IT should come as no surprise that the biggest and most common issue confronting a bunch of successful Western Australian companies is that of labour - getting and keeping the skills they need to meet the strong demand they are seeing.
IT should come as no surprise that the biggest and most common issue confronting a bunch of successful Western Australian companies is that of labour - getting and keeping the skills they need to meet the strong demand they are seeing.
The disappointing thing is that few of them can see any workable policy solutions in place, despite 2011 emerging as a rerun of 2005-06 when the mining boom started sucking the life out of the workforce in this state.
Of the nine finalists for the western region of Ernst & Young’s 2011 Entrepreneur of the Year Awards, all of them mentioned some variation on labour constraints, skills shortages or wage pressures, with most of them raising the issue first during a post-judging interview with WA Business News.
There was clearly frustration with this issue among entrepreneurs who saw opportunity but struggled to deliver it because people were not available, at least not here.
RecruitWest managing director Brad Pense is one who ought to be in the box seat for this kind of problem but even he is being hit by wage rises in his very competitive sector while the avenue for sourcing skills for his clients – 457 visas – remains problematic.
Mr Pense’s simple summary would find agreement among his entrepreneurial counterparts.
“There are too many constraints in the labour market,” he said.
“There is a lot of red tape,” Mr Pense said, with particular regard to the 457 visa, a federal government immigration avenue that was a lifeline to employers a few years ago but has been tightened up considerably due to the global financial crisis and some cases of rorting.
“It is not necessarily cost prohibitive but it is certainly time prohibitive.
“The process takes too long and is quite onerous.”
Matrix Composites & Engineering CEO Aaron Begley said: “Skilled labour, that is a challenge, especially for manufacturing.
“Tightening that up is insane, especially with what is happening. You don’t want to be in the situation where we were in 2007, you could not get someone to wait on tables. That was a low time in business in WA.”
The issues confronting employers were broad. While Mr Pense also had issues around workers’ compensation rorts, Perth Energy founding director Ky Cao highlights the loss of engineers to the resources sector, Mineworks Group managing director John Gallop was dealing with confronting occupational health and safety processes after a period of rapid growth and Swan Energy founder James Rhee was struggling to find electricians because they could make more money selling rooftop solar systems than working for him.
While Matrix and another business, Alloy Steel International, which is chaired by inventor Gene Kostecki, were export-focused players actively looking to manufacture offshore as an answer to the constraints placed on them by labour and the cost of other key inputs, Northerly CEO Michael Lawson had an added issue from the perspective of his construction firm.
Restricted by the high cost of materials and labour in Australia, Northerly was looking at cheaper and more technologically advanced solutions to deal not just with the price of inputs in WA but also to challenge current thinking on construction methods.
However, the opportunity Northerly sees in importing new building materials and techniques faces a barrier in the form of local content – a key issue for some local contracts, notably government which is keeping commercial building alive at the moment.
“We have to declare local content,” Mr Lawson said.
“That can be a disincentive to people from seeking products outside of Australia. That is protectionism.”
Vassallo Corporation owner Rory Vassallo’s challenge is a mixture of labour and red tape, with the two issues bound together in his key area of interest – child-care centres – a field in which he sees significant opportunity.
Operating or owning 21 centres, Mr Vassallo is critical of the way governments change the rules in the sector frequently, requiring management to constantly educate both staff and customers about new requirements.
Mr Vassallo said he constantly lost experienced staff who had lost interest in learning what they already knew. A recent challenge was a requirement to have a qualified teacher present at each centre who, whatever their level of experience, would oversee others who have worked in the field for years.
He is not opposed to the reforms but simply concerned about the speed of their implementation, without any form of funding or assistance from the government.
“It is growth and you can only get better but you have to have it properly resourced,” Mr Vassallo said.
Mr Vassallo is looking to offer his expertise – including benchmarks honed across his group – to other centres in an as yet undecided format.
Swan Energy managing director James Rhee faces something of the opposite problem created by government intervention in his sector – notably booming conditions as a result of rebates and, until Sunday at least, uncertainty over the carbon tax.
Swan Energy offers a range of renewable energy products to big commercial users, from large-scale solar to the latest in fuel-cell technology.
While Mr Rhee believed the market was misinformed about renewable energy, which he said was far more affordable and efficient than most businesses realised, he was dismayed by unnatural growth in the market created by government rebates and incentives.
“There is a bubble,” Mr Rhee said.
“The industry grew too fast; it is 100 per cent reliant on government rebates.”
Nevertheless, Mr Rhee’s focus on big users which make more commercial decisions appears to have paid off, resulting in a pipeline of work that is so big he has been prompted to bring in two global players as equity partners.
Another of the finalists confronting high growth at a fledgling business phase is Mineworks Group managing director John Gallop, who offers a range of services to the resources sector, including filters for vehicle and equipment emissions.
Mr Gallop, a former diesel mechanic, admits he is still putting systems in place to help him control the growth that saw his staff jump more than 50 per cent to 65 in just six months.
One of those areas of development is in managing safety, even though his staff are on worksites operated by other companies.
“We are starting to almost audit each site because we are putting our people out there,” he said.
Perth Energy’s Mr Cao has found a range of energy issues that have made life difficult for industry and customers.
The indecision about the future of the state’s energy sector was destabilising last year while Mr Cao is highly critical of the conflicting policies across state and federal jurisdictions in relation to climate change.
He would like to see vision in this area.
“People are still digesting the latest rises, now you have new taxes,” he said in anticipation of the carbon tax announced at the weekend.
“I think there is a strategy that can be laid down by the state, you can have 20 years of transfer to gas and 20 years to renewable, that is a 40-year framework,” he said.
