Not too long ago, a large-scale civil construction project started up. It was clear that it would have a difficult time resourcing all the required staff as the skilled labour pool in the region was small. Rob Sellars, Managing Consltant, Eighty4 Recruitment comments.
Both Engineers and Trades were in short supply, yet there was a large residential population nearby, just without the desired construction skill set.
A case was put forward for setting up training programmes and facilities, student pathways, cadetships, and practical skill classes. Numerous community, governmental and private stakeholders were pro-actively getting in touch with offers of support, resources and financial assistance to enable the initiatives. A labour hire firm proposed to set up a digger school on their own coin.
But the powers that be said no. Wasn’t in the budget, and wasn’t catered for in the estimate. Long story short – the project ended up 50 percent over budget, well over time, had lots of negative media and consistently struggled to attract and retain people.
The poor project outcomes were not all related to the decision not to make these investments, but I genuinely believe that if more upfront investment had been made in training and developing locals and building a strong, loyal and high-performing workforce, a lot of money and time could have been saved off the backend.
“…It appears highly likely that the Government will restrict immigration in future and essentially force employers to take un-skilled labour, (and people that have minimal previous participation in the construction labour force) and invest resources in getting them to a productive capacity.”
Tony Alexander might agree with me. He’s a leading economist, a great New Zealander who gave a very engaging keynote at the CCNZ Rotorua conference back in 2019, although many people might not remember all of it as it was first thing on the Friday morning after a pretty late night up the Skyline.
Tony puts out a regular newsletter which I highly recommend people subscribe to, and in one of his recent reports he offered some good economic advice and predictions on the labour market that I thought were relevant.
He explains that while many employers would like the Government to step in and provide more resources to get new people into jobs (something many civil contractors have asked of Ministers in Q&A sessions I have attended) it is just not going to happen.
In fact – the reverse is true, where due to an overarching political agenda to change social outcomes for a large number of New Zealanders, it appears highly likely that the Government will restrict immigration in future and essentially force employers to take un-skilled labour, (and people that have minimal previous participation in the construction labour force) and invest resources in getting them to a productive capacity.
Granted, many companies already have programmes and specific funding for this area, however there’s always scope to do more and it looks like those that do not, run the risk of getting left behind.
Why is this so significant? Because if you find it very difficult to recruit labourers and drainlayers (as many people do) then the drainage work doesn’t get done on time. If the drainage work does not get done on time the project gets delayed and the client gives the PM and the engineers a hard time. If the Engineer and PM get a hard time, then they leave and go to another employer. And then you have an over-budget project with delays and no engineers or drainlayers. Like the one I mentioned earlier.
So, whether you are already investing in training and development now or whether you will be soon due to political forces, here is some of Tony’s advice to employers to handle the upcoming ‘structural shift in labour availability’.
• Recognise that lobbying the Government for more overseas workers will be very unlikely to result in the outcomes you are hoping for.
• You need to get more productive, less reliant on labour and invest more into technology. Autonomous vehicles anyone?
• A training and development budget needs to be built into rates and intangible costs relating to people need to be priced and accounted for in estimates, included in client interactives and is not just lip-service anymore.
• You need to be future-focused and allow for increased labour costs, as the government pursues its plan of giving workers more holidays, higher wages and increased power in the market. Also, you will need to carry resources and back yourself to win work, rather than sign a contract and then scramble to staff it.
Lots of companies baulk at the expenses of staff and are anxious about increasing salaries, recruitment fees and the cost of a full use vehicle.
Yet employees that are paid well and valued, were hard-to-source because they are quality, high-performing workers, are given training and development opportunities, reasonable working hours and are provided with all the tools and resources they need, tend to be more productive, positive and stick with the same employer for a long time.
It’s a hard balancing act, but if you can employ lots of these types of people, then you may have a better chance at delivering projects on time, on budget and with a stable, skilled, and engaged workforce. Which will give you a great platform to win future work and grow your business.
Part of the potential issue from this obviously is that adding to the bottom line may reduce competitiveness and ability to win work. We can only hope that if the government wants to push its agenda of changing social outcomes, it realises that some of these costs need to be reflected in the price it pays for its infrastructure.
We are increasingly seeing more engagement from government, more attributes-related criteria in tenders and more willingness to share cost, so things appear to be on the right track.
Don’t get complacent, be pro-active as Tony suggests, and spend money to make money. Things are changing rapidly, and no-one wants to be at the back end thinking about what might have been if they had made better choices at the beginning.