JVMP Reports
June 2006
Diesel Mechanic :
OCCUPATIONAL SKILL SHORTAGE ASSESSMENT
2004 Situation: Genuine skill shortage
Current Situation: Genuine skill shortage
Short-term Outlook: Genuine skill shortage
Executive Summary
Results from the 2005 Survey of Employers who have Recently Advertised suggest employers have had considerable difficulty in filling diesel mechanic positions in New Zealand . Only 21% of positions were filled within ten weeks of advertising and there was an average of only 1.1 suitable applicants for every diesel mechanic vacancy. This report considers these survey results in the context of trends in the demand for and supply of diesel mechanics.
| Fill Rate |
Average Number of Suitable Applicants | |
|---|---|---|
| Diesel Mechanics | 21% | 1.1 |
| All Trades Surveyed | 37% | 1.0 |
Growth in the demand for diesel mechanics has been driven by a number of factors including growth in the number of registered trucks and buses, a growing preference for diesel engine vehicles and an increase in the use of road freight transportation in New Zealand. The data available suggest that demand for diesel mechanics has been high since 2001.
There were 192 newly qualified diesel mechanics in 2005, over double the number recorded in 2001. However, this equates to a training rate of only 1.8% which will only just cope with retirements from the occupation (1.5% per annum) let alone account for growing demand and existing shortages. Continued increases in new enrolments mean that the number of trainees achieving qualifications is likely to increase in the future, and thus boost the supply of qualified diesel mechanics.
Due to the on-going disparity between the levels of supply and demand, the Department of Labour has assessed the diesel mechanic occupation as experiencing a genuine skill shortage .
The demand for diesel mechanics will continue to grow over the next few years on the back of strong growth in the number of diesel vehicles being registered. While training data shows an increase in the number of trainees achieving the nationally recognised qualification for diesel mechanics, supply through training and to a lesser extent, inward migration, will battle to keep pace with rising demand for diesel mechanics, let alone diminish the extent of the current shortage. The Department of Labour therefore expects shortages to persist over the short-term.
Introduction
The purpose of this report is to investigate skill shortages for diesel mechanics in New Zealand.
The following section presents key findings from the Department of Labour’s (the Department’s) Survey of Employers who have Recently Advertised (SERA) . This survey provides an indication of employer’s success in filling advertised vacancies for diesel mechanics as well as other information on their recruiting experiences. The next two sections investigate trends in the demand for, and supply of, diesel mechanics. The penultimate section presents some of the issues that arise from the matching of demand and supply in the labour market, such as wage rates. Finally, the ‘Assessment’ section considers all the information presented in the report and provides a view on whether the occupation is in shortage, and if so, the type of shortage being experienced. A short-term outlook for the shortage situation is also offered.
Further background to this occupational report, including a discussion of the methodology; a glossary of terms; and an overview of the Department’s Survey of Employers who have Recently Advertised, including the survey questionnaire, can be found in the ‘Background and technical note’.
Diesel Mechanics in New Zealand
Diesel mechanics are classified as machinery mechanics (code 72311 in the New Zealand Standard Classification of Occupations ). They repair and maintain the diesel engines that power transportation equipment such as heavy trucks, buses, locomotives and other heavy vehicles, as well as mobile equipment such as road graders and forklifts.
The Department estimates that there were approximately 10,400 diesel mechanics employed in New Zealand in 2005. Census figures indicate that almost the entire diesel mechanic workforce is male (98%) and is employed full time (98%).
Survey of Employers who have Recently Advertised
This section presents the key SERA findings of employers’ experiences in recruiting diesel mechanics.
The SERA allows the Department to gain insights into skill shortages by investigating how difficult it is for employers to fill vacancies. A ‘fill rate’ is calculated for each occupation – this being the proportion of vacancies included in the SERA sample which were filled with an adequately qualified and experienced person within ten weeks of advertising. Occupations with fill rates lower than 80% are typically regarded as being in shortage, while fill rates lower than 40% usually indicate that the occupation is in acute shortage.
| Number of Employers | Number of Vacancies | Fill Rate 1 | Average Number of Suitable Applicants per Vacancy | |
|---|---|---|---|---|
| Diesel Mechanics | 50 | 87 | 21% | 1.1 |
| All Trades Surveyed | 885 | 1480 | 37% | 1.0 |
1 The ‘All Trades Surveyed’ fill rate and average number of suitable applicants per vacancy figures were both weighted to compensate for any under or over sampling of individual trade worker occupations in the 2005 survey.
