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Select Committee on the Future of Work and Workers
14/05/2018

BREEN, Ms Lisa Jane, Head of Human Resources, Austal Ships

[09:54]

CHAIR: Thanks very much for joining us today, Ms Breen. I understand that information on parliamentary privilege and the protection of witnesses and evidence has been provided to you.

Ms Breen : It has.

CHAIR: Great. I'd like to invite you to make a short opening statement, and then we'll have some questions.

Ms Breen : Thank you for inviting Austal to contribute to the inquiry on the future of work and workers. To provide some context, Austal is a shipbuilder and Australia's only global defence prime contractor. Austal designs, constructs and sustains some of the world's most advanced commercial and defence vessels. Austal successfully balances commercial and defence projects and celebrates 30 years success in 2018. Austal has designed, constructed and delivered more than 300 commercial and defence vessels for more than a hundred operators in 54 countries over this period.

Austal is Australia's largest defence exporter and only ASX listed shipbuilder. Austal is an industry leader in shipyards in Australia, the United States of America and the Philippines as well as service centres worldwide. Austal delivers iconic monohull, catamaran and trimaran commercial vessel platforms, including the world's largest trimaran ferry, and multiple defence programs, such as the littoral combat ship and the Expeditionary Fast Transport, for the United States Navy. Austal has grown to become one of the world's largest aluminium shipbuilders.

Crucial to Austal's success is our highly skilled workforce, who, time and time again, beat benchmarks to maintain our position as one of the most cost-effective and efficient shipbuilders, even in a high-cost labour environment. Critical to our skilled workforce is the technology we utilise across our operations to keep the process cost effective. This has resulted in the US Navy recognising our Mobile, Alabama site as the most cost-effective shipyard in the United States.

In Australia, we are currently working on two programs—the Pacific Patrol Boat Replacement Program for the Commonwealth and a 109-metre catamaran for a European customer. The Pacific Patrol Boat Replacement Program is running on time and on budget, with the first vessel scheduled for launch in a couple of weeks. Despite being the first of class, this vessel has not exceeded the allocated cost for the project. This is a direct result of the skills and training of our production workforce and the experience of management in delivering this program. In the international market we compete for our export success, and cost is key to that success. The current commercial vessel we are building in Henderson was costed on a Philippines' build price. Despite the labour cost difference, that program is running on budget because of the technology we have invested in in the build process.

Technology goes hand in hand with productivity. Every element of our operation utilises technology. Our build process has been deconstructed to capitalise on efficiency gains. This does not mean we have reduced the number of people involved in our programs. We have 400 people currently working on the commercial catamaran in Henderson. In the build process, we work with our design team and producibility teams to create the most efficient work packages to decrease the man hours per tonne of production and limit rework. These efficiency gains are what have enabled Austal to have an internationally competitive business in a high-cost labour environment.

Repeatedly delivering large-scale multimillion dollar projects on time and on budget is not achieved without investing in your workforce. What enables us to sustain a business with more than 5,000 people internationally is ensuring that we remain competitive in the international market. The future of work for Austal will be a continued investment in its workforce that is creative and innovative, to ensure that we remain internationally competitive. As mentioned, Austal has a blend of continuous shipbuilding programs and bespoke commercial vessels. The nature of continuous shipbuilding programs, such as the five-year 21-vessel Pacific Patrol Boat Replacement Program, creates an environment for our workforce to invest in enabling technology and enhancing their skills while generating value for our customers over a long period of time. The commercial side of our business, however, does not have the luxury of the same time frames, and it pushes our employees to be creative and innovative in a much more condensed time frame. This creativity and innovation thinking is the key to our future success.

Shipbuilding is a terribly inefficient process due to the complexity of each build and no amount of automation will change this. This guarantees that Austal will always require a large workforce to build our ships. Austal invests heavily in training and development of its staff due to the manual nature of work that we do, and we rely heavily on the vocational training programs offered by the national TAFE system. In the last 12 months, Austal has employed 100 apprentices to continue to generate a pipeline of talent for the business and ensure that we continue to have the right balance of skilled and competent employees to deliver high-quality vessels to the government and commercial customers.

