Jeremy Blockey, Blockey Consulting - Outcomes of the Cairns FIFO Project Paper


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Jeremy Blockey, Blockey Consulting delivered the presentation at the 2013 Mining the Territory Conference.

Mining the Territory Conference is part of the Northern Territory Resources Week. It provides the perfect platform for stakeholders in the NT mining industry to hear the latest information on this booming region.

For more information about the event, please visit:

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Jeremy Blockey, Blockey Consulting - Outcomes of the Cairns FIFO Project Paper

  1. 1. Outcomes of the Cairns FIFO Project, Jeremy Blockey MINING THE TERRITORY CONFERENCE 2013, DARWIN CONVENTION CENTRE, 12 SEPTEMBER 2013 OUTCOMES OF THE CAIRNS FIFO PROJECT A FLIGHT PATH TO JOBS JEREMY BLOCKEY Slide 1 Welcome Over the past 2 days we’ve gleaned a lot about the outlook for the Territory in the context of the global economic climate; we’ve gained some exposure to the explorers driving the future; and we’ve learned what the mining companies are doing in the Top End. In this final 20-minute sector of our journey, I will be serving up an overview of the Cairns FIFO Coordinator Project – where we’ve come from, what we’ve achieved, and where we are going. So why is FIFO important in the Territory, and why Cairns? I’ll start by saying that in the time we’d have had in this last session of around 1½ hours, we could have flown from Cairns to McArthur River. 2 Background – Our Flight Plan The Cairns FIFO Coordinator Project arose from the NRSET Report – which contained 31 recommendations to address the then (2010) looming skills shortage, including a recommendation to look at FIFO as one of many solutions. DEEWR funded the Cairns FIFO project for 2 years, which commenced in October 2011 – through to the end of August 2013. It was auspiced through SkillsDMC with local partner Advance Cairns. Its focus was on the opportunities arising from resources sector projects across northern Australia. My Steering Committee included industry representation across the region – QRC, CMEWA, MCA-NT – as well as Advance Cairns and Cairns Chamber of Commerce. There were Five key objectives – i) working with the resources sector to identify their needs/skills/timing, ii) identifying the potential FIFO workforce & pathways to employment, iii) gathering workforce data, iv) linking in with the aviation sector, and v) marketing the Cairns region as a viable point of hire. 3 Flying Conditions – 18 Months Ago At the time of commencement in October 2011, the industry was in a significant growth phase, with skills shortages looming large across the sector, both in operational as well as construction jobs. The Resources sector was gathering pace – we’d had a tripling of resource exports over the decade, commodity prices were going skywards and forecast well above historic levels, and industry bodies like QRC and CMEWA were predicting over 40,000 new jobs in both Qld & WA. All manner of solutions were being proffered, including FIFO and Enterprise Migration Agreements. 4 Flying Conditions – Today By mid-2012 the industry had to come to terms with falling commodity prices and growing cost pressures, which precipitated a range of cost control measures and the deferral of many new projects – most notably manifested by a shedding of jobs or delay in hiring – some 10,000 jobs for example being shed across the Qld & NSW coal sector. Mining the Territory Conference 2013 1 12 September 2013
  2. 2. Outcomes of the Cairns FIFO Project, Jeremy Blockey Although this took the heat out of the employment market with large-scale redundancies in some sectors, the peak in employment in the industry is still expected to occur by the end of the year. There are still employment opportunities being created by projects that are already committed and underway, as well as some incremental growth at existing sites within the northern Australia catchment. In many respects, this shift has enabled a more targeted effort. Regardless of the actual employment levels, as a direct result of this dynamic situation, it has proved a more difficult environment in the second half of the Project in which to engage with the resources sector, and generate traction on regional FIFO initiatives. 5 Flying Conditions Over Cairns Against this backdrop, one which was creating low levels of unemployment across most of the country, Cairns meanwhile faced the highest unemployment in the country – at one point hitting 13%, and averaging 11% for 2009-10, double the national average of 5.5%, and over three times that of the Territory (3.4%) – not to mention the 1.9% rate in Darwin. Construction in Cairns had taken a huge hit with three high profile development company failures, while tourism had been hit hard by high exchange rates and falling Japanese numbers. The under-employment rate pretty much doubles these numbers, so there has been a significant capacity laying idle in the Cairns region. Was it possible that we could transfer some of the gains felt in other sectors in other regions to benefit the Cairns region? That was our opportunity. 