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Skills & finance shortfalls a concern for engineering sector

By: John Fernando
29 July, 2010

Feature of the week: Australia's engineering sector, despite the negative impact of the global financial crisis (GFC), has shown itself to be resilient and adaptable. But there are two major areas of concern, which could have severe repercussions for the future of engineering in this country.

The primary concern is the skills shortage faced by the industry. It has been estimated that the current engineering labour shortage stands at no less than 20,000. This is in addition to a further shortfall of about 30,000 engineers in coming years, as the number of professionals retiring (about 75,000) outnumbers new engineering graduates (45,000) entering the workforce. These figures represent statistics for the five years from 2006-2011. So, by late next year, the engineering sector may see a shortage of perhaps 50,000 engineers.

The second area of serious concern is the decrease in private sector financing of engineering projects across Australia. With banks not keen on lending capital post-GFC, several projects have stalled or been downsized.

The government's inflow of funds for infrastructure projects, reminiscent of Roosevelt's New Deal, has been a welcome stimulus to the economy and the engineering sector. New roads, ports, buildings, church halls, schools, railways and bridges are being built, renovated or expanded, and that has made a significant difference. But experts argue the government alone is unable to bail out the whole economy.

In regards to the skills shortage, several solutions exist. A recent survey of 2,400 engineers revealed the majority viewpoint that more new engineers are needed in the industry, as are enhancements in levels of skills and qualifications, which would eventually improve overall productivity. Unfortunately, enrollments in engineering courses by university students have dropped slightly this year.

A second option is to proactively hire a fairly large army of new (1-5 years) overseas migrants with engineering qualifications, who are working in professions unrelated to engineering – some of them could be train or tram drivers, managers or workers in mid-sized non-engineering firms, or even restaurateurs.

According to APESMA (the Association of Professional Engineers, Scientists and Managers Australia), if the current shortage continues, it could be "potentially catastrophic" for the country. APESMA cites the invaluable role engineers perform in works related to the mining, infrastructure, and green energy solutions sectors in Australia.

On the financing front, Australia is relatively lucky (in comparison to Europe and the United States). Our economy was not as badly affected by the GFC, and a recent surge in foreign investments, mainly from China and Germany, to the commercial and residential property sectors is creating badly needed growth.

A Chinese business consortium recently engaged Australian architectural and engineering companies to construct a $400 million multi-storey commercial and residential building in the heart of Melbourne. A resurgence (albeit cautious) of the resources sector, due to demand from China, has also been a welcome boost.

An initiative by the government, through its Australian National Engineering Taskforce (ANET) program, to address and rebuild the engineering profession is a timely move. But much needs to be done if Australia's engineering sector is to reach its optimal level of growth and performance. It is expected that engineering construction activity will fall by as much as $14 billion (or 20 per cent of total activity) in 2010-11.

Several major areas of growth and expansion of the engineering sector are jeopardised by the skills shortage. Australia is ideally located to provide a range of quality engineering services to three large booming economies – namely China, India and Indonesia. There are also the secondary markets of Malaysia, Thailand, some South Asian countries and the Arabian Gulf (Kuwait, Saudi Arabia, Abu Dhabi, Qatar) – many of which are initiating large-scale multi-billion dollar projects, such as ports, airports and bridges.

The skills shortage also threatens to stifle innovations in engineering and technology. Most of the aforementioned countries are expanding their defence capabilities, transport (air, shipping and rail) and automotive industries. These are areas where Australian expertise, or the nation's products, could create thousands of jobs, and billions in revenue, over the next decade.

Finally, the next 20 years will be defined by Australia's (and the region's) commitment to environmental sustainability and energy efficiency – be it in carbon reduction, sustainable buildings or the harnessing of reusable energy.

The $1 billion Siemens and Windseal project to build wind-powered desalination plants in South Australia, and to have the capacity to provide useable water for consumption, and even export to Indonesia, is a good case in point. Similar environment-friendly engineering projects, pioneered in Australia, could generate billions in revenue for the economy.

With our ageing population compounding the chronic engineering skills shortage, innovative solutions by all stakeholders – be it government, private sector, the engineering professional bodies, foreign investors and salient export markets – have to start creating viable solutions, and fast.