To support our apprentices and tradespeople, Austal is dependent on vocational training programs. However, the current state of national vocational training offerings is not aligned with the needs of industry and the speed of technological advancements for our industry. For example, over the past three years, our apprentices have provided feedback to Austal about the poor quality of TAFE training available for apprentices. They do not get the same lecturers. They can change regularly. Workbooks given out look like they've been photocopied on numerous occasions, and apprentices feed back that some lecturers don't even attend and they're just given material to read for an hour. This neither stimulates our apprentices nor motivates them to be engaged in their learning.

This is not limited to just our apprentices: employees who gain cert IVs or diploma qualifications through the TAFE system report the same levels of frustration at the low quality being delivered. The future of work is reliant on stimulating and inspiring our people to be innovative and creative, and make Australia an internationally competitive country. Poor-quality training programs that are not currently aligned to industry will not achieve this.

Additionally, apprenticeship programs are still designed the same way and I have not seen any changes in the last 30 years to structural delivery. Trade training is too narrow, and there appears to be no attempt to design programs that allow for tradesmen to have generalist skills. What I find disappointing about this is the design of tertiary degrees is much different. In comparison, the tertiary system is more modern. For example a Bachelor of Business is a generalist degree where students choose a major. However, the majority of the degree is creating generalist skills. This allows students to expand their knowledge by undertaking further study in postgraduate qualifications on top of their bachelor degree in a shorter period of time due to the generalist nature of the degree. Apprenticeships and trade training do not allow for this and, in the context of Austal, this means that we cannot use our workforce efficiently. The cyclical nature of shipbuilding means that, unless there is a perfect alignment between build schedules, employees may face redundancy as the system makes it too difficult for skills training and transfer.

However, on the flipside of this is the government's innovative schools Pathways in Technology program, or P-TECH. As you may be aware, the P-TECH pilot program is an important element of the government's plan to build Australia's science, technology, engineering and mathematics capability and equip young people with the skills employers need. Austal supports this program at Cecil Andrews College in WA, St Patrick's Technical College in South Australia and is part of the implementation's program in schools in Darwin. I've seen firsthand what is being offered and delivered to students who subscribe to this program, and I can only say I wish schools based programs had been this exciting when I was at high school.

The concern I have with the P-TECH program is that it's offering students the opportunity to be more involved in the design of their learning and future opportunities but, when they leave this program to continue their education at TAFE, the current quality of programs is well below standard that they experience at P-TECH and this may cause them to not continue their education.

Programs that are old-fashioned and not designed to stimulate learning also impact older workers. The workers, in particular, may have been out of traditional learning for over 20 years and be faced with a program of upskilling that is not targeted and designed to understand technology, and industry challenges could create an unsafe and disengaged workforce.

For Australia to remain competitive, especially in manufacturing, the quality of education needs to focus not only on developing technically skilled individuals but future employees who are resilient, adaptive to change, curious and creative. Thank you for your time and I'm happy to take any questions from the committee.

CHAIR: Thanks, Ms Breen. We might kick off with Senator Patrick.

Senator PATRICK: Thank you especially for coming along. I know the committee invited a number of shipyards, and you have given time. I also appreciate there are some tenders running that may have prohibited others from showing up. It's clearly a very important area here for South Australia. I'm hoping we'll end up seeing Austal involved in a significant way with ASC and the future frigate program—I'll start off with that.

I've actually been to Austal and I've seen some of the great stuff you're doing in your design area. There's lots and lots of technology being adopted in your design area. It was a bit harder for me to see, necessarily, in the short visit I had in the workshop, if there were any disruptive technologies or any game changers taking place. You're clearly very labour-intensive. Have you seen changes over, say, the last five years that would cause you to think that there are going to be significant changes over perhaps the next five years or longer?

