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Boat Industry Training Market Analysis and Conceptual Model

Strategy for recreational boat manufacturing training in Victoria


August 2013 Report to the Department of Education and Early Childhood Development

Allen Consulting Group Pty Ltd ACN 007 061 930, ABN 52 007 061 930

Melbourne Level 9, 60 Collins St Melbourne VIC 3000 Telephone: (61-3) 8650 6000 Facsimile: (61-3) 9654 6363

Sydney Level 1, 50 Pitt St Sydney NSW 2000 Telephone: (61-2) 8272 5100 Facsimile: (61-2) 9247 2455

Canberra Level 1, 15 London Circuit Canberra ACT 2600 GPO Box 418, Canberra ACT 2601 Telephone: (61-2) 6204 6500 Facsimile: (61-2) 6230 0149

Online Email: info@allenconsult.com.au Website: www.allenconsult.com.au

Suggested citation for this report: Allen Consulting Group 2013, Boat industry training market analysis and conceptual model, Report to the Department of Education and Early Childhood Development, Melbourne.

Disclaimer: While the Allen Consulting Group endeavours to provide reliable analysis and believes the material it presents is accurate, it will not be liable for any claim by any party acting on such information. Allen Consulting Group 2013

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Contents

Executive summary
Project overview Skills needs of the boat building sector Issues with the boat building apprenticeship in its current form

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v v vii

A long-term vision for meeting the skills needs of the Victorian boat building industry viii Redesign of the boat building qualification ix

Chapter 1

Project overview
1.1 Background 1.2 Methodology

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Chapter 2

Overview of the boat building sector in Victoria


2.1 Market structure 2.2 Product segments 2.3 Product demand 2.4 International competition

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Chapter 3

The specific skills needs and current training delivery in the boat building sector
3.1 The qualification: The Certificate III in Marine Craft Construction

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3.2 Operational practice, skills requirements and the value of the Certificate III in Marine Craft Construction apprenticeship 10 3.3 Diverse training requirements across the boating industry 3.4 Training delivery in Victoria 3.5 Issues with the boat building apprenticeship in its current form 3.6 Lessons from the New Zealand model of boat building training 12 13 15 17

Chapter 4

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Options to meet the training needs of Victorian boat builders in the short-term
4.1 Approach to development of options

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4.2 Options for the short term: Alternative curriculum and delivery models 21

Chapter 5 The Allen Consulting Group

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A long-term vision for meeting the skills needs of the Victorian boat building industry
5.1 Long-term considerations 5.2 A long-term vision for meeting the skills needs of the Victorian boat building industry 5.3 Redesign of the boat building qualification

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Appendix A

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Conceptual model for analysing thin markets


A.1 Conceptual model A.2 Training market analysis

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28 30

Appendix B

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The boat building training system in New Zealand


B.1 NZ Marine industry B.2 NZ training system B.3 The boat building apprenticeship system B.4 Pre-apprenticeship courses B.5 Lessons for Victoria

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32 32 32 33 33

Appendix C

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Stakeholders consulted
Appendix D

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Units in the Certificate III in Marine Craft Construction


D.1 Core units 5.4 Elective units 5.5 Other elective units

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36 37 38

References

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BOATING INDUSTRY TRAINING MARKET ANALYSIS AND CONCEPTUAL MODEL

Executive summary
Project overview

The Allen Consulting Group was commissioned to examine the Victorian market for recreational boat building training and develop a model for the continuation of such training in Victoria. Victoria University, the only RTO in Victoria approved to deliver the Certificate III in Marine Craft Construction, ceased delivery training in 2012. In recent years Victorian University had struggled to maintain training in this area due to falling enrolment numbers and high course costs. The Boating Industry Association of Victoria (BIAV) and employers are concerned that a lack of boat building training will lead to a skills shortage in the industry. This project comprised three stages as follows: analysis of data on the boat building industry and trends in training provision, and a literature review of training in thin markets and boat building training in other countries; consultation with employers, the BIAV, training providers across Australia and relevant New Zealand organisations regarding the likely demand for training, and the viability, content and delivery of options for boat building training; and development of training options based on a desktop analysis and consultations, including high level business cases for each option to examine the financial viability of different courses and delivery models.

Skills needs of the boat building sector

Recreational boat building businesses in Victoria have a range of operational practices and processes in place with significant variation from firm to firm. Skills requirements in the industry vary according to: Manufacturing setup and scale:

manufacturers that have adopted small-scale production line processes or batch manufacturing processes prefer to employ apprentices or experienced workers who are competent in working in a particular process or in a specialised trade; larger manufacturers compete mostly on volume and price, and normally have a production line setup, with each worker specialising even more narrowly in a small part of the manufacturing process;

Construction materials used most businesses tend to specialise in a small number of product designs based on a single construction material typically either steel, aluminum or fiberglass and as a result, most manufacturers tend to require workers to are competent in working with just one material;

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Firm-specific equipment and processes businesses tend to have firm-specific fabrication processes and production methods, which often embody the design philosophy, differentiation and innovation of the individual product or company; Pathways into a broad and long-term career in the marine sector some businesses suggest that the apprenticeship has suffered from low numbers of enrolments due to the narrowness of the career opportunities to which the qualification is geared; The need to compete in the international boat markets many firms agreed that skills would continue to be a critical area of competitive advantage for the Victorian boat building industry with skills required in:

quality workmanship whilst improving operational efficiency and competitiveness; the area of research and development and product development and design to ensure constant innovation and product differentiation; and adaptability and versatility to support bespoke products and higher degrees of product customisation;

The diverse needs of the domestic repair sector the repair sector requires a wide breadth of technical skills across all materials and boat sizes.

The diversity of the skills requirements of the boating industry is summarised in Figure ES1.1 below. The skills requirements of the industry outlined above provides a clear explanation for the long-standing low levels of enrolments in the Certificate III in Marine Craft Construction in Victoria.
Figure ES 1.1

MAP OF TRAINING REQUIREMENTS ACROSS THE BOATING INDUSTRY

Source: Allen Consulting Group

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Issues with the boat building apprenticeship in its current form

Following Victoria Universitys cessation of provision, four RTOs deliver the Certificate III around Australia (the Hunter Institute, recently ceased provision in regional New South Wales.) All four current training providers are experiencing similar issues with falling student numbers. The issues relating to the boat building apprenticeship in its current form can be summarised in three categories: the industry-specific challenges that are being faced across the boat building industry recent falls in local and international demand for recreational vessels in a time of weak global economic conditions, growing international competition and the move towards production line and batch production methods suggests that a declining proportion of firms will consider the traditional boat building trade to be the qualification that best fits their needs; issues specific to the Certificate III qualification as it is currently designed the Training Package rules are restrictive and often not aligned to the contemporary work practices and production processes of firms; and broader issues which underpin the declining popularity of apprenticeships in many other sectors and trades consistent with the experience in other industries, the broader issues with the traditional apprenticeship model include:

declining support for a contract of training approach due to the inflexibility and high commitment required from the perspective of employers; the administration and management costs of having an apprenticeship; issues with the length and timing of block release requirements, which can adversely impact on production schedules and delivery deadlines; challenges around the retention of apprentices; issues around the work readiness of apprentices, particularly young apprentices, and the difficulties in identifying suitable candidates; a general move towards workforce development through non-formal training and on-the-job learning delivered within the organisation rather than formal education and training delivered by third party providers.

