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Ballarat Industry Workforce Development Strategy

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City of Ballarat Ballarat Industry Workforce Development Strategy Final Report May 2010

International Standards Certifications Lic: QAC/R61/0760

www.sedconsulting.com.au

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CONTENTS EXECUTIVE SUMMARY ........................................................................................................... 5 DISCLAIMER ........................................................................................................................... 11 1.

BACKGROUND ............................................................................................................ 12

STRUCTURE OF THIS REPORT ................................................................................. 13

PROJECT OBJECTIVES .............................................................................................. 14

METHODOLOGY .......................................................................................................... 15

LIMITATIONS OF THIS REPORT................................................................................. 16

RESULTS ...................................................................................................................... 17

6.1

Environmental scan ........................................................................................................................................ 17

6.2

Survey and consultations .............................................................................................................................. 18

6.3

Economic and workforce profiling and analyses .................................................................................... 36

RECOMMENDATIONS ................................................................................................. 58

7.1

Industry development pathway .................................................................................................................. 59

7.2

Specific council / economic development actions ............................................................................... 65

7.3

Workforce development recommendations ............................................................................................ 69

ACTION PLAN .............................................................................................................. 74

APPENDICES ............................................................................................................... 77

9.1

Appendix 1 - Consultation list ....................................................................................................................... 78

9.2

Appendix 2 - Detailed environmental scan .............................................................................................. 80

9.3

Appendix 3 - Copy of survey and survey results ....................................................................................... 95

9.4

Appendix 4 – Detailed analysis of increased local expenditure by local manufacturing industry ………………………………………………………………………………………………………………………112

9.5

Appendix 5 - Summary of relevant industry assistance programs ...................................................... 113

9.6

Appendix 6 – References ............................................................................................................................ 118

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FIGURES FIGURE 1 OVERVIEW OF PROJECT METHODOLOGY ...........................................................................15 FIGURE 2 VALUE OF OUTPUT - ALL SECTORS DEC 2008 - JAN 2010 ....................................................38 FIGURE 3 OUTPUT PERFORMANCE BY SUB-SECTORS DEC 2008 – JAN 2010 ......................................40 FIGURE 4 WAGES AND SALARIES BY SUB-SECTORS DEC 2008 – 2010 ................................................40 FIGURE 5 LOCAL SALES BY SUB-SECTOR DEC 2008 – JAN 2010 ..........................................................41 FIGURE 6 REGIONAL EXPORT BY SUB-SECTOR DEC 2008 – JAN 2010 ................................................41 FIGURE 7 LOCAL EXPENDITURE BY SUB-SECTOR DEC 2008 – JAN 2010 .............................................42 FIGURE 8 REGIONAL IMPORTS BY SUB-SECTORS DEC 2008 – JAN 2010 .............................................42 FIGURE 9 VALUE ADDED BY SUB-SECTORS DEC 2008 - JAN 2010 .......................................................43 FIGURE 10 VALUE ADDED BY EMPLOYEE ALL SECTORS DEC 2008 .....................................................44 FIGURE 11 VALUE ADDED BY EMPLOYEE SUB-SECTORS JAN 2010 .....................................................45 FIGURE 12 OVERVIEW OF BALLARAT WORKFORCE DATA ...................................................................48 FIGURE 13 EMPLOYMENT BY INDUSTRY SECTORS (ABS 2006) ..............................................................49 FIGURE 14 MANUFACTURING WORKFORCE BY SUB-SECTORS (ABS 2006) ........................................49 FIGURE 15 OCCUPATIONS FOR BALLARAT (ABS 2006) ........................................................................50 FIGURE 16 OCCUPATIONS IN MANUFACTURING (ABS 2006) ..............................................................50 FIGURE 17 BALLARAT WORKFORCE QUALIFICATIONS (ABS 2006) .....................................................51 FIGURE 18 BALLARAT MANUFACTURING WORKFORCE QUALIFICATIONS (ABS 2006) .....................51 FIGURE 19 BALLARAT WORKFORCE AGE GROUPS (ABS 2006) ...........................................................52 FIGURE 20 BALLARAT MANUFACTURING WORKFORCE AGE GROUPS (ABS 2006) ..........................52 FIGURE 21 BALLARAT WAGES AND SALARIES (ABS 2006) ....................................................................53 FIGURE 22 BALLARAT MANUFACTURING WAGES AND SALARIES (ABS 2006) ...................................53 FIGURE 23 BALLARAT WORKFORCE PLACE OF RESIDENCE (ABS 2006) .............................................54 FIGURE 24 BALLARAT MANUFACTURING WORKFORCE PLACE OF RESIDENCE (ABS 2006) ............54 FIGURE 25 BALLARAT HOURS WORKED (ABS 2006) ..............................................................................55 FIGURE 26 BALLARAT MANUFACTURING HOURS WORKED (ABS 2006) .............................................55 FIGURE 27 WORKFORCE COMPARISONS (ABS 2006) ..........................................................................56 FIGURE 28 OVERVIEW OF INDUSTRY PATHWAY PROGRAM ................................................................61

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TABLES TABLE 1 SUMMARY OF PROJECT OBJECTIVES.......................................................................................14 TABLE 2 PROJECT METHODOLOGY........................................................................................................16 TABLE 3 SUMMARY OF CONSULTATIONS AND SURVEY NUMBERS ......................................................19 TABLE 4 SECTORAL ANALYSIS - WORKFORCE RELATED ISSUES............................................................32 TABLE 5 DETAILED ANALYSIS OF GROWTH, BUSINESS AS USUAL, TRANSITION AND NON MANUFACTURING SECTORS ...................................................................................................................35 TABLE 7 KEY ECONOMIC DATA ..............................................................................................................37 TABLE 8 LOCAL EXPENDITURE INCREASES DEC 2008 - JAN 2010 ........................................................46 TABLE 9 IMPACT SUMMARY - 50 JOB GAINS MANUFACTURING INDUSTRY .......................................57 TABLE 10 IMPACT SUMMARY - 50 JOB GAINS FOOD PROCESSING INDUSTRY..................................57 TABLE 11 IMPACT SUMMARY - 50 JOB GAINS TRANSPORT EQUIPMENT AND MACHINERY MANUFACTURING INDUSTRY ..................................................................................................................57 TABLE 12 WORKFORCE DEVELOPMENT THEMES ...................................................................................70 TABLE 13 ACTION PLAN ...........................................................................................................................76

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Executive summary The Victorian Governmentâ&#x20AC;&#x;s Industry Workforce Development Strategy Initiative (IWDS) aims to assist industries in regional areas plan for and address skill and labour needs. Workforce development is seen as an important tool to boost local economies and support improved industry performance, skills, training and employment outcomes for workers. Within this context, the Ballarat Industry Workforce Development Strategy (BIWDS) was one of five such bodies commissioned across Victoria and funded under the IWDS. The BIWDS is being delivered by the City of Ballarat and conducted as a two-phased project to be completed over 2009-10, with Phase 1 involving research and development (this report) and Phase 2 involving implementation. The report is not a manufacturing industry strategy per se, however it contains elements that would form part of a broader strategy and would act to inform the development of such a strategy. Moreover, this report will inform the development of the Ballarat Economic Development Strategy (EDS), which is also presently being developed. In addition to providing recommendations relating to industry and workforce development, this project has engaged with local industry. Consultations have been used as an opportunity to bring key issues into focus and increase local industryâ&#x20AC;&#x;s awareness of key development and workforce programs that are available to assist them. The principal objectives of this report are to: 1. provide direction and guidance to the sustainable development of the Ballarat workforce; 2. assist local manufacturing industry with workforce planning and workforce development as well as improve awareness of industry transition trends; 3. provide guidance to Council and other organisations about the long term profile of employment in Ballarat, in order to assist with planning and targeted investment; and 4. provide a clear picture of the current situation facing the Ballarat manufacturing sector. To achieve these objectives, extensive consultation to around two-thirds of the industry (by employee numbers) was conducted.

In addition, an environmental scan of key literature in relation to the

manufacturing industry and workforce was completed. Importantly, results of consultations, surveying and preliminary recommendations have been regularly discussed and feedback sought with both the project reference group and key stakeholders including industry, the City of Ballarat and Workforce Victoria.

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The results of the environmental scan highlight that the manufacturing industry is being influenced by key drivers largely outside the control of industry participants. Such drivers include the rise of China, higher AUD $, skills shortages, faster pace of import competition, input price pressures, growing tax and regulatory burdens and trend to outsource / offshore. Around 35% of the companies in the sector were concerned with the prospects for the industry, compared to 11% for the economy as a whole.

Firms involved in the production of elaborately

transformed manufacturers (ETMs) are less likely to be exposed to these changes than firms producing simply transformed manufacturers (STMs), and larger firms are likely to have strategies defined to assist in overcoming these issues and less likely to be concerned than smaller (<25 employee) firms. Notwithstanding these concerns, the manufacturing industry also has unprecedented opportunities for growth and development as the Australian and world population grows, large middle classes develop in emerging economies and new technologies proliferate.

Strategies employed to overcome and

leverage these issues and opportunities include increasing sales of new products, import replacement, outsourcing / off-shoring, skills development / acquisition, increasing capital expenditures and increasing spending on R&D. The most important role for Government included tax and depreciation requirements, followed by innovation, research and development, export assistance and direct support for new technologies. The lowest response was to introduce best practice efficiencies. Smaller firms stood to gain more from these initiatives than larger firms. In addition to looking to Government to provide support to help overcome some of the negative conditions facing the industry, Government can also assist the industry to seize opportunities via the encouragement of technological development through changes in procurement policy, reducing regulatory burden and developing a positive investment environment. Skills shortages, market growth opportunities, technological development and demographic change are principal drivers of workforce development strategies. There are a range of factors that influence the success of workforce development programs, including skills levels required for occupations and industry, attitudes to training within the organisation, size of organisation, ownership structure, level of union membership, skills already possessed, work versus family issues and return on investment. The nature of training is also broadening, and increasingly in-house programs, informal learning and techniques such as mentoring, are being used. Smaller organisations and those facing cost pressures and imperatives to increase productivity are likely to face greater workforce development issues than larger organisations. required to improve competitiveness.

Skills for innovation are

There is a clear link between using innovation as a business

strategy and underlying innovation related skills.

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The surveying and consultation with stakeholders has been extensive and has resulted in large amounts of statistical and qualitative data. There were clear correlations between the survey results and the literature review, indicating that the Ballarat manufacturing sector is subject to the same forces driving change in the local industry as the broader industry. Similarly, the local industry has the opportunity to develop, improve its competitiveness and grow as the demand for manufactured goods and services increases both nationally and internationally over the foreseeable future. The principal themes to arise from the research are: 1. Globalisation and increasing levels of industry competition are impacting on the local manufacturing industry. Job losses during the GFC and identified during the consultations totalled 9651, higher than the 600 â&#x20AC;&#x201C; 700 previously identified. A majority of respondents believed the stimulus package was a key enabler over the past 3 years. 2. The Ballarat manufacturing industry has a relatively high concentration of STMs, increasing the exposure of the industry to globalisation-related issues and relying on proximity to customers to secure business. The issue of most concern to respondents over the next 3 â&#x20AC;&#x201C; 5 years relates to cost of inputs. 3. The role of Government in relation to the sector and skills development is to provide frameworks and support, not detailed program level involvement. 4. The image of the manufacturing industry and Ballarat is somewhat tarnished and contributes to workforce development issues. 5. Future sustainability of the manufacturing sector is uncertain for around 8%-12% of industry participants (360 â&#x20AC;&#x201C; 550 employees), considered positive for around 61%, and business as usual for the remainder. The future was seen as positive for the majority of larger businesses and those involved in more sophisticated manufacturing. 6. Skills shortages arise due to job insecurity, competition from other sectors, poor industry image, career advancement opportunities and work quality, as much as remuneration-based concerns. The <25 age demographic was the most difficult to retain. 7. Training is deemed adequate, however most is low level. There is a low awareness within industry of assistance programs available to assist in workforce development and broader development. A significant number of respondents do not believe workforce represents a key asset and source of competitive advantage. Changing this view presents an opportunity for the industry to develop over both the short and longer term.

This number was sourced from the direct consultations that were undertaken with industry as part of this project. Details regarding the type of positions lost and / or employment tenure (permanent, casual, part-time etc) were not provided by the interviewees.

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8. Workforce needs in the future will revolve around trades being the most in demand and management skills being the skills most in need. These results reflect the „dual speed‟ nature of the local industry, with trade and process workers needed in growth sectors and management skills required to assist firms deal with transitional issues and / or managing more complex organisations as firms increase from being small to medium in size. The economic modelling highlighted the following key issues: 1. Manufacturing is the largest sector by output (3 times the next biggest), is the most significant sector in terms of value add, is the 3rd largest employer and is responsible for around 30% of local expenditure. 2. Over the previous 12 months, the manufacturing sector increased its purchases of local goods and services by 35%, or $278m (2.5% of the entire economy). This figure is likely to include some once-off effects, such as stimulus spending.

However, it does highlight the strategic importance of the

industry to the rest of the local economy. 3. Food processing manufacturing (30%) and transport machinery and equipment (25%) are the largest sectors in terms of output and value add. These sectors contributed $225m of the increase in local expenditures. Other sectors are reliant on these „lead sectors‟. Consideration should be given to investigating the development of the supply chains of these sectors, or the potential to develop „clusters‟ around the key firms. 4. The relative size of the food processing and transport machinery and equipment sectors highlights structural concerns for the industry. There is a reliance on two major sectors being serviced by a number of smaller businesses (that are likely to be reliant on the larger firms) forming industry supply chains. The risks associated with this are further heightened when it is clear that the two key sectors are made up of two – three major players in each. 5. Other risks facing the industry include loss of local expenditure offshore, loss of a major firm to the region, larger firms using bargaining power to reduce industry profitability, dependency on bigger firms and the unwinding of the stimulus, which is thought to be principally responsible for the increase in local expenditure over the past 12 months. Workforce profiling analysis was also undertaken. This highlighted that senior positions in the industry are more highly paid that across other industries, but that lower-end positions are not as well paid. In addition, the industry is less well qualified, has a higher proportion of people working longer hours and a lower percentage of people under 25 years.

The industry has fewer „older workers‟ than average,

probably due to the manual nature of the work.

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In terms of job creation, economic analysis shows that 50 jobs created in manufacturing results in a further 65 jobs being created elsewhere in the economy and an increase in total economic output to the region of $56.1m. If jobs are lost, the inverse occurs. The principal recommendations include the development of an industry and workforce development pathway that: 1. Aims to increase the awareness within industry of current issues as well as the programs available to assist workforce and business development. This recommendation includes the development of a professional services group to act as a new conduit to the manufacturing industry; 2. Provides for an approach to assist businesses in a transition phase, including undertaking a study to gauge the extent that family business closure in Ballarat may impact on the broader economy and community; and 3. Assists those businesses that wish to further develop and grow through a high performance pathway including benchmarking and training components. In addition, it is recommended that an industry transition fund / program should be sought, similar to those provided to Geelong and North-West Tasmania. Specific recommendations made in relation to Ballarat City Council include: 1. Developing a strong vision for the local manufacturing industry; 2. Developing a manufacturing strategy, consistent with the findings of the EDS. This may include consideration of the development of clusters around food and transport equipment manufacturing which have, as an objective, workforce development and future skills identification and training, including that of retrenched workers. Creating appropriate linkages with the new manufacturing training facility at the University of Ballarat will improve the likelihood of generating positive outcomes from this recommendation; 3. Lobby Federal Government, in conjunction with other parties such as the RDA and other regional councils for favourable R&D, depreciation and EMDG support for regional industry; 4. Improve the collaboration between the University of Ballarat and local manufacturing industry, with a specific focus on aiming to increase the commercialisation of intellectual property sourced from the University; 5. Consider the method of governance used for Phase 2 of this program (and subsequent programs) as being either internally resourced, subcontracted to an external party, or the formation of an incorporated body, such as ICT Ballarat, with a charter to promote local manufacturing; and 6. Investigate the possibility of building a low cost / smart electricity grid to provide local manufacturers with a cost-based competitive advantage.

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Workforce development recommendations have been made around the central tenets of transition, high performance, attraction, retention and training and development. The recommendations are framed within the holistic definition of workforce development. That is, workforce development extending beyond the boundaries of existing firms, but to also include those entering and leaving employment. The key recommendations include: 1. Develop a program that aids employers to manage and improve an ageing workforce; 2. Improve the image of the industry within schools and with school leavers; 3. Build a series of case studies of successful workforce development initiatives; 4. Link workforce development into the Leadership Ballarat and Western Region program; 5. Develop an â&#x20AC;&#x153;advertisingâ&#x20AC;? campaign to attract < 25 year olds to the industry; 6. Develop training programs to assist employers manage the < 25 year old demographic; 7. Appoint workforce ambassadors; and 8. Focus on development of future skills in the growth sectors of food processing and transport and machinery equipment manufacture. These recommendations have been indicatively costed over 3 years at $300k - $475k, being $200k $325k of once-off expenditures, and $50k - $75k of annual recurring expenditures.

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Disclaimer The Ballarat Manufacturing Industry Workforce Development Strategy has been prepared specifically for the Ballarat City Council.. The Ballarat Manufacturing Industry Workforce Development Strategy and its contents are not to be referred to, quoted or used by any party in any statement or application, other than by the Ballarat City Council, without written approval from SED Consulting. The information contained in this document has been gained from anecdotal evidence and research. It has been prepared in good faith and in conjunction with the Ballarat City Council. Neither SED Consulting, nor its servants, consultants, agents or staff shall be responsible in any way whatsoever to any person in respect to the Report, including errors or omission therein, however caused.

SED Consulting- Central and Western

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1. Background The Victorian Government‟s Industry Workforce Development Strategy Initiative (IWDS) aims to assist industries in regional areas address skill and labour needs.

Workforce development is seen as an

important tool to boost local economies and support improved industry performance, skills, training and employment outcomes for workers. Ballarat‟s manufacturing sector represents a significant component of the local economy, being the largest sector in terms of output (three times the next largest), value added, and is the third largest employer. The sector is responsible for purchasing around 30% of local expenditures. The manufacturing sector is also going through significant change, much of it driven by factors outside the control of industry itself. The impact of the global financial crisis (GFC) has brought the impact of these issues to a head and, as a result, there has been the loss of a significant number of jobs and firm closures in the Ballarat region during 2008 and 2009. The drivers of industry change, firm closures and job losses are also impacting on the workforce that supports the industry. Within this context, the Ballarat Industry Workforce Development Strategy (BIWDS) was one of five such bodies commissioned across Victoria and funded under the IWDS. The BIWDS report aims to: 

Consider the existing and current state of the manufacturing industry in Ballarat and, more specifically, the workforce requirements of the industry;



Assist the local manufacturing industry with workforce supply, planning and development needs; and



Identify employment and workforce development opportunities in Ballarat.

The BIWDS is being delivered by the City of Ballarat and conducted as a two-phased project to be completed over 2009-10, with Phase 1 involving research and development (this report) and Phase 2 involving implementation. The report is not a manufacturing industry strategy per se, however it contains elements that would form part of a broader strategy and would act to inform the development of such a strategy. Moreover, this report will inform the development of the Ballarat Economic Development Strategy (EDS), which is also presently being developed. In addition to providing recommendations relating to industry and workforce development, this project has engaged with local industry. Consultations have been used as an opportunity to bring key issues into focus and increase local industry‟s awareness of key development and workforce programs that are available to assist them.

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2. Structure of this report The report has been tailored to suit the key stakeholders of the City of Ballarat, Workforce Victoria and the broader manufacturing industry. To enhance the readability and usefulness of the report for these key stakeholder groups, analysis of the literature and results have been headed as industry or workforce related issues. Having made this distinction, however, we would strongly recommend that both aspects are recognised as being symbiotic. That is, workforce and industry related issues are fundamentally related, and impacts made in one area will impact on the other.

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3. Project objectives The principal aim of the BIWDS is to provide the City of Ballarat and key stakeholders with robust direction and guidance on the sustainable development of the Ballarat workforce within the manufacturing sector. Table 1 details the project objectives detailed in the brief and cross references the objectives to the relevant section of the report. BIWDS objectives

Report reference

Primary objectives 1.

Assist the local manufacturing sector with workforce planning and development and improve the awareness and understanding of industry transition trends

9.2,6.2.1,6.3

Identify barriers to business growth and associated employment growth

9.2, 6.2, 6.3

Identify key investment and employment opportunities across selected growth industries in Ballarat

6.3.3, 7.1,

Support locally retrenched workers impacted by the closures and employment restructuring in manufacturing by identifying workforce development and employment opportunities, including those available through existing programs and recent government infrastructure investment programs

6.3.4,7.1.4, 9.5

Provide guidance to Council and other organisations about the long term profile of employment in Ballarat to assist with planning and targeted investment

Provide a clear picture of the current situation facing the Ballarat manufacturing sector

9.2, 6.2, 6.3, 7 6, 7

Supporting objectives 1.

Provide a strong research-based assessment of the issues and opportunities facing the current and future labour market

9.2.3, 9.2.4, 6.3, 6.3.5

Investigate and analyse solutions to overcome workforce issues and take advantage of workforce development opportunities in manufacturing and emerging industries

7.1, 7.2, 7.3

Provide advice to stakeholders and other agencies about the future workforce needs of the business community

Provide insight into the key barriers for business and jobs growth and best practice solutions to resolve workforce issues

9.2, 9.2.5, 6.2, 6.3.3, 7

Provide guidance on best practice programs to support workforce and industry transition

9.2.3, 9.2.4, 7

Indentify and communicate immediate workforce development and employment opportunities through infrastructure development, emerging industries, all-of-government initiatives targeting retrenched workers, business support and training initiatives

6.3.4,7.1.4, 9.5

Provide an understanding of the inter-relationships between jobs growth, population growth and the economy and, therefore, provide a workforce profile of the city in 2030

Identify opportunities for targeted investment to support industry and workforce transition

Table 1 Summary of project objectives

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9.2.4, 0, 7

6.2, 6.3 7

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4. Methodology Figure 1 highlights the broad model adopted for the project. Potential research questions:

EXIT

ENTRY

INDUSTRY

Define manufacturing

What will industry look like in 2010 – 2020 (facts / foresight?)