Results from the 2005 SERA show that only 21% of diesel mechanic vacancies included in the survey were filled within ten weeks of being advertised, down from 55% in 2004. The fill rate for diesel mechanics was below the fill rate for all surveyed trade occupations (37%). There was an average of 1.1 suitable applicants for each diesel mechanic vacancy compared with an average of 1.0 for all trade occupations surveyed.
Demand for Diesel Mechanics
This section investigates trends in the demand for diesel mechanics and the factors underlying these trends. Demand is measured by the number of diesel mechanics required by employers at current wage rates.
Historical Demand
The demand for diesel mechanics is closely linked to the number of registered trucks and buses, and the growth in road freight transportation in New Zealand.
Data from Land Transport New Zealand shows a steady increase in the total number of truck and bus registrations (see Figure 1). Between 1999 and 2004, the number of registered buses and trucks has grown by 2.2% per annum on the back of strong growth in the economy. There has also been an increase in the proportion of all registered vehicles which are diesel-powered. In 1999 diesel vehicles made up 14.6% of all registered vehicles. This increased to 17.8% in 2004
Figure 1: Total Number of Trucks and Buses in NZ Fleet
Source: Land Transport New Zealand.
Data for Figure 1
According to the Ministry of Transport, New Zealand ’s geography, low population density, and its commodity-based economy make it highly dependent on road transport. Freight transportation by truck is also an intermediary for other forms of transportation such as rail and air. From 1996 to 2001, the vehicle-kilometres travelled by goods vehicles increased by 34% for light goods vehicles and 19% for heavy goods vehicles1. This substantial increase in freight movement by road has been mainly due to increased demand for just-in-time deliveries and growth in trade.
A number of factors, however, have moderated the demand for diesel mechanics:
- The expense of repairing many older vehicles was greater than the cost of purchasing new vehicles following the removal of import tariffs in 1998, and the subsequent increasing volumes of imported vehicles available to New Zealanders;
- A reduction in the price of vehicle parts, leading to the replacement of those parts rather than their repair; and
- Technological improvements which mean that many vehicles require less frequent servicing and repair.
Data from the Household Labour Force Survey show that there has been an upward trend in the employment of machinery mechanics and fitters (the broad occupational group into which diesel mechanics fall) since 20012. The number employed grew by an average of 3.5% per annum in the four years to December 2005 (see Table 3). This was driven by strong employment growth in 2004 and 2005, which coincided with strong growth in the number of registered trucks and buses. Another measure that can be used to assess demand is the total distance travelled by the heavy vehicle fleet. Heavy vehicles travelling greater distance require more routine servicing and repairs. The total distance travelled by heavy vehicles increased strongly between 2001 and 2003, with 11% growth recorded over this time period3.
| year | Machinery Mechanics and Fitters |
|---|---|
| 2001 | 25.6 |
| 2002 | 29 |
| 2003 | 27.5 |
| 2004 | 28.3 |
| 2005 | 34.4 |
| Annual Growth in Employment | 3.5% |
Source: Household Labour Force Survey, Statistics New Zealand.
Future Demand
Demand for diesel mechanics is likely to continue growing over the short- term. Strong growth in the number of truck and bus registrations in recent years suggests that there will be ongoing demand for diesel mechanics. In addition, the number of cars powered by diesel engines is expected to increase in the future. In 2002, the Ministry of Transport predicted that the total number of diesel cars would increase by 44% between 2000 and 2015 compared to an increase of only 23% for petrol–fuelled cars. The Ministry also predicted an increase of 68% in the number of light commercial diesel vehicles and a 38% increase in the number of heavy commercial diesel vehicles over the same period, with the caveat that energy efficiency targets, improved transport options and other pressures may change this trend4. Rapidly changing technological advances, particularly in electronic control systems found in heavy diesel vehicles, will also increase demand for diesel mechanics.
Figure 2: Number of Advertised Vacancies for Diesel Mechanics
Source: Job Vacancy Monitor, Department of Labour.
Data for Figure 2
Changes in Market Conditions5
The Department’s Job Vacancy Monitor shows that between mid-2003 and late 2005, the three-monthly moving average for job advertisements in this field grew strongly (see Figure 2). However, from early 2005, the number of advertised vacancies for diesel mechanics has shown a slight downward trend indicating that while the market for diesel mechanics is still tight, recruitment conditions for employers may have eased slightly in recent months.
Supply of Diesel Mechanics
This section investigates the various sources contributing to the supply of diesel mechanics. Supply is measured by the number of people willing and able to work as diesel mechanics at current wage rates.
Training - National Certificate (Level 4) Qualifications and Equivalent
This section investigates the growth in supply of fully qualified diesel mechanics through training. It considers two sources of supply:
- The award of The National Certificate in Motor Industry (Automotive Heavy Engineering)6 Level 4 by the New Zealand Motor Industry Training Organisation Incorporated (MITO). This is the nationally recognised qualification for diesel mechanics which is designed by MITO to meet the needs of employers of diesel mechanics in the motor industry.
