of the dual build program.
Noting the skills shortages already experienced by Defence industry businesses,
ACIL Tasman reported:
Continuation of this shortage during concurrent construction of
the AWD and amphibious support ships and on-going support of the fleet could
entail significant cost and schedule risks for the above construction program.[96]
7.87
According to Defence, the peak demand period resulting from these
projects (2008 to 2012) would require a doubling of the construction workforce.
Defence emphasised that such expansion should not reduce the labour resources
available to provide ongoing in-service support to the existing fleet. That is,
new workers would need to be brought into the sector. Defence questioned
whether there are sufficient sources of new skilled labour to meet the
construction peak generated by the AWDs and LHDs, commenting that 'This is a
significant workforce 'peak' that will be hard to meet'.[97]
7.88
While Defence considered that the workforce peak would be hard to meet,
it also acknowledged that it did not yet have industry data to support this
assumption:
Industry companies will submit their proposals for how they will
grow their staff to build up to the required numbers. Until we have those
submissions from industry we cannot predict whether they actually have all of
the staff required and whether they will be able to obtain them in a time frame
that is commensurate with the schedules for build.[98]
7.89
Defence also indicated that an expanded workforce would be hard to
sustain, as the ongoing workforce needed for repair, maintenance and upgrade of
the fleet would be substantially smaller.[99]
Defence was of the view that Australian construction of the AWDs alone would
expand the workforce sufficiently to meet the ongoing service needs of its
fleet:
With the onshore build of AWDs and the long-term maintenance
programs for Collins and Anzac, there will be sufficient skills—notably,
design, platform and system engineers—to meet that requirement and to act as a
base for any future development programs. An LHD onshore build would only add
large modules of construction skills to the skill base developed by the AWD
program and the long-term maintenance contracts.[100]
7.90
Defence emphasised that the case for a domestic build was not as strong
for the LHDs as for the AWDs, commenting that a local build was likely to
produce relatively few savings for through-life support.[101]
In particular, Defence argued that the LHD platform would not require the
highend skills that are critical for the industry to retain:
For a low to moderate technology basic platform like the
Amphibious-LHD (as differentiated from a high technology AWD/Aegis or a Collins
submarine) there is only a low correlation between Build capability and Sustain/Upgrade
capability...The key skills to nurture for the long-term in this technology area
are in systems integration and upgrade. In this sense, the skills used during
platform construction are...less important in the through life support phase of
ships.[102]
7.91
A report by ACIL Tasman also commented on the different skill sets
needed for the two projects. While the Air Warfare Destroyers would require
more specialised fabrication skills, ACIL Tasman considered that construction
of the Amphibious Ships could 'draw more readily on the skills available in the
general engineering base'.[103]
7.92
Engineers Australia noted that the workforce requirements for the AWDs
and remaining capacity, or lack of, to deliver the Amphibious Ships has not yet
been quantified.[104]
However Engineers Australia considered that much of the nation's engineering
capacity would be taken up with the AWD project.[105]
7.93
While Engineers Australia would welcome an expansion of the engineering workforce
to meet the demand of the Amphibious Ships build, there would need to be commitment
to ongoing work to sustain the workforce.[106]
Engineers Australia observed:
Whilst Engineers Australia supports the Government's strong
preference for future naval ships to be built in Australia, the argument to
build the Amphibious Ships in Australia, is not as clear cut as it is for the
Air Warfare Destroyers. With little future demand currently programmed by
Defence for large steel ships to be built in Australia, the establishment costs
for new infrastructure and training must be amortised over the two ship LHD
program.[107]
7.94
Numerous submitters referred to a study by ACIL Tasman which suggested
that the skills pressures generated by both the LHD and AWD programs would not
be significant given the size of the relevant labour pools.[108]
However, other submitters noted that regional effects were important. For
example, DITR commented:
At the aggregate level it will be marginal in terms of the
national economy. The shipbuilders group had a large study done...and at an
aggregate level it is certainly marginal. The question will be whether there
are specific effects in specific locations. You have had advice from a couple
of the aluminium shipbuilders anxious about the supply of labour. If these
things are managed with appropriate resources being put into training then that
will reduce the extent of those problems.[109]
7.95
ThyssenKrupp Marine considered that expanding the skilled workforce base
to undertake construction of the AWDs and LHDs was possible and appropriate,
but that other projects may need to go offshore:
...construction of the AWDs and LHDs in Australia will impact on the
other major acquisitions: the AOR [Auxiliary Oiler Replenishment ship] and
strategic lift ship. The AWDs and LHDs will be the largest and most complex
warships ever built in Australia. Problems, whose resolution will require
experienced, skilled engineering management, will inevitably occur. Stretching
the capacity of Australian industry to also build the AOR and strategic lift
ships in Australia would introduce a very significant risk that the AWD and LHD
projects would be left without sufficient resources to overcome these problems.