What are the principle drivers of change over 2010 – 2020?

What industries are likely to be attracted / or leave?

How industry is best attracted?

What is the current skill set of the workforce?

What skills will be needed in 2020?

What programs assist transition (current, future, reskill / retrenched)?

What transitioning of current industry and workforce will (need to) take place?

INDUSTRY

DRIVERS OF CHANGE

WORKFORCE

10. How can assistance best be provided? 11. What else (enablers) needs to be in place?

TRANSITIONAL MANAGEMENT OPPORTUNITIES

Figure 1 Overview of project methodology

This project was funded to support a more proactive and longer term approach to addressing the workforce issues for the manufacturing industry in Ballarat and addressing the needs of the Ballarat manufacturing workforce. Therefore, the brief required assessments of both workforce and industry factors to achieve project objectives. The project methodology is underpinned by the view that the development and growth of the industry and its workforce are integrally related. As a result the methodology is: 

Considering the manufacturing industry profile and direction in depth



Identifying the workforce needs and issues for the manufacturing industry, and



Considering opportunities across other industries in the Ballarat area as potential opportunity for the manufacturing workforce that already has been. and in future may be. impacted by structural changes in Ballarat manufacturing.

As a result, the strategy and suggested actions will include a focus on the manufacturing industry as well as the manufacturing workforce. Results regarding the industry and direction will also inform the

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development of the Ballarat Economic Development Strategy 2010-2014. The key steps undertaken to complete the project are as follows Project phase 1.

Literature review

Details

Report references

Review key literature aspects around: 

Manufacturing industry



Workforce



Other relevant factors

6.1

Survey

Survey of manufacturing and non-manufacturing organisations

6.2, 9.3

Consultations

Consultations with industry and other relevant stakeholders

6.2, 9.1

Workforce profiling

Economic modelling and workforce profile analysis

Recommendations formulated

Develop recommendations in consultation with the reference group

Reporting

Final report in a format suitable for all stakeholders

Project management

Appropriate engagement from key stakeholders 

Reference group



Industry



BCC



Workforce Victoria

6.3 7, 8, 9.1 7, 8 6.2, 7, 9.1

Table 2 Project methodology

5. Limitations of this report Readers should be conscious of the following limitations when reading this report: 

We have not audited or verified the economic modelling data provided to us by REMPLAN;



The most recent employment data used in the REMPLAN economic modelling software is sourced from the ABS and dated June 2006;



Survey data and consultations are largely from industry. Although solid and statistically significant, this research will have some degree of bias from this stakeholder group; and



Surveys have been used to gather significant information used in undertaking analysis and forming recommendations in this report. Notwithstanding that the survey data represents over two-thirds of the industry (by workforce) and approximately 27% of the industry by number of firms, statistical variability will be present and interested parties should be aware of this when reading the report and taking note of conclusions made based on this evidence.

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6. Results 6.1

Environmental scan

A limited environmental scan was undertaken to identify key trends in the broader manufacturing industry and key issues relating to workforce development, particularly as this pertains to the manufacturing industry. These were the original parameters of the project brief, however after review of the preliminary results of survey and consultations, it became apparent that certain issues relating to succession for family business were of particular relevance to the manufacturing industry and workforce development within Ballarat and, therefore, a limited review of these issues was undertaken. The environmental scan is contained in Appendix 2 - Detailed environmental scan.

The scan is

summarised as follows: 6.1.1

Manufacturing industry

The manufacturing industry is going through structural change driven by a combination of factors including the rise of China, higher AUD $, skills shortages, faster pace of import competition, input price pressures, growing tax and regulatory burdens and trend to outsource / offshore. These drivers will impact on some sub-sectors more greatly than others, however to compete all firms must engage more broadly to seek more imported supply chains, invest in new technologies and product development, and reduce labour costs to remain competitive. Around 35% of the companies in the sector were concerned with prospects for the industry, compared to 11% for the economy as a whole.

Firms

involved in the production of elaborately transformed manufacturers (ETMs) are less likely to be exposed to these changes than firms producing simply transformed manufacturers (STMs), and larger firms are likely to have strategies defined to assist in overcoming these issues and less likely to be concerned than smaller (<25 employee) firms. Strategies employed to overcome these issues include increasing sales of new products, import replacement, outsourcing / off-shoring, skills development / acquisition, increasing capital expenditures and increasing spending on R&D. 6.1.2

Role of Government

The most important role for Government included tax and depreciation requirements, followed by innovation, research and development, export assistance and direct support for new technologies. The lowest response was to introduce best practice efficiencies. Smaller firms stood to gain more from these initiatives than larger firms.

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Government has a role in assisting workplaces to become places of training. This location is best suited as many skills are enterprise or technology specific. Government has a role to play in increasing the amount of private R&D expenditure undertaken. 6.1.3

Workforce development

Skills shortages, technological development and demographic change are principal drivers of workforce development strategies. The renewed emphasis on workforce development has highlighted the need to use a new approach (titled the â&#x20AC;&#x17E;workforce skills development approachâ&#x20AC;&#x;) to address this issue. This approach extends beyond merely looking at skills development, but to all aspects associated with skills acquisition. There are a range of factors that influence the success of workforce development programs, including skills levels required for occupations and industry, attitudes to training within the organisation, size of organisation, ownership structure, level of union membership (there is a positive correlation between the level of membership and the amount of training provided), skills already possessed, work versus family issues and return on investment. The nature of training is also broad. Increasingly in-house programs, informal learning and techniques such as mentoring are being used. Smaller organisations and those facing cost pressures and imperatives to increase productivity are likely to face greater workforce development issues than larger organisations. Skills for innovation are needed to improve competitiveness.

There is a clear link between using

innovation as a business strategy and underlying innovation related skills. Of the 68% of companies identifying skill shortages as being an issue, 60% found that this was directly impacting on innovation. Softer and management skills are critical in developing innovative capabilities. 6.1.4

Succession related issues

The impact of family business closures will affect the local economy. With the average age of family business owners at 56 and nearly 50% wanting to sell by 2015, the local economy will be affected. Poorly handled succession impacts the broader economy through reducing returns to families, economic losses, personal and psychological impacts, loss of entrepreneurial capital and opportunity, loss of customers and suppliers, employment, population, community, housing and skills.

6.2

Survey and consultations

Significant consultations were undertaken to add depth and further understanding of the results of the survey. Appendix 1 - Consultation list - and Appendix 3 - Copy of survey and survey results - contain details of consultations undertaken and a copy of the survey completed and details of the survey results (raw data).

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Ballarat Industry Workforce Development Strategy

Page 19 of 118

The extensive nature of the consultations and surveys completed are demonstrated through the industry coverage achieved: Consultations

Survey

No.

No. of firms in manufacturing industry

% of total estimated workforce

No.

Workforce represented

% of total estimated workforce

170

27%

3,044

66%

Table 3 Summary of consultations and survey numbers

In addition to this list, focus groups were held with current and retrenched workers, key Federal and State Government representatives and service providers. Due to the extensive nature of the survey and consultations and to aid readers, Appendix 3 - Copy of survey and survey results - contains the detailed results and commentary in relation to individual questions. This section of the report provides an analysis of the key trends and issues arising from the survey and consultations, as well as a section on issues for stakeholders for each of the themes. This section is intended to provide a summary for readers and report users. .

May 2010

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Ballarat Industry Workforce Development Strategy

6.2.1

General manufacturing industry

Theme

Industry generally Key survey data 

Globalisation and increasing levels of industry competition

Page 20 of 118



25.2% reported the industry had declined in the previous 3 years, whereas 17.6% said their business had declined over the past 3 years 49% reported the industry had remained the same over the previous 3 years, whereas 31.4% said their business had stayed the same over the past 3 years 29.2% reported industry growth over the past 3 years, and 50.9% reported business growth over the past 3 years Main industry enablers for the past 3 years included stimulus (60.4%), falls in interest rates (32.7%), management skills (27.7%) and new markets (27.3%) Main barriers over the past 3 years were global financial crisis (75.5%), cost inputs (65.3%), competition (55.1%), performance of the economy (54.9%) and exchange rates (54.0%) Businesses intend to use a wide range of tools and techniques to manage challenges including new innovation (38.2%), change business size (34.3%), submit for tenders / new contracts (31.4%), cost reduction (27.3%), identify new partners (26.7%), diversify (26.5%) and review strategic direction (25.5%)

Workforce related issues

General discussion & consultations 

  

Ability to compete with internationally-produced imported products is having a major impact, particularly in auto industry where Ballarat has high levels of industry concentration. Exchange rates are encouraging local purchasers to seek offshore options. Free trade agreements seen as „unbalancing‟ the playing field High input prices in the form of high labour costs and also for high steel prices dramatically impacting industry profitability and outlook / confidence. Much of the industry is competing on price and therefore exposed to changes in underlying input costs Increased regulation increasing costs unnecessarily Industries not competing on the basis of price (machinery production, food, ETM) are not affected to the same extent Workforce losses are closer to 965+ compared to 500 and this does not include 4 day or less shifts Little discussion / awareness / consideration of export markets and development Much of the industry is exposed to factors beyond individual company control – i.e. strategic in nature

March 2010

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Key survey data 

 

Workforce was not seen as having an impact on the industry by 40% or on their business by 44% of respondents Workforce was seen as an industry enabler by 16% of industry and a business enabler by 14% 28% saw workforce as a business barrier and 26% saw it as an industry barrier

General discussion & consultations  

 



 



Insufficient industry profitability to invest in significantly or at a high level in training and development With casual workforce options and lower industry profitability there is less incentive for employers to invest in training Staff up-skill and move onto more „secure‟ industries Competiveness will be secured through system improvements and lower staff costs, not through general improved training for existing staff, although some specific retraining / up-skilling of some staff will be required Little export / international market development capability evidenced, including awareness of FTA based opportunities Businesses don‟t understand how to improve their competitiveness, (eg: benchmarking) Local manufacturing seen as “unattractive” and not sustainable therefore recruitment of new entrants difficult. Many SME‟s lack good management disciplines and require training or support.

Ballarat Industry Workforce Development Strategy

Theme

Industry generally Key survey data 

Issues for stakeholders

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 

Workforce related issues

General discussion & consultations

Much of the influence over the industry is coming from non-controllable sources. The importance of the stimulus package to industry is a positive (as it has assisted industry in the short term), however when this dries up, longer term reliance is unhealthy. These results are very consistent with the results of the environmental scan where 61% identified competition from low-cost countries as being the largest source of concerns and 35% were very concerned about manufacturing prospects (compared to 35% for the economy)

May 2010

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Key survey data   

General discussion & consultations

The low percentage of respondents that noted workforce as an industry enabler reflects the broad nature of manufacturing (i.e. STM) in Ballarat where workforce is ”replaceable”. Moreover, the survey figures are inconsistent with the environmental scan where 46% were concerned about skills shortages, and 13% intended to use skills development as a principle development strategy. The failure of large parts of the industry broadly to see workforce as an asset, and capable of improvement through investment is worrying.

Ballarat Industry Workforce Development Strategy

Theme

Industry generally Key survey data 

Relatively high levels of STM industry concentration

Page 22 of 118



50.9% of respondents from fabricated metals (11.3%), textiles, clothing and footwear (7.5%) primary metal products (3.8%) and miscellaneous manufacturing (30.2% ) 78% of respondents believe cost is the main competitive advantage of their industry, followed by security of supply (76.5%) and 73.1% of delivery capabilities Only 62.5% of businesses have a formal business plan

Workforce related issues

General discussion & consultations   

 



High concentration in STM compared to ETMs High degree of price-based competition, and variability in workflow Much of the downstream industry, eg. metal fabrication, is dependent on contracts won further up the value chain. Issues around price competitiveness do not just exist for businesses, they are relevant along the entire value chain New Businesses (ETM‟s) need to be encouraged to relocate to Ballarat. Ballarat needs an industry base that will attract new entrants and encourage employee cross movement within the industry. Focus on delivery and proximity to customers is seen as being a key competitive advantage – reflects literature category of businesses that rely on larger firms within close proximity as being critical to business success

Key survey data 



Major HR management tools used include position descriptions (58.3%), HR policies and procedures (56.3%), individual employee training plans (54.2%), performance reviews (45.8%) and training needs analysis (43.8%). Only 22.9% used skills gap analysis to identify specific training needs and 12.5% of businesses did not use any HR management tools Workforce provided a source of competitive advantage to the industry in 50% of cases and to business in 80% of cases

General discussion & consultations 

   



  

Issues for stakeholders

 



There appears to be a gap between industry recognising that it is competing on price and the strategies / techniques used within their organisations to reflect this. The reasonably low percentage using a business plan may be a reason for this, i.e. there has not been a clear link between the external and internal environments. Room to improve business sustainability through improving business processes and cost management.

May 2010

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

Skills / capability to reduce underlying costs within organisations through lean manufacture, QA and other techniques lacking. Skills in relation to quality and other basis of competition being eroded Skills / capability in relation to new product development / innovation lacking Innovation not seen as cultural (and therefore workforce) related issue High degree of casualisation occurring – casual staff not subject to the same levels of skills based training as FTE Who is responsible for training – employers, employment agencies, employees or government? – there seems to be some confusion as to who has responsibility for skills development General correlation between size of organisation and training Much of the work is repetitive and monotonous, leading to high absenteeism Impacts on staff morale and creates workplace tension Pride in performance / product / workplace

Room for industry to develop HR practices and use this as a key tool to develop organisations‟ ability to attract and retain staff.

Ballarat Industry Workforce Development Strategy

Theme

Page 23 of 118

Industry generally

Workforce related issues

Issues for stakeholders

What is the role of Government in the sector / skills development

General discussion & consultations          



Key survey data

Increase awareness of issues (export, succession, new product development) Consistency of action and view that there is a disconnect between what is offered and what is needed Grant process is seen as time consuming and confusing with minimal chance of success Marketing of available programs is limited and selective Promotion of / vision for the manufacturing industry is limited / non – existent „Support‟ infrastructure for manufacturing is not well managed – water, power, planning, land availability Industry attraction activities limited or not producing enough wins If Council talks about buying local, it needs to follow through with this. Council needs to provide clarity as to what is, and what is not its role Inconsistency in policy and programs across 3 levels of government



Industry generally supportive, but programs can be confusing to some participants and focussed on securing government outcomes not participant outcomes. Industry framework and support key issues.

 

May 2010

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

In terms of awareness of workforce planning activities, 44.4% are aware of State Government programs, 38.9% of Federal Government programs, 33.3% of Apprentice Kickstart, Industry association programs, 30.6% of the Victorian Training Guarantee, 25% of skills for growth, Only knew of 16.7% of industry sector programs and 16.7% of Enterprise Connect and 11.1% of skilled migration program 22.2% of participants were not aware of any workforce activities available to businesses.

General discussion & consultations 



Government needs to encourage industry to clearly articulate its skill development requirements. Businesses will need to have a basic skills matrix + development program to provide this info. Industry representatives (+ businesses) need to provide government with short and longer term skill requirement expectations. Industry needs to work in conjunction with government to promote the career opportunities and benefits of working within a manufacturing environment.

Awareness development is the principal issue. Government should adopt a broader definition of workforce development and manage the funnel of skills into and out of the industry, not just develop programs for those in the industry.

Ballarat Industry Workforce Development Strategy

Theme

Industry generally Key survey data 

Future / sustainability of the manufacturing sector

Page 24 of 118



 



50.9% of business reported that their business was in a growth phase, while 31.4% believe the business was mature, and 17.6% believe the business was in decline 66.6% reported that they expected to see a decline or business as usual in the sector while 17.1% expected a decline in their business over the next 3 – 5 years 301.% expected industry growth and 62.8% expected business growth over the next 3 – 5 years Main business enablers over the next 3 – 5years include new markets (16.9%), the stimulus program (14.4%) and management (12.7%) Major barriers for next 3 – 5 years include cost of inputs (13.8%), skills shortages (10.5%), exchange rates, increased competition and interest rates (9.3%)

Workforce related issues

General discussion & consultations 

  



Opinion as to the future of the industry differs from business to busines , as would be expected, however there is a general concern that the manufacturing industry in Ballarat is on a downward / contracting trend. This view is particularly predominant in the STM space. Companies with a unique product (or service) and a business plan have a good level of confidence for the future. Companies that operate within an “import protected” environment are also confident for the immediate future. Manufacturing businesses that are reliant on volume production, i.e. automotive components, are under threat due to global influences and exchange rates. Some businesses expressed concern at additional government charges that were incurred with business growth and which impacted on profitability and by default sustainability.

Key survey data 



 



May 2010

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While skills shortages (6.8%) and workforce (5.4%) will not have any impact on business over the next 3 – 5 years, 47.2% report that workforce costs will have a high impact on business sustainability and 19.4% reported a moderate impact on business sustainability 47.9.6% of survey responses expect no increase or a decline (29.3%) in workforce over next 3 – 5 years 52.1% expect an increase, with 27.1% of the workforce expecting an increase of up to 5 people. Skill shortages is seen as an industry barrier over the next 3 – 5 years by 10.3% of respondents and workforce an industry barrier by 5.6% 7.4% of respondents do not believe skills shortages and 8.1% do not believe workforce will impact on industry over the next 3 -5 years Workforce is seen as an industry enabler by 9.4%

General discussion & consultations 

 



 



Skills identified in industries and business that were generally positive included innovation, strategic planning, new product development and market / customer based approaches. These skills were not as prevalent in organisations that were pessimistic as to the future of the industry Succession planning management and awareness and skills / capability is very limited and not appreciated Focus on transitionary skills development consistent with other industry development around ICT, health Climate change, energy impact issues / training needed The demand for relatively low skilled manufacturing process workers has and will continue to reduce as production volumes decline. Process automation will provide opportunities for workforce skilled at setting and maintaining sophisticated equipment.

Ballarat Industry Workforce Development Strategy Theme

Industry generally

Future / sustainability of the manufacturing sector

Key survey data

Issues for stakeholders

Page 25 of 118



 

Energy costs (47.2%) and climate change policy (33.3%) will have a high impact on business sustainability and 33.3% reported a moderate impact on business sustainability due to energy costs and 25% due to climate change policy Other high impact issues include influence of government policies (47.2%), transport and logistics (44.4%) and availability of raw materials (36.1%) Key growth industries in the future will be food-related manufacturing (72.2%) and the key support sectors will be around mining (47.2%), manufacturing (41.7%) electricity, gas, water, waste services (38.9%), agriculture, forestry and fishing (36.1%) and education and training 16.7%)

Workforce related issues

General discussion & consultations 

 



 

Key survey data

General discussion & consultations

This view contrasts with the strongly held view that Ballarat has significant natural (comparative) advantages such as a loyal workforce, location, experience and growing population. Anecdotally there is evidence of an under-investment in capital – impacting on industry sustainability Business succession planning is limited and presents as being a threat to industries future sustainability (refer to paper on potential impacts) Competition and other structural considerations are likely to place ongoing strain on some segments of the market Stimulus package has had a positive impact and is seen as a key enabler for business in the foreseeable future Energy costs and climate change are high impact issues and causing much uncertainty in the sector

Sector has two speeds – reasonably positive and somewhat pessimistic. The impact of likely cost increases is of major concern to significant sections of the industry. The reliance on the stimulus program for business development is short term. Food and agricultural related sectors are expected to grow.

May 2010

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 

Workforce costs are a major issue for the industry. Only a small percentage see workforce as an industry enabler.

Ballarat Industry Workforce Development Strategy

Theme

Page 26 of 118

Industry generally

Workforce related issues

Issues for stakeholders

Image of the industry and Ballarat

General discussion & consultations      

 

Key survey data

The image of manufacturing was seen as being tired and uninviting. „Old industry‟ with uncertain future, low pay and difficult working conditions The image of Ballarat was seen as negatively impacting on the industry in terms of attraction of new industry (whether rightly or wrongly) and workers Higher portion of Ballarat manufacturing is at the „non-glamorous‟ end of industry, not the high technology end The (un)availability of the right type of skills was seen as contributing to the image of Ballarat manufacturing Previous council not viewed as being supportive of the manufacturing sector. New council better regarded, however needs to make a statement.



Industry has to accept some responsibility for the image it projects. There represents an opportunity to improve this image.



May 2010

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

Image of the industry (45.7%) and job security / industry security (47.8%) related issues where the largest recruitment related issues faced by the industry 37% reported the image / perception of Ballarat as being the biggest issue in recruiting workers to Ballarat

General discussion & consultations 

Impacting on recruitment of staff and the retention of staff were many „leave‟ the industry  Workforce is relatively old as a result and seen as more difficult to retrain / re-skill  New / younger generation of workers not attracted to the industry and are the hardest to retain within the industry  Some older workers encouraged to continue with business due to work ethic (leads to “old industry” perception). Improved image likely to improve the prospects of attracting and retaining staff.