Options identified

Based on stakeholder consultations, and research and analysis undertaken around the possible variations in the course/curriculum content and the training delivery model, five options have been identified as potential alternatives to the delivery of the Certificate III in Marine Craft Construction previously offered by Victoria University. The options identified represents a subset of a wider range of options considered and tested through the consultations with stakeholders and internal analysis. The primary reasons for omitting the other options from the shortlist were twofold: there is a long expected lead time to establishing these options as viable solutions; and there is at present a lack of strong training provider interest in these options. The Allen Consulting Group

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BOATING INDUSTRY TRAINING MARKET ANALYSIS AND CONCEPTUAL MODEL

The shortlist of options is as follows: Option 1: Delivery of the Certificate III in Marine Craft Construction by a Victorian TAFE institute Option 2: Delivery of the Certificate III in Marine Craft Construction by an interstate TAFE institute Option 3: Alternative trade training programs in relevant areas by a Victorian TAFE institute or private RTO Option 4: Work- and campus-based delivery by a TAFE institute/RTO of an alternative trade training program with some specialisation in marine craft construction Option 5: Overseas delivery of the New Zealand National Certificate in Boat Building

A long-term vision for meeting the skills needs of the Victorian boat building industry

In the future, the boat building industry can expect to see a shift away from the prescription of one or two courses as the primary qualifications for the sector and see the emergence of more highly customised provision which is characterised by: the ability for employers and employees to select from a broad menu of relevant courses and qualifications at different levels; work-based training and assessment and other innovations in delivery which meet the needs of businesses with minimal disruptions to ongoing operations; and concurrent delivery of technical and generic skills across all employees within a given firm including in business administration (such as book-keeping and compliance), management (including front-line management), environmental sustainability, and lean and competitive manufacturing.

The issues regarding the long-term sustainability of delivery of any given course could be obviated in a market where RTOs leverage training of boat building into other occupations and skills sets in a firm and across the sector. While the long-term delivery of a holistic boat building provision will continue to be important to the sector, this is likely to be delivered interstate or overseas. Building on the map of training requirements across the boating industry, Figure ES1.2 illustrates how the preferred training options identified in the analysis above will meet those training needs. The BIAV could support the evolution and emergence of such a model by promoting investment by firms in training and on-going professional development across a wide range of areas as a point of competitive advantage for the industry. The BIAV could go a step further by playing a facilitative role in the development of customised training programs for individual member organisations or industry clusters with similar training needs, and reputable and innovative RTOs.

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BOATING INDUSTRY TRAINING MARKET ANALYSIS AND CONCEPTUAL MODEL

Figure ES 1.2

MAP OF TRAINING REQUIREMENTS ACROSS THE BOATING INDUSTRY AND PREFERRED TRAINING OPTIONS

Source: Allen Consulting Group

Redesign of the boat building qualification

In the long-run, the redesign of the Certificate III in Marine Craft Construction is a key underpinning step towards a more dynamic and sustainable training delivery model. The inflexibility of the existing training package restricts the ability of RTOs to tailor courses that are more responsive to the specific needs of individual employers and raises the cost of delivery by requiring highly skilled trainers and access to teaching infrastructure across a large number of areas. Manufacturing Skills Australia (MSA) is currently undertaking a full review of the Metal and Engineering Training Package, which the Certificate III in Marine Craft Construction falls under. The review is due to be completed in early 2014. As part of the review MSA could modify and extend the qualification to allow for: a stronger pre-apprenticeships pathway pre-apprenticeships can present an opportunity to increase the interest, enrolment and completion of courses in a particular trade and (not withstanding the differences in the apprenticeship model) in New Zealand, it is a significant and critical foundational component of the National Certificate in Boat Building; and a marine craft construction traineeship as recommended by one provider (Challenger Institute), the introduction of a traineeship model for marine craft construction could present a more sustainable alternative pathway into the industry. A traineeship model would involve the development on a simplified version of the current apprenticeship training package, with less focus on the breadth of technical units of competency and less onerous requirements for block release (if any).

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BOATING INDUSTRY TRAINING MARKET ANALYSIS AND CONCEPTUAL MODEL

Given its strong international reputation, the redesign of the marine craft construction should draw on New Zealand Certificate in Boat Building. It was reported that the New Zealand Certificate in Boat Building has been licensed to the Canadian state of Nova Scotia, demonstrating the international currency of the qualification. The option of licensing part (or all) of the New Zealand training model could be explored further as part of the redesign process.

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Chapter 1

Project overview
1.1 Background

The Allen Consulting Group was commissioned to examine the Victorian market for recreational boat building training and develop a model for the continuation of such training in Victoria. The project was undertaken for the High Education and Skills Group (HESG) of the Department of Education and Early Childhood Education (DEECD). Victoria University, the only RTO in Victoria approved to deliver the Certificate III in Marine Craft Construction, ceased delivery training in 2012. In recent years Victorian University had struggled to maintain training in this area due to falling enrolment numbers and high course costs. The Boating Industry Association of Victoria (BIAV) and employers are concerned that a lack of boat building training will lead to a skills shortage in the industry. This project focused on issues associated with the sustainable future provision of a qualification equivalent to the Certificate III in Marine Craft Construction, and will not directly address the broader challenges of the boat building industry. Nonetheless, the options for the provision of training particularly in terms of apprenticeship training must be informed by an overall assessment of the structural trends and medium outlook for boat building activity. The Victoria Government has established a fund to address market failures in the vocational education system. As the first initiative to be financed by the fund, this project is a prototype response to issues of market failure affecting strategic industry sectors.
1.2 Methodology

This project employed a four part methodology which was developed in discussions with the project Steering Committee. The first stage involved an analysis of data on the boat building industry and trends in training provision, and a literature review of training in thin markets and boat building training in other countries. The project then undertook an extensive round of consultation with employers, the BIAV, training providers across Australia and relevant New Zealand organisations. The consultations indicated the likely demand for boat building training, and provided stakeholder views on the viability, content and delivery of options for boat building training. A full list of stakeholders consulted is in Appendix C. Based on the desktop analysis and consultations, training delivery options were developed, including high level business cases for each option to examine the financial viability of different courses and delivery models. The conceptual model developed as part of this project for the identification and analysis of thin markets is in Appendix A. The Allen Consulting Group

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This report

The remainder of this report is structured as follows: Chapter 2 provides an overview of the boat building industry in Victoria; Chapter 3 examines the supply of boat building training to date, the specific skills sector and draws lessons from other thin VET markets and New Zealands training system; Chapter 4 sets out the five short-term options for boat building training in Victoria; and Chapter 5 proposes a long-term vision for meeting the skills needs of the Victorian boat building industry.

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Chapter 2

Overview of the boat building sector in Victoria


The recreational boat building industry in Victoria has some unique and important characteristics which have both direct and indirect implications for the skills and training requirements of the sector. The following sections discuss: the market structure of the boat building sector in Victoria, mainly comprising small businesses; the wide variety of products and services which constitute the boat building sector; the nature of market demand for recreational vessels; the industrys exposure to international competition in both local and overseas markets; and the operational practices and processes of firms, and the corresponding range of skills and training requirements across the sector.
Market structure

2.1

The recreational boat building industry is made up of companies that build or repair small to medium-sized boats. As Figure 2.1 shows, there were around 115 businesses in the industry in Victoria as of 2011-12. A key feature of the recreational boat building industry in Victoria, and Australia more broadly, is that the industry primarily comprises small firms, with the majority employing less than 20 workers. Only 8 per cent of firms in the boat building industry employ more than 20 workers. This has a direct impact on the capacity of each individual business to take on and maintain an apprentice through a four-year contract of training this is a problem common to most small businesses particularly in the manufacturing sector. Victorias recreational boat building industry is concentrated in Melbourne, Geelong and the Mornington Peninsula, with small clusters of boat builders in some regional Victorian towns such as Lakes Entrance. Victoria accounts for approximately 13 per cent of the 870 recreational boat building companies in Australia. The majority of businesses are located in Queensland and New South Wales (IBISWorld 2013).

