Skilling: Building the skills to build the ships| ADM September 2012

In terms of tonnage, there is a lot of shipbuilding on the Australian horizon over the coming decade. But it’s not a smooth path to delivery. There are, as always, peaks and troughs between programs. With this in mind, ADM Editor Katherine Ziesing spoke to three shipbuilders to see how they are dealing with their workforces and planning their business.

BAE Systems is building Air Warfare Destroyer (AWD) modules and the superstructure fit out on the Land Helicopter Dock (LHD) ships, Austal is building the Cape Class Patrol boats for Customs, and ASC is the shipbuilding prime in the AWD Alliance, building AWD modules and putting the giant lego-like blocks together. Between them, the trio represent a good proportion of the defence shipbuilding market around the nation.

As mentioned, there is a comprehensive program of shipbuilding ahead of the industry; Sea 1180 the Offshore Combatant Vessels (OCV), Sea 5000 the Future Frigate, the oiler replacement under Sea 1654 and the Future Submarine under Sea 1000. The current programs mentioned above all seem to end around the same time; 2015-2016. But the new programs mentioned here will not start until a few years after that. This gap between programs is what the industry and defence have been trying to smooth out for years with little success. In order to keep the shipbuilding business afloat, these companies have turned to other work to keep their workforces occupied.

“Austal has 25 year history of building high speed vessels and ultimately high performance war ships and patrol vessels for various navies including Royal Australian Navy, Australian Custom and Border Protective Service, the US Navy as well as other forces,” Charlie McGill, Austal’s chief operating officer Services and Systems said to ADM. “We have very complicated high-speed vessels that have a full-integrated bridge system that allows operators ashore and on the ship to maintain and operate those vessels. Over the last five years we’ve really taken that to the fore.

“We are now presenting the company as three segments that are intertwined; the ships, the systems that support the ships and their operation and the support or service business that supports those systems and ships as they go to sea.

“In the last five years, and in particular the last two years, management has been focused on growing the services and support aspects of the business. We believe that is critical, not only to our financial capability but to establishing Austal as a true global prime defence contractor.”

Diversify

The company is moving more into the services side of the industry, offering turnkey solutions for their ships and boats, both on the commercial side of the business (mainly ferries) but also moving more into defence and paramilitary customers. There are also plans to establish a Cape Class bridge set up in their Canberra office to provide the customer with an opportunity to see future upgrades and training options.

McGill also explained that diversification, particularly with their workforce in Darwin where there is a lot of competition for skilled people from the oil and gas sector, is key.

“We need to diversify our revenue stream into other sectors to subsidise our work in the Defence sector,” McGill said. “We have a number of relationships with significant oil and gas companies in that area and we are increasing our market share in concerted effort for those groups.

“Service work - we refit, repair, fabrication work, hydraulics work, electrical work for non-defence suppliers is growing steadily. For example, if one of our customers were to come and say “We’ve got a tug that needs to have XYZ done, can you help us out?” and we’ll say, “absolutely we’ll go do that”.

“Defence can only pay so much to do this sort of work. We can’t keep our workforce fed, we can’t keep ourselves competitive if we just focus on that. So we need to grow into these other sectors to help us maintain the skills and capability Defence requires,” McGill concluded.

The company has also gone into other markets globally, opening offices in the Middle East and Caribbean where their patrol vessels have found a home with Border Protection agencies in Trinidad and Tobago and Oman.

“Workforce is a very tricky question for us,” McGill said. “I’ve talked about the service business but in terms of actual ship building we are constantly thinking about how to remain cost competitive in a very difficult market. With the labour rates going in the direction they have gone, particularly in WA and the foreign exchange it becomes very hard for that yard to remain competitive.

“As a result we’ve been looking to do other work offshore and we’ve opened a shipyard in the Philippines. We intend to keep building Defence craft in our Perth facility but it is very hard for us to maintain that force in the current economic environment. We will maintain that workforce but it’s very difficult.”

These overseas environments also give their Australian workforce the chance to travel should they wish. Growing talent internally is a key part of the plan for all the shipbuilders through their apprenticeship and training programs.

“Internally, we do have a very strong internal training program and what that entails is taking individuals from the various regions and bringing them to Perth which is our intellectual hub, if you will and training them up in that area and then sending them back to the various regions. Sometimes that is difficult because of the distance. “In the case of Trinidad we send trainers to Trinidad to train them to become “A-class” welders which is one of the qualifications. For example, right now in Trinidad we have a guy who will spend a full year there and be the supervisor.”

