Business is returning to normal but company bosses say labour shortages, supply chain issues will linger

Blue-chip company bosses say skills shortages and supply chain issues continue to be the two biggest challenges to their operations, even as business conditions return to normal. Over 750 institutional investors and 100 corporates flew into Sydney this week for the 24th Macquarie Australia Conference, which for many was their first opportunity to attend an in-person conference since COVID-19 hit over two years ago. The vast majority of company bosses The West Australian observed named supply chains and labour shortages as the two biggest challenges ahead, as the country prepares to choose its next government. Mineral Resources boss Chris Ellison this week described labour shortages as a “universal problem” and said the company was looking for “500-plus people” at any given time. Like many other businesses, Mr Ellison said MinRes was also grappling with price hikes of goods and had seen the cost of some parts increase by 15.5 per cent. “Getting stuff made overseas or in Australia is challenging and shipping is incredibly challenging . . . it takes a long time,” he said. “We’ve just got to be a bit careful with our expectations on time now because if you’re pressing time too hard, that’s when the cost will blow out.” Perth-based drilling firm DDH1 is also erring on the side of caution. Chief financial officer Ben MacKinnon said DDH1 didn’t want to add rigs that it couldn’t get workers for and tipped organic growth to slow next financial year as a result of labour shortages and supply chain constraints. The company’s labour woes are being felt most acutely in its Swick business, Mr MacKinnon said, adding they were “battling hard to get enough people in the door”. “We’re looking all over the country for people to come and man our rigs and we’ll take people from anywhere in Australia and hopefully New Zealand as well,” he said. “It is certainly a tight market and there’s certainly cost inflation in the market. We’ve processed roughly 7 per cent wage increases on average across our business in FY22 but we expect there will be some wage increases in FY23 as well.” Wesfarmers chief executive Rob Scott also said he had seen wage inflation in competitive technology and engineering roles, and expected those pay pressures to move “across the board” in the year ahead. He said the Bunnings owner was supportive of real wage growth to keep pace with soaring inflation. Seven Group boss Ryan Stokes said that while supply chain issues had “started to moderate to a degree” they would continue to be a challenge this year. And scarcity of “every form of labour” is a constant theme across all its businesses, which include CAT dealer WesTrac, equipment hire company Coates Hire and building products group Boral. Seven Group also has a 30 per cent stake in Beach Energy and a 39 per cent interest in Seven West Media, publisher of The West Australian. “As we look at some of the constraints and challenges I think the two key call-outs relate to supply chains and labour,” Mr Stokes said. “I think that there’s more acute pressure on labour at site — that hasn’t impacted us much in Perth (where most of the workforce is based) — but it is an impact. We’ve found the fly-in, fly-out workforce is extremely tight.” Data from the National Skills Commission showed online job advertisements jumped 3.7 per cent (or 10,200 job ads) in March to 282,400. Job advertisements are now at their highest level since July 2008. Western Australia recorded an increase of 3.4 per cent, taking growth in job ads over the year to 18.8 per cent and 96.3 per cent compared to pre-COVID.