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EnergyNewsPremiums queries, hes fielding calls from local media and taking TV crews around his workshop in East Arm as the excitement over the Ichthys LNG final investment decision begins to build. Its really just started because the whole of Australia has been in a recession for 18 months and its been very tough a lot of businesses have gone to the wall, he told ENP. Theyre starting to talk about the project now in the town. About two years ago I said Inpex is going to come, no matter what. As soon as WA lost it to the [Northern Territory] government I knew it was going to come here. So I spent a fair bit of money trying to get us into this situation, and people questioned that, but I took a punt and its come through. STORY IMAGE SLIDESHOW
T hurs day, 2 February 2 0 1 2 James M c G rath

Friday, 4 May 2012

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A tale of two fabricators

MARK Taylor, managing director of Darwinbased Fingers Specialised Metal Fabrication is spending a lot of his time lately talking to the media.
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With previous clients including PTTEP, Fingers has been around for 18 years and is in the middle of preparing accreditation documentation to submit to FEED winners JGC C orporation, KBR and C hiyoda C orporation and to Inpex itself through the Northern Territory Industry C apability Network. While the contractors on the EPC have yet to be announced, its the start of what is expected to be a groundswell of work for fabricators, engineers and other services thanks to the Ichthys project. RELATED COMPANIES As C hief Minister Paul Henderson told assembled media and dignitaries at the final investment decision announcement: Never before have we seen a project of this scale in the Northern Territory. A project with the potential to change so much, and change it for the better. Theres no doubt building a $US34 billion, 8.4 million tonnes per annum LNG plant in Darwin is going to change a few things. The project itself is expected to employ 3000 to build the facilities at Blaydin point. For Taylor, its been part of his business strategy. Weve attempted to develop in conjunction with Ichthys and Shell Prelude, those projects have kind for been the driver for us, he said. Taylor is planning to ramp up his staff to roughly 100 at peak if it were to win work on Ichthys, and has already started talking to employment agencies, both international and domestic, about sourcing workers. But the buzz doesnt tell the whole story. Kim Fox, director of OGM Engineering, whose workshop is metres away from Fingers, told ENP that the likes of Ichthys and Prelude arent going to be a magic bullet for the states fabrication sector. It [Ichthys] means ongoing work for the next four or five years there are a whole heap of challenges with that though because theres not a whole heap of skilled labour around the place at the moment. The government is making it very difficult to do business as well, he lamented. Of course, the Territory government would beg to differ on the last point. It points to a number of initiatives on training and jobs, the latest of which will see the NT government canvass both employers and employees in the region for their input into the Employment Strategy Discussion Starter. Acting chief minister Delia Lawrie said discussion was OGM ENGINEERING

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Acting chief minister Delia Lawrie said discussion was needed as the NT emerged as a resources hub. The Territory is set to emerge as a resource development and export location, creating more demand for skilled and semi-skilled workers and new business opportunities, she said. We want to put Territorians in the best position to grab these jobs, and give Territory businesses the best chance of securing the labour they need to grow and prosper. Taylor concurs with Foxs assessment that it cant currently source enough workers from the Territory or even nationally, with the majority of discussions with employment agencies taking place internationally. Fox though, has deep reservations about the type of workers any domestic-based training program will churn out. I take those training opportunities offered by the NT government with a grain of salt really. What weve found since theyve bought in competency-based training is that the kids arent serving a full apprenticeship, he said. Theyre rushing people through the system, and when they rush people through you get semi-skilled people with no experience, while the reason to do an apprenticeship is to get skills and get experience. Theyre going in, doing a weeks course or maybe a three-months course and walking out with a piece of paper but theyve got no idea about how a workshop operates, what to expect, how to act, all that sort of thing. Both Fox and Taylor say the growth potential for their businesses out of potentially winning work on the Ichthys project will be severely curtailed for the simple reason most of the work will be done by overseas operators, with the local companies merely putting the pieces together. I dont think winning Inpex work will put us in a shop window, because all well be doing really is getting scraps off the table because Australia has priced itself out of the international market and all I see local companies doing is repairs and maintenance, or basic fabrication, Fox said. There will be a lot of work to come out of it, no doubt, but when the build is actually done it will just be repairs and maintenance. Taylor backed up the sentiment. Only a few of us up here can actually do the amount of work theyre talking about. Everything will be built overseas and a small portion will be built in Australia. We will be the people on the ground. When it comes to putting all the different components together, thats where well come in, he said. Australia simply doesnt have the fabrication it used to have. Its all gone overseas, and thats dollar driven. In fact, Taylor said if it werent for an Industry Participation Plan signed by Inpex back in 2009, local companies wouldnt get much of a look in. While we can compete in Australia, we cant compete internationally. I know there is work which is being committed to having to be built within Australia as part of the project so were looking to complete for those projects, he said. If that work commitment wasnt there then I dont think wed be able to compete and thats simply because our rates are too high. While both say it will be nigh on impossible to get local fabrication out of its funk, there are opportunities for smaller fabricators to fill a niche market on major projects, but its going to get tougher if inflationary pressures from Ichthys are felt throughout the local economy. The NT government is trying to address this, by building a workers village in Darwin. The government said last month that it was calling for proposals to develop the short-stay village, on a site which can currently support 250 people with room to grow. The territory government is committed to ensuring our bright future does not drive up the cost of living for Territorians, and has planned extensively to accommodate the influx of workers expected, acting C hief Minister Delia Lawrie said at the time. According to Fox though, this is akin to locking the gate after the horse has bolted. Theyre [NT government] way behind on housing which has driven the price of housing up through the roof, the rents through the roof, and that doesnt

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roof, the rents through the roof, and that doesnt attract the staff needed to work on these projects. Thats why he said the average Territorian, and those in the fabrication business are treating FID on Ichthys with cautious optimism. While Ichthys will invariably bring in work, the work will be needed to keep up with the inflation 3000 cashed up workers will have on the Darwin economy. More broadly it has been viewed as positive but there is a lot of negativity going around about it as well about the sort of effect its going to have on the social and economic side of things, Fox said. Theres a bit of concern about the cost of living going up and the sort of people this sort of project is going to bring into Darwin. So while Ichthys will be talked about breathlessly by the NT government keen to talk up the transformative effects of the project on the Territory, for local suppliers and fabricators such as Fingers and OGM, the net gain may be hard to see.

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