Ballarat Industry Workforce Development Strategy

Theme

Industry generally

Workforce related issues

General discussion & consultations  

 

Skills shortages generally

Page 27 of 118

Issues around skills shortages are prevalent and impacting on business growth potential, particularly in smaller businesses (<50 employees) Job agencies not seen as being positive to industry development or skills development – they do not proactively engage in either - and are effectively responsible for increasing numbers of manufacturing workers Not being able to complete work (internet) on the train from Melbourne / other areas was noted as a recruitment issue for non-local workers Many of the skills seem to be in the region, however: 1. the lack of employee turnover is an issue as it is difficult to attract people with relevant skills (i.e.: the market for skills is not liquid); 2. many of the skills leave Ballarat to work in Melbourne (either permanently or on a daily basis); 3. tight margins in STM sector limit ability to attract or develop certain skill sets 4. the skills reside in larger organisations that attract skills through higher wages, work conditions and promotional opportunities

May 2010

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Key survey data

General discussion & consultations

Attraction  77.3% of businesses have attempted recruitment in the past two years  Main issues for attraction to the industry are job security (47.8%), image of manufacturing (45.7%) and career opportunity (23.9%)  Job security (45.8%), good working conditions (43.8%) supportive workplace (39.6%) were seen as more or equally important to good wages (39.6%)  61% of those attempting recruitment reported difficulties in finding employees  50% of businesses reported having difficulties finding employees with relevant qualifications  Occupations that were the greatest difficulties in recruitment were trade workers (23.9%), production / operations managers (13%), sales representatives, engineers, technicians and process workers (10.9%)  32.6% of surveyed businesses had attempted to recruit non-local workers. Of these, 46.6% reported difficulties due to spouse / partner not willing to relocate and 46.6% reported the preferred applicant not willing to relocate.  There was no major difficulties noted in either the recruitment of contractors or apprentices  The principal means of recruitment included the use of private agencies (54.2%) and word of mouth / referrals (19.2%)

Attraction  Shortages in core technical skills that take time to develop, ie: 3 – 4 years +  Attraction of staff generally is not as bigger issue as attracting appropriately qualified staff. This general statement can be extended to include contractors  Shortages in middle management skills (project management, process development, new product development, cost management, continuous improvement, analytical skills development and problem resolution) – skills that allow business to grow and develop scale and maintain profitability.  Consider role of job agencies in this area  Workforce is not being seen as a strategic resource, nor as being the source of business growth / development  The industry and business are facing high level strategic challenges and have gaps in middle management skills and training (ability to implement). This structural gap presents risks to the industry as a whole.  HR management tools and techniques seem inadequate / deficient  Factors other than wages offer prospects for workforce development  Age issues most prevalent for < 25 years  Consider adjunct to apprentice programs (KICKSTART ?) that aims to improve industry image  Survey results are consistent with Taking Stock report (2009) that found 79% of manufacturers had attempted recruitment and about half had difficulties

Ballarat Industry Workforce Development Strategy

Theme

Industry generally

Workforce related issues

Skills shortages generally

General discussion & consultations

Issues for stakeholders

Page 28 of 118



Industry must recognise that it is facing competition for skills and must find ways to compete.

May 2010

Key survey data

General discussion & consultations

Retention Retention  41.5% of respondents reported that employees remain with  Low turnover and when staff do leave, their organisation for 10 yrs or longer, with a further 34.1% large amounts of knowledge leave with saying the average length of time an employee was with them the organisation was between 5 – 10 years  Older workforce – issues around OHS &  The largest problems faced by employee turnover leave entitlements included loss of skills (53.3%), need to retrain (43.9%),  Career pathway development and decreased profitability (31.7%) and increased costs (17.1%) training for organisations  41.5% of respondents reported that employee turnover  Succession planning for individual was not an issue for the business workers? Prima facie indicates low levels of turnover amongst largest occupational  The main reason for employees leaving an organisation included career advancement (51.2%), personal reasons groups (34.1%), seeking improved remuneration (29.3%), boring  Reasons for leaving the industry as well as work and retirement (17.1%) organisation related issues.  Retaining employees less than 25 years (36.6%) was the  High level of retirement highlights age group employers had the most difficulty retaining. succession related issues organisations are consistent with consultations – career  Most significant workforce retention issues included competition from other sectors (24.4%), remuneration advancement, remuneration, and boring (17.1%), low job security (19.5%), little career advancement work. opportunities (14.6%) and work being sufficiently challenging (14.6%)  Issues for attraction and retention of staff are different for larger employees compared to smaller ones.  Development of appropriate HR processes, career advancement, and training programs will assist in overcoming skills shortages in smaller organisations.  Younger workforce retention is an issue.

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Ballarat Industry Workforce Development Strategy

Theme

Industry generally

Workforce related issues

General discussion & consultations  

Industry is generally happy with the nature and type of training The need for training to be very firm specific (over and above industry specific) was a reoccurring theme Replacing lost skills, rather than developing or building new skills, comprises a significant component of current skills training

Training



Key survey data 



 

Issues for stakeholders

Page 29 of 118



The principal issue is probably around the quality (depth of skill development) of the training provided, the nature of the skills developed (are they appropriate now and in the future) and the transportability of them between businesses.

May 2010

 

65% of respondents reported having completed training in the past two years, with 10% responding that positions do not require specialist skills (and therefore training) and 10.7% said cost was a barrier On the job training (77.5%) was the preferred training method, followed by offsite professional development (45%), offsite skills based (TAFE/RTO) 45%, on site skills based (TAFE/RTO) 30% and internet based training 22.5% Training levels provided were basic / introductory (62.5%), technical skills (62.5%) coaching / mentoring (52.5%), apprenticeships / traineeships (47.5%) While most organisations were satisfied with the training provided, 35% believe a gap exists in training available in the industry While 32.5% responded that there was no need for further training, 25% would like more middle management training and 32.5% would like more technical skills training

General discussion & consultations      

Marketing of courses, benefits and opportunities for training could be improved; high levels of internet training is encouraging Development of internet training – dual benefits around IT skills as well as skills based Gap analysis of skills / training needs gap Most training provided seems to be at a relatively low level – is this due to industry needs or a failure to recognise higher level training benefits? Skills needed around the management of businesses and industry in mature stages of the business lifecycle – these differ from growth sectors Skills lost as older workers retire

Industry needs to move training development to the next level through appropriate skills identification and training programs. Training organisations need to respond with suitably tailored courses that deliver on industry needs. Providers need to assume some responsibility to ensure skills are appropriately developed.

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Ballarat Industry Workforce Development Strategy

Theme

Industry generally

Workforce related issues

General discussion & consultations

Issues for stakeholders

Future workforce



6.2.2

Page 30 of 118



Key survey data

Future workforce needs are consistent with the overall survey and consultations‟ findings in that different sectors have different requirements. Those sectors in transition are expecting to lose workforce numbers and those with growth ambitions using capex are also expecting to see a decline in employment relative to output



Ensure proper workforce development planning is used as a key planning tool within the organisation.

 

  

General discussion & consultations

Key areas for recruitment include trade &  Trade and trade related skills are likely to be in technicians, operators and process workers demand for the foreseeable future Industry will use a range of employment  A critical issue is the amount of capacity in the arrangements, with permanent, part time and Ballarat economy after job losses that can be casual being the most popular. accessed to fill in demand positions. Labour hire will continue to be used  The appropriateness of skills will continue to be an issue for industry. Middle management and senior management positions will also be needed Consider which approach is to be used for recruitment and retention. Trades and trade related skills will continue to be in demand.

Sectoral analysis

To provide a more comprehensive analysis of the results of the surveys and consultations, a cross analysis of the survey data was undertaken to analyse specific issues by sub-sector. Table 4 further highlights the different issues facing different sectors and emphasises the need for recommendations and outcomes to be sufficiently tailored to be effective.

The skills development needs are identified for

transition, high performance, attraction, retention and development and training, and will allow training providers the opportunity to tailor potential training to the sub-sectoral level.

May 2010

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Ballarat Industry Workforce Development Strategy

Sector

Food

Transport equipment

Wood products

Misc manufact ure

Main occupation

Employees



Survey 1,140



ABS 2006 1,619



Survey - 886



ABS 2006 1,281



Survey - 390



ABS 2006 313

 

Survey - 93 ABS 2006212



Process workers

Machinery operators

Process workers

Employment growth (next two yrs)



Minimal

Growth in process workers

Moderate growth across all occupations

Motivation



Good wages



Good working conditions

 

Job security



Supportive workplace



Good work/life balance

  

Good working conditions

Loyalty to employees

Attraction



May 2010

67% no recruitment issues

Effective retention



Training and skills development



10+ years



Career advancement



Employee rewards



5-10 years

Retirement



Higher rates of pay

 



Internal promotion opportunities



Career path development



Training and skills development



10+ years



40% relevant qualifications / training

Career advancement



Non-salary based benefits



5-10 years



Better remuneration



100% have attraction issues



Training and skills development



5-10 years



Career advancement

75% relevant qualifications /training

 

Flexible hours



Employee choice rostering

Better remuneration



 

Higher rate of pay

Personal reasons

67% recruitment issues

 

Flexible hours



10+ years



Training and skills development

Personal reasons

67% relevant qualifications /training



Higher rates of pay

5-10 years

Career advancement



Non-salary based benefits



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(+++ = high need) T

+++

Personal reasons

50% no issues



Basis of skills development

Reasons for leaving

Tenure

 

Job security Supportive workplace

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Non-salary benefits

Ballarat Industry Workforce Development Strategy

Fabricated metal



Survey - 205



ABS 2006 137



Trade workers



Moderate mainly in trades



Job security

Page 32 of 118



67% recruitment issues



60% relevant qualifications /training



Training and skills development



Higher rates of pay



Non-salary based benefits



2-5 years



Career advancement



Better remuneration

+++

T= transition issues HP = high performance needs R = retention A = attraction D = training and development needs

Table 4 Sectoral analysis - workforce related issues

Table 5 contains an analysis of the manufacturing sector on the basis of categories of growth, business as usual and transition2. These sectors are defined as follows: 

Growth: firms expect industry growth over the next 3 – 5 years;



Business as usual: firms expect industry conditions to remain the same over the next 3 – 5 years; and



Transition: firms expect industry decline over the next 3 – 5 years

The analysis is designed to highlight the differences between firms operating in each of these categories. Manufacturing sector Business issue

Sectors

Business v industry performance past 3 years

Growth     

Food product



Better

Business as usual

Wood product Fabricated metal



Most sectors represented

Transport machinery & equipment Miscellaneous



Same or slightly worse

Transition    

Textile, clothing & footwear



Non-manufacturing Finance & insurance

Transport equipment

   

Same



Better

Primary metal & metal product Fabricated metal

Professional, scientific and professional Information media & telecommunications Transport, postal & warehousing

It should be noted that not all survey respondents provided an answer on their business prospects for the next 3-5 years. The table represents those businesses that did respond to this question.

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Ballarat Industry Workforce Development Strategy    

New markets

   

Exchange rates

Business lifecycle

Enablers over past 3 years

Interest rates Government stimulus

 

Government stimulus Management skills



No enablers identified

Management skills

Growth – 72%; maturity – 17%



57%



40%



63%

Service levels

  

Reputation

Quality

  

Quality



250 (10%)



337



45+ - 52%



26-44 – 48%

46-50



46-50



41-45



Same level for all occupations



Trade occupations to decline



Professionals

  

Job security

  

Job security



Good working conditions & supportive workplace

 

Good wages

 

Yes – 57%

 

Yes – 60%

 

Yes – 100%



No specific issue presented

 

No difficulty – 40%

 

Suitable applicants – 38%

Suitable applicants – 40%



Yes – 57%



Yes – 60%



Yes – 75%

Have a business plan



84%

Competitive advantages

  

Quality

Survey workforce numbers



1,530 (61%)



730 (29%)

Main age group



26-44 – 50%

 

26-44 – 44%

Average age



31-35



Growth occupations



All

Employee motivators

  

Supportive workplace

Recruitment in past two years

 

Yes – 83%

Key recruitment difficulty

 

No difficulty – 47%

Applicant skill/training gap



Yes – 42%

Global financial crisis Emerging economies Increased competition

Reputation

Difficulty – 59% Suitable applicants – 21%

Management skills



Job security

Government stimulus

Maturity – 40%; decline – 40%

Growth – 58% ; maturity – 37%

Good wages

Cost inputs

New markets



Innovation

   

Interest rates

Maturity – 71%

Performance of economy

Global financial crisis

Performance of the economy

Cost inputs

    

   

Barriers over past 3 years

Page 33 of 118

45+ - 41%

Supportive workplace Personal loyalty to employees

Difficulty – 80%

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Global financial crisis Federal Government policy Emerging economies Increased competition

Delivery capabilities

Interesting work Good wages

Difficulty – 66%

GFC Accessing finance Increased competition

Service levels Quality

Company with high values Difficulty – 75% Experience level – 31%

Ballarat Industry Workforce Development Strategy   

Sales

Tenure



Main reasons for leaving

 

Production / operations managers

5-10 years – 53%



10+ years – 86%

  

Career advancement

Personal reasons

  

Training in past two years



75%



Training method provided



On the job skills based

  

Technical skills

Type of training Training gaps exist



Training need Industry growth scenario

Skills shortages

Future business barriers



Trade and technical



Professionals



10+ years – 80%



5-10 years – 47%

 

Career advancement

  

Career advancement

43%



40%



79%



On the job skills based



On the job skills based



Off-site professional development

 

Basic introductory

 

Basic introductory Apprenticeship

 

Technical skills

42%



42%



60% unsure if gaps exist



36%

 

Middle management

 

Coaching and mentoring



Executive & middle management

 

Technical skills & middle management

 

Growth – 47%



Same

 

Growth – 57%

    

Skills shortages

    

Skills shortages

  

New markets

    

Availability of skilled workforce



Somewhat prepared

  

Engineers Trade and technical

Better pay

Basic introductory Coaching and mentoring

Technical training Stay the same – 37% Cost inputs Skills shortages Interest rates

Future business enablers

 

New markets

Workforce costs

Future business impacts

     

Somewhat prepared

Preparedness

Page 34 of 118

Government stimulus



Trade and technical

Better pay Seeking a more challenging role

Executive management



 

Same – 75% Decline – 24%

Interest rates Exchange rates



Cost inputs

Cost inputs State Government policy Management response

Energy costs Transport & logistics

Retirement

Nearly all listed

Climate change



 

Marginally new markets

Government policy Market forces

Climate change policy



Somewhat prepared

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

Somewhat prepared

Better pay Seeking a more challenging role

Basic introductory

No need for more training Rapid growth – 29% Interest rates Increased competition Cost inputs Accessing finance Performance of the economy Government stimulus Workforce costs Market forces Cost competitiveness Government policy

Ballarat Industry Workforce Development Strategy

Preparedness gap

Likely response to impacts

Key influencers



Workforce costs

    

Review strategic direction

Transport and logistics Climate change policy Market forces

    

Review strategic direction

 

Federal Government – 63%

 

Federal Government – 86%

Individual business – 58%



More middle managers, trades and technicians, process workers.

 

Slightly less trades and technicians.

2020 workforce

Program awareness

Government policy

   

Change in business size Diversification New tenders / contracts Innovation



Less permanent and casual

  

Federal Government – 42% State Government – 42% Industry programs – 42%

   

Change in business size New tenders / contracts Innovation Supply chain relationships Industry as a whole – 57%

Little change in employment structures State Government – 71% Victorian Training Guarantee – 43% Skills for Growth – 43% Apprenticeship Kickstart – 43%

Page 35 of 118

    

Availability of natural resources

   

Change in business size

 

Federal Government – 80%



Less senior managers, middle managers, trade and technicians & process workers.



Less fixed term contracts

  

Unaware of any – 60%

Climate change Climate change policy



No key issue presented

    

Review of strategic direction

 

Individual business – 57%



More professionals, senior & middle managers.



Little change in employment structures

 

State Government – 36%

Market forces Population

New tenders / contracts Change in workforce numbers Reduce capex

State Government – 40%

Enterprise Connect – 40% Victorian Training Guarantee – 40%

Adopt technologies Innovation Diversification Identify new strategic partners Federal Government – 43%

Industry programs – 36%

Table 5 Detailed analysis of growth, business as usual, transition and non-manufacturing sectors

There were clear trends evidenced in the survey and consultations that further demonstrated the industry has segments that are not as healthy as others. Moreover, the information contained in this table can be used in the development of programs as recommended in section 7 Recommendations. For example, the issues facing firms in transition can be used in training programs tailored to suit these organisations, and specific sectors / firms can be targeted to increase awareness of program assistance. Based on this analysis, around 8% - 12% (360 – 552 employees) of the current Ballarat manufacturing industry is identifiable as being in transition, using a current manufacturing workforce number of 4,600. Similarly, around 61% of the industry expects growth to occur over the next 3 – 5 years, and 29% expect a business as usual outlook. This analysis is based upon extrapolating survey responses from employees as a percentage of the total survey employees.

For example for transition, 250 employees have been classified as being in transition

(250/2510 = 10%), and while indicative, we are of the view that it is generally consistent with the evidence provided by the survey, consultations, economic analysis and environmental scan contained in this report. May 2010

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Ballarat Industry Workforce Development Strategy

6.3 6.3.1

Page 36 of 118

Economic and workforce profiling and analysis Introduction and overview

Table 6 highlights key economic data for Ballarat and the manufacturing sector over the period December 2008 to January 2010. Readers should consult the REMPLAN data statement to ensure they are aware of issues surrounding the timeliness of economic data. 6.3.2

REMPLAN data statement

The recent REMPLAN update applied the following, newly released datasets from the ABS: 

2005/06 National Transactions Tables; and



June 2009 VIC Gross State Product.

The application of the datasets has resulted in updated estimates for each of the reports in REMPLAN (output, wages & salaries etc) except for employment, which is based on 2006 Census place of work data. Transactions tables can vary significantly between releases in terms of ABS' estimates of: 

Output per worker;



Wages & salaries per dollar of output; and



Expenditure on inputs from within Australia (upon which estimates of local expenditure are based when building regional economic models).

The substantial change for local expenditure by the 'fruit & vegetable products' sector in the model of the Ballarat economy is due is small part to the incorporation of new Gross State Product data for Victoria. Most of the change, however, is due to revised estimates by the ABS in terms of expenditure on inputs by the 'fruit & vegetable products' sector from within Australia, versus inputs imported from overseas.

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Regional imports

Local expenditure

Regional exports

Local economy

Employment

Economic value

Fact

Jan 2010

Change from Dec 2008

Total value of Ballarat economy (total gross revenues all industry and business)

$11.366bn

 9%

Value of manufacturing to the Ballarat economy – lead sector

$3.898bn

 2.2%

34.3%

 from

Manufacturing contribution share to the Ballarat economy

36.6% Total Ballarat employment3 (REMPLAN ABS Census 2006)

37,708

Number of jobs in manufacturing in Ballarat – 3rd most important employment sector (REMPLAN ABS Census 2006) representing 14.89% of the Ballarat workforce

5,615

$2.838bn

9.1%

Manufacturing wages and salaries – lead sector

$525m

7%

Manufacturing contribution share to wages and salaries

18.5%

 from 18.9%

$3.538bn

17.8%

Manufacturing local sales – lead sector

$962m

12%

Manufacturing contribution share to the Ballarat economy

27.2%

 from 28.6%

Total Ballarat regional exports5

$3.973bn

1.1%

Manufacturing regional exports – lead sector

$2.389bn

1.5%

60.14%

 from 61.8%

Total Ballarat local expenditure6

$3.538bn

17.8%

Manufacturing local expenditure – lead sector

$1.075bn

35%

30.4%

 from 26.5%

Total Ballarat regional imports7

$3.236bn

0.6%

Manufacturing regional imports – lead sector

$1.959bn

 10%

60.5%

 from 67.6%

$4,590bn

9.2%

Manufacturing value added – lead sector

$863m

2.7%

Manufacturing contribution share to value added

18.8%

 from 20%

Total Ballarat wages and salaries

Total Ballarat local sales4

Manufacturing contribution share to regional exports

Manufacturing contribution share to local expenditure

Manufacturing contribution share to regional imports Total Ballarat value added8

Value added

Page 37 of 118

Table 6 Key Economic Data 3

The number of employees whose place of work is located within Ballarat Goods and services produced in Ballarat which are sold to local industry sectors as input into production and for value-adding. 5 Goods and services produced by industry sectors in Ballarat which are sold to consumers based outside municipal boundaries 6 Value of intermediate goods and services purchased by industry sectors within Ballarat 7 Intermediate goods and service which are imported into Ballarat by industry sectors 4

Value that is added by industry sectors in Ballarat to intermediate inputs

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Page 38 of 118

Figure 2 highlights the relative output from each of the sectors of the Ballarat economy. 

At around $3.9b, manufacturing is the largest sector in the local economy by value of output, and around 3 times larger than the next largest sector.

[ Figure 2 Value of output - all sectors Dec 2008 - Jan 2010

General observations 

While the Ballarat economy grew 9% over the period, the share attributable to manufacturing fell from 36.6% to 34.3%.



The local manufacturing sector grew 2.2% to $3.9b, however growth in wages and salaries was 7%, indicating increased wages and salary related pressures for the sector.



Despite the manufacturing share of the overall economy falling from 36.3% to 34.3% (a 5.5% decline), the share of employment only fell from 18.9% to 18.5% ( a decline of 2.1%), indicating that the industry: is a relatively important sector from an employment perspective; and has not reduced wages and salaries spending at the same rate as revenue has declined, indicating firms have been reluctant to reduce their workforces during the industry contraction.



Increases in local sales of 12% (approx $103m) are mirrored in falls in regional imports (goods imported into Ballarat by the manufacturing sector) by 10%.



The growth in local sales ($103m) represents the entire growth in the manufacturing sector ($84m) over the period.

