Mick McMillan is taking matters into his own hands to develop the skilled workforce he desperately needs.
The Townsville businessman has brought training in-house to keep up with the demand for the mechanical engineering services and advanced manufacturing his company, AEP Engineering, delivers to the defence, mining and energy sectors in North Queensland.
Ahead of next week’s state election, Mr McMillan laid bare the challenges and obstacles he says are crippling small and medium-sized enterprises (SMEs).
“As far as skilling the workforce, we're having to take it on our own bat to do it because we can't find people,” he said.
“The VET (Vocational Education and Training) system is not fit for purpose under its current structure to deliver timely outcomes.
“The issue is the requirement for someone to attend a formalised course and the time it takes to achieve the qualification.
“There is currently only one way, and that’s via the apprenticeship system, but an organisation like mine would use only about a fifth of what they're having to do at those courses.
“There's no real push to try and reduce those times.
“Meanwhile, we can teach someone to weld what we need to in about four weeks.
“That’s just one approach to address our immediate need, but how do we formalise that?”
Mr McMillan suggests microcredentials and stackable qualifications may be the answer.
“They could do a Cert I, then a Cert II, followed by a Cert III if they choose,” he said.
“It’s giving them a bit of flexibility, but there seems to be significant pushback from TAFE and Tec-NQ in allowing people to build skills over time as an alternative to signing them up for a four-year apprenticeship."
“We often say they’ll train 1000 baristas but won't look at ways to train one CAD (Computer Aided Design) operator,” Mr McMillan said.
“CAD is a cornerstone of manufacturing now.
“We need to skill in the right areas, so again, we've developed our own internal CAD training course.
“It goes for about four weeks, and I can take someone off the street with no CAD experience and have them become a functional CAD operator via a boot camp in about four weeks.”
But, it’s more of a Band-Aid solution, Mr McMillan says.
“Microcredentialling only addresses a particular skill. It's not rounding them out into fully fledged skilled technicians,” he said.
“Having said that, that's the point of microcredentialing: it’s a way to get through to the final solution without having to do it all up front.
“For some older people rejoining the workforce or changing careers — maybe they’ve gone from an office job and now want to get on the tools – committing to a four-year apprenticeship is daunting.
“So, while we're keeping the traditional requirement to maintain TAFE because there is no other pathway, we tell some of our people that if you don't want to go to TAFE, we'll train you in a particular skill — but, that's all you'll do.
“Quality assurance and quality control are managed internally, and we're comfortable with that approach, but it's not formalised.
“We are taking the risk, and the risk is real, because we're taking the liability for their training and ongoing competency assessments.
“It’s an informal process, but we can't find a shorter pathway or alternative way to formally acknowledge someone.”
Mr McMillan is not holding his breath for change.
“Unfortunately, this situation is slowing our business down," he said.
"Our growth is crazy; I don't even know how we're going to achieve the next level of growth.”
The problem is not unique to Queensland.
“I was in WA last month, and the same issues with accessing a skilled workforce exist there,” Mr McMillan said.
“The mines pay ridiculous amounts of money, and trying to get even close to it is not an economical option for traditional service-based businesses. It would only lead to financial ruin.
“The unions keep the wages in mining at a certain level. However, we have to be competitive in the marketplace.
“I know of three local manufacturing businesses that have shut because they can't get the workforce they need, or they did – but ended up down the path of financial ruin by paying somebody $50-$60 an hour.
“To do that, you’ve got to be able to charge out three times that to cover expenses such as leave loading, superannuation and overheads.
“Yet, people aren't prepared to pay $180 an hour for trade-related work. Between $110 and $130 an hour is the average.
“The award wage for a boilermaker is about $28 an hour. The minimum we pay is roughly $45. That's not even close to the top of the range in Townsville.
“We've had two apprentices leave us in their second year to go work for a company to get paid $45 an hour as a second-year apprentice.
“You can't just keep paying people more money. It puts too much pressure on the business to cover all those other costs, and it's not even a rule of thumb, it's a real mathematical outcome."
Then, there’s the housing crisis.
“Even if you could attract someone to the regions, there's nowhere for them to live,” Mr McMillan says.
“It can take three to four months for them to find accommodation.
“It’s a perfect storm of how things can go wrong, and the government has had a significant hand to play in that.”
“A pallet of supplies we got a shipping quote for came in at $400 one day,” Mr McMillan said.
“We shipped the same pallet three weeks later for $1800.
“Pretty much every time we put out for a quote, there's no guarantee it'll be the same price. We’re rarely able to keep up to speed with that.
“There’s just no stability in transport costs. The supply chain hasn't caught up. It’s not as bad as it was, but there is still a long lag from order to delivery.
“Hence, I invested in machinery to take some of the risk out of it, and that’s why I've been able to keep moving forward.”
“Electricity used to be six or seven per cent of our operating costs, now it’s 28 per cent.
“Our consumption has gone up at least 80 per cent from where we were — we went from 17 people to 50 — but our bills have gone up even higher.
“We're looking at ways to reduce our energy, swapping out lights and the like.”
“In my business, my wife and I have to cover all the ups and downs, and that has happened more than once,” Mr McMillan said.
“We're the ones who don't get paid. We're the ones who don't have the weekends.
"There's no repayment for that. We're not getting a massive return on investment.
“Our moral obligation is to our staff, to ensure they get paid every week. They deserve to be, and that's where we prioritise the outcome.
“Through that moral obligation, we're supporting 50 people. A vast proportion of those have families. That's our moral obligation.
“I've had a great military career and I’m happy with where I'm at, but, at the end of the day, businesses are there to support the community, as well as to make money.
“In my situation, 100 per cent of the money goes back into the business.
“Most small businesses acknowledge the fact that you've got to support your people, and your people make the business.
“Unfortunately, the government has fostered poor workplace culture in Australia by accepting and passing some of these particularly heinous labour laws that have just caused small business to go: ‘How do we deal with this?’
“There is no way we can keep operating as we were to be successful because all these hindrances are put forward: I can't call an employee after hours, even if they’ve made a mistake that I need to follow up.
“All those things, it’s just an extra kick in the guts, and when you think things can't get any worse, they're getting worse.
“The overheads are becoming beyond reasonable. There are always challenges in business, but when the challenges are: ‘put up with bureaucracy’ or ‘put up with these changes because they will make everybody's life better’, well, they haven't made everybody's life better.
“Our advice to the next government would be: if it keeps going down this pathway, there'll be no small business and no long-term future for Australia.
“It isn’t a pleasant experience, and I wouldn't do this again if you asked me.”
Mick McMillan spoke to Ai Group Communications Manager Wendy Larter