- The award of the National Certificate in Motor Industry (Automotive Heavy Engineering) Level 4 by other providers such as polytechnics.
There were no non-national certificate qualifications at the equivalent level of the National Certificate Level 4 awarded over this time period.
Table 5 shows that the vast majority of National Certificate qualifications for diesel mechanics are awarded by MITO . In 2005, 192 trainees achieved the National Certificate, over double the number in 2001 (75). New enrolments for this qualification have risen from 251 in 2001 to 453 in 2005, an increase of over 200 (see Table 4). This suggests an increase in future achievements of the National Certificate is likely.
| Total Enrolled |
New Enrolments |
|
|---|---|---|
| 2001 | 848 | 249 |
| 2002 | 1011 | 375 |
| 2003 | 1043 | 334 |
| 2004 | 1063 | 426 |
| 2005 | 948 | 448 |
| Total Enrolled |
New Enrolments |
|
|---|---|---|
| 2001 | 8 | 2 |
| 2002 | 9 | 3 |
| 2003 | 12 | 4 |
| 2004 | 10 | 4 |
| 2005 | 11 | 5 |
| Total Enrolled |
New Enrolments |
|
|---|---|---|
| 2001 | 856 | 251 |
| 2002 | 1020 | 378 |
| 2003 | 1055 | 338 |
| 2004 | 1073 | 430 |
| 2005 | 959 | 453 |
| National Certificate in Motor Industry (Automotive Heavy Engineering) Level 4 (MITO) | National Certificate in Motor Industry (Automotive Heavy Engineering) Level 4(Other Providers) | Total | |
|---|---|---|---|
| 2001 | 70 | 5 | 75 |
| 2002 | 85 | 5 | 90 |
| 2003 | 101 | 8 | 109 |
| 2004 | 146 | 11 | 157 |
| 2005 | 181 | 11 | 192 |
Some figures were estimated by the Department.
The training rate for diesel mechanics is given in Table 6. This indicator provides an approximate measure of the rate at which the supply of fully qualified diesel mechanics can potentially grow through training. The training rate is calculated by expressing the number of persons achieving the relevant qualification as a percentage of total employment in that occupation. The training rate for diesel mechanics has increased in the last four years from 0.8% in 2001 to 1.8% in 2005 . The training rate for diesel mechanics is lower than the average training rate of 3.3% for all trades analysed by the Department.
| Diesel Mechanics | All Trades7 |
|
|---|---|---|
| 2001 | 0.8% | 2.0% |
| 2002 | 0.9% | 2.2% |
| 2003 | 1.1% | 2.3% |
| 2004 | 1.5% | 2.7% |
| 2005 | 1.8% | 3.3% |
Migration
New Zealand has experienced a net migratory inflow of 363 machinery mechanics and fitters (NZSCO Minor Group 723) in the four years to December 2005, coinciding with the strengthening of the domestic economy. However, this follows a net outflow of 346 for this group in the previous four-year period (see Table 7). The net increase in the past four years has been mainly driven by an increase in arrivals. Since migration statistics are only recorded at the broader 3-digit category of machinery mechanics and fitters, the data must be interpreted with caution as it includes occupations other than diesel mechanics. However, diesel mechanics represent about a third of this category indicating there was most likely a net gain of diesel mechanics over the period. In addition, many e mployers interviewed in the 2005 SERA Intensive mentioned that diesel mechanics were coming into the country.
| Arrivals | Departures | Net Migration |
|
|---|---|---|---|
| 1998 | 223 | 290 | -67 |
| 1999 | 185 | 324 | -139 |
| 2000 | 127 | 205 | -78 |
| 2001 | 196 | 258 | -62 |
| 2002 | 260 | 189 | 71 |
| 2003 | 312 | 211 | 101 |
| 2004 | 285 | 225 | 60 |
| 2005 | 402 | 271 | 131 |
Retirements
Based on 2001 Census data, it is estimated that approximately 1.5% of the diesel mechanic workforce retires each year (assuming a retirement age of 65). This equates to about 160 diesel mechanics per annum. This is higher than the average retirement rate for all trade occupations (1.3%). Census data shows an ageing of diesel mechanics occurred between 1991 and 2001 (see Figure 3). The percentage of diesel mechanics under 30 years of age decreased from 29% in 1991 to 22% in 2001, while the proportion in all age groups over 50 increased. By 2001 over half of all diesel mechanics were 40 years of age or older and the average age was 41, up from 38 in 1991. As the diesel mechanic workforce ages, the number of diesel mechanics retiring each year will increase, especially in an occupation where the physical demands of the job mean that many leave the occupation before the age of 65.