The end result would be a significant increase in the risk of failure of the
AWD and LHD projects.[110]
7.96
The Government of Western Australia reported the findings of a study
into the employment demand and predicted skill requirements of major projects
in WA over the period 2005 to 2010. The study found that while Western
Australia could not afford to reduce its efforts to ensure the availability
of skilled workers, generally major projects were not being significantly
delayed or failing to go ahead as a result of an inability to source skilled
labour. The Western Australian government considered that while 'the State
would be ill-advised to leave the market entirely to its own devices',
government and industry skills initiatives combined with the timing of the
amphibious ships build should be 'sufficient to obviate the need for adjusting
the demand side of the labour market by, for example, building the amphibious
support ships offshore'.[111]
7.97
The Queensland government indicated that the AWD and LHD build programs
should provide a catalyst for industry investment in workforce training:
It is estimated that around 3,000 to 5,000 additional engineers,
specialist technicians, key trades people and project managers will be required
by defence industry over the next decade to provide the skills necessary to
build and maintain Australia’s major defence platforms. Defence and defence
industry alike have an interest in, and responsibility for, developing these
skills. The funding available for the program will not meet the full
requirement for growth and industry will need to make an additional investment
to grow the industry skill base to the required level.[112]
7.98
Submitters to the inquiry drew different conclusions about the implications
of workforce availability for the AWD and LHD builds. Defence considered that building
only the AWDs or Amphibious Ships in country would have a positive impact on
program costs. Specifically:
Defence would not be required to bear the significant Non-Recurring
Expenditure (NRE) costs associated with the ramping up and ramping down of
workforce requirements. The steeper the ramp-up /ramp-down the higher the NRE
costs borne by Defence.[113]
7.99
Other witnesses considered that workforce and skill supply issues
made a strong case for longer-term, more even defence demand. For example, the
RSL considered that long-term employment benefits could be assured through a
policy of Australian construction of all Australian warships and an ongoing
ship replacement program as vessels reach the end of their service life.[114]
Future Directions International Pty Ltd commented that 'Consistency of order
books is the essential means of maintaining a skills set'.[115]
The Government of South Australia commented that, from a workforce perspective,
simultaneous construction programs are not ideal and that demand needs to be
smoothed over the longer term.[116]
South Australia called for a national skilling and shipbuilding
infrastructure plan in the context of a rationalisation of the industry.[117]
The issue of demand planning is covered further in chapter
15.
Workforce and skills initiatives
7.100
Numerous submitters expressed confidence in the ability of the industry
to meet future naval construction demand. The committee heard about a number of
initiatives being implemented by governments and industry to increase the
supply of skilled labour to the naval shipbuilding industry. Several of these
initiatives are canvassed below.
Federal government—skilling Australia's
defence industry
7.101
The Skilling Australia's Defence Industry (SADI) Program is a federal
government policy initiative aimed at addressing the shortfall in the quantity
and quality of skills available to defence industry. In 2004 the federal
government committed up to 0.5 per cent of the money spent on major defence
capital equipment projects and maintenance to SADI, equating to around $215
million over ten years.[118]
7.102
Defence has entered into SADI agreements with five companies, with two
more imminent. A further two proposals are under review and Defence anticipates
proposals from a further 15 companies in coming months.[119]
The initial focus of SADI is on entering into agreements with larger companies
who hold major contracts with Defence. Agreements are not generally
established directly with SMEs. Rather, larger companies are encouraged to
provide places for their subcontractors in the programs for which they receive
SADI funds.[120]
The South Australian government commented on the need to make SADI more
appealing to small to medium enterprises.[121]
7.103
Proposals for SADI funding must meet a range of criteria, including
addressing short, medium and long term growth requirements, attracting
experienced and entry level employees and retaining skilled employees in the
industry for longer. SADI proposals must target professional and technical
trades where current and future shortages are identified.[122]
7.104
SADI funding is specifically aimed at expanding, not maintaining, the
skilled workforce:
Consideration will be given only to those proposals that
demonstrably increase the numbers of skilled employees over and above the
projected growth that could be reasonably expected within the constraints of a
company’s normal commercial considerations or any mandatory contractual
conditions within an extant contract between Defence and the company. Funding
will not be made available to proposals that maintain the status quo.[123]
7.105
Given that SADI is a relatively new program, as yet there is little
evidence to assess its effectiveness. Defence explained that companies
receiving SADI funds are required to report progress against agreed targets
twice a year. The one company that has so far been required to report has achieved
all its targets.[124]
State government initiatives
7.106
State governments, in conjunction with industry, have implemented a
range of training and skilling initiatives to improve labour supply. The South
Australian, Western Australian and Queensland governments provided particular
detail of initiatives undertaken and these are outlined below.
