Welcome into the year of 2017 where we are back at the early stages of a new commodities cycle, or so we are led to believe. Costs to develop projects are at an all time low, services contractors are making next to nothing and you can solve engineering conundrums on your next Uber drive!
I distinctly remember a very experienced pundit giving me his assessment and view on the engineering and construction world back in early 2004, where he couldn’t believe that engineers were in such high demand at what one could argue was the beginning of the biggest commodities super cycle that our generation is likely to see. “They used to be on every corner and a dime a dozen” were his comments, with regards to the general availability of engineers in the resources and industrial sectors. This was the beginning of where demand exceeded supply in the sector, wages and lack of availability began to increase and quality and availability of experience began to decline.
By the late 2000’s first year university graduates were earning 120k per annum and turning down offers of employment for a closer walk to their paid for car park on the terrace… my how times have now changed and the industry has reset back to reality. Graduates are now offering to work for free to gain experience and skills. Anything that enables them to be more employable than the next and to get an edge on the next proponent, because ‘the shoe is back on the employers foot’ - which also goes without saying is the scenario currently in the client/contractor relationship circles.
This reset, that had to happen, is having in my view a positive effect on the industry where reality has set back in. The ‘pack’ has thinned as not only companies that were riding the boom have fallen by the wayside but also the ‘real competitors’ of the industry that have survived are well positioned for the next wave of works in the pipeline and for the majority, clients are becoming more confident in the services they are receiving.
The balance of equilibrium is starting to head back to where it should reside… where both parties are ‘feeling the love’.
There is no doubt that this transitioning market does catch some businesses ‘on the hop’ that are susceptible to significant fluctuations in staff turnover, and the companies that have managed to retain long term and high quality staffing levels will be best positioned to springboard into the rebound cycle. At this point in the impending swing there is one thing that is for certain and that is that clients will still be holding that ‘shoe advantage’ and that any potential ‘superheating’ of investment will be more measured and considered than the previous cycle we have all endured.
So the next time you are ordering an Uber, and need some engineering advice, (even though the funds are heading overseas!) keep the service and product pricing as balanced as possible by ordering the Uber XL model, and ensuring the right relationship between customer and client is maintained… and that engineers are getting a fair days pay!
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Cameron is the Managing Director of Primero Group. Primero delivers multi-discipline 'turnkey' design and construct projects in the areas of minerals, energy & non-process infrastructure.
www.primero.com.au