Subs and ships

ASC apprentices move across both the AWD build project and the Collins Class submarine maintenance program enabling well-rounded exposure and skill development. The total workforce at ASC is about 2,300 permanent employees.

“ASC’s apprenticeship program is based on three core trade groups; mechanical, fabrication and electrical,” Mat Hunter, ASC’s general manager of Human Resources. “The program is targeted at young adults exiting the school system. A large number of our 100 or so apprentices are based in South Australia. There is a small number in Western Australia. We do a lot of work with schools, training organisations to maximise the opportunity we can provide young adults who are looking for a career in engineering or the defence industry.

“I think next year we’ll probably take on another 35 apprentices in those trades that I mentioned earlier. We find a very healthy level of interest in the program. Last year we had 600 or so applications and we’ve got even more again this year.

“It’s certainly a program that attracts a lot of attention. We’re now one of the largest apprentice employers in the defence industry with over 100 at the moment. Next year it’ll probably be closer to 130 apprentices, which is fantastic for our business but also more generally for skills in South Australia.”

When the apprentices join they start a seven-week block at TAFE, emphasizing how important that initial academic focus is for the future of their apprenticeship. It also gets students in the right mind-set in relation to things like workplace safety. And it prepares them to enter into an employment environment, a new experience to a lot of young people straight from the classroom environment.

“We take a lot of pride on the level of depth and diversity that we have with our apprentice intake, it’s an ongoing challenge but we are making progress each year, for example, increasing gender diversity in our workforce,” Hunter said.

“For our graduate engineers we have a formal mentoring program. For our apprentices we have a dedicated apprentice development office – a small staff of two – dedicated at managing the program and they will bring in whatever additional resources we need in terms of developing individuals whether it be in a technical sense or in a professional development sense.”

BAE Systems is working on both AWD blocks and LHD superstructure at their Williamstown yard, with roughly 530 blue-collar workers on site. Brent Clark, BAE Systems’ Head Strategy, Business Development and Communications Maritime admits that the workforce there has had to relearn a lot of skills that had been lost previously. The yard had not had any significant shipbuilding programs since it was in Tenix hands and both the site and workforce skills had been run down.

“We also had some of the most complex blocks in the AWD build,” Clark said.

With this in mind, the company leveraged off its UK parent company to bring in more experienced supervisors and get some confidence back into the workforce. Clark also outlined that a yard the size of Williamstown needs about 600,000 man-hours a year to keep the skills of the workforce current. Considering they have about 450,000 man-hours in place, the shortfall is being filled by commercial sustainment efforts but this is not exactly the same as shipbuilding.

“If we want to be able to build 12 submarines in Australia, we have to be building those build skills now,” Clark said to ADM.

AWD blocks

In the last 12 months there have been well-documented issues surrounding the initial BAE Systems blocks but Clark puts this down to a different in shipbuilding philosophies between BAE Systems and ASC. BAE Systems tends to leave a lot of ‘green metal’ around joins, particularly where the blocks will be matched up with other blocks. This allows welders extra material to work with as having too much rather than not enough is much easier to deal with, Clark explained. ASC has had to reschedule and reposition a number of blocks in their South Australia facility to ‘remediate’ some BAE Systems blocks.

BAE Systems is building two Anzac class size structures to be placed on top of the LHD hulls. The first hull is already on its way from Navantia’s Ferrol yard (see P12 for more on this). While the blocks may be the size of an Anzac class ship, they only weigh 890 tonnes versus the 3,600 tonnes of the frigate. BAE is nearing completion on the first superstructure for LHD01 and has begun cutting steel on the second. Getting the yard ready for the scale of the ships is also underway with various constructions programs in progress.

Clark also explained that the company was also looking at oil and gas programs, with BAE Systems now actively pursuing work in this sector. The biggest issue with moving from a company that is culturally used to dealing with Defence has been timing.

“When responding to a Defence Request for Tender, we generally have 12 weeks to respond,” Clark said. “In oil and gas, we can sometimes have two weeks to get an RFT response in.”

All in all, the key messages from all three players seem to be investing in your people and planning work outside the usual Defence programs by diversifying into other sectors. Time will tell how the performance of the current build programs will reflect on the options available to government when future build programs come to decisions time. Shipbuilding skills are different to ship sustainment skills. While industry is making an effort to keep both sides of the house skilled, the lags between major build programs are a concern for the industry in a small Australian market.

Calls for a national shipbuilding management plan have come from various groups from the state government and industry association levels but none have yet made a dent at the federal government level. Since 2013 is a year of key documentation to be released (new White Paper, final Force Structure and Posture Reviews) an updated industry policy that addresses this issue would also be a fine read.