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Figure 2.1

BOATBUILDING BUSINESSES IN VICTORIA

Source: ABS 8165.0

2.2

Product segments

The products and services offered across the boat building industry are diverse. Business can first be divided between manufacturers and repairers. The manufacturing side of the sector includes firms that build a wide variety of small to medium sized vessels (boats of under 50 tons displacement) of which the main segments are listed in Figure 2.2. Stakeholders interviewed included manufacturers of speedboats, sailboats, pilot boats, fishing cruisers, houseboats, and racing sculls.
Figure 2.2

AUSTRALIAN BOAT BUILDING BUSINESSES BY PRODUCT SEGMENTS

Source: IBISWorld Industry Report C2392 Boatbuilding and Repair Services in Australia 2013

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BOATING INDUSTRY TRAINING MARKET ANALYSIS AND CONCEPTUAL MODEL

In addition to differences in vessel type and design, manufacturers in the industry also vary according to the materials. Modern materials primarily comprise fiberglass and other composites, aluminum and steel. Some niche manufacturers continue to specialize in timber vessels.
2.3 Product demand

Most of the recreational marine craft built by boat building companies can typically be classed as luxury goods; the consumption of luxury goods increases more rapidly as income levels rise and demand is more sensitive to household disposable income. It is clear that the industry is thus particularly exposed to the economic cycle. When consumers experience a fall in their income levels, spending on luxury goods, including recreational marine craft, is often one of the first areas of expenditure to be reduced. Some observers note that the impact of the global financial crisis on superannuation funds also impacted on the purchasing decisions of retirees (and those approaching retirement) who drive a significant proportion boat sales. Some of the larger manufacturers (Riviera and Whitley Marine Group) went in to receivership as a result of weak demand following the global financial crisis (IBISWorld 2013). In 2011-12, the Australian boat building industry generated around $1.6 billion in revenue annually, a sharp decline from the peak of approximately $2.3 billion in 2005-06. In recent years the fall in industry revenue has continued due to the adverse economic conditions following the global financial crisis of 2008-09. However as Figure 2.3 shows, there appears to have been a modest recovery in the 2011-12 financial year. In the same period, total employment in the sector has also been declining, falling 18 per cent since 2006-07 (Figure 2.3).
Figure 2.3

BOAT INDUSTRY REVENUE AND EMPLOYMENT


2,500 2,000 Revenue $m 1,500 1,000 500 0 10,000 8,000 6,000 4,000 2,000 0 Employment

2005-06

2003-04

2004-05

2006-07

2007-08

2008-09

2009-10

2010-11

Revenue (LHS) Source: IBISWorld 2013

Employment (RHS)

2011-12

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BOATING INDUSTRY TRAINING MARKET ANALYSIS AND CONCEPTUAL MODEL

Despite the recent downturn in the boat building industry, stakeholders consulted suggest that there is the potential for growth. Constraints on local demand, in particular the limited access available to slipways and moorings in Victoria suggest that domestic ownership and sales may be somewhat depressed. IBISWorld forecasts average annual revenue growth of 4.3 per cent over the next six years, although employment growth is only expected to average 1 per cent, likely due to increased automation in the industry.
2.4 International competition

Like most manufacturing industries in Victoria, the domestic recreational boat building market is subject to competition from overseas manufacturers and imported products, while local manufacturers also produce for export and compete in overseas markets. From 2003-04 to the onset of the global financial crisis, both imports and exports were increasing, although imports had been growing more strongly see Figure 2.4. The global financial crisis saw imports and exports fall as demand in Australia, and in overseas markets such as the US and Europe, was impacted by the economic slowdown. While imports appear to have plateaued, exports have continued to fall. Like all manufacturing sectors, the continued strength of the Australian dollar is likely to be an important factor in making imports more affordable to local consumers while exports become less competitive in overseas markets.
Figure 2.4

RECREATIONAL BOAT IMPORTS AND EXPORTS


700 600 500 400 $m 300 200 100 0 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Exports Source: IBISWorld 2013 Imports

In addition to exchange rate impacts, Australia has also recently seen a large increase in the practice of importing second hand vessels from the United States, offering domestic consumers a more affordable alternative to buying a new boat.

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At the same time, there is also emerging competition from mass-produced imported vessels from China. While China accounts for only 7 per cent of all recreational boat imports into Australia at present, growth has been very strong, averaging 28 per cent annually over the last 5 years (UNCOMTRADE 2013). Consultations with stakeholders and industry analysis share the expectation that imports from China (and the quality of those imports) can be expected to grow, putting additional pressure on the industry, particularly the larger manufacturers. One advantage local manufacturers have over imported products is a preference for locally designed and manufactured vessels. There is strong anecdotal evidence to suggest that consumers develop a high level of brand loyalty and maintain an affinity for locally manufactured products designed especially for local conditions, particularly those vessels produced by custom boat builders. In the future, most of the manufacturing firms consulted agree that while price and therefore efficiency are critical to competition, Australian boat builders will have to compete primarily on the basis of product differentiation, innovation and customisation. Unlike the manufacturers, the repair sector is a service industry and is therefore not exposed to international competition and is likely to continue to grow in line with boat ownership in Victoria.

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Chapter 3

The specific skills needs and current training delivery in the boat building sector
This chapter examines the current Australian boat building apprenticeship qualification, and the reasons the sole provider in Victoria decided to cease offering it. The chapter identifies boat building training as a thin VET market, and draws lessons from other thin markets around Australia. The final section examines the strengths and weaknesses of the New Zealand system of boat building training.
3.1 The qualification: The Certificate III in Marine Craft Construction

The Certificate III in Marine Craft Construction (MEM30705) is delivered as a three year apprenticeship with off-the-job training occurring over eight weeks of block release annually. According to the training package rules, the qualification must comprise the following three categories of units: There are 12 core, generalist engineering units such as measurement, task management and occupational health and safety (OH&S). Each student must then complete around 20 elective units (depending on how many points each unit is worth) covering specific marine craft construction skills. Students then complete a further 15 elective units from a wider set of trade specialisiation units from the Metal and Engineering Training Package (MEM05).

The core and elective units are listed in Appendix D. The Certificate III in Marine Craft Construction is the only qualification that specifically caters to the boatbuilding industry. The apprenticeship has traditionally been the sole entry-point for new workers seeking a career as a boat builder. While the Certificate III in Marine Craft Construction continues to be the primary qualification required in many boat building and boat repair businesses in Australia, it is apparent from the consultations with industry that a large proportion of firms no longer consider it the preferred qualification, much less the required qualification (see discussion below). The boat builder and repairer category was identified by Department of Education, Employment and Workplace Relations (DEEWR 2012) as an area of skills shortage in 2005-2008 and 2011 but consultations with the boat building industry in Victoria did not identify any notable skills shortages, primarily due to depressed market conditions at present. In Victoria, the Certificate III in Marine Craft Construction attracts the highest possible rate of government subsidy at $12.50 per student hour (DEECD 2012).

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Enrolment numbers

Figure 3.1 shows the total number of apprentices Australia-wide registered in the Certificate III in Marine Craft Construction from 2006 to 2012. Queensland and New South Wales have historically had the highest number of apprentices enrolled but both states have seen significant falls in registered apprentices since the global financial crisis. The decline in Queensland, where a large proportion of the boat building industry is concentrated, has experienced a precipitous fall over the last four years with the number of registered apprentices now at less than one-fifth of the levels observed prior to the global financial crisis.
Figure 3.1

NUMBERS OF REGISTERED APPRENTICES IN THE CERT III IN MARINE CRAFT CONSTRUCTION BY STATE 2006 2012
450 400 350 300 250 200 150 100 50 0 Jul - Sep 2006 Jul - Sep 2007 Jul - Sep 2008 Jul - Sep 2009 Jul - Sep 2010 Jul - Sep 2011 New South Wales Victoria Queensland South Australia Western Australia

Oct - Dec 2008

Apr - Jun 2006

Apr - Jun 2007

Apr - Jun 2008

Apr - Jun 2009

Apr - Jun 2010

Apr - Jun 2011

Jan - Mar 2006

Oct - Dec 2006

Jan - Mar 2007

Oct - Dec 2007

Jan - Mar 2008

Jan - Mar 2009

Oct - Dec 2009

Jan - Mar 2010

Oct - Dec 2010

Jan - Mar 2011

Oct - Dec 2011

Source: VOCSTATS

Figure 3.2 shows that Victorias enrolment levels have not faced such a significant decline but rather have been persistently low, averaging approximately 60 registered apprentices at any given time. For a three-year program, this is roughly equivalent to 20 new apprentices every year. There has been a further reduction in enrolments in the last year with only 40 registered at the end of 2012. For any provider these numbers are not likely to support a decision to enter the market in an environment when all RTOs require a reasonable return for any program offered under the Victorian Training Guarantee and decisions to enter new markets are assessed against other market opportunities.

