Sale & District Business Opportunities Study 2003

Sale and Region Business Opportunities Study

Final Report

March 2003

Contents

Contents...... 1 Executive Summary...... 6 1 Introduction...... 9 1.1 The Study ...... 9 1.2 The Analysis ...... 9 2 The Regional Economy ...... 10 2.1 Wellington Shire ...... 10 2.2 Population ...... 10 2.3 Labour Force ...... 11 2.3.1 Employment ...... 11 2.3.2 Occupations ...... 11 2.3.3 Unemployment ...... 12 2.4 Sale – A Service Economy...... 13 2.4.1 Key Characteristics...... 13 2.4.2 Vulnerability to Change ...... 14 3 Major Industries and Employers...... 15 3.1 Key Sectors ...... 15 3.2 Major Employers ...... 16 3.2.1 A Service Focus ...... 16 3.3 Key Sectors ...... 17 3.3.1 Oil and Gas ...... 17 3.3.2 Agribusiness...... 18 3.3.3 Timber and Timber Processing ...... 20 3.3.4 Aerospace...... 20 4 Trends – Population and Employment...... 22 4.1 Population ...... 22 4.2 Employment ...... 24 4.3 Comparing Sale and Regional Victoria...... 28 5 Assessing the Region...... 30 5.1 Industry Survey ...... 30 5.2 Regional Strengths ...... 31 5.3 Regional Weaknesses ...... 33 5.4 Threats...... 34 5.5 Sale Assessment – Advantages and Disadvantages...... 35 6 Future Directions...... 37 6.1 Facing the Future...... 37 6.2 A Partnership Approach...... 38 6.3 Strategic Directions ...... 38 6.4 Future Business Opportunities ...... 38 6.4.1 Key Sectors...... 38 6.4.2 Identified Opportunities ...... 39 6.5 Major Business Opportunities...... 40 7 Business Opportunities – Manufacturing...... 45 7.1 Overview ...... 45 7.2 Manufacturing in Australia...... 45 7.3 Growth Industries ...... 46 7.4 Manufacturing in Victoria ...... 47

7.5 Metals and Engineering Sector - Victoria ...... 48 7.6 Gippsland Region...... 48 7.7 The Oil and Gas Sector ...... 49 7.7.1 Overview of the Sector ...... 49 7.7.2 Oil and Gas Sector – Impacts on Sale ...... 50 7.7.3 Industry Supporting the Oil and Gas Sector ...... 50 7.8 Major Manufacturing Employers ...... 51 7.9 Industry Strengths ...... 52 7.9.1 Regional Strengths ...... 52 7.9.2 Engineering Strengths ...... 52 7.10 Constraints ...... 53 7.10.1 Regional Constraints...... 53 7.10.2 Engineering Constraints ...... 54 7.11 Identified Business Opportunities ...... 54 7.12 Threats to Business Activity ...... 55 7.13 The Way Forward...... 55 7.13.1 Developing the Industry...... 55 7.13.2 The Next Steps...... 56 8 Business Opportunities - Aerospace ...... 57 8.1 Overview ...... 57 8.2 Aerospace in Australia ...... 57 8.3 Aerospace in Victoria...... 58 8.4 Regional Victoria ...... 59 8.5 Gippsland Region...... 59 8.6 Sale Region...... 60 8.6.1 RAAF Base East Sale ...... 60 8.6.2 West Sale Aerodrome ...... 60 8.6.3 Activities at West Sale Aerodrome ...... 61 8.6.4 Aircraft Usage ...... 61 8.7 Regional Competition ...... 62 8.8 Business Opportunities ...... 62 8.8.1 Aerospace Cluster ...... 62 8.8.2 Capabilities ...... 63 8.9 Strengths Sale ...... 64 8.10 Constraints Sale...... 64 8.11 The Way Forward...... 65 8.11.1 Opportunities ...... 65 8.11.2 The Next Steps...... 67 9 Business Opportunities – Primary Industry...... 69 9.1 Overview ...... 69 9.2 Primary Industry – Australia ...... 69 9.3 Primary Industry – Victoria ...... 70 9.4 Wellington Shire ...... 71 9.5 Overview of Opportunities ...... 71 9.5.1 Government Strategy Context...... 71 9.5.2 Dairy ...... 72 9.5.3 Intensive Animal Industries ...... 72 9.5.4 Horticulture...... 72 9.5.5 Grains ...... 72 9.5.6 Meat ...... 72

