CONSOLE SUNSHINE COAST: CONSTRUCTION INDUSTRY ACTIVITY AND WORKFORCE PROFILE

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1 CONSOLE SUNSHINE COAST: CONSTRUCTION INDUSTRY ACTIVITY AND WORKFORCE PROFILE MAY 2014

2 Disclaimer: Whilst all care and diligence has been exercised in the preparation of this report, Construction Skills Queensland does not warrant the accuracy of the information contained within and accepts no liability for any loss or damage that may be suffered as result of reliance on this information, whether or not there has been any error, omission or negligence on the part of Construction Skills Queensland, or their respective employees. A number of unforeseen variables can affect any projections used in the analysis, and as such, no warranty is given that a particular set of results will be achieved.

3 SUNSHINE COAST KEY POINTS Residential and commercial building activity has largely followed a downward trend over the past six years. The one-off significant investment in the Sunshine Coast University Hospital has given a significant boost. Overall industry sentiment weakened in December after a strong increase in the September quarter, likely supported by this major project. Industry employment has rebounded sharply over recent quarters, rising to 17,000 persons. The limited number of new entrants and recommencements entering training locally has resulted in a declining in-training cohort. This is much in line with the overall decline in levels of activity over the six years to It is unlikely that the work on the Sunshine Coast University Hospital will reverse this decline. Overall, the approval of the construction of the Sunshine Coast University Hospital has given a much needed boost to the Sunshine Coast region; however, without further large projects on the horizon, this is unlikely to increase activity for the region in the years to come. 3

4 HOTSPOT: SUNSHINE COAST HOTSPOT VALUE OF RESIDENTIAL AND COMMERCIAL BUILDING APPROVALS, 2013 NOOSA HEADS COOROY COOLUM BEACH NAMBOUR MAROOCHYDORE HIGHEST WURTULLA CALOUNDRA LOWEST 4

5 PIPELINE: SUNSHINE COAST APPRENTICES &TRAINEES PIPELINE ENTRIES EXITS DIFFERENCE BETWEEN ENTRIES & EXITS 1,786 1,773 1,581 1,505 1,288 1, NEW COMMENCEMENTS RECOMMENCEMENTS CANCELLATIONS/ WITHDRAWALS/EXPIRIES COMPLETED Source: Department of Education, Training and Employment (DETE) DELTA Database Sept 2013, Original. SUNSHINE COAST ANNUAL BUILDING APPROVALS $2.5b $2.0b $1.5b $1.0b $0.5b $0.0b RESIDENTIAL: ALTERATIONS & ADDITIONS NEW OTHER RESIDENTIAL NEW HOUSES COMMERCIAL: SOCIAL/INSTITUTIONAL INDUSTRIAL COMMERCIAL (OFFICES, RETAIL) Source: ABS Jan

6 SKILLS MIX: SUNSHINE COAST NEW ENTRANTS SKILLS MIX 29% KEY GENERAL CONSTRUCTION % 13% 7% 12% CIVIL CONSTRUCTION ELECTRICAL PLUMBING 49% 41% 28% 14% 16% 19% ENGINEERING 8% 11% 8% SKILLS MIX: SUNSHINE COAST IN-TRAINING SKILLS MIX 13% 12% KEY GENERAL CONSTRUCTION 1,773 1,505 1, % 5% CIVIL CONSTRUCTION ELECTRICAL 43% 46% 35% 18% 21% 27% PLUMBING ENGINEERING 8% 12% 8% 9% Source: Department of Education, Training and Employment (DETE) DELTA Database Sept 2013, Original. 6

7 POPULATION FORECASTS Office of Economic and Statistical Research population projections show that regional population growth will be high, above the Queensland trend for the 15 years to The region is expected to grow by 2.1% on an average annual basis compared to 1.8% for Queensland overall. Similar to most other regions, this growth will moderate slightly over this period. The regional population is expected to grow by 2.2% per annum for the five years to 2018, followed by 2.1% per annum for the five years to 2023 and 1.9% per annum for the 5 years to This means regional population growth will remain well above trend and most other regions with the exception of Ipswich and Mackay. ACTIVITY Residential and Commercial Building Activity: Building activity in the Sunshine Coast has followed a mostly downward trend. While the total value of building approvals looked to have mostly stabilised between 2009 and 2011, there was a significant decline in In 2013, the downwards trend in the value of building approvals was reversed by a large jump in the approval values for health related building. This likely reflects approval of the Sunshine Coast University Hospital. Overall, the Sunshine Coast recorded growth of 191.7% (or $1.3 billion). While the commercial sector accounted for the majority of growth, the residential sector also saw a rise in the value of building approvals (46.4% or $230.0 million). Given the scale of the Sunshine Coast University Hospital, the product mix is heavily weighted towards the social/institutional subsector, accounting for over half of the total value of building approvals in The value of commercial (offices, retail) and industrial subsectors also increased by 55.6% (or $44.1 million) and 38.9% (or $5.4 million) respectively. Shifts in the residential product mix were also apparent at the subsector level with the new other residential building (apartments, townhouses and flats) accounting for a higher proportion of residential building approvals in Both the number and total value of building approvals were relatively high in the three months to December January 2014 saw a drop in the number of approvals (60.5%) but a slight increase in the total value of building approvals (19.6%) from December Year-on-year the region recorded a decline in the number of building approvals (18.5%), but an increase in the total value of building approvals (69.6%). The graph below shows the total value of building approvals within the Sunshine Coast Region. Without the inclusion of the Sunshine Coast University Hospital, the total value of building approvals remains relatively stable throughout hhh BUILDING APPROVAL VALUE AND COUNTS, SUNSHINE COAST ,200 1, Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 The Sunshine Coast University Hospital is a significant, though timelimited regional project. No. dwellings Value of building ($m) Source: ABS Jul 2013, Original. 7