Jan - Mar 2012

Apr - Jun 2012

Jul - Sep 2012

Tasmania

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Figure 3.2

REGISTERED VICTORIAN APPRENTICES IN THE CERT III IN MARINE CRAFT CONSTRUCTION 2006 - 2012
90 80 70 60 50 40 30 20 10 0 Jul - Sep 2006 Jul - Sep 2007 Jul - Sep 2008 Jul - Sep 2009 Jul - Sep 2010 Jul - Sep 2011 Apr - Jun 2006 Apr - Jun 2007 Apr - Jun 2008 Apr - Jun 2009 Apr - Jun 2010 Apr - Jun 2011

Jan - Mar 2009

Oct - Dec 2006

Oct - Dec 2007

Oct - Dec 2008

Oct - Dec 2009

Oct - Dec 2010

Oct - Dec 2011

Jan - Mar 2006

Jan - Mar 2007

Jan - Mar 2008

Jan - Mar 2010

Jan - Mar 2011

Source: VOCSTATS

The data above is consistent with information supplied by the previous sole provider of the Certificate III in Marine Craft Construction in Victoria Victoria University. Table 3.1 shows that since 2007 the annual intake of boat building apprentices has been approximately 14 per annum with some volatility and only 11 enrolments in 2012.
Table 3.1

VU STUDENTS CERTIFICATE III IN MARINE CRAFT CONSTRUCTION Intake year 2007 2008 2009 2010 2012 2012 Apprentice notifications* 18 20 9 22 16 11 Finished/current 14 14 6 12 14 N/A

Source: Unofficial records from Victoria University Note: *Apprentice notifications includes apprentices who dropped out of the course, and people who registered for the course but did not commence.

3.2 Operational practice, skills requirements and the value of the Certificate III in Marine Craft Construction apprenticeship
Skills required based on manufacturing setup and scale

As discussed in Section 2.1, the vast majority of businesses in the boat building industry are small enterprises. Most of the manufacturing businesses consulted operate on small-scale production line processes or batch manufacturing processes. The Allen Consulting Group

Jan - Mar 2012

Apr - Jun 2012

Jul - Sep 2012

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Many manufacturers that have adopted small-scale production line processes or batch manufacturing processes do not consider the Certificate III in Marine Craft Construction to be the core or requisite qualification. Most employers recognise the value of having a person trained in the breadth of skills and knowledge in marine craft construction but nonetheless many prefer to employ apprentices or experienced workers who are competent in working with composites, boiler-making, welding, wood-working and electrical components. For many of the small businesses interviewed, a competent and adaptable manufacturing workforce is more important than craftsmen capable of building a wide variety of vessels from start to finish. For this reason, most employers were not concerned about the loss of the Certificate III in Marine Craft Construction with the exception of those boat builders who worked with the more traditional materials and the boat repairers who had to work across a range of designs and materials (see discussion below). Larger manufacturers compete mostly on volume and price, and normally have a production line setup, with each worker specialising even more narrowly in a small part of the manufacturing process. As a result, the skills needs of these businesses are even narrower.
Skills required based on construction material used

Most businesses also tend to specialise in a small number of product designs based on a single construction material typically either steel, aluminum or fiberglass. The skills required to work with these materials are distinct. As a result, most manufacturers tend to require workers to are competent in working with just one material. In contrast, the Certificate III in Marine Craft Construction is an apprenticeship which builds on the traditional shipwrights craft, and it includes a wide range of units for working with steel, composites and timber; aluminum units are notably absent from the current qualification.
Skills required based on firm-specific equipment and processes

Businesses tend to have firm-specific fabrication processes and production methods, which often embody the design philosophy, differentiation and innovation of the individual product or company. Some businesses report that in some instances, the delivery of the Certificate III in Marine Craft Construction can be in fact be counterproductive as apprentices learn of methods or processes that are either out-dated or ill-suited to the particular approach adopted at their enterprise.
Skills required to have a broad and long-term career in the marine sector

Some businesses suggest that the apprenticeship has suffered from low numbers of enrolments due to the narrowness of the career opportunities to which the qualification is geared. At least two firms support the broadening of the apprenticeship to allow more varied career paths through the sector.

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Skills required to compete in the international boat markets

Many firms agreed that skills would continue to be a critical area of competitive advantage for the Victorian boat building industry with firms increasingly competing locally and globally on the basis of quality and innovation, which in turn depends on a skilled workforce. In many instances, these skills will be required in: quality workmanship competitiveness; whilst improving operational efficiency and

the area of research and development and product development and design to ensure constant innovation and product differentiation; and adaptability and versatility to support bespoke products and higher degrees of product customisation.

Conscious of international competition, most businesses consulted saw lean manufacturing as an emerging skill need, and one business had already invested in gradually upgrading the skills of its employees in this regard. Some businesses also recognised that while the skills needs of the technical production staff on the workshop floor were important, the skills needs of other staff including administrative staff, sales staff and management could not be overlooked.
Skills required for the domestic repair sector

The repair sector requires a wide breadth of technical skills across all materials and boat sizes. Repair sector employees must work with wood, composites, and aluminium, and be able to repair all parts of a boat. As a result, the repair sector is understandably more strongly supportive of the ongoing delivery of the Certificate III in Marine Craft Construction, which offers a well-rounded introduction to the industry for their apprentices.
3.3 Diverse training requirements across the boating industry

The diversity of the skills requirements of the boating industry is summarised in Figure 3.3 below, and can be categorised as follows: the mass producers that compete primarily on volume and price tend to be larger businesses that require workers who are specialised in a small number of steps in the production line; batch manufacturers and custom builders competing on smaller volumes of highly innovative or bespoke vessels will require a more versatile workforce that is highly competent in the specific production methods and practices of the firm; and the domestic repairers will continue to seek apprentices with broad technical knowledge across all aspects of marine craft construction.

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Figure 3.3

MAP OF TRAINING REQUIREMENTS ACROSS THE BOATING INDUSTRY

Source: Allen Consulting Group

3.4

Training delivery in Victoria

The skills requirements of the industry outlined above provides a clear explanation for the long-standing low levels of enrolments in the Certificate III in Marine Craft Construction in Victoria depicted in Figure 3.2. In Victoria, the Certificate III in Marine Craft Construction had been delivered by Victoria University for a number of decades. The course took place at the VU Boatbuilding Program Facility at the VU Newport Campus. The majority of students came from the western suburbs, metropolitan Melbourne, and Geelong Figure 3.4. Due to a lack of training in their own state, some students would travel from Tasmania to undertake the Certificate III at VU.

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Figure 3.4

DISTRIBUTION OF APPRENTICES ATTENDING VICTORIA UNIVERSITY IN 2011


First-year apprentices 12 10 8 6 4 2 0 Docklands, Williiamstown, Laverton Metro Melbourne Geelong Tasmania Others Second-year apprentices Third-year apprentices

Source: Unofficial records from Victoria University

In 2012, VU ceased offering the Certificate III in Marine Craft Construction. Consultations. Various current and past members of the relevant faculty identified a number of factors contributing to this decision, but ultimately it came down to the fact that the course was not commercially viable. The Certificate III had been cross-subsidised by VU for sometime, with hobby builders also exerting pressure on VU to maintain the training facility used for boat building training. A letter from VU to DEECD in late 2011 indicated that, VU had been operating its boat building program an annual loss of about $200,000. The course administrators had exhausted efficiencies and cost savings in the delivery of the course average annual enrolments were simply insufficient to sustain the employment of one trainer. Victorian Government reforms of the VET sector, in particular reductions in subsidy rates in other areas and the removal of other financial support to TAFE institutes meant that the avenues for cross subsidies were no longer available. With the high hourly funding rate and the removal of limits on fees, VU found that student numbers were too low to sustain the course even if tuition fees were increased. Towards the end of the course at VU, students per year were below 15, with a particularly low number in 2009, possibly due to economic conditions at the time (Table 3.1).

VU closed its Newport Campus in 2012, moving most courses to the new Sunshine Construction Futures facility. While the Sunshine campus did not factor in the infrastructure required to deliver the Certificate III in Marine Craft Construction, the infrastructure costs were not the main issue for VU.

Apprenticeship numbers

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3.5

Issues with the boat building apprenticeship in its current form

Following VUs withdrawal from provision, four RTOs continue to deliver the Certificate III around Australia (an additional four have the qualification on their scope of registration) two in Queensland and one each in New South Wales and Western Australia. The Hunter Institute, recently ceased provision in regional New South Wales. The issues relating to the boat building apprenticeship in its current form can be summarised in three categories: broad challenges that are being faced across the boat building industry; issues specific to the Certificate III qualification as it is currently designed; and broader issues which underpin the declining popularity of apprenticeships in many other sectors and trades.