9.5.7 Emerging Industries ...... 73 9.6 Assessment of the Region ...... 73 9.6.1 Advantages ...... 73 9.6.2 Constraints...... 73 9.7 The Way Forward - Primary Industries ...... 74 9.8 Next steps ...... 76 9.9 Dairy Industry...... 77 9.9.1 Dairy in Australia ...... 77 9.9.2 Dairy in Victoria ...... 78 9.9.3 Dairy in Wellington Shire ...... 78 9.10 Opportunities and Trends ...... 79 9.10.1 Industry Trends ...... 79 9.10.2 Market Trends – Domestic and Export ...... 79 9.11 Assessment of the Region ...... 80 9.11.1 Advantages ...... 80 9.11.2 Constraints - Dairy Industry ...... 80 9.12 The Way Forward – Dairy ...... 81 9.12.1 Key Issues ...... 81 9.12.2 Next steps ...... 84 9.13 Horticultural Industry...... 84 9.13.1 Horticulture – Australia ...... 84 9.13.2 Horticulture - Victoria ...... 85 9.13.3 Horticulture - Wellington Shire ...... 85 9.14 Opportunities and Trends ...... 86 9.14.1 Horticulture...... 86 9.14.2 Specialist Crops...... 87 9.14.3 Hothouse Production ...... 87 9.14.4 Vegetable Processing ...... 88 9.15 Assessment of the Region ...... 88 9.15.1 Advantages Horticulture ...... 88 9.15.2 Constraints Horticulture ...... 89 9.16 The Way Ahead – Horticulture ...... 89 9.16.1 Key issues ...... 89 9.16.2 Next steps ...... 91 9.17 Forest Industries ...... 92 9.17.1 Forest Industries – Australia ...... 92 9.17.2 Forest Industries – Victoria ...... 92 9.17.3 Forest Industries – Wellington Shire ...... 92 9.18 Market Opportunities ...... 93 9.18.1 Advantages - Forest Industries ...... 93 9.18.2 Constraints – Wellington Shire ...... 94 9.19 The Way Ahead - Forest Industries ...... 94 9.19.1 Key Issues ...... 94 9.19.2 Next Steps ...... 94 10 Business Opportunities Tourism...... 95 10.1 Overview ...... 95 10.2 Tourism in Australia - Key Market Trends...... 95 10.3 Tourism in Victoria...... 96 10.4 Regional Tourism - Victoria ...... 96 10.4.1 Tourism Regions ...... 96

10.4.2 Phillip Island and Gippsland Discovery Region ...... 96 10.4.3 Key Attractions ...... 97 10.5 Tourism in the Sale Region...... 97 10.6 Tourism Resources – Sale ...... 98 10.7 Accommodation Sector...... 98 10.7.1 A Business Market ...... 98 10.7.2 Accommodation Mix...... 99 10.8 Current Visitor Activity ...... 99 10.8.1 Current Market Positioning ...... 99 10.8.2 Sale Attractions ...... 100 10.9 Market Assessment -Sale and Region ...... 102 10.9.1 Tourism Advantages – Sale...... 102 10.9.2 Tourism Constraints - Sale ...... 102 10.10 Competition ...... 104 10.11 The Way Forward...... 106 10.11.1 Future Opportunities ...... 106 10.11.2 Market Segments ...... 107 10.11.3 Nature Based Tourism ...... 107 10.11.4 Cultural Tourism ...... 108 10.11.5 New Attractions for Sale ...... 108 10.11.6 Developing the Industry...... 109 10.11.7 Issues and Actions...... 110 10.11.8 The Next Steps...... 112 11 Business Opportunities - Services...... 113 11.1 Overview ...... 113 11.2 Australia - Services Growth...... 113 11.2.1 Drivers of Growth...... 113 11.2.2 Growth Trends...... 114 11.2.3 Major Service Industries ...... 115 11.2.4 Growth Outlook ...... 115 11.3 Regional Employment - Service Industries ...... 116 11.4 Services – Victoria...... 118 11.4.1 Employment Trends ...... 118 11.4.2 Sector Employment Shares ...... 119 11.5 Sale – A Service Economy...... 119 11.6 Regional Assessment - Services ...... 120 11.7 The Way Forward...... 121 11.7.1 Business Opportunities ...... 121 11.7.2 Threats ...... 123 11.7.3 Key Issues ...... 125 11.7.4 The Next Steps...... 126 12 Directions for Economic Development...... 127 12.1 Overview ...... 127 12.2 Investment Attraction...... 127 12.3 Business Directory ...... 127 12.4 Industry Infrastructure...... 128 12.4.1 Industrial Estates ...... 128 12.4.2 Commercial Activity ...... 130 12.4.3 Council Support ...... 131 12.4.4 Support Infrastructure ...... 131

