Report Warns of Labor Decline in Western Australia

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Researched by Industrial Info Resources Australia (Perth, Australia)--A report released by The Western Australian Chamber of Minerals and Energy (CME) indicates that the number of people employed in Western Australia's (WA)'s resource sector will decline up to 20% by 2025. The decline will be caused by the loss of construction jobs on major energy projects that are nearing completion. Falling commodity prices will also contribute to job losses, according to the report. Proposed projects like Woodside Petroleum's (Perth, Australia) (ASX, WPL) $40 billion Browse Liquefied Natural Gas (LNG) venture face the risk of being delayed or cancelled if commodity prices don't improve.

According to the WA Resources Sector Outlook 2015-2025, the WA resource labor force will shrink from 105,000 to 87,000 by 2025. The report predicted that the resource sector will lose more than 17,000 construction jobs. This fall will be slightly offset by the creation of 4,000 new operational jobs by 2019.

The major shift in resource sector employees will be caused by the completion of a number of major energy projects in WA that are being tracked by Industrial Info. The number of jobs provided by projects like Chevron Australia's (Perth, Australia) $54 billion Gorgon LNG project will fall substantially once they become operational. The Gorgon project provided 6,000 jobs at the peak of construction. This number is expected to fall by 15% to 25% when it becomes operational in June 2015. Chevron Australia is a subsidiary of Chevron Corp (NYSE:CVX) (San Ramon, California). In addition to job losses, the CME report indicates that a growing proportion of WA resource workers will be on fly-in, fly-out (FIFO) arrangements by 2020. The report anticipates that 63% of WA's resource workforce will be on FIFO arrangements by 2020; up from 60% in 2014. The report indicated that the rise in FIFO workers will be driven by the growing demand for skilled labor on the operational plants. The report also suggested that the FIFO arrangement is considered as providing more flexibility for workers. This trend indicates that there will be a strong demand for FIFO accommodation and support facilities in WA, especially when the second stage of the state's energy boom kicks into gear.

The key question for WA is when the second leg of the state's energy boom will commence. Industrial Info research has revealed that more than $95 billion worth of projects remain in the preliminary phase of planning. The recent decline of commodity prices has caused the value of these proposed projects to decline from $104 billion in 2013. Projects like Woodside's Browse venture are at risk of missing financial approval if oil and LNG prices don't increase.

Declining commodity process have forced Woodside to postpone the date of final investment decision on the Browse project from mid-2015 to mid-2016. The $40 billion venture would provide a big boost for the West Australian economy, which is desperate to find new industries that can reduce the state's economic dependence on iron ore mining, which has deteriorated in the wake of declining demand from China. As well as providing financial royalties to the state, the Browse project would provide thousands of jobs to contractors who are finding themselves out of work as the first wave of the state's energy construction boom comes to a close.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.