Industry-specific factors

The challenges facing the boat building industry discussed in Sections 2.3 and 2.4, including the recent falls in local and international demand for recreational vessels in a time of weak global economic conditions as well as growing international competition, suggest that there is unlikely to be a short-term increase in apprenticeship numbers. For the Victorian industry in particular, apprenticeship numbers have been relatively static, even during the pre-GFC boom years. In addition, the move towards production line and batch production methods discussed in Section 3.2 suggests that a declining proportion of firms within the sector will consider the traditional boat building trade to be the qualification that best fits their skills needs.
Issues specific to the Certificate III in Marine Craft Construction

While there appear to be a large number of elective units available as part of the Certificate III in Marine Craft Construction, the Training Package rules are in fact restrictive. As a rule, providers are required to deliver units across steel, composites and wood, but are unable to focus or specialised on a single material to mirror the practice in industry. Providers are also unable to include units for aluminium boat building. In addition, as discussed in Section 3.2, employers report that some units are not aligned to the contemporary work practices and production processes of firms. In the model of delivery previously adopted by VU there has not been a significant component of work-based training. In the eyes of some firms, the Certificate III in Marine Craft Construction is held to be an adequate but by no means cutting edge qualification.

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Broader issues with the traditional apprenticeship model

It is important to recognise that the issues regarding low and declining enrolment numbers in the boat building apprenticeship are symptomatic of broader issues with the apprenticeship model in Australia. Consistent with the experience in other industries, some employers in the boat-building sector who support the traditional apprenticeship appear to be driven in part by a philosophical commitment to the training model based on their own personal experience having completed the qualification. Nonetheless, supporters of the boat building apprenticeship and those who are unsupportive or simply indifferent report a consistent list of challenges, which exemplify the broader issues with the traditional apprenticeship model across a range of trade areas. In general, there has been declining support for a contract of training approach due to the inflexibility and high commitment required from the perspective of employers. The administration and management costs of having an apprenticeship are also an obstacle for some firms, particularly smaller firms. Employers often take issue with the length and timing of block release requirements, which can adversely impact on production schedules and delivery deadlines. Employers and providers alike report retention challenges as a proportion of apprentices inevitably realise that they are no longer interested in the limited career offered by a traditional trade (or simply lose interest or have a falling out with their employer). The work readiness of apprentices, particularly young apprentices, and the difficulties in identifying suitable candidates is an important factor that discourages more firms from participating. There is a general move towards workforce development through non-formal training and on-the-job learning delivered within the organisation rather than formal education and training delivered by third party providers.
1

In sum, a range of other niche trades are facing thin market issues which are in turn eroding the long-term commercial viability of provision. Governments, industry and RTOs have employed a number of strategies to overcome thin markets. Some states place restrictions on the number and/or type of RTOs which can receive public subsidies to deliver the training in thin markets, thus making the provision of training more financially appealing. Consultations indicate that one Victoria RTO would be much more likely to offer the Certificate III in Marine Craft Construction if it was given a monopoly over provision. In another area, a private RTO operating in thin VET markets in regional NSW has sought to increase the viability of training by employing distance education options, and by using a traineeship as the first year of the apprenticeship so that training and assessment can occur fully on the job (Ferrier et al 2008).

Thin markets can be defined as occupational or geographical areas where there are an insufficient number of learners seeking training to make the provision of such training viable. Causes of thin markets include declining industries, out-dated forms of training, low staff turnover within industries and a failure to recognise synergies for training in other occupations and industries (Ferrier et al 2008).

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For many years states in thin market apprenticeship areas such as printing and watchmaking have arranged for apprentices to be trained interstate under block release models.
Lessons from the New Zealand model of boat building training

3.6

Apprenticeship training in New Zealand underwent a series of reforms in the 1990s which led to the countrys Modern Apprenticeships system, which is predicated on strong industry support and involvement in the development and delivery of qualifications through Industry Training Organisations (ITOs). ITOs are funded by the relevant industry and government. The government does not fund apprenticeship training separately, which gives ITOs significant control over curriculum development and delivery. The New Zealand National Certificate in Boat Building is a highly regarded apprenticeship model both for the quality of the curriculum and the involvement of the industry in its design and delivery. The New Zealand Marine Industry Training Organisation (NZMITO) was established in 2000 and is the training division of the NZ Marine Industry Association. The NZMITO is responsible for developing the apprenticeship curriculum, which is then reviewed and updated every five years, ensuring it keeps pace with current technology. Apprenticeships normally take 4-5 years. The curriculum is structured through unit standards or competencies. Students learn on the job, through an e-learning platform and at technical college. Most learning takes place at the apprentices worksite with unit standard manuals provided by the NZMITO. There are around seven assessors traveling to worksites throughout New Zealand to assess apprentices against the competencies set by the NZMITO. The unit standards are reviewed every five years to ensure the course is consistent with current technology use in the industry. The National Certificate in Boat Building facilitates sector specific skills with each apprentice choosing one of eleven areas to specialise in, including composites, wooden, alloy, marine systems engineering, and marine cabinetmaking. The NZMITO also offers apprenticeships in Marine Sales & Services, Competitive Manufacturing and Marina Operations and Services. The NZMITO training program has trained approximately 1300 apprentices including around 200 from Australia in the 12 years since its establishment with approximately 420 students currently enrolled (78 per cent of whom are in the Boat Building relating trade). NZMITO field officers develop individual training agreements with boat building apprentices, with most training taking place in the workplace or online. For formal apprenticeship training, the NZMITO subcontracts to training provider Unitec Institute of Technology. Apprentices normally undertake two weeks of block release annually, except in their first year. As Unitec is the only provider of formal boat building education, apprentices travel from around New Zealand to its campus in Auckland. The cost of formal training is split between the NZMITO and apprentices. The Allen Consulting Group

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Unitec offers a stand-alone formal vocational qualification, which takes one year full time and is considered a pre-apprenticeship. Annual student numbers are around 30-40, with international students accounting for around 50 per cent of students. The Unitec certificate is independent of the NZMITO qualifications, although students may obtain credits towards the qualifications. Around half of Unitec boat building graduates go on to the NZMITO apprenticeship. Consultations indicate that the block release is not particularly profitable for Unitec, and that its provision may not be viable without the one year course which supports the training facility and materials, and trainers. There are a number of issues raised by the New Zealand model of training that Victoria could consider including: More industry involvement in course development and regular review of the training curriculum; Increased use of online learning; A reduction in the number of block release weeks; and Consolidation of training provision and increased travel by apprentices for block release.

A detailed description of the New Zealand model of boatbuilding training is in Appendix B.

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Chapter 4

Options to meet the training needs of Victorian boat builders in the short-term
This chapter outlines a series of potential options for boat building training in Victoria.
4.1 Approach to development of options

As discussed in Chapter 3, a key factor governing the sustainability of an alternative training solution for the boat building industry will be the financial viability of the proposed solutions. This focus on options that are most likely to be viable leads to the identification of a range of factors affecting the two principal factors, namely: adequate numbers of enrolments in the proposed training solutions going forward, which are reliant on both employer support and student demand; and payment of an economic price which is contingent of sufficient revenue from government subsidies and tuition fees that will cover the cost of delivery.

The complete list of eight factors that ultimately determine the sustainability of provision are listed in Figure 4.1.
Figure 4.1

DETERMINANTS OF COURSE SUSTAINABILITY

Source: Allen Consulting Group 2013

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For each of these eight factors, the options considered fall on a spectrum of possibilities which either promote sustainable provision or pose a challenge for sustainable provision. Based on feedback from stakeholders, Figure 4.2 illustrates how under the previous arrangements the delivery of the Certificate III in Marine Craft Construction at Victoria University was unsustainable. According to a letter from Victoria University to DEECD, the Certificate III in Marine Craft Construction was running at a loss of approximately $200,000 per annum. Stakeholders suggested that the course: was merely adequate and not cutting edge; was highly focused on boat building and so missed a chance to develop a set of skills that could transfer across the broader marine sector; developed apprentices who were relatively less well paid than those trades in high demand in interstate resources projects or in local infrastructure projects such as the desalination plant; attracted a very high rate of government subsidy, but with low willingness to pay on the part of students and employers; was based on the traditional apprenticeship model, with training package units across a wide range of expertise and knowledge (including more traditional boat building materials such as timber); and required too many periods of block release throughout the year.