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

Page 39 of 118

This data indicates, prima facie, that there has been a significant shift in the buying habits of local manufacturing firms, replacing previously imported manufactured goods with locally produced manufactured goods. This shift is also apparent in the broader economy with a 17.8% increase in the use of local firms across the entire economy.



Further analysis of this issue has been undertaken at 6.3.4 to further understand this shift. While the use of local firms brings positives to the sector, however, it does increase some risks to the sector, as: the diversity of the customer base shrinks; this work is also subject to being „retendered‟ to outside firms or „off-shored‟ to overseas firms; and this increase may be a once off and reflect the Government stimulus spending, in which case the value of this increase may not be sustainable, indicating further industry restructuring over the medium term.



A reduction of regional exports (goods being sold outside the region) of 1.5% is reflective of a decline in demand consistent with the impacts of the global financial crisis.



The importance of the sector to the local economy is clearly apparent – the sector increased its purchasing of local goods and services by 35%, or around $278m, or 2.5% of the entire Ballarat economy over the period. The sector is clearly of strategic importance to the Ballarat economy as a whole and responsible for a significant amount of local economic activity.



Despite the GFC the sector has grown, although not as much as the economy as a whole. Around 5% of the sector‟s size at January 2010 is due to replacing manufactured imports with locally manufactured goods.

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6.3.3

Page 40 of 118

Key economic performance of manufacturing sub-sectors

The following analysis is based on the key manufacturing industry sectors of the Ballarat economy:

Figure 3 Output performance by sub–sector Dec 2008 – Jan 2010

Figure 4 Wages and salaries by sub-sector Dec 2008 – 2010



Key sectors for the Ballarat economy are food manufacturing, transport machinery & equipment manufacture, basic metals and products, other machinery & equipment manufacture and non metal mineral products.



Wage movements roughly reflect changes in output, with the exception of food manufacturing, which showed a decline in overall output but an increase in salary and wages.



Major sectoral output declines are food manufacturing ($25m), chemical & chemical products ($25m) and textiles ($100m).



This may indicate underlying wage pressures in this sector and increase risks accordingly.



Major growth sectors are transport machinery & equipment ($100m), other machinery & equipment ($25m).

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Figure 5 Local sales by sub-sector Dec 2008 – Jan 2010

Page 41 of 118

Figure 6 Regional export by sub-sector Dec 2008 – Jan 2010



Local sales to the manufacturing sector increased 12% to $962m over the period, or around $102m. This growth represents almost the entire growth in the broader manufacturing sector.



A decline in regional manufacturing exports of 1.5% to $2.4b is not unexpected – general decline in external demand would account for this decline.



This data indicates growth in local sales across all major sectors except transport machinery & equipment of sales to local industry. This is particularly evident in the downstream sector of basic metals and products – this sector has a significant dependency on other sectors.



The obvious exception is the transport machinery & equipment manufacture sector, where there has been an increase of around $100m.



The broad evidence of this change (also noted across the entire economy) reflects an economy-wide shift towards using local firms.

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Figure 7 Local expenditure by sub-sector Dec 2008 – Jan 2010 

The value of the manufacturing sector to the local economy is clearly demonstrated– the sector increased its purchasing of local goods and services by 35%, or around $278m, or 2.5% of the entire Ballarat economy over the period.



The transport machinery & equipment sector and other food manufacturing sectors are of obvious strategic importance, being responsible for around $242m of the increase.

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Figure 8 Regional imports by sub-sector Dec 2008 – Jan 2010 

Reduction in imported expenditures of around $200m has occurred in the sector with food manufacturing reducing imported expenditures by $225m.



There will always be a significant component of regional imports, however further analysis of the sectoral value chains will highlight where further industry development could occur and supply chains in key sectors further developed.

Ballarat Industry Workforce Development Strategy

Figure 9 Value added by sub sector Dec 2008 - Jan 2010

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

Value add sectors are consistent with output, with the largest 3 sectors of output also being the largest 3 from a value added perspective.



Interestingly, non-metal mineral products is the 4th most important value added sector, but 5th largest by output, and paper, printing and publishing is the 5th most important value added, but 8th largest sector by output.



Notable sectors that move in the opposite direction, indicating a lower value add component, include textiles, clothing footwear and leather products.

Ballarat Industry Workforce Development Strategy



Readers should be aware the analysis in Figure 10 represents value add as at Dec 2008 and employment statistics from ABS 2006. Whilst this will result in EVA that is not technically correct, the results will be sufficiently accurate to draw broad conclusions as to the relative importance of the sectors, from a value added perspective.



The EVA analysis for the entire Ballarat economy shows that together with health and community services and retail, manufacturing represents a significant sector and is the largest value adding sector in the local economy, 70% larger than the next biggest in terms of value add (which employs more people).

 150,000

The analysis partly explains why the manufacturing sector plays such a significant role (and therefore is strategically important) in the local economy through:

100,000

drawing goods and services from other sectors;

50,000

employing a large portion of the local workforce (which then spend salaries and wages locally); and

contributing the largest component of regional value add.

Ballarat Economy - value add analysis

450,000

Electricity, gas and water supply Finance and insurance Wholesale trade Manufacturing Construction Gov ernment administration and defence Health and community serv ices Accommodation, cafes and restaurants Retail trade

400,000

350,000

Value add / employee

Page 44 of 118

300,000

Mining Communication serv ices Property and business serv ices Transport and storage Agriculture, forestry and fishing Education Cultural and recreational Personal and other serv ices Av erage all sectors

250,000

200,000

0 0

1000

2000

3000

4000

5000

6000

7000

8000

Employees per sub-sector

Figure 10 Value added by employee all sectors Dec 2008 

Figure 10 details the value-add per employee (VAE) and total employment by sector of the Ballarat economy. The size of the bubble represents the total economic value-add of the each sector

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Ballarat Manufacturing Sector - value add analysis Beverage, malt, tobacco manufacturing Non-metal Mineral products Basic metals and products Paper, printing and publishing Other machinery and equipment Transport machinery and equipment Meat and dairy products Miscellaneous manufacturing

Value add / employee

350,000

300,000

Chemical and chemical product Other food manufacturing Rubber and plastic products Fabricated metal products Textiles Wood and wood products Clothing, footwear and leather Ave manf sector



The sectors producing above average VAE ($158k), are responsible for 57% of economic value add ($494m), and employee 46% (2,576) of the workforce. This skewing of the sector highlights the relatively high number of firms operating at lower ends (STM) of the value chain



Food processing has VAE of $190k and transport machinery & equipment manufacture a relatively low VAE $116k. This indicates that the majority of this sector operates at the STM end of the manufacturing spectrum, rather than the manufacture of complex machinery (ETM) end.



It would also indicate that some firms are really STM manufacturers engaged in assembly, rather than higher value manufacturing and production



Moreover, low VAE indicates a relatively high labour component in end product, relatively low capital investment and also price taking behaviour, reflective of price based competition.



The analysis further demonstrates:

250,000

200,000

150,000

100,000

50,000

the relative importance of the two dominant sectors; and

0 0

200

400

600

800

1000

1200

1400

1600

also highlights that the majority of the manufacturing industry comprises smaller firms in underdeveloped supply chains, likely to be playing support roles to other local industries, whether manufacturing or to other sectors.

1800

Employees per sub-sector

Figure 11 Value added by employee sub-sectors Jan 2010 

Figure 11 details the value-add per employee (VAE) and total employment per sub-sector. The size of the bubble represents the total economic value-add of the sub-sector



Readers should be aware that VAE uses June 2009 value add and June 2006 employment data, so the actual VAE figure will not be technically correct. However, we would expect the relationship displayed in Figure 11 to be reasonably accurate and therefore acceptable for analysis purposes

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

The relatively small size of the sub-sectors indicates opportunities for growth if they are able to secure customers outside the region

Ballarat Industry Workforce Development Strategy

6.3.4

Page 46 of 118

Analysis of changes to location of expenditures

As identified above, there had been a significant shift in where the manufacturing industry had sourced goods and services over the review period. The economic analysis further showed the manufacturing sector had increased its local purchasing by 35%, or around $278m. The sector has responsible for increasing its share of local expenditure from 26.5% to 30.4%. This increase directly replaces (whether intentionally or not is not able to be determined) goods and services previously imported into the region. The manufacturing sector reduced the amount of goods and services imported into the region by 10%, or around $196m. Table 7 shows the impact (>$10m) this change has had on the economy.

Appendix 4 – Detailed

analysis of increased local expenditure by local manufacturing industry provides a more expansive analysis on each sector within the economy and sub sector within the manufacturing industry.

Sub–sector – change in local expenditure Food manufacturing ($m)

Transport equipment & machinery ($m)

Other Manufacturing ($m)

Total ($m)

Manufacturing sector (total)

(15)

Accommodation, cafes and restaurants

Electricity, gas and water supply

Property & business services

Retail trade

(5)

Transport & storage Wholesale trade

Other

$138

$94

$45

$277

Table 7 Local expenditure increases Dec 2008 - Jan 2010

Crucial to this increase were the changes in the food processing and transport machinery & equipment sectors. These sectors combined have purchased around an additional $232m locally compared to Dec 2008. These sectors are clearly drivers of the other sectors of the manufacturing industry such as paper, printing and publishing, rubber and plastic products manufacturing, basic metals and products, fabricated metal products and other machinery and equipment. These are strong sectors, utilising key comparative advantages such as location to suppliers, well developed supply chains, lower cost labour and industry knowledge. The food processing and transport equipment and manufacturing sectors are higher up the value chain (close to the end customer) and represent a significant component of Ballarat‟s higher value

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manufacturing base.

Page 47 of 118

Those sectors that are reliant on them are therefore quite dependant.

For

example, of basic metals and products manufacturing‟s output of around $380m, $51.6m (14%) is directly attributable to these two sectors.

Combined, they increased their expenditures on locally

produced basic metals and products $27.4m over the period. Further analysis of the information highlights that this performance is even more impressive, given that in sectors other than food and transport and machinery manufacture, the reduction in transport and machinery expenditure was by $51.2m. Such a reduction reflects the GFC and associated lack of business confidence for businesses to purchase capital items as well as the difficultly businesses had securing appropriate finance to purchase capital assets during 2009. On the surface the increase in local purchasing is a positive for the economy and the manufacturing sector specifically. However, such a high dependency presents significant mid- to long-term risks to the broader economy, including: 

Higher exposure to loss of a major individual firm. In regard to this risk, we would note that both these sectors have a small number of large firms. The broader Ballarat economy, and the manufacturing sector more particularly, has, therefore, a higher degree of risk to firm exit than might otherwise be the case. Section 6.3.6 specifically considered this issue further;



Exposure to work completed locally being lost to outside the region or offshore;



Larger firms using their superior bargaining power to reduce industry profits in downstream firms and industries.

This can potentially limit future investments in capital, research and

development and skills, jeopardising the long term viability of the industry; 

Dependency on large local firms by smaller firms, potentially inhibiting their ability to service other, more diverse markets; and



Moreover, it is not possible to unwind the impact of the recent Federal Government stimulus package from the economic data. If the stimulus moneys are the principal driver behind the increase in local purchasing, then there is a risk that this change might not be sustainable and thereby reflects a once-off impact.

If this is the case, then the firms that benefited are

exposed when the stimulus spending slows and other markets, whether local or other, are not identified to replace the stimulus impacts. In this regard, we would note that a large portion of survey respondents believed the stimulus to have had a major positive impact on their business and industry over the past three years, indicating that this constitutes a genuine short term risk to the industry.

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6.3.5

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Workforce analysis and profiling

According to ABS 2006 Census data, there were 37,705 people employed in Ballarat. Manufacturing was the 3 rd large employment sector, employing 5,612 people. Figure 12 shows employment trends for the Ballarat region using more recent data (but not incorporated into the REMPLAN economic modelling software) from the Department of Education, Employment and Workforce Relations (DEEWR) Small Area Labour Markets Analysis: Ballarat - workforce overview No of unemployed (LHS) W orforce (LHS) Unemployment % (RHS) 50,000

8.15%

45,000

(Un)employment

35,000

8.05%

30,000 25,000

8.00%

20,000 7.95%

15,000 10,000

The information shows that although unemployment has remained static at close to 8%, the workforce declined by nearly 1,100 people, or 2.3%, of the workforce over the period to June 2009.

ď&#x201A;§

We are not able to identify which sectors are specifically affected, however we note that the survey and consultations highlighted the loss of 9659 jobs in the manufacturing sector over 2009.

% unemployed

8.10%

40,000

ď&#x201A;§

7.90%

5,000 0

7.85% Mar-08

Dec-08

Time

Jun-09

Figure 12: Overview of Ballarat Workforce Data

This number was sourced from the direct consultations undertaken with industry as part of this project. Details regarding the type of positions lost and / or employment tenure (permanent, casual, parttime etc) were not provided by the interviewees.

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Figure 13 Employment by industry sectors (ABS 2006) 

The latest available economic data for employment indicates that manufacturing was responsible for 5,615 jobs, or 14.9% of the workforce. Based on information contained in the survey (refer 6.2.1), without job replacement or firm re-hires this number is now likely to be in the order of 4,600.

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Figure 14 Manufacturing workforce by sub sectors (ABS 2006) 

Jobs per sub–sector are broadly consistent with output per segment, however paper, printing and publishing is the 8th largest sector by output and the 5th largest in terms of employment, indicating its relatively high ratio of employees to sales. Wood and wood products also has a high ration of employees to output, being the 10 th largest sector by output, but the 7th highest employment sector.

Ballarat Industry Workforce Development Strategy

Figure 15 Occupations for Ballarat (ABS 2006)

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Figure 16 Occupations in manufacturing (ABS 2006)



The manufacturing industry has a lower skilled workforce than the Ballarat average, with technical and trade workers being the most significant occupation, with around 28% of the total, followed by labourers 24% and machinery operators and drivers – 16%. These percentages are significantly higher than the average across the broader Ballarat workforce



Noticeably, professional workers at 7% are significantly lower than the Ballarat average of 19% while managers at 12% are consistent with the Ballarat average of 11% These figures are consistent with the survey results that highlighted the need for management skills and demand for trade and technical services



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Figure 17 Ballarat workforce qualifications (ABS 2006)

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Figure 18 Ballarat manufacturing workforce qualifications (ABS 2006)

ď&#x201A;§

These figures highlight the relatively lower level of qualifications in the Ballarat manufacturing workforce compared to the Ballarat average. Over 52% of the workforce does not possess qualifications, compared to 46% of the Ballarat average, with only 8% holding a Bachelor degree or above qualification compared to 18% of the Ballarat average

ď&#x201A;§

There is a higher proportion (43%) of the manufacturing workforce holding Certificate and diploma level qualifications, compared to the Ballarat average of 31%

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Figure 19 Ballarat workforce age groups (ABS 2006)

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Figure 20 Ballarat manufacturing workforce age groups (ABS 2006)



The largest age group in manufacturing is 35 – 44, representing around 28% of the total, compared to 24% for Ballarat as a whole. Total workforce over 45 years in manufacturing is 36% compared to Ballarat‟s 39%.



Manufacturing employees constitute 12% of those aged 55 and over, compared to 16% across the Ballarat region



12% of the manufacturing workforce is under 25, compared to the Ballarat average of 19%



The age profile of the sector is skewed towards older employees, however there is not the same number of under 25s or over 55s as in the broader Ballarat economy

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Figure 21 Ballarat wages and salaries (ABS 2006)

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Figure 22 Ballarat manufacturing wages and salaries (ABS 2006)



The industry is generally paid less than the Ballarat average, with 75% of the manufacturing workforce earning less than the average Australian weekly earnings ($1,046) (ABS 2006), compared to 66% of Ballarat as a whole



Interestingly, the sector has 16% of its workforce earning more than $1,300 per week, compared to the Ballarat average of 10%. This indicates that for those at the top end of the scale the industry pays reasonably well and values higher skill levels accordingly.



The data highlights the „divide‟ within the Ballarat industry; those with lower skill levels receive relatively lower pay and those with higher skills levels receive relatively higher pay.



These positions are a reflection of the underlying nature of the industry and the skills utilised by it rather than the wage levels of the industry per se

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Figure 23 Ballarat workforce place of residence (ABS 2006) ď&#x201A;§

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Figure 24 Ballarat manufacturing workforce place of residence (ABS 2006)

There is no significant difference between the location of the manufacturing workforce compared to the broader Ballarat workforce

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Figure 25 Ballarat hours worked (ABS 2006)

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Figure 26 Ballarat manufacturing hours worked (ABS 2006)



This data indicates than 31% of the workforce works greater than 40 hours, compared to 24% of the broader Ballarat workforce



Conversely, the industry has relatively low levels of casualisation, with only 9% of the workforce working less than 25 hours, compared to 23% of the broader Ballarat workforce



This data indicates that workforce flexibility comes from increasing work hours, rather than the use of part time or casual labour. This data does not highlight the percentage of the workforce that is sourced from labour hire companies

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Ballarat manufacturing sector comparisons:

Figure 27 Workforce comparisons (ABS 2006)

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

54% of the Ballarat workforce has some form of qualification, compared to 46% for manufacturing and 51% of the Australian workforce;



The sector has around the national average number of people earning less than the average wage;



The sector has a significantly (51% compared to 35%) higher portion of people working 35 – 40 hours and a slightly higher portion of people 32% compared to 39% nationally, worked more than 41 hours;



The sector has a higher percentage of employees aged 35 – 54 (52%), compared to the national average (48%); and



The sector has a lower percentage of employees aged below 25 (10%), compared to the national average (17%)

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6.3.6

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Future economic modelling

This section of the report considers the economic impacts of job gains from the manufacturing sector to the broader Ballarat economy. The model works to inform the effect of job losses by merely inverting the figures. The analysis has been undertaken for 50 job gains under 3 scenarios for the: 1. Manufacturing industry as a whole (Table 8); 2. Food processing sector (Table 9); and 3. Transport equipment and machinery manufacturing sector (Table 10) Impact summary report Direct Effect

Industrial Flow On Effect

Consumption Flow On Effect

Total

34.7

14.2

7.1

56.1

Employment (Jobs)

115

Wages and Salaries ($M)

4.7

2.9

2.0

9.6

Value Added ($M)

7.7

5.2

3.3

16.2

Impact Summary Output ($M)

Table 8 Impact summary - 50 job gains manufacturing industry

Impact summary report Direct Effect

Industrial Flow On Effect

Consumption Flow On Effect

Total

37.1

14.9

7.8

59.8

Employment (Jobs)

125

Wages and Salaries ($M)

5.2

3.1

2.2

10.6

Value Added ($M)

9.4

5.7

3.6

18.8

Impact Summary Output ($M)

Table 9 Impact summary - 50 job gains food processing industry

Impact summary report Direct Effect

Industrial Flow On Effect

Consumption Flow On Effect

Total

39.4

18.1

6.9

64.4

Employment (Jobs)

120

Wages and Salaries ($M)

3.8

3.6

1.9

9.3

Value Added ($M)

5.8

6.1

3.3

15.1

Impact Summary Output ($M)

Table 10 Impact summary - 50 job gains transport equipment and machinery manufacturing industry

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The analysis indicates the following: 

The dependency of the broader Ballarat economy to changes, either positive or negative, to the manufacturing sector;



The potentially high economic benefits that would flow to the broader community from the attraction of a high value added manufacturer;



Job losses within food manufacturing would have the highest impact on flow-on job losses of the three scenarios caused by the higher value-add this sector delivers. This value-add per worker is $189.6k in food manufacturing, $153.8k across the industry and $116.5k in transport equipment and machinery;



Conversely, job creation within these sectors will have corresponding economic positives. Create 50 jobs in food manufacturing, an additional 75 jobs are created (126 in total) and overall local output increases by $59.8m;



Other industry sectors that would experience flow-on job gains include retail, wholesale, transport and storage and property and business services;



Effects on output within key supply chain sectors include other downstream manufacturing (for example basic metals and metals fabrication), property and business services, retail, wholesale and transport;



The data also shows the higher wages and salaries that are paid to employees within the food sector, which is reflected in the survey and other analysis for the BIWDS;



Wages comparisons show that the value of wages and salaries in the food sector is 36% higher than transport and 11% higher than the industry as a whole;



Output effects per job gain across the three scenarios are $1.3m from transport equipment, $1.2m from food manufacturing and $1.1m from the industry as a whole; and



The analysis further highlights the strategic importance of these two sectors to the broader Ballarat economy, with both sectors demonstrating a higher than industry average increase (2.3 total:1 direct) in employment; food processing (2.5:1) and transport equipment and machinery manufacturing (2.4:1)

7. Recommendations The final recommendations have been broken into several key themes, with key actions to be completed under each. Central to the development of the industry is the development of appropriate skills for the industry.

Consistent with the best practice literature and results from surveying and

consultations, the development of the workforce and specific skills is critical to the wellbeing of the broader industry. Accordingly, workforce and skills development issues will be considered under each of the recommendations and, in many cases, this is the central plank of the recommendation.

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Industry development pathway

The broader literature highlights the difficulties being experienced by some sectors of the manufacturing industry. More specifically: those sectors that are subject to high levels of competition, those that compete on price, and those that have limited abilities to develop new technologies products and markets. Businesses that are at the smaller end of the spectrum are more likely than larger businesses to be suffering difficulties or be in higher risk positions. The results from the economic analysis, survey and consultations completed with the Ballarat manufacturing industry are broadly in line with the results from the wider Australian industry and reflect the range of issues being faced by the industry. In addition to highlighting the issues facing industry, the literature also highlights the key strategies being employed to tackle issues and capture opportunities.

To have the best possible chance of being

commercially sustainable, local industry must recognise the issues facing manufacturing, and then be sufficiently engaged to both formulate and implement strategy and changes to work practice that reflects best practice. The survey highlights that a significant number of industry participants have been able to identify key influences on their businesses.