Ms Breen : For us, it's more around the enabling technologies. People keep talking about automation, and, as I said earlier, shipbuilding is a terribly inefficient process. It won't be significantly disruptive, I don't believe, but it's the enabling technologies like cobotics, as the witnesses were speaking about earlier, and exoskeletons that will allow us to be more efficient. We have a workforce in the Philippines. To do the same work in the Philippines would probably require 800 employees; in Australia it would probably be 400 employees. For us to compete internationally, we need to get that gap where the low cost margin is limited and be more efficient to be able to produce boats a lot faster. So I don't see it as disruptive technology; it's more around enhancing the enabling technologies that allow us to do things faster and more efficiently and reduce the man hours per tonne.

Senator PATRICK: You were talking about apprentices. I'm grateful that you've taken on 100 apprentices—that's great news—but you're clearly very frustrated with trade training. What's the solution to that frustration? Does it involve perhaps industry having more of a say? What's the answer to that?

Ms Breen : I think it does. We regularly talk to our local TAFE to give them feedback about what's happening for our apprentices and also tradesmen who are going for upskilling. In the time I've been at Austal, we've managed to get no traction in those changes. I continue to have the same dialogue. Nissan did an upgrade to their apprenticeship program with Skilling Australia, and they reduced their apprenticeship program from four years—the standard apprenticeship program is four years—to 2½ years. I had a look at that through Skilling Australia and it was more relevant to what Nissan were doing, it was more exciting for the apprentices and it allowed them to get up to speed quicker. It just seems to be that at the moment the TAFE system—I don't know if I'd say they're not interested—don't seem to take on our feedback, because it's repetitively the same problem. It's repetitively different lecturers and quality of material. The apprentices are left on their own a lot, and I don't know what the change is because we continue to feed back, and they don't seem to be interested in being engaged with industry, from our experience.

Senator PATRICK: I presume that's really directed at the Western Australian system.

Ms Breen : Yes.

Senator PATRICK: Have you had any experience in other states?

Ms Breen : No, although in Darwin we have a small engagement with the TAFE system up there for our service centre. I haven't experienced as much frustration with the apprentices we have up there, but we've only got about three or four up there. They haven't given us any feedback around how they're finding that system, so I couldn't really comment on whether Darwin is the same as WA. It's just the volume of apprentices we've got through—we have, I think, about 150 apprentices that are going through from year 1 to year 4.

Senator PATRICK: My last question feeds back to the technology issue and, in some senses, feeds off what Professor Spoehr said about travelling to Hanover, looking at the technologies that would perhaps transform your workshop. What sorts of things does Austal do to make sure it's leading-edge? Is it a technology maker as well as a taker?

Ms Breen : We have a technology development department who are working on upcoming technology for our designs and also for the sustainment of our vessels. So I'd like to say that we are, hopefully, a technology maker, but we're in the development of that at the moment.

Senator PATRICK: Do you have R&D support for that through the federal government?

Ms Breen : Yes, we do.

Senator PATRICK: Thank you.

Senator SIEWERT: If you were to indicate to us the things that we should be recommending to achieve better outcomes, what are the key things that you would say to us need to be changed?

Ms Breen : In relation to education or technology?

Senator SIEWERT: Both. We are talking about the future of work and they're both really important for those issues.

Ms Breen : I mentioned the P-TECH program in my statement and that has been run across several schools in Australia. I found that to be a really innovative way of capturing future employees that were going to be in a trade role or a vocational role, rather than not going to tertiary education. It was prepping them, because it started to introduce them to work life. Unlike years ago where we used to go off and do two weeks work experience, which really didn't give you any value, this is partnering with industry. We spend time at Cecil Andrews high school with the students there introducing them to the workforce, and allowing them to add value to Austal and work on mini projects that are real and live for Austal. I think that creates some excitement for students about where they can take their career. As I said, it breaks down when they then enter the next part of the system, because there doesn't seem to be an alignment between schools to TAFE to work.