Figure 4.2

PROMOTING SUSTAINABLE PROVISION

Source: Allen Consulting Group 2013

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4.2 Options for the short term: Alternative curriculum and delivery models

The contribution of each of the eight factors towards sustainable provision listed above depends first and foremost on both the course/curriculum content and the training delivery model. The course/curriculum content encompasses the range and possible combination of relevant units on offer at different levels. The range of units may span highly specialised and/or traditional units, or include more generic and transferable units of study. The training delivery model relates to the mode of delivery of the relevant units including the role of the employer in training (including traineeship/apprenticeship models), on-campus versus work-based training, and the use on online models.

The course/curriculum content and training delivery model are the key levers that have the potential to directly or indirectly influence all other factors. The Certificate III in Marine Craft Construction on offer at Victoria University can be characterised as having: a broad curriculum and a diverse curriculum, with limited flexibility and a wide variety of units that had to be delivered under the packaging rules; and a typical apprenticeship delivery model, including a total of six weeks of block release per annum.

Options identified

Based on stakeholder consultations, and research and analysis undertaken around the possible variations in the course/curriculum content and the training delivery model, five options have been identified as potential alternatives to the delivery of the Certificate III in Marine Craft Construction previously offered by Victoria University. The options identified represents a subset of a wider range of options considered and tested through the consultations with stakeholders and internal analysis. The primary reasons for omitting the other options from the shortlist were twofold: there is a long expected lead time to establishing these options as viable solutions; and there is at present a lack of strong training provider interest in these options. The shortlist of options is as follows: Option 1: Delivery of the Certificate III in Marine Craft Construction by a Victorian TAFE institute Option 2: Delivery of the Certificate III in Marine Craft Construction by an interstate TAFE institute Option 3: Alternative trade training programs in relevant areas by a Victorian TAFE institute or private RTO Option 4: Work- and campus-based delivery by a TAFE institute/RTO of an alternative trade training program with some specialisation in marine craft construction

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Option 5: Overseas delivery of the New Zealand National Certificate in Boat Building

These five options are depicted in Figure 4.3 against the two dimensions of course/curriculum contents and the training delivery model. These options are discussed in turn in the following sections and assessed in detail in the following chapter.
Figure 4.3

SHORT-TERM OPTIONS IDENTIFIED

Source: Allen Consulting Group

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Chapter 5

A long-term vision for meeting the skills needs of the Victorian boat building industry
5.1 Long-term considerations

Four important external factors need to be factored into any decision regarding the long-term training solutions for the Victorian boat building sector. First, the impact of the introduction of an entitlement in other states is imminent with all states having signed up to the National Partnership Agreement for Skills and Workforce Development. Although it is likely that other jurisdictions will adopt entitlement systems that are more conservative that the Victorian Training Guarantee, there is nonetheless a significant amount of uncertainty regarding the impact of an entitlement and new funding rates on provision at North Sydney Institute and SkillsTech Australia. Second, the cessation of delivery by Victoria University is a significant shock to the local delivery of the Certificate III in Marine Craft Construction. Some apprentices have already initiated their continuation of training interstate with SkillsTech Australia. If this model of interstate delivery becomes the accepted model of training (as it has been for Tasmania and South Australia for some time) then local providers such as Advance TAFE who are looking to enter the market will need to be prepared for the fact that it may not be able to enjoy Victoria Universitys past position as the monopoly local provider of choice. Similarly, it is unclear whether the cessation of delivery by Victoria University and the move towards generic courses such as the composites course will come to represent a permanent shift away from the traditional boat building trade. Such a shift could persist in the longer term if there is a decline in industrys commitment to the Certificate III in Marine Craft Construction or to the apprenticeships model more generally. Finally, as discussed in Section 3.5, there are broad and systemic reasons for the declining popularity of the apprenticeship contract of training as a model of workforce development and VET markets are gradually moving towards more responsive customised training models that meet the breadth of training needs that may be specific to individual or clusters of firms.
5.2 A long-term vision for meeting the skills needs of the Victorian boat building industry

With the skills reforms starting with the introduction of the Victorian Training Guarantee and national skills reform, VET providers in the Victoria are well-placed to work with the firms that constitute the boat building industry to identify and address their skills and training needs. In particular: firms and their employees have access to a student entitlement for training (subject to basic eligibility criteria);

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RTOs are able to enter into new training markets based on known rates of subsidy and demand-driven funding; RTOs are able to develop customised training programs within and across increasingly flexible training packages; and fee deregulation allow RTOs to work with firms to develop training programs that meet their needs and deliver value for money.

A dynamic training market response to the needs of the boat building industry

In the future, the boat building industry can expect to see a shift away from the prescription of one or two courses as the primary qualifications for the sector and see the emergence of more highly customised provision which are characterised by: the ability for employers and employers to select from a broad menu of relevant courses and qualifications at different level; work-based training and assessment and other innovations in delivery which meet the needs of businesses with minimal disruptions to ongoing operations; and concurrent delivery of technical and generic skills across all employees within a given firm including in business administration (such as book-keeping and compliance), management (including front-line management), environmental sustainability, and lean and competitive manufacturing.

The issues regarding the long-term sustainability of delivery of any given course could be obviated in a market where RTOs leverage training of boat building into other occupations and skills set in a firm and across the sector. While the long-term delivery of a holistic boat building provision will continue to be important to the sector, this is likely to be delivered interstate or overseas. Building on the map of training requirements across the boating industry developed in Chapter 1, Figure 5.1 illustrates how the preferred training options identified in the analysis above will meet those training needs. The BIAV could support the evolution and emergence of such a model by promoting investment by firms in training and on going professional development across a wide range of areas as a point of competitive advantage for the industry. The BIAV could go a step further by playing a facilitative role in the development of customised training programs for individual member organisations or industry clusters with similar training needs, and reputable and innovative RTOs.

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Figure 5.1

MAP OF TRAINING REQUIREMENTS ACROSS THE BOATING INDUSTRY AND PREFERRED TRAINING OPTIONS

Source: Allen Consulting Group

5.3

Redesign of the boat building qualification

The existing training package rules offer only limited flexibility to RTOs in terms of the units of competency that can be included from across the training packages in the areas of light manufacturing. In addition, many of the units that must ultimately be incorporated include units that are of limited relevance to most businesses (for example units relating to working with timber) while not allowing for more in depth skills development (such as additional units relating to working with composites or electro-technology). In the long-run, the redesign of the Certificate III in Marine Craft Construction is a key underpinning step towards a more dynamic and sustainable training delivery model. The inflexibility of the existing training package restricts the ability of RTOs to tailor courses that are more responsive to the specific needs of individual employers and raise the cost of delivery by requiring highly skilled trainers and access to teaching infrastructure across a large number of areas. Manufacturing Skills Australia (MSA) is currently undertaking a full review of the Metal and Engineering Training Package, which the Certificate III in Marine Craft Construction falls under. The review will cover all 24 qualifications and 577 units of competency with regards to: The Allen Consulting Group content currency and relevancy; prerequisites including multiple prerequisite pathways; compliance with policy and templates; and grouping within qualifications.

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While the continuous improvement process allows MSA to modify the training package to address technology changes and other emerging issues, there has not been a structural review of the training package for seven years. The review is due to be completed in early 2014. Any changes to any training packages in Australia, from small modifications to structural reviews, must follow the National Skills Standards Councils Training Package Development & Endorsement Process Policy, as set out in Box 5.1.
Box 5.1

THE PROCESS FOR MODIFYING VET TRAINING PACKAGES There are eight steps in the process of modifying VET training packages. 1. ISCs produce annual Environmental Scans that identify changing industry skills needs. 2. ISCs produce an annual Continuous Improvement Plan (the Plan) that sets out the changes that need to be made to the training packages to enable them to meet the skills needs of industry. 3. The ISC briefs Commonwealth, each state and territory government and VET regulators on the changes needed. 4. National consultations on the proposed changes. 5. Changes are validated by a representative sample of industry stakeholders as reflecting accepted industry practice. 6. Final independent review of the training package components against the Standards for Training Packages. This is provided to the National Skills Standards Council (NSSC) prior to submission. 7. Submission of Case for Endorsement to the NSSC outlining changes to be made and stakeholder views. 8. The NSSC considers the Case for Endorsement and if the modifications are endorsed, they are recorded on the National Register.
Source: NSSC 2012.