Less apparent is the recognition that, in many cases, changes to

underlying operations will be required to overcome the negative impacts and capture the positive opportunities arising from these influences. The economic modelling highlights the high economic impacts of firms growing and of firms closing. Over the medium to longer term, organisations that remain in the industry without making changes to their underlying operations, are at an ongoing and possibly increasing risk of becoming unviable. The degree of this risk will vary from sector to sector; it is clear, however, those that are smaller and / or producing STM type manufacturers are more exposed than those firms producing more elaborately transformed manufactures. To this end, we are proposing that a development pathway is developed for businesses that highlight 3 alternatives: 1. Exit; 2. Stay and do nothing; or 3. Focus on improving to remain competitive and viable. This model covers all industry participants and allows each to make decisions as to which pathway they wish to follow. This recommendation is strongly supported by an intervention designed to provide information to both industry and industry advisors as to the risks being faced by the industry and the alternatives participants can pursue. To this end, we are of the view that Council has discharged its responsibility to the industry as it is:

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1. Publicising key issues being faced by the industry; 2. Bringing potential solutions to the attention of participants; and 3. Should the program be funded, providing significant resources to assisting individual firms. In short, Council will be establishing a framework for the industry to develop (grow output) and deal with key transitionary issues (reduce industry risk) that large segments of the industry will continue to have to deal with for the foreseeable future. The two key change related pathways of exit and improvement will have a suite of programs that will aid businesses to achieve their aims. Those that chose to do nothing can enter an exit or improvement pathway at a subsequent time if they so desire. The pathway model is shown in Figure 28.

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DRIVERS OF INDUSTRY CHANGE

TRANSITION

EXIT



REDUCE RISK

   

BALLARAT MANUFACTURING INDUSTRY

PROGRAM ASSISTANCE  Exit - succession  VC Help  Workforce transition  Merger / sale  Industry transition fund

VALUE RETENTION TRANSITION RE-ENTRY SKILLS DEVELOPMENT

DO NOTHING

STAY

TRANSITION

EXIT

INFORMATION

DO NOTHING

STAY

DRIVERS OF WORKFORCE CHANGE

IMPROVE IMPROVE STM 

PROVIDE INFORMATION  Professional service group  Portal  Industry associations  Partners eg UB



GROW OUTPUTS

HIGH PERFORMANCE

PROGRAM ASSISTANCE  Benchmarking  New Product development  Innovation  R&D  Skills for innovation  HR  Export  Outsourcing  Lean techniques

AWARENESS

Figure 28 Overview of industry pathway program

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ETM

   

COST COMPETITIVENESS MARKET POSITION INNOVATION SKILLS DEVELOPMENT

NICHE FOCUS

   

FOOD RAIL & TRANSPORT CONSTRUCTION AGRI / MACHINEY EQUIPMENT

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This mode has several key intervention points (noted as 1, 2 and 3 on Figure 28) and requires action at several levels:

7.1.1

Intervention 1 â&#x20AC;&#x201C; information provision

The initial intervention requires Council to work with other industry participants to increase awareness of both the broader issues facing the industry and the assistance available to the industry. This represents a more proactive â&#x20AC;&#x17E;pushâ&#x20AC;&#x; approach to information provision and is a shift from the more reactive approach of responding to information requests from the sector. 7.1.2

Engage professional services sector / develop professional services group

Pivotal to the successful dissemination of information will be the engagement of the professional services sector, particularly the accounting profession, who typically engage with clients at least annually. We believe accessing this sector will prove to be easier, more effective and will achieve a higher degree of penetration than trying to take issues to the industry directly. The rationale for this is simply that: 1. Many of the local manufacturing businesses look to their accountant for advice and are more likely to act upon recommendations coming directly from this source than other sources; 2. Accessing the accounting profession will be easier, cheaper and quicker than attempting to achieve an acceptable coverage of industry participants through other means (for example workshops or advertising); and 3.

It is likely that an information awareness campaign will reach end users if the accounting profession brings the issues and assistance alternatives to the attention of their manufacturing clients than if purely left to industry participants to identify issues and assistance alternatives themselves.

This initiative may be leveraged into a more formal professional service network which could be a very useful and efficient medium and longer term means of informing industry of key issues and the assistance alternatives available to them. 7.1.3

Build a manufacturing industry information portal

In addition it is recommended that: 1. A web portal surrounding the issues and assistance alternatives for the manufacturing industry is developed and appended to the Business Ballarat website, and linked to other key stakeholders and enabling parties such as AIGroup, UB and VECCI; and 2. Industry groups and other key enablers such as UB, Federal and State Government are engaged to promote the issues and assistance alternatives to members and various networks.

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Intervention 2 - industry transition

The second point of intervention is to assist those businesses that wish to explore, and possibly go through a formal and staged industry exit. This may take many forms: for example trade sale, merger, acquisition, or generational succession. The key objective of this pathway is to recognise that a formal and planned exit is more likely to produce better economic and societal outcomes than an unplanned one.

There is a greater likelihood that the business continues in some form or another, potentially

operating in a different industry, or as part of a larger group if this issue is addressed in a formal fashion. Whilst there is no imperative for Council to provide assistance in this matter, we are of the view that the significance of family businesses, and the portion of the manufacturing sector that is at risk, is sufficiently high and, therefore, could have a significantly negative impact (as evidenced by the economic modelling) on the broader regional economy if transition does not occur successfully. The issues that arise from a general failure to exit appropriately could become broader social and economic issues than Council has the imperative to manage. The cost of managing this situation in the longer term is likely to be more expensive than making an effort to manage the issue in the short term. To this end, we would recommend: 1. A program is developed which specifically addresses business transition related issues.

would further recommend this is modelled on an Industry Transition Fund Model, such as being used by the automotive industry to assist businesses transition within this sector. The program would cover issues such as: 

Exit / generational succession;



Workforce re-skilling and transition (cost reduction, lean, energy / green, problem solving);



Merger / acquisition and preparation for trade sale; and



Venture capital.

Specific aspects of the program cater for employees in transition (and wishing to develop skills in an alternative industry or sub-sector within the manufacturing industry). 7.1.5

Undertake study to ascertain key risks of family business closure

A more detailed study into the risks of family business failure across the broader Ballarat economy is completed with a view to informing a more detailed and holistic approach to managing this „at risk‟ component of the local economy 7.1.6

Intervention 3 - high performance

The final intervention is for businesses to adopt a high performance pathway that exposes them to best practice in both industry and workforce development. The underlying principle with this pathway is to

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grow those businesses, and improve the skill base (and therefore the industry) that can be nurtured through implementing best practice management. Economic modelling demonstrates the significant region wide benefits that growing the sector brings, with economic output increasing by around $56.1m for every 50 manufacturing jobs created. Businesses would aim to improve their underlying competitiveness through programs developed around cost reduction, process improvement and market focussed approached, such as new product development.

The skills to be developed are consistent with the strategies being adopted by

organisations across the broader Australian industry. We would recommend that this pathway takes two basic forms: 1. Benchmarking against international standards – not financial benchmarking - but practice and process benchmarking in the areas of production, engineering and innovation aiming to improve

firm

competitiveness.

would

recommend

Manufacturing

Microscope

benchmarking for this aspect of the program; and 2. Detailed training in areas such as: 

Lean manufacturing;



Innovation;



Research and development;



Outsourcing;



Export / international market development; and



Human resources and workforce development.

We have had initial discussions with UB as to whether it would assist in the development of programs (conducted through the new manufacturing technology school being developed). The university has provided early stage support for this and is willing to continue discussions to ensure that any program is industry specific and appropriately tailored. It is envisaged that the results from the benchmarking would be used as a key learning tool and allow the training program to be specifically tied to the business. In this way, the skills development should be firm specific; a requirement identified in the literature as being critical in engaging the broader business community in skills development activities, as well as ensuring the program is as effective as possible. 7.1.7

Seek support for an Industry transition fund

The survey, literature, consultation and economic profiling information is consistent in identifying that significant segments of the manufacturing industry are facing external conditions that are broadly unfavourable and would appear to be the norm over the foreseeable future. In such situations, the

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likelihood of businesses exiting the industry is higher than if industry conditions are more favourable. In addition, the strategic importance of the industry to the Ballarat economy (high value added component, local expenditure, employment), the high dependency on two key sectors (food processing, transport equipment and machinery manufacturing) dominated by a small number of large firms. and the generally underdeveloped supply chains all indicate an industry facing challenges and high levels of inherent risk. The literature also recognises that if industry exit / transition is somehow â&#x20AC;&#x17E;managedâ&#x20AC;&#x; there are not as likely to be as many economic, social and community negatives than if the exit process is left entirely to the market. The economic risk of exit has been quantified at $56.1m, with economy wide job losses of 115 for every 50 manufacturing jobs lost. Using this rationale, it is recommended that a fund to assist businesses exit / transition from the manufacturing industry is sourced.

The fund should include a mandatory workforce development

component that aims to assist affected workers re-skill to enhance their employability. The Supplier Assistance Coordination Project is a program currently being run by the Federation of Automotive Products Manufacturers (FAPM) and aims to assist businesses access Commonwealth Government funding and State Government Industry Transition funding (ITF). These funds have objectives around industry sustainability. For example, the ITF provides $50 million to support firms with the potential to move into new and emerging industries, as well as those that contribute to the State's baseline capabilities that underpin our industry sectors.

Similarly,

Commonwealth Government funds have been used to assist Geelong with the transition of industry following the announcement of the closure of the Ford plant, whereas the North-West and Northern Tasmania Investment and Innovation Fund is part of a $20 million stimulus package announced in December, in response to the closure of a number of large factories in the region. Discussions should commence to determine if a program similar to the one run by FAPM or the Geographic funds of Geelong and North-West Tasmania can be established for Ballarat manufacturers. A precondition for entering the program should be established that requires a component of the program to be around re-skilling of the workforce.

Such a precondition (recognising the broader

definition of workforce recommended at 7.3) would improve the overall employability of the workforce, and improve the skills base of the organisation itself.

7.2

Specific council / economic development actions

We have identified several recommendations for Council that can assist with both the transition and growth of the industry.

The proposed recommendations have a focus on improving the long term

sustainability of the industry through:

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1. Taking a leadership position in relation to the industry, including being prepared to advocate for assistance for the industry; 2. Improving the nature of Ballarat manufacturing through increasing the amount of R&D and export undertaken by the industry; 3. Providing the basis for the ongoing sustainability of the existing manufacturing sector; and 4. Increasing awareness of the issues to facilitate the uptake of programs and assistance available to the industry. 7.2.1

Develop a strong vision for Ballarat’s manufacturing industry

A reoccurring theme of the consultations was for Council to take a leadership position for the industry and strongly support the industry as a critical part of Ballarat‟s economic future.

To this end, we

recommend that Council develop a clear vision for the industry and allocate resources and work plans to support the industry‟s development and transition. Also, a strong theme from the consultations and surveys was that the poor image of Ballarat and the industry generally was impacting on the ability of employers to attract staff. Key to this recommendation being successfully implemented will be ensuring Council is clear as to its role. Council cannot be responsible for the wellbeing of individual firms nor does it have a role, in our opinion, in providing assistance to individual firms or for ensuring individual firms take up assistance that it is offered. However, Council can assist the broader industry through: 1. Advocating for assistance where possible; 2. Attracting firms to the region; 3. Providing appropriate information to the industry, and improving the conduits to industry through which this information can be accessed and understood; 4. Ensuring key State and Federal Government agencies, such as Austrade and International Victorian Government Business Offices are aware of the opportunities in the Ballarat region; and 5. Building collaborative networks between industry stakeholders. 7.2.2

Develop a manufacturing industry strategy

While this report contains elements of an industry strategy, the development of a more comprehensive manufacturing industry strategy is recommended. This strategy should bring together issues such as: 

Strategies and recommendations considered in the EDS review currently underway and the linkages to other areas that are relevant to industry such as land usage, planning and transport / logistics;



Investment attraction;

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

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Which industries should be developed in the short and longer term (we have recommended food, agricultural & machinery equipment manufacture, construction and rail & transport machinery manufacturing as being critical to the existing economic base of Ballarat);



Strategies to manage risks identified in this report, particularly those around the potential loss / closure / downsizing of a significant firm;



Consider

the

development

clusters

for

food

processing,

transport

equipment

manufacturing, with an emphasis on supply chain development. The objectives of the clusters should consider the issue of training and workforce development, and in particular retraining of retrenched employees from other manufacturing sectors; and 

Other linkages critical to this industry (we have identified UB in this regard as a source of R&D and training for the industry).

7.2.3

Lobby Federal Government for regional business concessions to aid in investment attraction and industry growth

It is clear that organisations that have a technological focus are better positioned, prima facie, than organisations that rely on other basis of competition to secure customers (for example, price based competition). To encourage the growth of these organisations, and facilitate the attraction of such industry to regional areas, Council should lobby, in conjunction with other relevant organisations, Regional Development Australia, Economic Development Australia and other regional local governments to attempt to secure the following for firms headquartered in regional areas: 1.

Higher rates of R&D tax concession;

More favourable tax depreciation rates (that is, allowing assets to be more quickly depreciated); and

More favourable EMDG concessions

These changes would make investment in regional Australia more favourable and, with the focus on R&D and EMDG, be more appealing to organisations that are innovative and export oriented and also provide some cost based relief for existing firms. A recent Austrade study reported that exporting firms pay employees an average $17,400 per annum more than non exporting firms. Such firms are therefore highly attractive in terms of economic value add. It is clear that Council will not be able to secure such concessions specifically for Ballarat and, given the significance of these changes, a broader lobby approach is more likely to be successful. We would also note that changes of this sort can be linked to the broader population debate currently underway at Federal Government level, as a critical aspect of this debate is ensuring there is sufficient commercial interests in regional areas for people contemplating relocation to be employed. There is

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precedent for the taxation system to be used to provide support to specific sectors and geographical regions; for example, remote allowances and improved tax deductibility for investments in certain farming industries. 7.2.4

Improve collaboration between industry and UB

There are four principle methods to increase R&D expenditure in the private sector: 1. Increase the amount undertaken by firms currently completing R&D activities; 2. Increase the number of firms undertaking R&D activities; 3. Allow overseas firms to complete R&D activities on Australian soil without penalty; and / or 4. Improve the collaboration between universities and industry to improve the chances of university research activities being effectively commercialised by the private sector. It is recommended that Council lead a push to increase the collaboration between UB and Ballarat industry, with an aim to develop the commercialisation of UB research and intellectual property by local firms. The new manufacturing training centre provides the opportunity for this collaboration to be fast tracked. Other recommendations in this report will affect 1, 2 and 3 above, however the linkages between industry and UB could, in our view, be improved and, as such, should be the focus of some of Councilâ&#x20AC;&#x;s efforts to facilitate the growth and development of the manufacturing sector. Improving this linkage would enhance the comparative advantages Ballarat enjoys by having UB within its boundaries and this has obvious appeal to larger organisations that are in a position to exploit the intellectual property assets of the university. The ICT industry provides evidence of the success of this using this approach with IBM. 7.2.5

Promote awareness within industry of programs

The survey responses show that 22.2% of industry participants were unaware of the assistance available to them and no program had an awareness level over 50%.

A near-term objective should be to

increase the level of awareness and take up of these programs. Recommendation 7.1.1 specifically addresses this issue, and Council should play a role in implementing the recommendation and monitoring the outcomes. Council should ensure there is ongoing investment and resources allocated to maintaining and increasing awareness of assistance programs. Whether this is undertaken internally or externally is a decision for the Council, however we would note that an industry association such as AIG would be well suited to fulfil such a role on a subcontract basis.

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Investigate the possibility of building a low cost / smart electricity grid

Low cost or smart technology electricity grids are an alternative to existing power generation mechanisms. They reduce power usage by utilising power that is generated in proximity to its use, saving the losses in transmission that occur when power is moved to a central location and then redistributed back to users. The potential savings for Bendigo, for example, have been estimated to be 17% if such a grid were developed. Such a grid is not possible to be implemented in larger regions as it is not possible to generate sufficient power close to source, so regional cities such as Ballarat are seen as ideal for such grids. The comparative advantage that Ballarat enjoys in relation to power generations (wind, biomass) provides the basis for further investigation into this issue within the broader development of EDS. Moreover, should such a facility be developed, it would provide Ballarat firms with a competitive advantage (lower cost power, reduced uncertainty as to energy and climate change impacts), encouraging investment as well as making the existing industry more competitive. 7.2.7

Governance model

There is a need to ensure this (and any future manufacturing strategy) is appropriately implemented. We have previously noted the need to appropriately resource this and future efforts. Consideration should be provided for either of the following options: 1. Employ a staff member with the economic development unit with responsibility to implement strategy; or 2. Consider the development of a separate entity, similar to ICT Ballarat, that is responsible for industry development and strategic implementation. 8 Action Plan contains indicative costings to implement the reportâ&#x20AC;&#x;s recommendations, and these monies could be used for either of these implementation vehicles.

7.3

Workforce development recommendations

Recommendations made in relation to workforce development issues have been categorised under a single heading for ease of use by interested stakeholders. Themes have been developed that are consistent with the results of our work on the nature, status and structure of the industry and broader workforce related issues. In this fashion, we are also hopeful that this ensures: ď&#x201A;§

Consistency in recommendations between the broader needs of the industry and the more specific workforce requirements;

ď&#x201A;§

Different segments and organisations of different size can be identified with different training and development needs and programs tailored accordingly; and

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

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Skills development can play a key role in the broader strategic development of the industry (as is recommended in this report).

The model used is based around five themes. This is outlined in Table 11. Theme 1.

Transition

High Performance

Attraction

Retention

Training & development

Which means



Key issues

Reflects that some sectors within the industry are in, and are likely to remain in, a state of transition into the foreseeable future



Skills around workforce transition / older workforces



Employability

Sectors of the industry have the capacity to continue to compete and remain viable



Skills issues focus on improving the competitive position of the firm



Appropriateness of training



ETM and STM components



Appropriateness of skills



Job security



Issue for firms <50 employees



Role of job agencies



Industry structure – big versus small firms



Younger employees



Image of the industry



Career advancement



Quality of work



Job security



Remuneration



Image of industry



Awareness of training



Level of training



Training gaps



Nature of training

Focus on attraction of staff to the firm and industry more broadly

Focus on retention of staff within the firm and industry more broadly

Specific training requirements identified as a result of the surveys and consultations

Recommendation



7.1.1, 7.1.4, 7.1.5, 7.1.7, 7.2.2, 7.2.5, 7.3.1, 7.3.3, 7.3.4,



7.1.1, 7.1.6, 7.1.7, 7.2.4, 7.2.5, 7.3.3



7.1.1, 7.1.6, 7.1.7, 7.2.1, 7.2.2, 7.2.4, 7.2.5, 7.3.1, 7.3.2, 7.3.3, 7.3.4, 7.3.5, 7.3.6, 7.3.8



7.3.1, 7.3.2, 7.3.3, 7.3.4, 7.3.6, 7.3.7



7.1.1, 7.1.4, 7.1.6, 7.1.7, 7.2.2, 7.2.5, 7.3.1, 7.3.3, 7.3.4, 7.3.7

Table 11 Workforce development themes

Our recommendations are predicated on recognising and adopting a broader definition of workforce to include not just those presently employed, but also those exiting and wishing to re-enter the workforce. This allows development of programs and consideration of issues relevant to the broader economy be considered from a workforce perspective. Adopting this definition reflects best practice and we would recommend Council consider its adoption, therefore opening the door to considering the entire workforce as an asset the city can enhance in terms of its skills, flexibility and productivity.

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7.3.1

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Develop a program that aids employers to manage and improve an ageing workforce

Engage with industry groups to develop a short program that assists employers and employees to understand the needs of an ageing workforce and how to manage this issue. Consideration could be given to developing templates and training around issues such as: 

Understanding the workforce age profile and where the age profile and points of risk lie now and in the future;



Engagement with older workers about this issue – using the issue as an empowering tool to transfer knowledge and skills and getting the most out of the workforce;



Career support / path / retirement management;



Flexible workforce in areas such as role changes, fewer hours, less physically demanding roles;



Ensuring knowledge keepers are identified and processes and program are put in place to capture and transfer critical knowledge;



Begin to look at how the organisation can tap into a growing mature candidate pool in the labour market to create a growing source of new recruits; and



Understanding the different training needs of older workers and ensuring knowledge and skills transfer programs are appropriately tailored.

7.3.2

Improve image of the industry within schools and school leavers

The issue of the image of the industry generally and the inability of the industry to retain the < 25 year demographic highlights the need to improve this within the school / school leaver age group. The consultations referred to programs that bring school-aged people into the businesses for interaction with businesses. This generates several key benefits: 1.

Students get to see the industry firsthand and make a more informed employment / study choice;

Employers get to interact with and improve their knowledge base of this age group;

Allow career and trade teachers to interact with industry to greater appreciate their training and employment needs; and

Potentially sourcing apprentices and future workers.

These programs, for example Mindshop, Vocational Pathways Project and career breakfasts, may not result in immediate or short term skills for the industry (although several employers have been very successful in building apprentice programs around the VPP program in particular). However, they play a vital role in feeding the industry and providing a forum for interaction with industry stakeholders over the medium term.

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The failure to maintain and continue to invest in this area will reduce the industryâ&#x20AC;&#x;s ability to respond to the needs of younger workers. It also reduces the opportunity for the industry to improve its image with this demographic. 7.3.3

Build a case book / study of local examples

The issue of workforces not being considered as assets and worthy of ongoing investment and development by industries is clearly a barrier to workforce development within the Ballarat manufacturing industry.