For me, I believe that there needs to be participation. We can't be passive recipients of students. We need to be actively engaged in that. The education system needs to be actively engaged with industry. So from when they enter middle school—so the years of 9, 10, 11 and 12—they're starting to see what it is that they need to do to contribute to the workforce, but also it gives industry an understanding of what is important to that generation as well. We can then manage to design how we behave and interact with younger people who are coming in to be our future leaders and future employees. For me, it's about a connection across the whole system. At the moment I see a disconnection.

Senator SIEWERT: If there's a disconnection there, how would you improve it if you were going to expand the P-TECH program?

Ms Breen : If I'm being specific to Austal across the shipbuilding strip in Henderson, I think, we need to get an industry group together, so we can be feeding back into TAFE as a body, rather than individual organisations, to let them know about the technology that we're working on, so that they can design their programs to be fit for purpose. At the moment, they're probably designing their trade training programs based on what they believe industry wants. I think there needs to be more collective participation from the industries that're going to be receiving the students from the vocational education system. At the moment, this is in isolation. I catch-up with those from south west metro and give them feedback but there may not be enough pull from the strip for them to actually make those changes.

Senator SIEWERT: I don't know if you were in the room, at the end of the last witness, when we were talking about what can government do and the need for a strategy. Would you see this fitting into an overarching strategy that is addressing the issues we're facing in terms of disruptive technology, the future of work and getting industry ready for the way technology is shifting, and a much more innovative approach.

Ms Breen : I think I captured most of that question. I think there needs to be a strategy for preparing younger workers but also at the other end as well, because as enabling technology starts to be introduced into the workforce there's going to be those who are older workers. I would probably say that people who are in their 40s may not have been through any formal education in at least 20 years. We've got workers who are in their 40s, 50s and 60s that are also going to be impacted by these changes and they still have a large contribution to make to the workforce. There needs to be a strategy around keeping them engaged in the workforce and the design of that education system. The design of the education system for the younger people is going to be completely different to what it looks like for those who are older. You can't just design an education system that is focused on one group of people. So, I think it needs to be looking at who is going to be impacted by this technology, those who are coming in and those who will be leaving over a 10- to 15-year time frame who are still going to be impacted by it.

This is only a small technology change, but we recently outsourced our payroll model. That sounds simplistic, but going through that experience I watched the older workers who had been used to a manual process for a very long period of time struggle with moving what they had done on a piece of paper and doing exactly the same thing on a screen. It has taken us 12 months to get people to do what we need them to do, and that's with a simple technology shift. You can't underestimate the resistance to change because of the threat that it may create for them in their roles. So, there's not just the upskilling part of it; it's also about holding their hand as they go through this process of understanding that this is for their benefit, that they are valued and that they will continue to contribute to the workforce whether they're in full-time employment or part-time employment. The human factor needs to be a large part of this, because, if it is not, we'll disengage people and lose a large component of those who are older and not necessarily as adaptable to technology as are the younger people coming into the workforce.

Senator FAWCETT: You're in a unique situation, in a way, in that you have a workforce in the Philippines plus in the United States plus here in Australia. As you look at trade training, are there things that you observe as you look at all three environments that we should avoid? Are there things that we should adopt? What would be the best of breed across the three environments that you work in?

Ms Breen : The training in the Philippines is very different. Their education system is limited, so all the training that happens in the Philippines is done by us. Essentially we take what we have here in Australia and adapt that for our training in the Philippines, but it's a much more condensed model and more on the job than what we experience here. In the United States we have the luxury of having a very large workforce, and we actually have taken all of our training in-house, so we don't rely on the external training; we have designed it fit for purpose, for Austal. In the balance between the three, what we do in the US is perfect, because we have total input and total control over what we're doing. That doesn't share outside of what Austal do. I'd love to take the Austal USA model about what we do and then place it in here, into Australia, but where there was more input from other players in the industry so that we could move a lot faster. But then there's also that fear about sharing information and sharing how we do things at Austal, because what makes us competitive is that we do things differently. I don't know whether there's an ideal model.

