18/12/2017 - 13:39

Soft outlook for construction jobs

18/12/2017 - 13:39

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The number of workers on big projects in Western Australia is likely to stabilise at just one quarter of the peak level recorded during the mining construction boom, and that’s only if planned projects get approved, a new study has found.

Soft outlook for construction jobs
Peter Dyball and Petra Nelson have crunched the numbers on construction workers. Photo: Attila Csaszar

The number of workers on big projects in Western Australia is likely to stabilise at just one quarter of the peak level recorded during the mining construction boom, and that’s only if planned projects get approved, a new study has found.

Pit Crew Management Consulting Services has spent the past decade tracking demand for workers on big projects, and managing director Peter Dyball sees demand continuing to fall.

His analysis shows the number of individuals working on major WA projects – defined as resources, energy and infrastructure projects worth more than $150 million – peaked briefly at just over 35,000 in 2012.

It has fallen sharply since then as big iron ore and LNG projects have completed their construction phase.

At the start of this year, there were around 15,000 individuals on major construction projects; that has fallen to around 10,000 (see graphic).

Mr Dyball expects the number to fall further, to about 8,000, and stabilise around that level over the next five years.

However, those estimates only stand if planned projects are approved, he says.

Big projects on the drawing board include iron ore developments by BHP Billiton, Rio Tinto and Fortescue Metals Group (see table).

“While the volume of work is substantial, it is expected this will occur over a number of years, therefore damping any large increases in labour demand,” Mr Dyball said.

“The construction market will also be very dependent upon these projects receiving final investment decision in the next 12 to 18 months, otherwise the market will continue to ease through 2019 and 2020.”

Mr Dyball said there was little prospect of other big resources projects coming to fruition in the next five years, with a surge in infrastructure projects also unlikely.

“The prospects for another big increase in demand in WA isn’t that promising; it’s going to be four or five years of status quo,” he said.

However, contractors and project developers should not assume labour would be in ready supply.

The softness in WA is being offset by strong demand in NSW, Victoria, Queensland and SA, which are all enjoying a surge in infrastructure projects.

“In total, these states will need to find an additional 25,000 workers over the next two years,” Mr Dyball said.

Another challenge will come from maintenance work on big resources projects, particularly if multiple LNG processing trains have shutdowns at the same time.

“WA employers who recognise the challenges and engage adequate attraction and retention strategies should be able to resource their projects with local workers,” he said.

“However, as we move towards 2019 and 2020, those employers who believe there will be ample resources sitting on the bench waiting for a call will be sorely disappointed.”

As well as studying future demand, Mr Dyball has looked back at the difficulties that arose during the mining construction boom of the past decade.

He believes the cost blowouts and schedule delays on big projects flowed primarily from what he called ‘skills dilution’, a decline in the average level of skills and experience.

He said this applied across most blue-collar trades, but had a bigger impact up the line.

“The greatest impact we saw on projects was the dilution of skills at a supervision and management level,” Mr Dyball told Business News.

“I believe very strongly the direct and indirect effects of skills dilution had a far greater influence on projects’ costs and delivery than any other factor, including increases in labour costs.”

This conclusion is backed up by Bright People Technologies, which has an unparalleled statistical view of the mining construction boom.

“There are a lot of myths and a lot of legends, but we’re here to talk about facts,” Bright People managing director Petra Nelson told a recent seminar.

As an employment software supplier, Bright People has 17 years of data from 3,500 organisations, primarily in the contracting and resources sector.

Its latest study utilised data from 303,000 unique individuals mobilised to client sites between 2005 and 2016.

It found that 38 per cent of potential workers failed to meet client requirements to be mobilised to site at their first attempt.

Ms Nelson said the compliance rate worsened at the tail end of the boom.

The firm’s analysis highlighted the trend toward younger and less experienced workers as the boom wore on.

In 2005, 73 per cent of workers were over the age of 40; by 2016, that figure had fallen to 45 per cent.

In tandem with the loss of experience has been the entry of very young workers.

“In 2011, for the first time, workers under 21 were mobilised to sites,” Ms Nelson said.

“This number has grown in proportion, and today some supervisors are under 21 years of age.”

She said the average age of supervisors dropped about 12 years during the boom.

Bright People’s data showed just 4 per cent of mobilised workers (fewer than 13,000) were on 457 visas between 2008 and 2016.

The number peaked in 2012 at 2,440 visa holders, with

engineers and marine professionals the most common roles requiring 457 visas.

Bright People also found little commitment to training of apprentices.

Its data showed just 2,276 apprenticeships were awarded over the boom decade, with most in the electrical trades.

The peak year was 2009, when 462 were awarded.

Ms Nelson said this was due to a single company, which facilitated 10 times more apprentices going to site than any other operator.

The Bright People study found surprisingly little mobility by contractors.

More than half of all workers worked on one project only, while a further 25 per cent worked on just two projects.

In a similar vein, the vast majority of people were mobilised to either mining sites or oil and gas sites only.

Just 8.7 per cent of workers were mobilised to both sectors, and they were largely cleaners and administrators.

The Bright People data showed the typical boom time worker was a Caucasian male.

Less than 10 per cent were women and 4 per cent identified as Aboriginal.

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