8 Major Projects: The Sunshine Coast saw a major spike in residential and commercial sector approvals because of the Sunshine Coast University Hospital construction ($1 billion). A secondary major project in this region is the Cooroy to Curra: Sankeys Road (underway, Section A: $790 million). Together, these projects will provide a boost to local activity and support increased labour demand. Business Sentiment The QMBA Building Industry Outlook 1 showed that overall industry sentiment weakened in December, with sentiment declining from 71.7 to 65.9, remaining well within positive territory. All other indicators improved compared to the previous quarter. Even so employment, capital expenditure and levels of work remained somewhat weaker. In contrast to a number of other regions, sentiment is strong across the board, and suggesting a relatively positive outlook for the industry within the Sunshine Coast region. WORKFORCE Employment: Total industry employment has trended broadly downwards, mirroring the direction of overall residential and commercial sector activity. Industry employment hit a low of 15,400 persons in May 2013, the lowest level of construction employment over the previous five years. This is not unexpected given the magnitude of the decline in building approval values over this period. The total value of residential and commercial approvals was nearly 60% smaller in 2012 compared to Even so, the region experienced a significant rebound in total employment in February 2014, with total construction employment rising to 17,000 persons. This dramatic spike is likely in response to the Sunshine Coast University Hospital project which saw total approvals jump from just $50.7 million in March this year to $1.1 billion in April. This spike in total employment was enough to reverse ongoing declines, representing a 10.4% increase from May Year-on-year to February 2014 there was a slight decline in total industry employment of 1.7% (or 300 persons). CONSTRUCTION INDUSTRY EMPLOYMENT, SUNSHINE COAST ,000 20,000 15,000 10,000 5,000 0 Feb qtr 07 May qtr 07 Aug qtr 07 Nov qtr 07 Feb qtr 08 May qtr 08 Aug qtr 08 Nov qtr 08 Feb qtr 09 May qtr 09 Aug qtr 09 Nov qtr 09 Feb qtr 10 May qtr 10 Aug qtr 10 Nov qtr 10 Feb qtr 11 May qtr 11 Aug qtr 11 Nov qtr 11 Feb qtr 12 May qtr 12 Aug qtr 12 Nov qtr 12 Feb qtr 13 May qtr 13 Aug qtr 13 Nov qtr 13 Feb qtr 14 Source: ABS Feb 2014, Annual Moving Average. 1 QMBA indexes range between 0 and 100. An index level of 50 indicates satisfactory conditions. Higher results indicate relatively more positive conditions while index levels of less than 50 indicate less satisfactory conditions. 8

9 Internet Vacancies: The DEEWR Internet Vacancy Index (IVI) data is based on regions that are quite different from CSQ ones, so it can be difficult to comment on local trends in construction vacancies for some regions. In this case, the Sunshine Coast IVI region covers the entire CSQ Sunshine Coast region in addition to the southern end of Wide Bay. Total regional vacancies have generally followed a downward trend from the most recent peak in late Even so, a second lower peak is evident in 2012 while vacancies have mostly increased over the 2013 calendar year. Construction vacancies have generally followed this broader trend for total vacancies. Similar to the Gold Coast, Construction Trades account for a much larger volume of vacancies compared to other construction occupations such as Mobile Plant Operators and Construction and Mining Labourers for example. This suggests that a number of local factors have shaped the character of local construction labour demand. While the initiation of the Sunshine Coast University Hospital project has had a dramatic effect on building approval values, it is unlikely to have a similarly large impact on labour in terms of employment or vacancies. CONSTRUCTION OCCUPATION INTERNET VACANCIES SUNSHINE COAST , , Feb 11 May 11 Aug 11 Nov 11 Feb 12 Construction Trades Mobile Plant Operators SUNSHINE COAST (RHS) May 12 Aug 12 Nov 12 Feb 13 May 13 Electro. & Telecom. Trades Construction & Mining Labourers Aug 13 Nov 13 Feb 14 1,500 1, Construction Trades accounted for a high volume of local vacancies on the Sunshine Coast. Source: DEEWR. IVI Data Feb 2014, Original 3 Month Moving Average. APPRENTICES AND TRAINEES Pipeline: The local training pipeline shows many of the characteristics evident at the Queensland level overall as well as across many other regions. The headline in-training number has continued to decrease over recent years due to exits outweighing entries. Fortunately, as with almost every other region, these exits are mostly taking the form of completions rather than cancellations. Even so, the limited number of new entrants and recommencements entering the training locally has resulted in declining in-training cohort. As with other regions showing this particular dynamic, a jump in the number of entrants, either in recommencements or new entrants is required to counterbalance the trend for those exiting the pipeline. The boost to local activity provided by the Sunshine Coast University Hospital as well as increases in local industry sentiment may provide some support to this objective. 9

10 Composition: The in-training cohort echoes the shifts apparent at the Queensland level with a decreasing share of apprentices and trainees undertaking general trades as opposed to electrical and civil trades. General trades accounted for 35.0% of the in-training cohort in 2012, down from 42.8% in These shifts are even more obvious in the new entrant cohort where general trades declined from 40.5% to 28.3% between 2010 and Similarly, civil trades recorded a significant increase, rising from 11.5% in 2010 to 28.5% in The limited amount of major project work happening locally suggests that this training has largely served adjacent, resource exposed regions such as Central Queensland and Mackay. 10

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