To assist overcoming perceptions around what is involved, costs and how

workforce development strategies work, it is recommended that a book or case study series be developed using local examples from within the industry itself and from best practice outside the industry (where there is greater acceptance of workforce development being seen as an investment rather than a cost). 7.3.4

Link workforce development to the Leadership Ballarat and Western Region program

To broaden the exposure of the issue of workforce development and bring its importance to the next generation of local leaders, it is recommended that an effort is made to integrate some aspects of workforce development and skills more broadly into the Leadership Ballarat and Western Region program. The issue of regional skills and workforce is a topic that fits within the charter of the program and presents some interesting leadership challenges at an organisational level. This exposure may result in more investment being made in workforce and skills development over the medium term as participants move into positions where they can influence decisions in relation to workforce and skills within their organisations. 7.3.5

Develop an advertising campaign to attract <25 to the industry

Consideration should be given to creating an advertising campaign to attract interest from the < 25 year age group to the industry. The campaign should be designed to highlight the sector and the opportunities that exist in manufacturing more broadly. The industry must take some responsibility for the image it presently projects, and making a connection to the < 25 year old group through media which they relate to may help overcome some of the barriers industry presently faces in interacting with younger generations. 7.3.6

Develop training programs to assist employers manage < 25 year old demographic

Part of the image problem the industry faces is due to older style business and management practices. While managing older workers is important to the industry, so is bringing in younger employees. Without this being managed, the industry will not be able to readily access new skills, technologies and ways of doing business and, as older workers exit the industry, skills shortages will become more prevalent. Put within this context, the attraction and management of <25 year old demographic is critical to the industryâ&#x20AC;&#x;s longer term future and the industry must take some form of ownership for developing the skills

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to manage and retain younger people. Such a program may be very similar as outlined in 7.3.1, but with a focus on younger workers; for example, considering such issues as flexible work / school programs and career development and support training. We have had initial discussions with Ballarat Group Training (BGT) in relation to this recommendation. They have responded positively and with a high degree of penetration into the manufacturing industry are well placed to develop materials and run such a program. 7.3.7

Appoint workforce ambassadors

Consideration should be given to appointing workforce development ambassadors (one older, one younger) to visit manufacturing firms to discuss workforce development needs reflecting the respective generation. These individuals should be sourced from local firms and resources should be allocated to reimburse those firms for the time provided by the ambassadors. 7.3.8

Future skills

The survey results highlight the areas of future skills‟ needs as being around key growth sectors of food, transport and machinery equipment manufacture - and the downstream support industries.

Key

occupations for growth include: 

Trade and technicians; and



Operators process workers

Consideration should be given to working with industry to identify suitable pools of this occupation class. Should clusters for food processing and transport machinery equipment manufacture be progressed, the issue of future skills development should be identified in initial scoping as an objective of the clusters.

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8. Action Plan Reference

Action

Responsible

Date

Indicative costs ($,000â&#x20AC;&#x2122;s) Once off min

max

Recurring (2 yrs) min

max

Total (3 yr cost) min

max

7.1

Industry development pathway

Ref Group

Immediate

7.1.1

Intervention 1 â&#x20AC;&#x201C; information provision

Ref Group

Immediate

7.1.2

Engage

BCC

2011

5x2

10x2

BCC

Immediate

5x2

Ref Group

Immediate

155

professional

services

sector

develop professional services group 7.1.3

Build a manufacturing industry information

7.1.4

Intervention 2 - industry transition

Participant contribution

7.1.5

Undertake study to ascertain key risks of

BCC

2011

Ref Group

Immediate

family business closure 7.1.6

Intervention 3 - high performance

Participant contribution

7.1.7

Seek support for an Industry transition fund

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BCC

Dec 2010

125

Ballarat Industry Workforce Development Strategy

Reference

Action

Page 75 of 118

Responsible

Date

Indicative costs ($,000â&#x20AC;&#x2122;s) Once off

7.2

Specific council / economic development actions

7.2.1

Develop

strong

vision

for

min

max

Recurring (2 yrs) min

max

Total (3 yr cost) min

max

Ballaratâ&#x20AC;&#x;s

BCC

2010

strategy,

BCC

2011

Lobby Federal Government for regional business

BCC / RDV /

Immediate

concessions to aid in investment attraction and

RDA

& ongoing

BCC / UB

Immediate

manufacturing industry 7.2.2

Develop

manufacturing

industry

including an assessment of clusters for food processing

and

transport

machinery

and

equipment manufacture 7.2.3

5x2

10x2

industry growth 7.2.4

Improve collaboration between industry and UB

5x2

10x2

5x2

10x2

& ongoing 7.2.5

Promote awareness within industry of programs

BCC

Immediate & ongoing

7.2.6

Investigate the possibility of building a low cost /

BCC

2011

5x2

10x2

Ref Group

June 2010

5x2

110

200

smart electricity grid 7.2.7

Governance model

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Referenc e

Action

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Responsible

Date

Indicative costs ($,000â&#x20AC;&#x2122;s) Once off

7.3

Workforce development recommendations

7.3.1

Develop a program that aids employers to manage and improve an ageing workforce

7.3.2

Improve image of the industry within schools and

Ref Grp /

Build a case book / study of local examples

7.3.4

Link workforce development to the Leadership Ballarat and Western Region program Develop an advertising campaign to attract <25 to

Ref Grp

manage < 25 year old demographic

7.3.8

Future skills

Participant

min

max

contribution Immediate

5x2

Dec 2010

Ref Grp /

Dec 2010

Immediate

BCC Ref Grp

& ongoing

Develop training programs to assist employers

Appoint workforce ambassadors

max

WFV

the industry

7.3.7

min

Total (3 yr cost)

& ongoing

7.3.3

7.3.6

max

WFV

school leavers

7.3.5

Dec 2010

min

Recurring (2 yrs)

Ref Grp /

Dec 2010

WFV

Ref Grp /

Participant contribution

2011

5x2

2011

5x2

100

120

200

325

100

150

300

475

WFV

TOTAL â&#x20AC;&#x201C; INDICATIVE COSTING Table 12 Action Plan May 2010

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9. Appendices

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Ballarat Industry Workforce Development Strategy

9.1

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Appendix 1 - Consultation list Focus groups

Organisation Advanced Cabinetry ASEMA International

One on one consultation

Feedback provided









Australian Industry Group



Ballarat Goldfields





Ballarat Group Training





Ballarat Regional Industries





Biostarch





Bond Homes





Bryan and Peterson





Butler Pty Ltd





Carli Engineering





Cast Bonding





CE Bartlett





CentaBrace









Creswick Curtains and Blinds





Danbar Plastics





Berkley Ltd



BEST Community Development



Centre for Regional Innovation & Competitiveness (CRIC)



CMI Industrial Commerce Ballarat



Department of Education, Employment and Workforce Relations





Designer Commercial Furniture





Deutscher



Ferndale





FMP



Goldacres



Grigsbys Foundry









DIIRD - Grampians and Barwon Southwest Regions Workforce

Haymes Paint





Hemco Highlands Local Learning & Employment Network Inc.



Interact Australia





Interknit





JGKing





King Print





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K. T. Preston





Mars





MaxiTrans







McCain Foods





MEGT





Mentay





Nicholson Construction





OzPress





Plinius Engineering





Regina Glass





Regional Brass Industries





Regional Development Victoria



Robsons Glass





Polytank





Selkirk



Sharp Accounting





Smart Options





SmarTimbers





Smith and Jennings





Sovereign Concrete





Troon





Tgarage





OBG Assist



Online Personnel



Tracy‟s



Technology Park



United Group







United Rail











University of Ballarat



University of Ballarat - TAFE division



Valcor VECCI Western District Employment Access



WHK Focus groups

Individual 1 on 1 consultations

Retrenched workers

Current workers

Total consultations

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TOTALS



Waller and Chester

Ballarat Industry Workforce Development Strategy

9.2 9.2.1

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Appendix 2 - Detailed environmental scan Manufacturing industry generally

There is a significant amount of literature surrounding the state of the manufacturing industry. Much of this is specific to the state of the industry in Western economies such as the United States, United Kingdom, New Zealand, Europe and Australia.

Much can be learnt from this literature, as the

manufacturing industry in these economies is undergoing similar structural transformation as the industry in Australia. In addition to this, there are also several key pieces detailing the current issues, challenges, opportunities facing the Australian manufacturing industry and the strategies being employed by industry to overcome and take advantage of present conditions. Unfortunately, there is no significant literature available on the condition of the Australian industry post the global financial crisis.

Notwithstanding, the economic conditions being forecast over the

foreseeable future are not so fundamentally different as to render meaningles literature produced before the GFC. Indeed, many of the issues identified by the industry are sufficiently long term in nature as to be relevant for the foreseeable future. Much of the following is taken from the AIG report State Of The Manufacturing Industry (2006). It provides a detailed analysis of the broader Australian industry, as well as a review of relevant international literature, to inform the recommendations made in that report. General condition of the industry Manufacturers that have not identified specific strategies to improve their businesses are predominately those with smaller operations (less than 25 employees). While this subset of manufacturers will include many with strong prospects, it also includes a significant proportion of businesses that are highly vulnerable in the face of rapid changes in the operating environment. For some workers, particularly those with high skill levels, the process of adjustment may be smooth. However, as the experience of earlier periods of restructuring has highlighted, many others with low skills will experience difficulty in finding suitable alternatives. The capacity of the speed with which manufacturing will be able to regenerate will: …depend critically on the extent to which manufacturing capabilities are destroyed or displaced in the current cycle and the extent to which new capabilities are created and restored both in the lead up to and during the rebalancing phase.

Concerns over the lasting impacts of capability destruction and

displacement are captured in such terms as „hollowing out‟ and „loss of critical mass‟. It is vital that, as areas of manufacturing do experience a diminution of capabilities, new capabilities are created and nurtured as a foundation of future success. (AIG, 2006, p16)

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The twin pressures of China and the currency, combined with the shortages of skilled labour, a faster pace of import competition, input price pressures and growing tax and regulatory burdens, are accelerating a deep reorientation of manufacturing strategies. This reorientation has a number of elements. Australian manufacturers are among the drivers of a new wave of globalisation. They are playing this role as they: 

Take advantage of the cost competitiveness of the emerging economies by outsourcing significant segments of activity to these centres;



Position their businesses to take advantage of surging purchasing power in the rapidly growing economies; and



Invest around the globe in new ventures

They are also creating new capabilities to apply both domestically and as part of their global engagement. Manufacturers are: 

Investing in skill creation and supplementation;



Automating production;



Investing in research and development;



Developing new products, services and processes; and



Restructuring business operations – both internally and throughout their supply chains

Exporting is now only one element in a broader global engagement. Australian manufacturers, irrespective of their size, focus and ownership, are now realising „we must be global to survive‟; selling globally remains important but so too is business engagement in the global opportunities for innovation, production and investment.

Additionally, with high levels of import

penetration, many domestic-based manufacturers are finding the need to act globally as well, looking to use more imported supply chains and invest in new technology to lower labour costs. The future of Australian manufacturing will be determined by the extent to which all manufacturers are able to maintain their fitness to win and compete in the global market place, whether this is domestic or overseas. Unquestionably, an increasing share of the future growth of Australian manufacturing incomes will be driven by the utilisation of Australian capabilities abroad. Australian engineering and design will combine with the low-cost manufacturing attributes of the emerging economies. Companies will earn more income from abroad from the investments they make to add value in rapidly growing markets (AIG, 2006, p20).

The report notes that Australian manufacturers operate in one of the most globally exposed markets in the world.

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The actions of multinational corporations impact upon related suppliers and businesses (which are also required to be globally competitive). This reflects the integrated nature of the manufacturing supply chain and has particular relevance to manufacturing supply chains like those found in Ballarat, where there are a small number of larger, internationally exposed firms, being supported by smaller, more locally focussed firms. As the report notes: The strong presence of multinational corporations is acting to draw Australian owned companies more rapidly into integrated regional and global production strategies, including the need for cost-downs, greater use of global supply chains, pressure to source low cost imports, and moving production closer to offshore markets. These developments have heighted competition and accelerated the need for change (AIG, 2006, p25).

Aussie Dollar Challenges Manufacturing Competitiveness (2004) found that the US$.70 mark was the critical point for the manufacturing sector as a whole.

At this level our most sophisticated exports

become uncompetitive on world markets and, for basic manufacturers, the exchange rate threshold is even lower. The current levels of US$.90+ are sorely testing the resilience of the local manufacturing industry. Those sectors with export earnings highly sensitive to upward movements in the AUD $ include clothing and footwear, fabricated metal products, basic metal products, construction material products, paper, printing and publishing, and miscellaneous manufacturing. Sectors with less sensitivity to movements in the value of the AUD $ include chemicals, petroleum and coal products, transport equipment and machinery equipment.

These sectors are generally involved in the production of more elaborate

manufactured products. Companies face much stronger global competition; imports in 2005 accounted for 44% of manufacturing sales compared to 27% a decade ago. The rapid increase in import penetration has been driven by falling prices. Since the start of 2002, prices of imported final products have fallen in 11 of the 14 quarters (as at 2006).

For manufacturing over the same period, declines in the price of

manufactured goods has decreased by 9%, in chemical products by 11.5%, in machinery and transport equipment by 27.5% and miscellaneous machinery by 25%. A study in 2005 (The surge in manufacturing input costs) confirmed substantial increases in a wide range of input costs over the previous year across all 12 manufacturing sectors. Manufacturers absorbed over half of these cost increases. While the majority raised selling prices, the increases lagged the rises in costs. A significant proportion of manufacturers was unable or unwilling to increase prices, and even lowered prices. There is a third wave of globalisation that has seen outsourcing move from companies in developing countries taking advantage of wage differentials to establish offshore facilities (and then export the

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finished product back home), to companies specialising in component production and final assembly in the countries or regions with the strongest comparative advantage. With the wages of a manufacturing worker in a low cost country frequently a fraction of the cost of an Australian worker, the pressure of cost reductions and falling prices for manufactured goods has heightened the drift to outsourcing, particularly when the production process involves a high labour component. In 2006, around 15% of manufacturing activity was reported as being moved offshore; this was expected to increase to around 25% by 2009. Companies not participating in off-shoring in one form or another may well struggle to remain competitive, which could contribute to further industry restructuring and downward pressure on employment levels (AIG, 2006, p29).

While the percentage of exports to China has increased around 15% per year (mainly raw materials), the imports from China have increased by an average of over 20% a year for the last decade. This increase is mostly comprised of manufactured goods. Chinaâ&#x20AC;&#x;s manufacturing sector has grown by around 12% per year since 1990, compared to around 2% for Australian manufacturing. While some firms had benefited through export opportunities and sourcing of lower cost inputs, China was seen as having an overall negative impact on activity and profits through its competitiveness in the domestic and export markets of Australian firms. 88% of firms are responding through pursuit of production efficiencies, sourcing more imports from China to use in domestic operations (32%), accelerating the adoption of new technologies (30%) or moving up or down the supply chain. Since 2001, the OECD countries have lost around 6% of market share to China, whereas Australia has lost proportionally more than three times this amount. There has been a change in the level of net foreign investment in manufacturing from a broadly positive figure (around .8% of GDP), to Australia becoming a net investor in manufacturing faculties in manufacturing offshore.) Many firms have already outsourced assembly or basic manufacturing to affiliates in lower cost economies. There are two aspects to skills shortages: 1. The ageing workforce will see outflows of skilled workers accelerate beyond the availability of new entrants; and 2. As manufacturing becomes more sophisticated and technically complex, the demand for more skilled workers increases.

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In the last decade the percentage of labourers and process workers has fallen from 38.7% to 33.7%, while the percentage of managers and professionals has jumped from 20.5% to 27.1%. The level of tradespeople has remained largely unchanged at 25.9%. There has also been a movement of people across traditional employment lines. For example, production and process workers are increasingly completing maintenance and diagnostic roles, once the domain of tradesmen. Skills shortage is forcing companies to consider a range of activities to manage the issue, such as retaining existing staff, lifting capital intensity and engaging apprentices and student placements. The growth of regulatory burden is also impacting on business costs, including but not limited to, local and state government planning regulations, industrial relations, occupational health and safety, fair trading and competition policy, governance and reporting, training and the costs of dealing with the public sector and accessing government programs. Strategies being used by the broader industry For manufacturers of low to moderately complex goods, often involving a significant labour content, there is a focus on being lean and looking to introduce new technology to automate production and drive down labour costs. Where these manufacturers also face significant import competition - and internal savings are insufficient to meet competitor prices - many are moving all or part of production offshore to take advantage of lower labour costs. Another group of businesses is focusing on developing niche products. These businesses have the potential to also build export markets and are relying on innovation, product development and skilled inputs to retain a competitive edge. Such firms often produce elaborately transformed manufacturing (ETM)s. Another group, largely dependant on the domestic market, is concentrating on delivering high quality support services to customers, focusing on customisation, timely delivery and after-care services. Staying close to their customers is the key to remaining competitive provided, of course, they can remain price competitive. These businesses are often located lower in the industry value chain and are dependent on larger organisations located close to the final customer for increased business and business development. These organisations are often miscellaneous manufacturers or steel fabricators. They play a critical role in the overall functioning of the industry, however, they are particularly at risk if larger organisations (their customers) move production offshore, increase imports or adopt strategies to lower costs, such as import replacement. For exporters, the focus appears to be switching to building brand knowledge of products as being high quality, reliable, innovative and competitive.

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The final group are globalising operations by building offshore facilities, mainly to get closer to growing markets in developing countries. The AIG report also makes specific reference to smaller firms operating in sectors relevant to Ballarat: „(The) survey data would suggest that those companies who are less active in developing strategies to respond to competition are more likely to be firms employing 25 or fewer people, and mainly located in the food and beverage, basic metal products and machinery and equipment sectors…inevitably for some of these firms, the failure to pursue these strategies over the next 3 years may well lead to them becoming uncompetitive” (AIG, 2006, p44).

The AIG report highlights the percentage of firms very likely to adopt a particular strategy. These are summarised as follows: 

Increase % of sales from new products (19.5%);



Using imported materials (17.5%);



Outsourcing to offshore locations (16.2%);



Skills acquisition (13%);



Spending on capital equipment (12.5%); and



Increase R&D spending (12%)

The literature clearly articulates a focus towards increasing new products, customer and market focus, innovation and cost reduction, as key strategies for longer term sustainability.

Failure to adopt a

strategic approach to external competitive forces increases the risk of these organisations becoming unsustainable over the medium term. Clearly, organisations that produce technology, as well as goods and services, will be better placed than those not utilising or developing technology. Moreover, the importance of acquiring skills to support the overall strategy is highlighted, whether the organisation is focussing on market based, or cost reduction based strategies. How industry sees its future The AIG report focussed on the heightened perceptions industry participants had about industry‟s future. The report focussed on attitudes to the long term future of the industry rather than a response to a cyclical downturn (p36 – p38). This is particularly relevant to this project, given the impact of the GFC and the recent economic data indicating that the Australian economy is past this cyclical downturn. Companies were three times more likely to be concerned about the manufacturing prospects than about the Australian economy – 35% of companies were very concerned about manufacturing prospects, compared to 11% for the economy.

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The three sectors with the highest percentage of companies very concerned about the prospects for their sector over the next three years were those most exposed to global competition, namely textiles, clothing and footwear and transport equipment. Large firms were the least likely to express concerns about future prospects (22%), compared to medium sized (30%) and smaller firms (26%). This is relevant to the Ballarat industry, given the absence of any genuine large manufacturing firm(s). The largest sources of concern being identified as high risk were: 

Competition from low cost countries (61%);



Competition from domestic suppliers (26%);



Size of domestic market (49%); and



Skills shortages (46%).

The sectors with the least concern about import competition, in contrast, tended to be those largely supplied by domestic producers, namely food and beverages, construction materials, wood, wood products and furniture, and paper, printing and publishing. The impact on family business was particularly notable, as the skills passed on from generation to generation were lost to overseas competitors. This underpins a concern about the loss of critical mass in the sector. With around 96% of all business in Australia being small business, and around 60% of these being family businesses (Hockey, 2003), the exposure the Ballarat economy has to family business closure is apparent. This issue has been further discussed at 9.2.5 below. The loss of critical mass is an issue that must be overcome if industries and associated supply chains in decline are to remain sustainable. Loss of critical mass or scale means that not only will the sector continue to decline as a share of the economy, but the sector also loses capabilities built over a long period of time. The result is a smaller pool of skills, reduced innovative capabilities, weaker domestic supply chains and poor technology transfer (p39). It‟s debatable whether the local industry has reached the point where critical mass has been lost. However, the decline in the size of the industry and the high portion of simply transformed manufacturers (STMs), would indicate that the risk of critical mass being lost is real and should be of concern to stakeholders. In general terms, these results are consistent with the results of the surveying and consultations with the Ballarat sector; if anything, the local industry is more pessimistic than the broader industry. This could be due to the AIG survey being conducted prior to the GFC, whereas the Ballarat survey was completed at the tail end of this period.

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Role of Government and areas for Government assistance

The literature contains some useful insights into how the industry views the role of Government and the provision of Government assistance. First, Government should focus on improving the macro–economic competitiveness, such as export, R&D, reducing regulatory burdens, promoting skills development, building infrastructure, tax reform, environmental sustainability and enhancing competitive business practices. This should be in conjunction with a clear message about the importance of manufacturing to the future development of the nation. Governments should also play a more proactive role through procurement policies, particularly in regard to the development and commercialisation of new technology. As the AIG report (2008) notes: the return to the taxpayers needed to be seen over the medium term, and include benefits such as building stronger supply chains, the value of domestic ongoing support to contracts, and other potential spin offs from the development of innovation(p52).