Figure 3: Age Profile of Diesel Mechanics, 1991-2001.
Source: Census of Population and Dwellings, Statistics New Zealand.
Data for Figure 3
Occupational Detachment8
Employers were asked if they thought diesel mechanics left the occupation to go and do something different more or less than in other occupations. Of the fourteen employers who answered this question, seven thought they left at about the same rate as in other occupations, five thought they left at a higher rate, and two thought they left at a lower rate.
This suggests that occupational detachment may have a small impact on supply for this occupation, with some employers saying this may be because of factors such as dirty working conditions and relatively higher wages available in closely associated occupations and overseas.
Matching of Supply and Demand
This section considers some of the issues that arise from the labour market matching of the supply of diesel mechanics with the demand for diesel mechanics.
Salaries
Diesel mechanic wages are relatively high compared with other trades. The Labour Cost Index (LCI) measured an average hourly wage of $22.65 for diesel mechanics compared with an average wage for all trade workers of $19.81 (see Table 8). According to the LCI, wages of diesel mechanics have increased by 3.5% in the twelve months to June 2005, compared with 4.8% in all trades.
| June 2004 |
June 2005 |
|
|---|---|---|
| Diesel Mechanics | $21.89 | $22.65 |
| All Trades | $18.90 | $19.81 |
Assessment
This section considers all the information presented in this report on employers’ recruiting experiences, supply and demand trends, and matching issues and offers a view on whether there is a shortage of diesel mechanics and the type of shortage. A short-term outlook for the shortage situation is also offered.
Demand for diesel mechanics has continued to grow strongly over the last few years and is expected to rise in the future as the truck and bus fleet increases and the number of vehicles powered by diesel engines increases. While the growth in supply of diesel mechanics has increased in recent years, it still remains at a relatively low level. In the early 2000’s, supply through training was potentially growing by less than 1%, although this had risen to 1.8% in 2005. This only just compensates for the number of diesel mechanics retiring (1.5% per annum). Supply was probably complemented by a small amount of net inward migration but occupational detachment probably would have resulted in a loss of supply. As demand growth has exceeded supply growth an acute shortage of diesel mechanics has resulted. This is reflected in the extremely low fill rate of 21%. The disparity that has developed as demand has outgrown supply indicates that the diesel mechanic shortage is a genuine skill shortage.
The demand for diesel mechanics will continue to grow over the next few years on the back of strong growth in the number of diesel vehicles being registered. While training data shows an increase in the number of trainees achieving the nationally recognised qualification for diesel mechanics, supply through training and to a lesser extent, migration, will battle to keep pace with rising demand for diesel mechanics, let alone diminish the current shortage. The Department therefore expects shortages to persist over the short-term.
For queries regarding this report please contact info@dol.govt.nz.
End notes
1 Ministry of Transport, April 2002, ‘Transport for New Zealand : Overview’. [top]
2 Due to the close association of the constituent occupations in the broad occupational group, the trend at this broader is considered to be reflective of the trend for diesel mechanics. [top]
3 T.H. Mueller and P.H. Bass, Transport Engineering Research New Zealand , March 2004, ‘Profile of the Heavy Vehicle Fleet: Update 2004’. [top]
4 Ministry of Transport, April 2002, ‘Transport for New Zealand : Overview’. [top]
5 Analysis of the Job Vacancy Monitor suggests that it is an indicator of change in labour market tightness, or change in the degree of difficulty of recruiting staff. An increase in vacancies typically indicates increasing difficulty in recruiting staff and vice versa. While changes in demand usually dictate changes in labour market tightness, it can also be affected by changes in supply conditions, such as a rise in net migration. [top]
6 The National Certificate in Automotive Heavy Engineering includes separate strands in Agricultural Equipment, Plant and Equipment and Road Transport. [top]
7 The training rates for ‘all trades’ were calculated for the 14 trade occupations that were examined in-depth using data from the SERA Intensive 2005. As the composition of occupations being examined changes from year-to-year, so will the training rates. [top]
8 ‘Occupational detachment’ refers to individuals who choose not to continue practising in their occupation but retain a connection to the occupation (e.g. move into a management or supervisory role, or retain professional registration), or who leave the occupation entirely (e.g. by changing occupation or withdrawing from the labour market). [top]
9 The data shown from the LCI are unadjusted mean hourly rates. Caution should be taken with interpreting this information due to the relatively small sample sizes, particularly at the occupational level. Futhermore, the LCI is designed to measure changes in, rather than the actual level of, wage and salary rates. [top]
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