Ute and dog construction companies mask skills shortage

While the Australian construction industry is comprised of thousands of construction companies, that statistic does not recognise the fact that many of them are represented by a ute with a dog in the back, Bilfinger Berger Concessions managing director Charles Mott told the 4 th Financial Review national infrastructure summit in Sydney.

While it was a bit of a throw away comment, he made it as part of a discussion on the outlook for the construction industry, a part that inevitably embraced the skills shortage.

He said that a company like his, has to be a very large employer because “you can't focus on the billion dollar projects alone. You have to have a wide portfolio of opportunity but be prepared for the big projects when they arrive.”

These days too, any fairly big Australian project is of interest to global players. “We are involved in a project in Brisbane, and there was a serious attempt to attract a broad field of competitors, including Spanish, French and British. But the field ended up with just the familiar Australian faces.”

Local knowledge

The reason for that Mott said, was that companies which are successful in Australia, need to have more than money to compete. “It's actually about skills, infrastructure support and all the inputs needed for massively complex projects. Technology is a significant percentage of the required resource base. But clients are getting more demanding on environmental issues and community inputs and local companies know how to handle those things better than outsiders,” Mott said.

As an example, he said the “massive footprint” of the recently opened Cross City tunnel in Sydney, had been excavated in a way that was relatively unobtrusive. “That's not an accident. That's the result of a lot of skills and infrastructure and its very difficult to replicate that from a walk up stage,” he said.

The other participant in the discussion, Barclay Mowlem MD David Hudson, said there were better ways to utilise the skills we have in Australia in the most efficient manner.

“We have to be focussed on duplication, the layering of skills from clients and professional teams to contractors, where there might well be three individuals doing the job when the project in truth only needs one and half.

Early contractor involvement

“Mechanisms where you get integrated teams working together, and where you get early contractor involvement, are very efficient. In the UK there are early contractor involvement programs, design teams that don't engineer a project three times and have two of the designs abandoned,” he said.

A mining infrastructure project for Alcoa at Gove in the Northern Territory, showed another way of efficiently cutting down on labour, particularly in a remote environment.

“Alcoa asked itself, how do we make it attractive to contractors, how do we make it attractive to people and how do we get it done understanding the constraints we have in Australia? The solution was a highly modularised solution, in that parts of the aluminium smelting plant came in on skids on ships, in modules weighing up to 2000t. They were simply bolted together on site.

“However I am not too excited about those modules being built in Asia whereas they could easily have been built in Newcastle, Melbourne or wherever.”

Guest workers

Hudson said it was time we grasped the concept of guest workers. “Look at the US. It has a labour source encompassing the whole of the Americas. Europe has the eastern bloc to draw on and in Asia, the richer countries draw workers from the poorer ones.” He said a job his company had just done in Taiwan, used Thai workers and in New Caledonia it had workers from Vietnam.

Mott said the fruits of an inefficient market or a market that does not display vigorous competition, is super profits.

Terms of trade

“But I would challenge you to find super profits anywhere in the construction industry. In fact our terms of trade have diminished over a number years. The minute there is an attractive opportunity that fits the capacity of global players, then they will be here.”

He said that has been demonstrated by the limited interest in the Brisbane tunnel project. “It is a fair litmus test because that project is very specialised, very technically specific, in hard rock. It's not the sort of project you should cut your teeth on,” he said.

By way of comparison the Brisbane River bridge project being pursued in a parallel time frame, has attracted a field of 5.

“A bridge project is difficult as it is but nowhere near as difficult as a tunnel. Also you can break a bridge project up into little bits. You can't do that on a tunnel. So maybe the Gateway Bridge heralds a new era when we might see the resumption of international competition arriving to meet the demand.