We want to build nuclear submarines, but what about everything else we have to build?
Generating and sustaining a shipbuilding industry in Australia is not challenging for the Navy, Defence, or Industry. It is one part of a national challenge where a skilled workforce is an increasingly rare resource.
The Mandarin first published this essay.
The AUKUS pact paves the way for Australia to acquire nuclear technology for a fleet of submarines. It is a clear signal of Australia’s changing approach to the region; however, some practicalities must be addressed underneath the grand strategic questions. For example, will this decision cause a delay that leads to a new ‘valley of death’ for submarine building and expertise in Australia?
But as is often the case in workforce discussions, this question is too small and parochial. Generating and sustaining a shipbuilding industry in Australia is not challenging for the Navy, Defence, or Industry. It is one part of a national challenge where a skilled workforce is an increasingly rare resource.
The immediate impact on the shipbuilding industry is uncertainty for firms and several thousand employees.
While this program's benefits and opportunities for the workforce may be apparent to policymakers, people’s day-to-day needs are a little more pressing. The government has indicated the Australia Submarine Corporation (ASC) has been tasked with managing and implementing a new sovereign shipbuilding talent pool. ASC will seek to redeploy the existing shipbuilding workforce throughout current and new shipbuilding programs.
In the transition, the workforce must be productively engaged. This may include rolling into other programs of work; however, the opportunities may be limited. There is also an implicit assumption of interchangeable skills and expertise. They could also be moved into ‘training’, both in Australia and overseas. Finding ways to prevent skills atrophy while preventing leakage to other industries will be no easy task.
Regardless of the approach, retaining the workforce will be challenging when there is considerable uncertainty about the program and the national and international demand for skills is growing.
With an intense focus on submarines, it is easy to forget that Australia is investing significantly in other naval shipbuilding programs. Overall, Australia is doubling the naval ship tonnage on water over the next decade. This means more platforms and an increase in crew and workforce maintenance requirements. A long tail of thorny workforce challenges for Defence, Navy, and Industry pre-date the decision to acquire nuclear-powered submarines.
However, nuclear power adds a degree of difficulty in a country with minimal nuclear expertise and no established pipeline for developing that expertise at scale. Australia has a strong record of nuclear research, but a specialist body of knowledge comes with operating and maintaining a nuclear reactor in a submarine. There are clear skills gaps that Australia’s small community nuclear professionals have acknowledged.
Australia’s economy is increasingly digital, driving up demand for information and communications technology (ICT) and cyber skills and creating additional demand for STEM skills. The digital activity contributes about $426 billion to the Australian economy, and about 1 in 6 jobs are digitally geared. Defence is also increasingly a digital enterprise. Defence is reaping many benefits of new technology but also inheriting the accompanying risks.
A nuclear-powered submarine is more than steel and a reactor. It is a sophisticated combat, intelligence, and communications system operating in one of the most dangerous environments on the planet. The need for security-cleared ICT, cyber security, satellite communications, and space professionals will increase both through the build and in operation. Today, these skills are in short supply across the labour market and in demand across the economy.
The shortages in the STEM workforce are well known, but increasing digital activity across the economy (and an upsurge in digital activity during the pandemic) amplifies this challenge. This is a challenge that requires more application and greater imagination.
It is worth noting that Australia’s AUKUS partners have also identified substantial national shortfalls in STEM workers and have significant naval shipbuilding programs. Australia will try to generate and retain a skilled STEM workforce in a globally competitive labour market. When international borders open, the demand for the Australian workforce overseas will be strong and continue to grow, which may lead to more of our STEM graduates leaving Australia.
There is considerable competition for skilled workers across the Australian economy. For example, planned infrastructure spending across the states is significant. In Victoria, three infrastructure projects could create up to 35,000 jobs and many more across the economy. Similarly, in New South Wales, infrastructure pipeline spending is forecast to be about $108 billion over four years to support sustainable economic and population growth. Every Australian state has significant planned infrastructure spending.
In South Australia, where competition for the skilled submarine workforce will be sharpest, Defence industry contributes 4.5% to the State’s Gross State Product, with a workforce of about 11,000 (1.5% of the total state workforce). By 2030, shipbuilding was expected to grow that workforce by creating 4,000 direct defence jobs and thousands more in adjacent and supporting industries. However, South Australia also has an ambitious forward infrastructure plan. The state’s construction industry has about 67,000 jobs (8.36% of the workforce). South Australia is also focused on accelerating business expansion and job creation across nine industries over the next decade.
The competition for skilled workers within States and industries and across the economy is growing, and demand rapidly exceeds supply.
Border closures due to the pandemic have significantly impacted all Australian industries, from agriculture to banking and finance. The shortfall in jobs across the economy could be about 400,000 workers out by 2024.
This opens the prospect of greater internal mobility in Australia’s traditionally geographically stable workforce. The temptation to move from an uncertain industry to one with greater certainty may be strong for the submarine workforce.
The pandemic has also seen the rise of hybrid workplaces and changing expectations of work. This is still playing out, but workplaces and employee expectations have changed. These expectations have manifested in the global phenomenon of the ‘great resignation’. More and more employees are leaving the workforce or switching jobs driven by the reprioritisation of work and life and dissatisfaction with employers. Australia’s Defence and industry workforce is older. If the pandemic results in older workers leaving the labour force at a higher rate, the gap in skill, expertise, and experience will be challenging to close. This will be a significant problem for Defence and shipbuilding.
The workforce is a critical national resource. Unlike other national resources, the workforce has many intangibles, such as skills, knowledge, experience, and aptitudes. This bundle of intangibles takes considerable time and effort to rework to meet new demands. An axiom of human capital is that it takes time, effort, and endurance to reshape the workforce. The 2020 Defence Strategic Update clarifies that Australia’s strategic assumption of having time to prepare to meet a threat is no longer valid.
Presenting the submarine or shipbuilding workforce in isolation from national workforce supply and demand pressures is unhelpful. Assuming it is a problem that Defence can solve alone is unrealistic. It is a mindset that underestimates the challenges facing Defence and industry and leads to a limited solution set.
Generating and sustaining a shipbuilding industry and delivering a submarine program in Australia is not a challenge for Defence alone. It is one part of a national challenge central to Australia’s future prosperity and security.