The AIG survey noted the following areas where Government could play a role: 1. Most important – depreciation and tax arrangements (+50% of respondents); 2. Middle importance – innovation, and research and development, export assistance and direct support for new investment and technologies (+25% respondents); and 3. Lowest importance – introduce best practice efficiencies (+20% of respondents). small manufacturers showed the least support for these initiatives, with such initiatives being not well supported in the past and companies finding it difficult to find extra resources to devote to this area. Yet it was these companies who could well benefit most from taking part in business improvement initiatives (AIG, 2008, p53).

In relation to industry programs and grants, it is noted that industry must own their solutions, yet there is still a large portion of the industry that has not recognised the need to be globally competitive. There was also an uneven awareness of relevant programs across size and state. Business becomes frustrated when an appropriate context for a program is not identified and the focus is on program objectives, not on business outcomes. The cost of accessing grants / programs can be seen as too costly; many companies stated they were reluctant to apply for grants because of the time demanded to apply, the costs involved and the uncertainty of funding. In relation to skills development, the need to increase the focus of the training system from the entry level to up-skilling and re-skilling of existing workers is noted as being important. The increased focus on the importance of existing workers appears to be driven by the following factors: 

Decreasing pool of younger entrants into skilled occupations;



Perceived reductions in quality of the pool of new entrants into skilled occupations;

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

Difficulties in recruiting skilled workers into vacancies;



Increased enterprise and technology specific skill requirements; and



Recognition of the importance of investing in existing workers.

The increased importance of „soft‟ or employability skills has also continued to emerge as being of major importance.

Indeed, many employers acknowledged that beyond the generic skills base and

„standard‟ technical skills, the skills required in today workplace are specific to either the enterprise or the technology. This makes the workplace the most critical context for skills development – an ongoing challenge for the formal training system (AIG, 2008, p71).

This clearly draws the link between skills

development, innovation, and long term sustainability of the industry. In relation to R&D and its importance to national prosperity, it is noted by the AIG that (The) importance of business R&D expenditure to economic growth cannot be underestimated. The OECD in its study into The Sources of Economic Growth in OECD Countries has estimated that a persistent 0.1% increase in business expenditure on R&D as a percentage of GDP raises real output per capita by 1.2%....importantly the study also found no statistically significant effect of public R&D spending on growth, which in Australia‟s and NZ‟s case is where the majority of expenditure resides (p81).

Should Government wish to boost R&D, there are four recognised methods to increase R&D expenditures: 1. Getting more firms into R&D; 2. Promoting higher R&D intensity amongst firms already engaged in R&D; 3. Encouraging overseas companies with bases in Australia to allow R&D to remain in Australia; and 4. Encourage greater collaboration between industry and public R&D institutions. 9.2.3

Workforce development

The issue of workforce development has gained in significance over recent times as skills shortages and technological and demographic change mean that now, more than ever, many of the skills required by Australian business need to stem from the existing workforce (AIG, 2008, page vi). The area of workforce development does not just reflect skills development of existing workforces. A new approach aimed at recognising the need to take a broader approach to workforce development, rather than just skills development, has been recognised. The workforce skills development approach covers all forms of leadership and skills acquisition. This approach does not limit the work to formal training, or alternatively, to focus on workforce development; this is a much broader concept which includes a wide range of human resource management issues well beyond skilling (AIG, 2008, page vi). An extensive survey conducted by the AIG in 2008 found the following:

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The retraining of existing staff is considered the most effective method for meeting current skill needs (61.2%). This is twice as high as the number who favour taking on and training unskilled staff, the second most popular method (30.4%);



Manufacturing firms are the strongest proponents of retaining existing staff (83.4%) and smaller firms are more likely to look within their organisation for solutions to meet skills shortages;



76.7% of respondents confirmed using informal in-house training sessions to introduce new skills to their existing workforce;



Formal training, both external and in-house, is also popular for up-skilling. 61% externally and 54.7% use formal training to introduce new skills. Mentoring (44.8%) and vendor training (24.8%) are also used; and



Service sector firms use external formal training, formal in-house training, mentoring, and vendor training more than manufacturing and construction companies.

While informal in-house training is the up-skilling method most used by Australian firms, formal in-house training is the most highly regarded. Nearly 38.3% of CEOs‟ judge formal training to be „very successful‟ in introducing new skills to existing employees, despite it being the third most adopted up-skilling method. This finding suggests that costs, as well as access to and availability of formal in-house training, may be factors restricting current up-skilling efforts. Mentoring is also highly regarded as an up-skilling method, with 35.9% identifying it as very successful. This is despite up-skilling method being the forth most adopted by firms (AIG, 2008, page vii).

Skilling the existing workforce is increasingly important for a range of reasons including: 

The consequence of the trend of an ageing population and the resultant need to retain existing workers;



The lack of post school skills and qualifications acquisition by many existing workers;



The rapidly changing nature of skills required in the modern workforce; and



The need for a highly skilled and flexible workforce to help ensure that enterprises become and remain competitive in an increasingly competitive global market.

Informal and non-formal approaches to learning are increasingly important as learners age, but these forms of learning are not well recognised in current policy settings (AIG, 2008, page vii). Adopting recognition of informal learning would reflect the broader definition of workforce development and improve outcomes from these activities as their effectiveness was subjected to increased management scrutinies. In relation to workforce skills development participation, it is noted that:

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There are many factors which influence patterns of participation in workforce skills development. Participation in all forms of workforce learning and training declines with age. Participation in work based learning entrenches rather than alleviates differences in skill levels because those with the highest levels of skills receive more skills training than those with low skill levels.

(This) is even more pronounced for workers

whose primary language is not English, people with low literacy and numeracy levels, unemployed people and people in casual and part time employment (AIG, 2008, page vii).

Other factors which influence the general level of participation in training include the: 

Skill levels required for particular occupations and the nature of the industry;



Size of the organisation as larger organisations are far more likely to invest in skills development than small organisations;



Ownership of the organisation as public sector ownership is more likely to invest than private sector organisations; and



Level of union membership as unionised workplaces are more likely to have high levels of investment in skills development.

Based on these criteria, Ballarat is likely to have a relatively low training base, as it has a high number of privately held companies and a low number of large firms. There is also evidence of reluctance to participate in skills development by employees where they feel: 

They already have the skills to do the job;



Competing pressures from work and family obligations; and



They do not see a likely return on their time and money.

Finally, the research report identified that workplaces are becoming increasingly important sites of learning, using their own resources or by working in partnership with education and training providers, workplace trainers, facilitators and through change management and continuous improvement processes (AIG, 2008, page vii). Key recommendations to come from the AIG 2008 report and consultations include: 

Skilling the workforce is a priority;



The definition of workforce needs to be redefined to capture casual and part-time employees and those seeking to enter / re-enter the workforce;



Approaches to training are broad and need to cater to the specific needs of the enterprises;



Pathways to high level qualifications and skills levels must be created while supporting the retraining of those in the workforce with low skills;

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The barriers to training and up-skilling the existing workforce could be succinctly summed up as „cost, time and interest‟; and



Skilling is considered a shared responsibility between government, industry and individual.

Between different enterprises there are many challenges, including: 

The range of enterprise attitudes to training;



The difficulty of finding time to concentrate on training when operational problems arise;



The importance of management support for skilling;



The cost of providing compliance training for workers; and



The problems faced when training cannot keep pace with the latest innovations and technologies.

The development of the skills of the existing workforce is a major priority for Australian businesses. The challenges of delivering effective workforce development were greater with small and medium sized enterprises (particularly those facing significant competitive pressures requiring cost reductions and productivity improvements). Importantly, it is noted that companies demonstrate a strong willingness to invest in all levels of workforce skills development where there is a clear link between skills development and broader enterprise strategic goals (AIG, 2008, page viii). Workforce skills development approach is most effective when certain preconditions are met, including: 

A clear linkage between workforce skills development and the broader enterprise business goals;



Implementation of workforce skills development initiatives as part of the overall business development processes of the company;



Flowing from the above, a clear identification of skills needs by the enterprise;



Support for the approach by senior management, including senior management beyond training and human resource departments within larger organisations;



Proper resourcing of workforce skills development;



A preparedness by company employees to undertake the training;



The adequacy of employees‟ English language literacy skills;



A capacity by external and internal education training providers to understand the broader business needs and drivers of the enterprise, and the skills needs that flows from these drivers; and

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A capacity to provide skills recognition and training services that meet these needs in a way which has least impact on cost and productivity (AIG, 2008, page ix).

To achieve the preconditions, enterprises need access to high quality information and advisory services - this resulted in the most successful outcomes â&#x20AC;&#x201C; including effective identification and analysis of current and future skilling needs and information and advice about potential skilling providers. This process was more resource-intensive than anticipated and needs often changed. Workforce literacy and numeracy is an issue, with a large portion of the workforce not having adequate literacy, numeracy and problem solving skills to operate effectively in the workplace (AIG, 2008, page ix). Use of RTOs depended on the ability to demonstrate a capacity to understand and meet the individual requirements of the business. In relation to the use of RTOs and the workforce development process more generally, it was noted that: (the) identification of required skills, skills audits, skills assessment and recognition emerged as very important initial steps in workforce skills development. Often enterprises needed assistance to come to terms with these issues and external advisory services played a very important role in this regard (AIG, 2008, page ix).

The older workforce issue of knowledge transferring from retiring and experienced staff to other areas of the workforce is a priority issue that is gaining importance. However, strategies to achieve this are not yet evident on a systematic basis (AIG, 2008, page ix). The AIG study also highlights the continuing importance of industry competency standards as benchmarks for skills assessment, recognition of current competence, quality assurance and consistency. 9.2.4

Skills for innovation

The AIG report Skilling The Existing Workforce addresses the issue of skills for innovation at pp 4 -11. When innovation is a foundation for organisational strategy, it follows that innovative skills and capabilities of all employees in a business need to be developed and maintained. Skills shortages, the use (to some extent) of ineffective up-skilling processes, and barriers to skills development of existing staff, will restrict the ability of Australian companies to adopt and implement innovation strategies and, thereby, place the future competitiveness of companies at risk. There is a clear link between utilising innovation related strategies to develop businesses and the underlying skills of the workforce. This issue is further entrenched due to skill shortages, with 68% of Australian companies identified as suffering from such shortages and, of these, some 60.2% (that is 41% of total companies) finding this issue was restricting innovation.

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Companies from all sectors regardless of size indicated experiencing difficulties in securing skills of technicians and trade workers (62.2%) and the lack of corresponding skills in science, engineering and technology, which affects innovation capacity. Nearly 66% of companies stated that they used up-skilling as an innovation strategy. However, across the board, investment on up-skilling equated to just 0.46% of turnover, with a moderate increase expected from 2007 and 2008 (to 0.54%). Priority occupations for up-skilling were technicians and trades (27%), labourers and process workers (22.6%), apprentices and trainees (15.3%) and managers (14.4%). Whilst there may be less of a skills set shortage within management, the relatively high need to improve the skills of this group is more of a concern. Management skills are seen as vital in extracting value from ideas, developing new products, processes and business models, and implementing knowledge management strategies. Non-technical (soft skills) are increasingly seen as foundations for innovation and remaining competitive. Companies rated problem solving (31.7%) as the most important soft skills necessary to foster innovation. Australian companies felt they were lacking in soft skills, including communication (53.5%), adapting to change (47.2%), team work (33.3%) and problem solving skills (31.5%). 9.2.5

Succession related issues

Although not specifically identified in the brief, preliminary results of the survey and consultations highlighted that family manufacturing businesses had issues that were quite specific to this class of organisation. Within the broader context of the manufacturing industry and the Ballarat regionâ&#x20AC;&#x;s manufacturing industry specifically, it was deemed necessary to highlight to readers the potential significance of this sector and the issues faced by it. Of particular relevance was the potential impact of family business closures on the broader Ballarat economy. The discussion surrounding family business is only to inform and identify the likely range of economic and community impacts from the closure of family businesses, recognising that such closures can be both positive and negative. A report written by the Australian Institute for Social Research (2005) considered this issue from the South Australian perspective. Its focus was to consider the specific impacts of family business closures, not reasons for the closure. It was written in the context of family business capital depletion and the acceleration of the age profile of family businesses in line with the ageing of the population. The key findings that have relevance to this project include: ď&#x201A;§

The report highlights that the average age of the family business owner is 56 and nearly half intend to sell within 10 years (by 2015);

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There is the risk that a significant number of businesses being on the market simultaneously will reduce returns to the owners;



Failure of family businesses to survive generational change can have economic losses that extend to the broader community, however, some more personal type benefits can accrue under failure situations, such as improvements in lifestyle;



Losses included entrepreneurial capital and entrepreneurial opportunity, with any returns often deployed on less productive assets. Losses within a region were also noted, such as reduced business to customers and suppliers; and



Impacts of such closures are likely to be felt in areas such as employment, suppliers, psychological, population, taxation, community and housing and real estate.

Many of these issues will be relevant to the Ballarat economy and specifically to the manufacturing sector, as the changes being seen in the manufacturing sector hasten many of these transitional issues.

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Appendix 3 - Copy of survey and survey results Q1 - Which of the following best describes your industry

Q2 - Which best describes the performance of your industry sector and

Unsure

business over the past 3 years ?

M iscellaneous manuf act uring C25 – Furnit ure and ot her manuf act uring

50%

C24 – M achinery and equipment manuf act uring eg: scient if ic, elect ronic, elect rical, appliance, pumps, heat ing/ cooling, specialised

45%

Industry

C23 – Transport equipment manuf act uring eg: mot or vehicles, mot or vehicle part s, t ransport equipment

40%

Business

C22 – Fabricat ed met al product manuf act uring eg: iron and st eel f orging, st ruct ural met al, sheet met al

35%

C21 – Primary met al and met al product manuf act uring eg: basic f errous and non-f errous

30%

C20 – Non-met allic mineral product manuf act uring eg: glass, ceramics, cement and concret e product s C19 – Polymer product and rubber product manuf act uring eg: polymers, basic rubber product s

25%

C18 – Basic chemical and chemical product manuf act uring eg: chemicals, basic polymers, f ert ilisers, medicinal

20%

C17 – Pet roleum and coal product manuf act uring

15%

C16 – Print ing

10%

C15 – Pulp, paper and convert ed paper product manuf act uring

C14 – Wood product manuf act uring eg: sawmilling, t imber dressing, wood product s

C13 – Text ile, leat her, clot hing and f oot wear manuf act uring

Rapid

C12 – Beverage and t obacco product manuf act uring

Growth

Stayed the

growth

C11 – Food product manuf act uring

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Decline

Rapid

same

Unsure

decline

35.0%

Q3(a) - What do you believe have been the enablers and / barriers to growth in your industry sector over the past 3

Q3 (b) - What do you believe have been the enablers and / barriers to growth in your business over the past 3 years

years ?

Business enabler

Business barrier

No impact on industry

No impact on business

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Management skills

Workforce

Performance of the economy

Increased competition

Emerging economies eg: India

Government stimulus program

Local Government industry policy

State Government industry policy

policy

Federal Government industry

New markets

Accessing finance

Management skills

Workforce

Performance of the economy

Increased competition

Emerging economies eg: India

Government stimulus program

Local Government industry policy

State Government industry policy

policy

Federal Government industry

New markets

Accessing finance

Global financial crisis

Cost inputs

Exchange rates

Interest rates

Global financial crisis

Industry barrier

Cost inputs

Industry enabler

Exchange rates

Interest rates

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Q4 - Please decribe where your business fits in the business life cycle? Unsure

Introductory

Q5 - Where do you source your 3 main inputs into your processes?

60.0%

Decline

50.0%

40.0% Growth 44%

30.0%

20.0%

10.0% M aturity

0.0%

40%

Local

Regional

State

National

Ov erseas

Unsure

Q7 - What do you believe to be the top 3 compeititve advantages of your

Q6 - Please describe your three main customer/client type (eg other manufacturers, wholesale, construction) and where they are located?

industry and your business? 40

70.0%

60.0%

50.0%

40.0%

20 15

30.0%

20.0%

10.0%

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Unsure

Workforce

Reputation

levels

Service

Ov erseas

Delivery

National

capabilities

State

Quality

Regional

supply

Local

Security of

0.0%

Innovation

Cost

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Q9 - What is the occupation at your workplace with the largest number of

Q8 - How many employees does your organisation current employ ?

employees (select 1 only) ? General managers, 0.0%

Labo ur hire, 171

Independent co ntract emplo yees (no n payro ll), 102

P ro ductio n / o peratio ns managers, 2.1%

M iscellaneo us labo urers, 2.1%

Other emplo yees, 24

Engineers, 4.2% Sales representatives, 2.1%

A dministrative / clerical emplo yees, 4.2%

Fixed-term co ntract emplo yees, 4

P ackers / assemblers, 4.2%

Technicians, 8.3%

Sto res / wareho use perso ns, 0.0%

Casual emplo yees, 102

P ro cess wo rkers, 25.0%

P ermanent part time, 290 Trade wo rkers, 31.3%

P ermanent full time, 2,881

M achinery o perato rs, 12.5%

To o lmakers, 4.2%

Q11 - What is the average age of your workforce ?

Q10 - How many of youe employees fall into the following groups ? 40.0%

1,600 1,400

35.0%

1,200 1,000

30.0%

800 600

25.0%

400 200

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15.0% 10.0% 5.0%

60+

55-60

51-55

46-50

41-45

36-40

31-35

26-30

21-25

0.0%

16-20

Indigenous Australians

People with a disability

local area

Employees from outside the

Female workers

over

Workers aged 45 years and

Workers aged 26 to 44 years

years

Workers aged less than 25

speaking background

People from a non English

20.0%

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Q12 - Do you think your business will increase or decrease the total

Q13 - What is the main occupation in which you think numbers will

number of employees in the next 3 - 5 years ?

increase / decrease (select 1 only)?

Decrease by 11to 25, 6.3%

Decrease by more than 25, 0.0%

Unsure, 6.3%

Increase by more than 25, 8.3%

Administrative / clerical employees, 2.1%

Increase by 11to 25, 4.2% Decrease by 6 to 10, 0.0%

Packers / assemblers, 4.2%

Stay the same, 14.6% General managers, 0.0% Production / operations managers, 2.1%

Stores / warehouse persons, 0.0%

Increase by 6 to 10, 12.5% Decrease up to 5, 16.7%

Miscellaneous labourers, 2.1%

Engineers, 2.1% Process workers, 25.0%

Sales representatives, 4.2%

Technicians, 6.3%

Increase up to 5, 27.1% Stay the same , 18.8%

Machinery operators, 8.3%

Trade workers, 29.2%

Toolmakers, 0.0%

Q15 - Does your business plan include workforce planning covering

Q14 - Does your business have a business plan ?

current and future employee requirements, succession planning etc ? Informal business plan, 14.6%

Unsure, 5.4%

No, 21.6%

No , 22.9% Yes, 73.0%

Yes, 62.5%

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Q16 - Which of the following does your organisation have in place ?

Q17 - What do you believe are the 3 main factors that motivate your employees ?

70.0%

Q18 - Over the past 2 years, have you attempted to recruit any employees ? If yes,

Q19 - What was the main difficulty you have had in finding the appropriate

have you encountered any difficulties finding employees ?

employees (select 1 only) ?

90% 80%

Yes

70%

Level of experience, 6.5%

Level of qualifications / training, 4.3%

40%

Level of basic employability skills, 8.7%

30%

Unwilling to work required hours, 2.2%

Have not had difficulty recruiting, 43.5%

20% 10%

finding

May 2010

employees

Difficulties

Recruited

employees

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Number of suitable applicants, 23.9%

Number of applicants, 6.5%

has high values

Working at a company that

Difficulty informing people of the vacancy, 0.0% Seeking higher remuneration, 0.0%

60% 50%

Limited interest in the job, 4.3%

Good work life balance

done

Full appreciation of work

Feeling of being in on things

organisation

Promotions and growth in the

Unsure

None of the above

procedures

Human resource policies and

Exit interviews

Performance reviews

Mentoring

Position descriptions

Succession planning

Training needs analysis

Skills gap analysis

plans

Individual employee training

0.0%

Good wages

10.0%

Tactful discipline

20.0%

Good working conditions

30.0%

Interesting work

40.0%

Personal loyalty to employees

50.0%

Supportive workplace

60.0%

Job security

50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0%

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May 2010 Issues with the service provider

0.0%

Unwilling to commit for 3-4 years

0.0%

programs

10.0%

Changes to government

20.0%

10.0%

options

20.0%

Lower remuneration than other

30.0%

Type of work not appealing

40.0%

30.0%

Industry not appealing

40.0%

vacancy

50.0%

Difficulty informing them of the

50.0%

Unwilling to work required hours

60.0%

labourers

clerical Miscellaneous

assemblers Administrative /

warehouse Packers /

Stores /

Process workers

operators

Machinery

Toolmakers

Trade workers

Technicians

representatives

Sales

Engineers

operations

qualifications or training ?

Level of literacy and numeracy

60.0%

Number of suitable applicants

any, diffculties did you experience (contractors = non payroll) ?

Number of applicants

Q23 - If you have sought to employ contractors in the last 2 years what, if

managers Production /

No, 45.7%

No difficulties

Yes, 50.0%

filling postions General

No difficulties in

Q20 - Have you experienced any difficulty finding employees with relevant

apprentices or trainees

Unsure, 4.3%

Did not seek to employ any

vacancy

Difficulty informing people of the

Work ready status

Seeking higher remuneration

Unwilling to work required hours

Level of experience

Level of qualifications / training

Number of suitable applicants

Number of applicants

No difficulties

contractors

Did not seek to employ

Ballarat Industry Workforce Development Strategy Page 100 of 118

Q21 - Have you experienced greater difficulty filling positions in any

40.0% particular occupations ?

