Steel fabricators, engineers and unions have started a new campaign to win more work on big resources projects, but they lost the debate six years ago this month.
IN February 2005, Woodside hosted a briefing for 500 industry representatives at the Hyatt Hotel on its plans for the North West Shelf venture’s train 5 project; that briefing forever changed the way local suppliers work on big projects.
Woodside announced that day that it would shift away from the traditional ‘stick build’ approach for big gas projects towards modular construction.
That meant two things – the modules could be built anywhere, and the on-site construction workforce could be dramatically reduced.
The trend towards modular construction has continued apace, and that is one of the main reasons why local steel fabricators are struggling.
Woodside also decided to award its principal engineering design and procurement contract to international group FosterWheeler, which subsequently did most of the work in Reading in the UK.
That was a body blow for local engineers who had been hoping Woodside would assemble the engineering team in Perth, just as it had done on the previous train 4 project.
Train 4 set a record for local content in the LNG sector, with two thirds of the work done in Australia.
That proportion has fallen to about 50 per cent, and for some projects will be lower. The Gorgon gas project’s goal is 47 per cent.
To put these numbers in context, there is a large amount of work that must be done on-site. Equally, there are many components that need to be built overseas, because of their scale or complexity.
The critical bit is the 10-20 per cent that could be made here but is now supplied from overseas, usually from giant Asian fabrication yards that are larger, more efficient and lower cost than their Australian counterparts.
The trend away from local content is not restricted to the gas sector; large mining projects have done the same, getting everything from rail cars to dongas made in China.
Despite these adverse trends – or perhaps because of them – unions, engineers and steel fabricators have joined forces to try and limit the amount of work the big resources companies are sending offshore.
They launched their campaign, titled ‘WA Jobs From WA Resources’, one day after Premier Colin Barnett met with the leaders of mining and petroleum companies to try and convince them to give more work to the local manufacturers.
Australian Steel Institute state manager James England said Western Australia’s fabrication businesses were in danger of going out of business, while engineers were being forced to go overseas if they wanted the opportunity to design projects.
“It’s a unique event, it shows the depth of feeling and the importance of this matter to the people of Western Australia,” Mr England said at the launch.
Mr England, who said over 30,000 local jobs were at risk, accused the Barnett government of being complacent.
“It certainly hasn’t got any better; the government hasn’t done enough to change the policies or the outcomes for all the local firms,” he said.
Australian Manufacturing Workers Union state secretary Steve McCartney went further, saying Mr Barnett made it easier to send work offshore by signing an agreement with Oakajee Port & Rail under which steel fabrication and engineering for that project would be done in China.
“We need him to speak to resources companies to ensure we get decent procurement and decent jobs for West Australians. If it can be made here, it should be made here, it’s our gas, our rocks and it should be our jobs,” Mr McCartney said.
The campaign seeks a legislative approach by the state government to ensure that, if local industry has the capacity and capability to perform work, it is done in WA.
Mr Barnett said he felt the risks associated with legislating on the issue would outweigh the benefits.
“It’s very dangerous territory when governments get involved in direct private sector financial arrangements. I don’t favour legislation at all, I think that would be a very poor way of proceeding and would probably make the companies recede even further from giving work locally, ” he said.
Association of Professional Engineers, Scientists and Managers of Australia state president Zaneta Mascarenhas said that, along with local fabrication businesses, WA engineers would have to uproot their families.
“It’s a tragedy because our engineers are missing out on the opportunity to design these projects from the resources that are right here in our backyard,” she said.
UnionsWA was of the opinion that the issue had more long-ranging implications relating to the employment of young people.
“In the Kwinana/Rockingham southern corridor area only one in five young people are employed and while these huge projects are going on, we are seeing a decline in apprenticeships and traineeships,” UnionsWA secretary Simone McGurk said.
The campaign will feature television, radio and print advertising, and its first phase will culminate in a rally at Parliament House on March 15.
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