Senator FAWCETT: St Patrick's Technical College here in South Australia is largely unique because it has a board of management that is led by industry. So, industry—and some parents and some educators, but largely industry—determines the schedules, the method of approach, and they are largely skilling people for jobs in the local area, as opposed to a generic education process. Is that something that you think would transform your situation in Western Australia, if the training colleges had that kind of industry leadership?

Ms Breen : Absolutely. When I've been out to St Patrick's College I've been amazed at what they're doing, and I think it's really unique, innovative and forward thinking. One comment I would make on that is that it's for industry, so we need to be careful that we then don't create workers who are unable to transform into something else if it becomes too narrow and too specific. If you look at the automotive industry here, where there is the situation of trying to upskill them and transfer their knowledge into a different industry, there still needs to be a generalist focus, and then they go out and specialise, but they've still got those underlying generalist skills in engineering or fabrication. And it's a wider scope; it's not just narrow and targeted to one employer or one specific industry. But what they're doing over there I think—at Cecil Andrews in WA we haven't quite got it. They're more focused on science and technology rather than the manual side of training that St Patrick's has. But it's certainly on the way to improving what we need.

Senator FAWCETT: And in many of the trades we're talking about—for example, welding—you see developments in terms of quality and productivity involve people using robotics to actually do some of the high-precision, high-quality welds needed on vessels. So, it's not just manual; it's also cooperative robotics and the human element involved in it.

Ms Breen : Yes, to make it more safe and more efficient.

Senator FAWCETT: In your ideal world, if you were looking to be training people—you said you've spoken with TAFE about the quality—of photocopying handouts and the students are left alone. Do you have any say in terms of the type technology? Are you able to influence them around their use of some of those automatic welding techniques and training their people not just to physically weld but also to understand all the metallurgy—the preheating and the use of robotics and all those other elements that are critical to construction of a high-quality vessel?

Ms Breen : At the moment we haven't had influence, and that's why I think an industry participation group in the Henderson region in WA would be beneficial, because there would be a larger number of employees to influence what is delivered there, because at the moment I don't think 100 or so apprentices is enough groundswell to get them to change how they deliver. But if we got a few more employees onboard at ASC, Sigma, BAE and those participating in that area that area that are sending their apprentices to the same facility, we could have a lot more influence over what it is that they're delivering, and giving the feedback on how it's not current with what we're doing. We've had apprentices who've come back into work who have been deemed competent by TAFE, and they're clearly not.

Senator FAWCETT: Many states in Australia have had a mix of RTOs as well as TAFEs in the past, and there's lots of political contention around where funding goes. But clearly in some sectors RTOs have been more responsive to industry and have delivered a product. Is that something you've explored in Australia?

Ms Breen : Yes. Our apprentices have only just gone back into the TAFE system. They were in an RTO previous to that. We moved them out of the local TAFE into an RTO. They were there for about 18 months and unfortunately the RTO closed, so then we had to move them back into the local TAFE. But the RTOs that we have used over the years have been much more successful, much more interactive, and much more responsive to what it is that we need as an organisation.

Senator FAWCETT: So, what would be required to make them viable, if that one closed? Was that a political decision that starved them of funding? Or was that a scale issue?

Ms Breen : I think it was a funding decision. I'm unsure. We just got notified that they were closing. It could have been a funding issue. I'm not actually across the detail of why that particular RTO closed down.

Senator FAWCETT: Would you be able to take that on notice and come back to us?

Ms Breen : Sure.

Senator FAWCETT: That would be useful. Thank you.

CHAIR: I might leave my questions there so that we can try to get back on schedule—and that is not a criticism of you, Ms Breen; it was my poor chairing earlier in the day! Thanks very much for coming along today.

Proceedings suspended from 10 : 23 to 10 : 37