6 Crew Shortages It’s largely a statement of the obvious that to fill the skills gaps, the resources sector generally will recruit from the local community or nearest regional centre first. However, it’s quite likely that unemployment rates for many of these remote areas are typically well below the national average, and skills are simply not available locally; at the same time, the cost and availability of housing are major constraints to suddenly dump 100s of new residents into a small community, and community infrastructure and services are in short supply. So it would seem plausible that – if Cairns is in fact the largest regional centre across northern Australia – our available capacity could be matched against the pockets of demand being driven by the resources sector. But this is not just about supplying labour – skills are paramount in meeting the needs of the sector. 7 Challenges – Turbulence And if that wasn’t enough, there was plenty of turbulence along the way, most notably the highly charged debate on FIFO being fuelled by Tony Windsor’s Parliamentary Inquiry into FIFO and DIDO work practices – providing a tortuous 26 public hearings strung out over 12 months, generating 230 written submissions and culminating in the Cancer in the bush or salvation for our cities report. Sadly, this report did little to provide solutions for the sector, and succeeded in stifling good and proper debate, which I believe has only aggravated the problems of the sector. It’s high time we got on with the business of deploying resources to make projects come in on time and on budget. Mining the Territory Conference 2013 2 12 September 2013
  3. 3. Outcomes of the Cairns FIFO Project, Jeremy Blockey A constraint that emerged was the fact that there has been a gravitational pull towards the capital cities – the main population centres where skills are obviously in higher supply, and where the operation of air services tends to be more viable based on high frequency. This pull is accentuated by the fact that many of the regional/corporate functions of resource sector companies, including their HR functions, are based in Brisbane and Perth, providing an in-built focal point for recruitment. While the industry restructure may have shifted the focal point for individual companies, the “pull” has remained towards the south and to the west. But there are viable options, particularly if we focus on the north. In many respects, Cairns has been a victim of its own good looks – it has a vibrant tourism industry which portrays a quality attractive leisure image across the globe; it is this success which also creates another perspective – the perception that Cairns is just about Reef and beaches and rainforests. The strength of the imagery around Cairns does, however, have one added benefit – that is, that Cairns represents a highly desirable place to live, and it’s a message that we rarely have to sell. Through the course of the FIFO Project, much effort has gone in to trying to dispel the “myths” of Cairns just being about tourism and bring together some key data that highlights the potential for the region to grow its FIFO base, both by drawing upon the skills of people already living in the region, as well as attracting FIFO workers to use Cairns as the residential base for employment in the sector. But from the outset of the Project, the ability to access useful workforce and skills data proved difficult, with government sources being limited and in some cases inconsistent. We combated this by undertaking some of our own research (which I’ll come to shortly), although the release of detailed 2011 Census data in the latter part of 2012 proved valuable. 8 Targets – the Destinations So how did we go about the task of developing more FIFO for Cairns? Priority destination targets for a FIFO workforce were split into construction projects and operational sites across central & northern Queensland, the Territory, and northwest WA. While construction has tapered off, there are still some large projects still in play, noticeably the Ichthys project here in Darwin, as well as a couple closer to home like Rio Tinto’s South of Embley project (Weipa) and MMG’s Dugald River. We quickly identified the Inpex project as a “game-changer” for the Territory – with Darwin’s job-seeker market already at the bottom of the barrel with 1.9% unemployment, housing supply being in shortage and at a premium cost, and 3,500 jobs to be created at peak, there has to be some FIFO to bridge the gap, and indeed to fill the Howard Springs Village. The flow-on impact of this demand for skills on other sites and projects is very real, leading to increasing use of a non-Territory workforce. Groote Eylandt and McArthur River are perhaps cases in point – the former increasingly using Cairns for its labour supply with its direct flights, and the latter having to fly its growing interstate workforce indirectly via Darwin. Cairns is ideally suited to service the Territory – we’re by far the closest major airport and population base, we have a workforce that is used to working in the tropical environment, and we have a greater empathy with our northern neighbour than the southern capitals could ever hope to have. Mining the Territory Conference 2013 3 12 September 2013