South Australia
7.107
The South Australian government described the investments it is making
to meet the trade and high technology skills needs of its naval shipbuilding
industry. These investments included:
- $20 million for a Maritime Skills Centre at Port Adelaide to
deliver trade and technical training to ASC and other users. The committee
heard that the welding classes delivered at Port Adelaide are world's best
practice, due to the exceptionally high standard of welding required for
submarine production and maintenance.[125]
- $8 million with DSTO and the University of South Australia for
the Centre of Excellence in Defence Industry Systems Capability, to enhance
Australian industry capability in software engineering, systems engineering,
systems integration and systems maturity.[126]
Western Australia
7.108
The committee received evidence about a number of initiatives in Western
Australia relevant to naval shipbuilding workforce supply. These included:
- the Skills Formation Taskforce—led by industry, the taskforce has
a major role in reforming the apprenticeship and traineeship systems in WA.
Outcomes have included reducing the duration of building and construction
industry apprenticeships to two and three years, with similar reductions
planned for the metals and automotive industries;[127]
- the fast track apprentice program—which gives mature age and
semi-skilled workers an 'express route' through the traineeship and
apprenticeship system;[128]
- a school apprenticeship link program—which targets the transition
from school to apprenticeships;[129]
- Challenger TAFE—which provides training to the RAN and other
regional maritime forces and has developed relationships with key naval
shipbuilding enterprises;[130]
- the Western Australian Applied Engineering and Shipbuilding
Training Centre, run by Challenger TAFE—which is the main shipbuilding
vocational training provider in WA, located within the Australian Maritime
Complex;[131]
and
- the Western Australian Skills Advisory Board—which is working to
encourage permanent skilled migration to Western Australia.[132]
7.109
A joint ministerial taskforce 'Skilling WA's Defence Industry Task
Force' has been established to look closely at Western Australia's defence
industry needs and inform, among other things, the establishment of a defence
industry training centre and the courses that the centre will provide. The
taskforce follows a state commissioned consultancy that investigated the
training strategies Western Australia should adopt to meet defence industry
workforce requirements. Recommendations of that consultancy included:
- establishing a defence industry centre of specialisation in Western
Australia to act as a training provider, developer and broker;
- conducting a comprehensive audit of skill requirements;
- customising and badging education and training programs to meet
industry needs and provide definite pathways into the industry;
- promoting defence industry careers to senior secondary school
students;
- exploring a 'defence industry group training scheme' to assist
smaller employers to take on apprentices and trainees; and
- evaluating strategies to increase uptake of engineering courses.[133]
Queensland
7.110
The Queensland government outlined a number of initiatives which,
although not targeted specifically at the naval shipbuilding industry, address
the trade workforce base relevant to the industry. Some of these initiatives
included:
- the Queensland Skills Plan—aimed at modernising the vocational
and education training systems, including improving delivery of TAFE training
and fostering partnerships with training providers, industry, communities and
unions;
- development of a Trade and Technician Skills Institute and
expansion of the number of trade and training places;
- the SmartVET strategy—encouraging accelerated skill development
and supporting workers to upgrade their skills. Some of the initiatives
involved include developing skills formation strategies, recognition of prior
learning, industry training partnerships and accelerated apprenticeships; and
- an integrated Manufacturing Careers Initiative—to promote
manufacturing careers and pathways and address negative perception about
working in the manufacturing industry.[134]
Overseas migration
7.111
Mr Gary Collins, of the Western Australian Chamber of Commerce and
Industry, commented that training local people is an inadequate solution to Western
Australia's shortage of skilled tradespeople. Skilled migration is also
required to provide an adequate labour pool for the naval shipbuilding sector.[135]
Tenix presented a similar view:
Existing Government policy provides for skilled immigration in
certain circumstances. It is worthwhile considering the need for higher
priority to candidates with proven skills applicable to industries such as oil
drilling, mining, shipbuilding and steel fabrication. In most cases, the basic
skills are similar and transferable between these adjacent industries. The
potential immigrants are available now; and if allowed to immigrate under
controlled conditions they could easily offset the shortage needed for the AWD
and LHD programs.[136]
7.112
The AMWU agreed that migrant labour may be required as an interim
measure to enhance Australia's naval shipbuilding capacity:
We are satisfied that, with the retraining programs that are in
place and the supply of supplementary labour when required as an interim
measure—migrant labour sourced by reputable companies that are not ripping off
these migrant workers—we can deliver all the skills required for these major
projects either now or in the future. If there is a short-term skill shortage,
that can be filled with supplementary labour through reputable companies. So we
do not think the skill shortage is a real factor that should be considered when
we are talking about whether or not we build these vessels overseas.[137]
7.113
The potential for skilled migration programs to meet specialist labour
shortages in Australia depends in part on the availability of skilled labour
overseas. Other countries, for example in Southern Europe, are also
experiencing skills shortages.[138]
Mr Pat Johnston of the AMWU emphasised the importance of appropriately
managed migration programs in this context:
Australia is not the only country with a shortage of skills.