As part of the review, MSA could modify and extend the qualification to allow for: a stronger pre-apprenticeships pathway pre-apprenticeships can present an opportunity to increase the interest, enrolment and completion of courses in a particular trade and (not withstanding the differences in the apprenticeship model) in New Zealand, it is a significant and critical foundational component of the National Certificate in Boat Building; and a marine craft construction traineeship as recommended by one provider (Challenger Institute) the introduction of a traineeship model for marine craft construction could present a more sustainable alternative pathway into the industry. A traineeship model would involve the development on a simplified version of the current apprenticeship training package, with less focus on the breadth of technical units of competency and less onerous requirements for block release (if any).
2

VUs experience with pre-apprenticeships in Victoria has not been encouraging with only three enrolments in 2011.

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Given its strong international reputation the redesign of the marine craft construction should draw on New Zealand Certificate in Boat Building. The New Zealand Certificate in Boat Building has been licensed to the Canadian state of Nova Scotia demonstrating the international currency of the qualification. The option of licensing part (or all) of the New Zealand training model could be explored further as part of the redesign process.

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Appendix A

Conceptual model for analysing thin markets


This chapter sets out three complementary approaches for analysing thin VET markets.
A.1 Conceptual model

A conceptual model of the market for boat building training was developed through this project (Figure A.1). The model is well suited to examining other thin VET markets and could be used as a basis for developing and assessing options for the sustainable delivery of training in other areas. It has a number of components, which are outlined below.
Drivers of demand

Demand for skills in a particular industry is influenced by a number of factors including consumer demand, industry growth, student preferences, and economic conditions. Consumer demand will be driven by price, quality, competition, and the reputation of industry goods or services. Demand will also be also by influenced by macroeconomic conditions, including the impact of the exchange rate in the case of trade-exposed industries. Learner demand for training in a particular occupation or field is likely to be influenced by perceptions of industry conditions, such as employment opportunities, relative wages and working conditions. Course supply and costs will also influence training demand.
Size of potential market for training

It is important to gain a full picture of the size and composition of the potential market for training. Demand for training is likely to come from a number of areas, including from school leavers, apprentices (including mature age learners), trainees, and the current workforce.
Demand filters

The manner in which the size of the potential market for training translates into demand for training is contingent on a number of factors. The number, type and quality of study options is particularly important. Industry efforts to promote careers in particular fields also feed into learner demand for relevant training. Demand will be influenced by the attitude of employers to formal training. If there are not enough businesses willing to take on apprentices, or commit to other qualifications or training products, student interest in relevant training may not translate into demand. The attitude of business towards up-skilling of the current workforce is therefore also important.

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Revenue sources

The revenue to provide particular training can come from a number of sources, including learners, businesses and government contributions.
Supply specifications

There are a number of different options for the supply of training. These include but are not limited to the following considerations: Qualification level and design; Training providers; Training delivery modes; and Training content.

Training governance

Based on the supply specifications, there are a number of potential governance arrangements. The governance framework will deal with implementation of the training delivery model, monitoring, and any refinement the supply structure.
The role of the Victorian Government

In a demand driven system the role of the Victorian Government is based on market facilitation, including identification and appropriate response to specific market failures. Government may also have a role in the governance arrangements of the training delivery model in selected areas where market failure has been identified.

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Figure A.1

CONCEPTUAL MODEL

Source: Allen Consulting Group

A.2

Training market analysis

Based on the analysis undertaken for this project, Figure A.2 summarises the process for analysing a potential VET market gap. It begins by asking whether there actually is a gap in the market based on student and industry demand for training, supply of similar training and the market response from RTOs.

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If there was a previous provider, the flowchart calls for analysis of why the RTO left the market. From this analysis, the flowchart suggests a number of supply and demand side measures that could assist in closing the market gap.
Figure A.2

TRAINING MARKET ANALYSIS FLOWCHART


Is there a gap in the market?
Student demand (possibly including un-completed students)

+
Industry demand for training

+
No similar training provision

+
Lack of interest from training providers

Was there a previous provider?


Y

What was the reason the previous provider pulled out?

Further investigation needed

Price

Enrolment numbers

Subsidy

Student/ industry contribution


N

Weak demand from students

Is the government willing to increase the subsidy?

Can fees be increased?

Weak demand from employers

Declining/small industry

Low wages / poor career options

Lack of awareness of career/training

Inconvenient delivery

Outdated curriculum

Lack of training culture

Subsidy increase Increase fees Industry promotion, VET in schools Change delivery mode Update curriculum Change culture

Supply side measures

Demand side measures

Source: Allen Consulting Group

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Appendix B

The boat building training system in New Zealand


B.1 NZ Marine industry

The marine industry in New Zealand is one of the largest manufacturing sub-sectors with over $2.2 billion in annual sales in 2011 (6.3 per cent of GDP) (Statistics NZ). The industry accounts for around 1000 companies which employ over 10,000 staff. The ships, boats, and floating structure exports totalled $231 million in 2012 (0.5 per cent of total exports). The early 1990s saw the development of a significant boat-building cluster in Auckland; currently 56 per cent of industry trainees and apprentices are located in the city.
B.2 NZ training system

Vocational education in New Zealand is structured around government recognised Industry Training Organisations (ITOs), which work with business and training providers to develop qualifications. The national government, through the New Zealand Qualifications Authority, approves qualifications and standards (New Zealand Government 2011). ITOs are funded by the relevant industry and government and have primary responsibility for curriculum development and management (Mitchell 2006).
B.3 The boat building apprenticeship system

The ITO in the boat building industry is the Marine Industry Training Organisation (NZMITO), the training division of the NZ Marine Industry Association. Since its creation in 2000, the NZMITO has developed a large array of training programmes and setting the standards and qualifications for boat builder training. Every five years, NZMITO updates course curriculum content. Training consists of learning in the workplace, supplemented by specialist courses at technical colleges. The employer and the NZMITO field officers support and regularly assess the apprentice to determine what skills have been achieved. For formal apprenticeship training, the NZMITO subcontracts training provider Unitec Institute of Technology to provide vocational education, which contributes to NZMITO established qualifications. Unitec still offers standalone formal vocational education, but such courses are independent of the NZMITO qualifications, although students may obtain credits towards the qualifications.
Numbers and duration

The total number of boat building trainees and apprentices in 2012 was around 420. Apprenticeships normally last between three to five years.

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Block courses

Apprentices normally undertake two weeks of block release annually, except in their first year. As Unitec is the only provider of formal boat building education, apprentices travel from around New Zealand to its campus in Auckland. Some apprentices do less than the normal amount of block release where their employer has the requisite equipment on site.
Prices

Each two week block release is priced at around NZ$1,200, with costs shared between the apprentice and employer. Over the life of the apprenticeship total training costs are around NZ$5000, including resources such as manuals for on-the-job training.
E-learning

RudderLive, the NZMITOs e-learning platform, allows students to complete some of their study in their own time and in an interactive manner over the internet. It also allows employers and apprentices to keep track of the training process, including upcoming classes.
B.4 Pre-apprenticeship courses

Unitec offers a stand-alone formal vocational qualification, Certificate in Applied Technology (Boatbuilding), which takes one year full time and is considered a pre-apprenticeship course. Annual student numbers are around 30-40, with international students accounting for up around 50 per cent of students. The Certificate costs NZ$18,000 for international students. Students that complete this Certificate can undertake further study though the Bachelor of Applied Technology (Marine), which is aimed at developing senior tradespeople with design skills. Consultations indicate that the block release is not particularly profitable for Unitec, and that its provision may not be viable without the one year course which supports the training facility and materials, and trainers.
B.5 Lessons for Victoria

More industry involvement in course development and regular review of the training curriculum; Increased use of online learning; A reduction in the number of block release weeks; and Consolidation of training provision and increased travel by apprentices for block release.