  4. 4. Outcomes of the Cairns FIFO Project, Jeremy Blockey 9 Cairns Connections Despite our reputation as being just a tourist town, albeit with many domestic and international connections, notable is that Cairns also has connections to some 15 mine sites or regions, including three to the Territory, several into regional Queensland and a handful into PNG. These connections have created opportunities for a range of supply and servicing capabilities out of Cairns… 10 Employment in Mining And has led to the growth in Far North Queensland in the mining sector – with 540 more people employed (17%) in the 12 months to May 2013. At 2.7% of the region’s total employment, the present level of some 4,000 employed in the mining sector is above the pre-GFC level, it is the highest level for the sector in the past ten years, and it continues the strong trend over the past two to three years. Interestingly, almost one quarter (24%) of the mining industry workforce are females. 11 FIFO Demographics – the Loadsheets I previously mentioned the challenge in accessing quality data on our skills capacity – so we did our own research to identify the typical FIFO worker and the profile of a keen prospective FIFO job-seeker. We did 2 surveys… 12 Survey of Existing FIFO Passengers In terms of the existing FIFO workforce, there’s a snapshot of some demographic data on this slide – the detailed report can be found on . Note the experience… 13 Survey: Wanting to Join FIFO Queue – Job-seekers Again the detailed report is available on – note here the experience 14 Survey: FIFO Job-seekers We found a strong interest in FIFO – and the willingness to travel interstate and to places like the Territory. Census data: 9,200 workers in the construction industry – noting that the Cairns region construction sector is still struggling to recover, many of these workers will be underemployed, and many have been forced to find work outside the region. 11,000 technical and trades workers potentially in occupations relevant to the resources sector, not just construction, but also automotive and engineering, electrical. Many from manufacturing/shipbuilding 3,000 Indigenous workers, of which 640 are professionals, 590 are technicians and trades workers, and 380 are machinery operators. Aside from these skill areas, we found a high level of prospective candidates for adult apprenticeships who would fit the National Apprenticeships Program criteria. Mining the Territory Conference 2013 4 12 September 2013
  5. 5. Outcomes of the Cairns FIFO Project, Jeremy Blockey Mining the Territory Conference 2013 5 12 September 2013 15 Outcomes – the Landing Over the past three years there has been a growth of some 500 workers employed in the resources sector on a FIFO basis – the extra 500 FIFO workers bringing $70 million in wages each year. With 2,600 FIFO workers now based in the Cairns region, plus 1,800 residential mine workers in Far North Queensland this is generating incomes of over $330 million. This volume provides a critical mass of core resources sector skills and experience which can help meet the needs of the industry. The data demonstrates that despite not having a large mine sector within the region (compared to say Central Queensland or the Pilbara), there is nonetheless, a significant FIFO workforce that is almost 50% larger than the residential mining workforce. I might just mention here that BMA have ramped up their recruitment campaign to hire 250 FIFO workers out of Cairns (+ 750 from SEQ) for its two greenfield coalmines near Moranbah, Daunia & Caval Ridge (9000). This is a significant investment in their workforce, but is laying the foundation blocks for two new mines for the next 25-30 years. Interestingly, BMA are recruiting up to 60% “cleanskin” operators out of Cairns, and are targeting a 30% female workforce. This innovative approach is creating a vastly different workforce culture to the coalmines of the 80s and 90s – setting them up for profitability for the next 3 decades. 16 Future – Cairns Hub So where to from here? The Cairns FIFO Coordinator contract concluded last month… But Advance Cairns will continue with the Cairns FIFO Project, linking in with other economic development activities. Discussions have occurred with organisations who have an interest in maintaining the momentum on Cairns growing its status as a FIFO hub and servicing the resources sector, eg: Regional Development Australia Far North Queensland and Torres Strait, North Queensland Airports, Cairns Regional Council and Cairns Chamber of Commerce. In particular, it is expected that the initiatives around the short-listed targeted opportunities will be continued as part of these activities over the next few months. And we will be expanding the focus to include the business of supply and servicing. 17 Conclusion – A Good Journey Cairns is closest to the NT, workers acclimatised to the tropics, empathy with end of line. Cairns has a population base that can support resource sector growth across northern Australia – don’t just look to the southern capitals. Current under-employment / high unemployment. Applicable skills & experience. Job-seeker desire for resources sector/FIFO jobs. Existing capability and hub for FIFO. Leverage into other supply & servicing opportunities.