35.0%

30.0%

25.0%

20.0%

15.0%

10.0% 5.0%

0.0%

Q24 - If you have sought to employ apprectices or trainees in the last 2 years what, if any, diffculties did you experience ?

Personal

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May 2010

10.0%

0.0%

above

None of the

Labour hire

Head hunting

promotion

Internal

referrals

Word of mouth /

newspaper

Local

Internet

30.0%

10.0%

Unsure

No issues

Climate

Arts and culture

Cultural diversity

20.0%

Community safety

30.0%

State

Traditional industries

40.0%

Location

50.0%

Services and facilities

Q27 - What do you think are the main issues for the manufacturing industry

Government

0.0%

Water

20.0%

job network

Q25 - If you have sought to employ non local employees in the last 2 years

Commonwealth

40.0%

Private

60.0%

recruitment

what, if any, diffculties did you experience ? (non local = need to relocate

Marketing of Ballarat

in attracting workers ?

area

Limited knowledge of the local

area

Level of services in the local

local area

Unwilling to relocate to the

vacancy

Difficulty informing people of the

to the area

No incentives to attract them

Seeking higher remuneration

to Ballarat)

Image / perception of Ballarat

No issues

industry security

Job security /

training

development /

Unwilling to work required hours

Level of qualifications / training

Number of suitable applicants

relocate

Spouse / partner not willing to

Number of applicants

No difficulties

local employees

Did not seek to employ non-

80.0%

partners

60.0%

Programs for

opportunities

Career

manufacturing

Image of

Ballarat Industry Workforce Development Strategy Page 101 of 118

Q26 - Which of the following methods do yo use to recruit or find employees ? (please select 3 only). Of these, which is the main recruitment method used (select 1 only)

70.0%

50.0% 25

Use

Main

10 5

Q28 - What do you think are the main issues for attracting workers to Ballarat

40.0% ?

35.0%

30.0%

25.0%

20.0%

15.0%

10.0% 5.0%

0.0%

Ballarat Industry Workforce Development Strategy

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Q31 - On average, how long do permanent employees from your organisational group remain with your organisation ? < 6 months, 0.0%

> 1year but < 2 years, 0.0%

> 6 months but < 1year, 0.0%

> 2 years but < 5 years, 17.1% Unsure, 7.3%

> 10 years or longer, 41.5%

> 5 years but < 10 years, 34.1%

Q32 - What key problems does employee turnover present to your business?

Q33 - Is turnover more a problem in any particular occuptational group ?

60.0%

45.0% 40.0% 35.0%

50.0%

30.0% 25.0%

40.0%

20.0% 15.0%

30.0%

10.0% 5.0%

20.0%

May 2010

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Miscellaneous labourers

employees

Administrative / clerical

Packers / assemblers

Stores / warehouse persons

Process workers

Machinery operators

Toolmakers

Trade workers

Technicians

Sales representatives

Engineers

managers

Production / operations

issue

Employee

turnover not an

Decreased

productivity

Loss of business

Need to retrain

knowledge

Loss of

corporate

Increased costs

Loss of skills

0.0%

General managers

10.0%

Employee turnover not an issue

0.0%

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May 2010 other sectors

mobility Competition from

Increase in workforce

0.0%

Level of job security

5.0%

skills/training

10.0%

employees Not able to use

20.0%

workload Problems with other

25.0%

Heavy/unreasonable

30.0%

Too much stress

35.0%

hours

45.0%

enough Seeking better work

employees in your business ?

Work not challenging

Q37 - What, if any, difficulties have you encountered in retaining non-local

Remuneration is low

Unsure

No difficulties

Indigenous Australians

People with a disability

area

Employees from outside the local

Female workers

Male workers

Workers aged 45 years and over

0.0%

Workers aged 26 to 44 years

10.0%

career

20.0%

poor quality No opportunity for

30.0%

Workers aged less than 25 years

Q35 - What do you believe are the main reasons for rmployee choosing to

training Training available is

40.0%

speaking background

50.0%

Level of available

60.0%

People from a non English

Unsure

Illness / sickness / injury

Physical work

Physical environment

Networking

Culture

Partner / family reasons

Personal reasons

Retirement

Unable to find child care

Transport problems

Level of job security

Unable to use their skills / training

Problems with other employees

Heavy / unreasonable workload

Seeking better work hours

Found the work boring

Seeking more challenging role

Seeking better remuneration

Seeking career advancement

leave your organisation (select 3 only) ?

No issues

Level of internal support systems

Difficulty adjusting to the work

Language and cultural issues

Conflict between employees

Family

Visa issues

Community networks

Level of / inappropriate public

Level of public services

Level of appropriate housing

Unwilling to travel to the area

Level of training and education

Family settlement services /

Language or cultural barriers

Too expensive

Difficulty adjusting to the work

Level of supportive services

Level of appropriate training

Level of local knowledge

Donâ&#x20AC;&#x;t want to live in local area

No difficulties

Don't employ non-local

Ballarat Industry Workforce Development Strategy Page 103 of 118

Q36 - Which, if any, of the following groups are you having difficulty

40.0% retaining (select up to 3) ?

35.0%

30.0%

25.0%

20.0%

15.0%

10.0% 5.0%

0.0%

Q38 - Do you think there are any workforce retention issues specific to the

35.0% manufacturing industry ?

40.0%

30.0%

25.0%

15.0% 20.0%

15.0%

10.0% 5.0%

0.0%

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May 2010

70.0%

50.0%

30.0%

10.0%

University

90.0%

training

Q42 - Which of the following types of training have been accessed by your

Middle

0.0%

management

No suitable courses

Unaware of courses

Lack of access to online courses

10.0%

Lack of access to provider

5.0%

or traineeships

20.0%

10.0%

Apprenticeships

15.0%

Employees unwilling to attend

20.0%

skills

40.0%

Positions do not require specialist

25.0%

Technical skills

30.0%

Cannot afford loss of productivity

50.0%

mentoring

Ballarat region ?

Coaching and

35.0%

Cost of training

40.0%

training in the past 2 years

45.0%

level training

No issues

50.0%

Not applicable, have had

self

partner Level of career opportunities for

Career / work opportunities for

Level of public transport

options

Level of appropriate housing

Level child care services

Unwilling to travel to the area

services

support Level of training and education

Family settlement service /

Language or cultural issues

Cost of living too high

culture

Difficulty adjusting to the work

Level of support services

Level of local knowledge

area

Q39 - Do you think there are any workforce retention issues specific to the

introductory

Basic /

Unsure

Online

Off site professional development

provided)

Off site/skills based (TAFE/RTO

provided)

On site/skills based (TAFE/RTO

On the job/skills based training

Donâ&#x20AC;&#x;t want to stay living in the

Ballarat Industry Workforce Development Strategy Page 104 of 118

Q41 - If your employees have not been engaged in any formal training in the

70.0% past 2 years, what have been the reasons why ?

60.0%

30.0%

0.0%

organisation ? Q43 - What areas of training have been accessed by your employees ?

80.0% 70.0%

60.0% 60.0%

40.0% 50.0%

20.0% 40.0%

0.0% 30.0%

20.0%

10.0% 0.0%

Ballarat Industry Workforce Development Strategy

Page 105 of 118

Q44 - What types of assistance do you make avaliable to employees to access training ? 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0%

None provided

time off

Study leave or

Financial

assistance

0.0%

Q47 - Is there a gap in the training avaliable to your industry or in specific occupations in the region ?

Yes, 35.0% Unsure, 27.5%

No, 37.5%

May 2010

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May 2010

Management response

Unsure

Rapid decline

Decline

same

Staying the

30.0%

Workforce

Performance of the economy

Increased competition

Emerging economies

Government stimulus program

Local Government industry policy

State Government industry policy

Industry enabler Industry barrier No impact on industry

policy

the next 3 - 5 years ?

Federal Government industry

New markets

Q51(a) - How do you think the following factors will affect your industry over

Accessing finance

0.0%

Growth

15.0%

Cost inputs

25.0%

Exchange rates

Rapid growth

Q49 - What training, if nay, would you like to see made avaliable ?

Interest rates

Coaching and mentoring

Apprenticeships or traineeships

University

Technical skills

Middle management training

Basic / introductory level training

Executive management training

No need for more training

35.0%

Skills shortage

Management response

Workforce

Performance of the economy

Increased competition

Emerging economies

Government stimulus program

Local Government industry policy

State Government industry policy

policy

Federal Government industry

New markets

Accessing finance

Cost inputs

Exchange rates

Interest rates

Skills shortage

Ballarat Industry Workforce Development Strategy Page 106 of 118

Q50 - What best describes the likely performance of your industry sector and

25 business over the next 3 - 5 years ?

Industry

20.0%

Busness

10.0% 15

5.0%

Q51(b) - How do you think the following factors will affect your industry over

30 the next 3 - 5 years ? Business enabler Business barrier No impact of business

10 5

Ballarat Industry Workforce Development Strategy

May 2010

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Ballarat Industry Workforce Development Strategy

May 2010

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Ballarat Industry Workforce Development Strategy

Page 109 of 118

Q57 - Who do you believe has the key influence / mandate to respond to these issues ? 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0%

May 2010

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No one

business

Individual

Industry

Local

Government

State

Government

Federal

Government

0.0%

Ballarat Industry Workforce Development Strategy

May 2010

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Ballarat Industry Workforce Development Strategy

May 2010

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Ballarat Industry Workforce Development Strategy

9.4

Page 112 of 118

Appendix 4 â&#x20AC;&#x201C; Detailed analysis of increased local expenditure by local manufacturing industry Level of increased local expenditure Dec 2008 â&#x20AC;&#x201C; Jan 2010 Food manufacturing

Transport equipment

Other manufacturing

Total

($m)

Accommodation, cafes & restaurants

5.2

2.6

2.5

10.2

Agriculture, hunting & trapping

5.1

0.0

(0.3)

4.7

Basic metals & products

7.9

19.4

(4.1)

23.3

Beverage, malt, tobacco manufacturing

0.0

0.8

Chemical & chemical products

1.7

0.0

(7.3)

(5.6)

Clothing, footwear & leather products

0.0

1.8

Communication services

2.7

3.0

2.6

8.3

Construction

3.5

0.0

2.9

6.4

Cultural & recreational services

2.4

2.6

1.0

6.1

Education

1.3

0.9

0.3

2.5

Electricity, gas & water supply

5.1

3.3

2.0

10.4

Fabricated metal products

0.0

3.4

1.0

4.4

Finance & insurance

2.3

1.5

6.1

Forestry & fishing

0.0

0.4

Government administration & defence

0.0

2.2

Health & community services

0.0

0.9

Meat & dairy products

1.2

0.0

(0.5)

0.8

Mining

0.0

6.4

Miscellaneous manufacturing

0.0

1.5

Non-metal mineral products

2.1

0.0

5.9

8.0

Other food manufacturing Other machinery & equipment

0.0 0.0

0.0 4.6

38.7 (1.8)

38.7 2.9

Ownership of dwellings Paper, printing & publishing

0.0 2.7

0.0 0.9

0.0 (0.6)

0.0 3.0

Personal & other services

0.0

0.8

Petroleum & coal products

0.0

Property & business services

26.7

42.0

14.8

83.5

Repairs

2.6

0.0

0.2

2.8

Retail trade

12.5

0.0

0.3

12.8

Rubber & plastic products

2.5

3.9

(2.4)

4.0

Textiles

0.0

(5.4)

Transport & storage

0.0

34.0

Transport machinery & equipment

25.3

4.9

(51.2)

(21.0)

Wholesale trade

24.7

0.0

(4.9)

19.8

Wood & wood products

0.0

2.3

137.5

93.8

46.4

277.6

Sector

Total

March 2010

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Ballarat Industry Workforce Development Strategy

9.5

Page 113 of 118

Appendix 5 - Summary of relevant industry assistance programs

Who DIIRD

DEEWR

Document / Program Back to Work

Job Services Australia â&#x20AC;&#x201C; ongoing.

Intent

Program Investment

The Back to Work support service assists workers and employers faced with retrenchment to make an informed decision about their future. The service provides information relating to rights, responsibilities, avenues for re-employment and potential up skilling opportunities Aims to increase employment participation, play a greater role in addressing skills in demand and help individual job seekers, particularly disadvantaged job seekers, find sustainable employment

Local Provider/s

Example Outcomes

Dependent on Program (see details below)

*Skill Up (see below)

*Centrelink

*Skills Stores (see below)

Examples for Ballarat

*Retrenched Workers Training Entitlement (see below)

*Family Assistance Office

$4.9 billion of which $298.5 million allocated to redundant worker assistance

*Job Services Australia providers (see below)

*Victoriaworks is a range of workforce participation programs designed to help Victorians who face challenges in accessing employment

* BEST Community Development

Identify skills and match job seekers with employers

* CentaBrace * CVGT (AusNac) * Integrated Employment & Training Services * MEGT * Tracey The Placement People * VECCI * Western District Employment Access Inc

DIIRD

Skill Up â&#x20AC;&#x201C; ongoing. (Part of the Back to Work Program)

Retrain workers who are retrenched as a result of a major industry downturn or workplace closure

March 2010

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* University of Ballarat

Rapid response retraining and supporting of redundant workers. Improve workers employment prospects to get back into workforce ASAP

In 2009 eight local businesses and 116 participants were involved in the program. 16 went on to study, 53 found further employment and 15 are still actively looking

Ballarat Industry Workforce Development Strategy DIIRD

Retrenched Workers Training Entitlement – August 2009 and is ongoing. (Part of the Back to Work Program)

DIIRD

DIIRD / Small Business Victoria

Skills Stores November 2007 to March 2010

Skills for Growth – July 2009 to December 2010. (Previously My Business, My People

Assists workers who have been adversely affected by the global economic downturn on or since 01 January 2009 to retrain into new job opportunities

Skills Stores staff are trained to help identify a person‟s skills and the skills they may need for a new job. Staff also offer free expert advice about how a person‟s current skills and experience can count towards a new qualification

$23.46 million

Provides Victorian based small to medium enterprises (SME) access to a team of independent workforce planning and training specialists, free of charge

$52 million

Page 114 of 118

Places are available through approved registered training organisations including TAFE institutes in Cert‟s 1 to IV

The Entitlement provides eligible retrenched workers with access to government subsidised training places

*BEST Community Development

Recognise prior learning (RPL) to refer into recognised qualifications

Referred 51 people into varying Engineering qualifications in the Ballarat region since inception

Provide detailed business analysis and training plan

Registered seven manufacturing businesses in the Ballarat region. Expected to get numerous enrolments into accredited qualifications

A single provider has been appointed in each main regional centre as well as four in metropolitan Melbourne

Based in Ballarat: * University of Ballarat * CentaBrace Based outside of Ballarat: * Australian Vocational Training & Employment Services * Bill Lang International * Business Skills Services * Chisholm Institute * Deloitte Growth Solutions * Drake Australia * East Gippsland TAFE * FS Learning * Mentor Professional * Phalanx Resources * Transport Distribution Training

May 2010

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Ballarat Industry Workforce Development Strategy

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* Verve – Knowledge & Skills * VACC * Workco Limited DIIRD

Australian Apprenticeships Centres (ACC‟s) – ongoing

Provide one-stop shops for those seeking to hire Australian Apprentices or to take up an Australian Apprenticeship as a career path

Private

Group Training Organisations – ongoing

GTOs employ apprentices and trainees, then place them with „host employers‟, usually from small to medium-sized enterprises

DEEWR

Productivity Places Program – started 2009 and is ongoing

DEEWR

NEIS - ongoing

* CVGT (AusNac) * MEGT * VECCI

N/A.

* BGT Employment

Industry Skill Centre – Metskills Program

Provide additional training opportunities to assist Australian workers and job seekers develop the skills they need to be effective participants and contributors to the modern workforce. The training places will be delivered in response to skills and occupations demand identified by industry

There are 25 providers in the local area

* Enterprise Based PPP – up to $25 million will be provided to fund training for existing workers via Industry Skills Councils.

Self-employment program that helps eligible unemployed people become self-supporting and independent of Centrelink by establishing and running their own business

* Australian Business Development Centre

May 2010

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Since 2007 there have been 179 commencements into the Metskills program with 156 completions and 106 outcomes (placements)

* 10,000 Structural Adjustment Places to support groups of recently retrenched workers. * 18,900 New Enterprise Incentive Scheme (NEIS) training places over 3 years

* BRACE Education, Training and Employment * Tracey The Placement People

Business Incubator Centre in Dawson Street Ballarat.

Ballarat Industry Workforce Development Strategy DIIRD

Building our Industries for the Future November 2008

Deliver broad economic reforms and business programs to boost competitiveness.

Page 116 of 118

$244.7 million in initiatives rolled out across of Victoria

Industry Transition Fund (ITF)

Investments made in renewable energies, food processing technologies and training

Invest in skills and innovation. Stimulate the growth of more globally competitive and sustainable industries DEEWR

DEEWR

DIIRD

Australian Apprenticeships Access Program

Provides vulnerable job seekers who experience barriers to entering skilled employment with nationally recognised prevocational training, support and assistance

Enterprise Connect – started in 2007 and is ongoing

Assists businesses to grow via involvement in free, comprehensive business reviews

Ballarat Vocational Pathway Program – finished 30th Nov 2009

Link students in schools studying Vocational Education and Training (VET and VCAL) to employers in the manufacturing sector

Five manufacturers have received support funding under the ITF.

* BGT Employment * Centabrace

$4.5 million +

Have just applied for a two year extension of this program called “connecting youth for employment”

*AI Group Other advisors have been appointed in Geelong and Albury, with 13 appointed in the Melbourne area

* AI Group

Apply business diagnostic tools to analyse a company‟s strengths and opportunities, benchmark against similar organisations internationally, and recommend actions to help SMEs become more innovative, efficient and competitive

Business reviews have been carried out for 12 companies in Ballarat with over 20 additional companies in the regions

Structured work placement, mentoring support and the facilitation of pathways into apprenticeships in identified skill shortage areas

Sixty businesses involved locally. There have been 182 Vet and VCAL students registered in the program, 150 of whom have been placed into Structured Workplace Learning. From these students, 22 have been employed into Apprenticeships. Manufacturers have also provided 20 letters of intent to employ

May 2010

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students into apprenticeships when the economy improves in the new year DEEWR

School Community Business Partnership Broker Program (working title) – 2010 to 2013

Create closer links with the industry and education sectors and provide strategic direction to them so that they can provide young Australians (13-19) with improved access to high quality information on career opportunities in industry and to assist Australian industry address skill needs and engage in young people's career development

$182.9 million

DEEWR

Skilled Migration Program ongoing

Help skilled and business migrants find out more about Victoria - the lifestyle, career and business opportunities it offers

$3.96 million for provincial Victoria

DEEWR

Local Employment Coordinator – started October 2009 and is ongoing

Coordinate and drive local responses to job losses and declining economic demand

* LLEN

Assist Australian industry address skill needs and engage in young people's career development to support these needs

The creation of „Taster‟ programs for the manufacturing industry and mentoring of students in manufacturing VET programs.

* City of Ballarat contracts People At Work to deliver the Global Skills for Provincial Victoria Program – program scheduled to finish in July 2010

Global Skills for Provincial Victoria program - helps provincial Victorian employers address skill shortages, with access to skilled migrants for vacant positions that cannot be filled locally

One manufacturing position recently filled in Ballarat in a general manager‟s role

* John Warmbrunn

Maximise stimulus packages in the region.

New position that has just been filled

nationally

Develop apprenticeship opportunities. Find new job opportunities and provide support for redundant workers

May 2010

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Ballarat Industry Workforce Development Strategy

9.6

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Appendix 6 â&#x20AC;&#x201C; References

Australian Fair Pay Commission, 2009, Manufacturing Industry Profile, Research Report No 6/09, Commonwealth of Australia, Canberra Australian Industry Group, 2008, Skilling the Existing Workforce, Australian Industry Group Publishing, Sydney, Aust Australian Industry Group, 2006, Manufacturing Futures: Achieving Global Fitness, Australian Industry Group Publishing, Sydney, Aust Australian Industry Group, 2006, World Class Skills for World Class Industries: Employersâ&#x20AC;&#x2122; perspective on skilling in Australia, Australian Industry Group Publishing, Sydney, Aust Department for Business Enterprise and Regulatory Reform, 2008, Globalisation and the changing UK Economy Department of Innovation, Industry and Regional Development (2008) Building our industries for the Future: Action Plans for Victorian Industry and Manufacturing, Victorian Government, Melbourne. Excellis Consulting, 2009, Analysis of the UK Manufacturing Engineering Sector, Analysis report for the European Project: Inter-countries Research for Manufacturing Advancement (IRMA) House of Representatives Standing Committee on Economic, Finance and Public Administration, 2007, Australian Manufacturing: today and tomorrow Industry and Small Business Policy Division, Department of Innovation, Industry, Science and Research, 2008, Manufacturing Sector: Overview of Structural Change Industry Brief 2006 -2 007, Commonwealth of Australia, Canberra. Institution of Engineers Australia, 2009, Engineering the Future of Australian Manufacturing Productivity Commission, 2003, Trends in Australian Manufacturing, Commission Research paper, AusInfo, Canberra. University of Adelaide Australia (Centre for Labour Research), 2005, Towards an understanding of the significance of family business closures in South Australia. Report prepared for the Department of Trade and Economic Development. Workforce Victoria, Department of Innovation, Industry and Regional Development, 2009, Industry workforce development needs and issues in Ballarat

March 2010

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