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Appendix C

Stakeholders consulted
Table C.1

STAKEHOLDERS CONSULTED Organisation Employers Bar Crusher Boats Status Luxury Houseboats International Marine Whittley Cruisers Hart Marine PM Marine Manufacturing The Wooden Boat Shop Sykes Racing Haines Hunter Penfolds Marine Boating Industry Association of Victoria Victorian training providers Victoria University Kath Curry John McCloud Eric Sandberg Coralie Morrissey Andrew Kong Phillip Murphy Matthew Trounce Fred Vanderslik Richard Owen Michael Grogan Bill Street Fiona Martin Face to face The RTO previously offering the Certificate III in Marine Craft Construction Lee Cottam Darren Withoos John Barbar Neville Whittley Mal Hart Paul Junginger Tim Phillips Nick French Nick Edgerton Roger Penfold Steven Gill Ben Scullin Face to face Phone Face to face Face to face Face to face Face to face Face to face Phone Face to face Face to face Face to face Aluminium Sector Aluminium Sector Composites Sector Composites Sector Composites Sector Composites Sector Wooden and Repair Sector Composites Sector Composites Sector Repair Sector Peak body representing for the recreational and light commercial boating industry in Victoria Name Contact Details

Chisholm Institute of TAFE Kangan Institute CLB Training & Development Advance TAFE (East Gippsland Institute of TAFE) FGM Consultants Pty Ltd Bass Coast Adult Education Centre NWT Other training providers SkillsTech Australia Gold Coast Institute of TAFE Northern Sydney Institute

Phone Face to face Phone Phone Phone Phone Phone

Large RTO with engineering program Large RTO currently providing the Certificate III Engineering (Composites Trade) Large, private RTO currently providing training in niche apprenticeship areas RTO located at Lakes Entrance Small, private RTO Small, community RTO Small, private RTO

Ian Lawrence Glenn Cuthbert Glenn Williamson

Face to face Phone Phone

A provider of Certificate III in Marine Craft Construction in Brisbane. A provider of Certificate III in Marine Craft Construction on the Gold Coast The NSW provider of Certificate III in Marine Craft Construction

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BOATING INDUSTRY TRAINING MARKET ANALYSIS AND CONCEPTUAL MODEL

Organisation Challenger Institute of Technology MEGT New Zealand Marine Industry Training Organisation Unitec Institute of Technology

Name Melanie Sorensen Steve Allen Chris van der Hor Rob Shaw

Contact Face to face Phone Phone Phone

Details The WA provider of Certificate III in Marine Craft Construction A large Group Training Organisation Responsible for the apprenticeship curriculum in NZ Technical college delivering boat building training

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BOATING INDUSTRY TRAINING MARKET ANALYSIS AND CONCEPTUAL MODEL

Appendix D

Units in the Certificate III in Marine Craft Construction


D.1
Table D.1

Core units

CORE UNITS ALL UNITS FROM THIS LIST Unit code MEM12023A MEM12024A MEM13014A MEM14004A MEM14005A MEM15002A MEM15024A MEM16006A MEM16007A MEM16008A MEM17003A MSAENV272B Unit title Perform engineering measurements Perform computations Apply principles of occupational health and safety in the work environment Plan to undertake a routine task Plan a complete activity Apply quality systems Apply quality procedures Organise and communicate information Work with others in a manufacturing, engineering or related environment Interact with computing technology Assist in the provision of on the job training Participate in environmentally sustainable work practices

Source: MEM30705 Certificate III in Marine Craft Construction (2012)

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BOATING INDUSTRY TRAINING MARKET ANALYSIS AND CONCEPTUAL MODEL

5.4
Table D.2

Elective units

GROUP A - MARINE CRAFT CONSTRUCTION STREAM UNITS UNITS FROM THIS LIST TO THE VALUE OF AT LEAST 40 POINTS Unit code MEM04018B MEM07001B MEM07024B MEM08002C MEM08011B MEM08014B MEM09002B MEM09021B MEM12007D MEM13003B MEM13004B MEM18001C MEM18002B MEM25001B MEM25002B MEM25003B MEM25004B MEM25005B MEM25006B MEM25007B MEM25008B MEM25009B MEM25010B MEM25011B MEM25012B MEM25013B MEM25014B MEM25015A MEM50002B MEM50003B MEM50004B MEM50009B Unit title Perform general woodworking machine operations Perform operational maintenance of machines/equipment Operate and monitor machine/process Pre-treat work for subsequent surface coating Prepare surfaces using solvents and/or mechanical means Apply protective coatings (basic) Interpret technical drawing Interpret and produce curved 3-dimensional shapes Mark off/out structural fabrications and shapes Work safely with industrial chemicals and materials Work safely with molten metals/glass Use hand tools Use power tools/hand held operations Apply fibre-reinforced materials Form and integrate fibre-reinforced structures Set up marine vessel structures Fair and shape surfaces Construct and assemble marine vessel timber components Undertake marine sheathing operations Maintain marine vessel surfaces Repair marine vessel surfaces and structures Form timber shapes using hot processes Perform fitout procedures Install marine systems Install and test operations of marine auxiliary systems Produce three-dimensional plugs/moulds Perform marine slipping operations Assemble and install equipment and accessories/ancillaries Work safely on marine craft Follow work procedures to maintain the marine environment Maintain quality of environment by following marina codes Safely operate a mechanically powered recreational boat Points 4 2 4 4 2 4 4 4 4 2 2 2 2 2 4 4 2 8 2 4 4 2 4 8 6 12 2 2 1 1 1 2

Source: MEM30705 Certificate III in Marine Craft Construction (2012)

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BOATING INDUSTRY TRAINING MARKET ANALYSIS AND CONCEPTUAL MODEL

5.5

Other elective units

Select units from Certificate III Trade Specialisation units listed in Appendix I, Volume 1 of MEM05 to bring the total value of units to at least 73 points, including any prerequisites.

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BOATING INDUSTRY TRAINING MARKET ANALYSIS AND CONCEPTUAL MODEL

References

ABS (Australian Bureau of Statistics) 2012, 8165.0 Counts of Australian Businesses, Canberra. DEEWR (Department of Education, Employment and Workplace Relations) 2012, Historical List of Skill Shortages (from 1986), Canberra, available: http://foi.deewr.gov.au/node/30829 accessed 12 April 2013. Department of Labour, 2008. The Skills-Productivity Nexus: Connecting Industry Training and Business Performance. Wellington, New Zealand. Ferrier, F, Dumbrell, T and Burke, G 2008, Vocational education and training providers in competitive training markets, NCVER, Adelaide. GTA (Group Training Australia) 2011, Introducing the Group Training Model, Sydney, available: http://www.dsf.org.au/component/docman/doc_download/123introducing-the-group-training-model Mitchell, R. 2006. Education and Training for Boatbuilders in New Zealand, United States of America and United Kingdom. International Specialised Skills Institute Inc. Victoria, Australia. NCVER (National Centre for Vocational Education Research) 2011, VOCSTATS database, Adelaide. NSSC 2012, Training Package Development & Endorsement Process Policy, Canberra. NZ Government 2011, Comparisons with industry training systems in other jurisdictions, Wellington. NZ Trade & Enterprise, Exporter Guide New Zealand, Country brief, July 2011. NZMITO 2011, Become One, Auckland. Sandberg, Eric 2012, Synopsis of Boatbuilding Workforce Training in Victoria, Melbourne. Statistics NZ 2013, Overseas Merchandises Trade, Wellington. TAFE NSW 2012, Tick, tock, make me a watch, Sydney, available: http://www.sydneytafe.edu.au/news/latest-news/tick-tock-make-mewatch#.UXkieYJgCiJ accessed on 15 April 2013. Transport Safety Victoria 2012, Marine Safety Incident and Demographic Report July-October 2012, Victorian Government, Melbourne. UN (United Nations) 2012, United Nations Commodity Trade Statistics (UNSD COMTRADE) database, via the World Integrated Trade Solution (WITS) application. The Allen Consulting Group

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