There is a skills shortage all around the world. That is why it is important
when people are sourcing labour from overseas to make sure that they have the
right providers—those who have the expertise to supply the labour.[139]
7.114
Skilled migration has had an increased focus in Australia's overall migration
program in recent decades. A record 97 500 places were allocated for
skilled migrants in 2005–06.[140]
As explained below, the skilled migration program targets particular areas of
skills shortage.
Permanent migration—Migration
Occupations in Demand List
7.115
In addition to age, English language and other generic requirements, migrants
under the General Skilled Migration program are generally required to be
qualified in an occupation listed on Australia's Skilled Occupation List.[141]
This list includes a wide range of occupations in the categories of managers
and administrators, professionals, associate professionals and tradespeople and
related workers. In addition, the Migration Occupations in Demand List (MODL)
lists occupations and specialisations which have an identified and ongoing
national labour shortage. Migration applicants are awarded additional points if
their nominated occupation is on the MODL and further points if they have a job
offer from a suitable Australian employer. Migration applications from people
whose nominated occupation is on the MODL are also given priority processing.[142]
7.116
As at March 2006 several occupations relevant to naval shipbuilding were
listed on the MODL, including metal trades such as metal fabricators,
machinists, sheetmetal workers and welders. Electrical trades listed included
general and specialist electricians and electronic instrument tradespersons.
The MODL is reviewed twice a year to take into consideration any existing and
emerging skills shortages.[143]
Therefore, there is some scope for the existing permanent skilled migration
program to respond to labour shortages related to naval shipbuilding.
Temporary migration—457 visas
7.117
In addition to increases in permanent skilled migration, there has been
an increased focus on temporary migration in recent years. The Temporary
Business (Subclass 457) visa, introduced in 1996 and expanded in 2002, allows
skilled personnel to come to Australia to work for an approved employer for up
to four years. Minimum skill and salary levels apply to positions filled
through the 457 visa program, although certified regional employers have been
able to seek exemptions from these requirements.[144]
In 2004–05, some 26 280 class 457 visas were granted.[145]
Conclusion
7.118
Availability of skilled labour is a critical determinant of the Australian
industry's capacity for naval shipbuilding. It is clear that Australia has a quality
skilled labour base, with skills relevant to naval shipbuilding distributed
across different sectors of the economy. Defence, however, is correct to draw a
distinction between a capable workforce and one that has the capacity to meet
an increase in demand.
7.119
It is clear that there are skilled labour shortages in a number of
occupations required for naval shipbuilding. The committee received different
views as to whether labour shortages are so significant as to affect adversely the
successful delivery of upcoming build programs. Many witnesses were confident
that the workforce could be expanded, through training, movement between
sectors and immigration, to meet the challenges associated with both the AWD
and LHD builds. Other submitters, including Defence, were more circumspect. The
committee is cognisant that in a competitive tender environment, such as the
current naval shipbuilding environment, companies would tend to be publicly optimistic
about their ability to attract and retain labour.
7.120
The committee recognises the cautious approach by some submitters
towards meeting the increased labour demands. For example, they are concerned that
mobilising labour for naval shipbuilding could sacrifice the capacity for
repair, maintenance and upgrade of the current fleet, or adversely impact on other
profitable industry sectors.
7.121
However, the committee also recognises the opportunities a naval
shipbuilding industry provides as a catalyst for skills development and
workforce growth. Forecast labour shortages are an incentive for innovation and
industry investment in training and skills development. Government investment
in naval shipbuilding programs in the past has strongly contributed to the
workforce capacity that exists today. This resource, particularly highly
specialised skill sets, will atrophy without further on-shore construction
projects.
7.122
The committee considers that current skills shortages provide a
significant but not insurmountable challenge for local construction of both the
AWD and LHD platforms. The committee sees critical roles for industry, Defence
and government in addressing the challenge. If Australian industry is to
benefit from substantial federal funding, in the form of local construction of
naval acquisitions, industry must show that is has innovative responses and
solutions to skills challenges. The committee is encouraged by Australian and
state government and industry investment in relevant training and skilling
initiatives. The committee also notes that appropriate enterprise bargaining
arrangements, which foster innovation and encourage workforce productivity, are
important to address labour and skills issues and increase industry efficiency.
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