12.4.5 Future Infrastructure Development ...... 131 12.5 Business Links...... 132 12.5.1 A New Approach...... 132 12.5.2 Economic Development Committee ...... 132 12.5.3 Industry Clusters ...... 133 12.5.4 Industry Taskforces...... 133 12.6 Business Development Programs...... 134 12.7 Securing Support ...... 134 Appendix A Gippsland Region Engineering Organisations...... 135

Executive Summary

A major finding of this study is that Sale has a unique structure in comparison with other regional centres in Victoria and elsewhere. It is highly dependent on the impact of several major sectors:

· Oil and gas activity and support services to Esso

· RAAF Base East Sale · Dairy industry

· Health and education services

The four sectors generate a demand for local goods and services. They have been important in the development of the large service sector in Sale. This concentration also creates a high level of vulnerability to changes in any of these sectors.

In comparison with other regions, Sale has limited manufacturing industry activity (outside the specialist engineering companies supporting Esso) but a much higher level of service sector employment.

The Sale economy is currently largely inward looking:

· It has developed as a major regional service centre for Wellington Shire and adjacent areas.

· There appears to be limited number of export firms located in the area. The business sector has largely developed around servicing a local market (including the major local customer of Esso).

· Few service business are involved in broader regional markets.

· Tourism is at the early stages of development.

While the extent of the local market has driven significant growth over Sale’s history (particularly since the development of the oil and gas sector in the 1960’s), the region can not be complacent about its future.

There are several factors that will put the region on a slower growth path over the next 5 – 10 years. These are:

· A continued decline in population impacting on the demand for services. The ageing of the population will also have implications for the pattern of demand for services – particularly the nature and structure of health services.

· Any major contraction in the RAAF Base.

· Reduction in oil output from Bass Strait.

· Contraction of other businesses in the region.

There is a need to ensure continued growth in jobs in the region.

The key advantages and disadvantages can be summarised as:

Sale and Region Key Advantages · Road access to Melbourne and major centres · Agricultural base - Dairy Industry · Esso and specialised support industry · RAAF Base and its impacts · Quality of life · Education quality · Health services · Business services · Major retail centre · Stable workforce Disadvantages · Narrow manufacturing base · Population size and trends · Lack of tourism attractions · Reliance on RAAF and Esso and vulnerability to change · High cost of residential land · Competition from other areas - Latrobe Valley, Bairnsdale · No long term strategy for the region · Business organisations not active enough · Change in traditional industries and the need to develop new agriculture industries

The major focus of future development needs to be on:

· Broadening the markets of existing manufacturing businesses – particularly engineering and aerospace (national and international markets).

· Developing new activities in agriculture, horticulture and related processing.

· Expanding the regional service role of Sale. · Positioning Sale as a regional tourism hub.

· Positioning Sale as an attractive investment location.

Achieving this will require a more active engagement by Council with business and the community. This will involve: · Council continuing to provide a leadership role in facilitation and development of existing business and the attraction of new business. · Partnering with business in specific industry and project taskforces and industry cluster groups. · Establishing an Economic Development Committee to advise Council and drive major regional development projects. · Ensuring there is an ongoing dialogue between Council and businesses in the area. · Securing funding for specific development initiatives from the State Government and Commonwealth Government.

· Making Sale (and Wellington) more visible as a vibrant business hub and investment location – with business, government agencies and industry organisations. · Ensuring that there is an infrastructure program in Sale (and elsewhere in Wellington Shire) that will support future business development (including industrial estates and industrial land).

1 Introduction

1.1 The Study

This report is the final report of a comprehensive review of Sale and its future business opportunities. The review was commissioned by Wellington Shire Council.

The report provides:

· A detailed analysis of the regional economy that is centered on the City of Sale.

· An identification of the major factors that will influence future patterns of development.

· An analysis of business opportunities in key sectors of the local economy.

· Recommendations on how these opportunities should be actioned.

In examining the Sale economy we also examine the broader region of Wellington Shire. This is because Sale is a major service centre for this broader region, and its development cannot be considered in isolation from the rest of the Shire.

1.2 The Analysis

The analysis is based on several sources of data:

· Australian Bureau of Statistics Population Census Data and other information

· Information collected on major employers in the region

· Interviews with 60 businesses in the region

· Interviews with a range of other organisations and stakeholders

· Information contained in various strategy studies on the region

The analysis has been undertaken by a team comprising Buchan Consulting and Neil Noelker Consulting.

Our thanks go to the Wellington Shire Economic Development Unit for the provision of reports and information, to all the business people who gave their time for interviews and to government agency staff who provided reports, comments and other information.

The views expressed in this report are those of the consultants. They cannot be construed as the views of Wellington Shire Council, or of any specific individuals or organisations interviewed, as part of the consultation program that formed a major component of this study.

2 The Regional Economy

2.1 Wellington Shire

Before analysing new business opportunities it is important to understand the structure and dynamics of the regional economy.

Wellington Shire is one of Victoria’s largest regional local government areas and has a population of 39,288 (2001 Census). The Shire is located in Gippsland and is about 2.5 hours drive east of Melbourne.

Sale is the principal town within the Shire and the major service and industry centre for the region.

2.2 Population

Sale is the dominant city in the Shire, accounting for almost a third of the Shire’s population and is the major industry, retail and service centre.

· Wellington Shire has a population of 39,288 and Sale 12,854 (2001 Census)

· The period 1996-2001 has seen a decline of population in both the Shire (-1.3%) and in Sale (-3.8%) Table 1. Population – Sale and Wellington Shire 1996 - 2001 1996 2001 Percent Change Population % of Shire Population % of Shire Population Population Sale 13,366 33.6 12,854 32.7 -3.8% Wellington Shire 39,817 100 39,288 100 -1.3% Source: ABS Census Data 1996, 2001

Table 2 is based on 1996 data and shows the dominance of Sale as the major population centre in the Shire.

Table 2. Population Wellington Shire 1996 City/Town Population Percent of Shire Major Features Population Sale 13,366 33.6 Major centre for oil and gas, manufacturing – engineering, aerospace, retail, business services and community services, Defence (RAAF) Maffra 4,033 10.1 Food processing, agricultural and horticultural services, retail and services Yarram 1,807 4.5 Timber processing, services for agriculture Heyfield 1,602 4.0 Timber process and component production Stratford 1,350 3.4 Local service centre Total 5 largest Towns 22,158 55.6 Source: Wellington Shire Council Statistical Profile 2000

2.3 Labour Force

2.3.1 Employment

Wellington Shire's labour force totals 17,048 of which 60% are employed full-time. Sale represents over a third of this, with a labour force of 5,828 (2001 Census). Table 3. Employment Levels – Sale and Wellington 2001 Region Number Employed Total Labour Force Male Female Total Male Female Total Sale 2,931 2,442 5,373 3,177 2,651 5,828 Wellington 8,786 6,936 15,722 9,579 7,469 17,048 Shire Source: ABS 2001 Census

2.3.2 Occupations

The occupation patterns for Sale reflect its strong service orientation with:

· Professionals(18%) and Associate Professionals (13%) combined making up a total of 31% of employment.

· Clerical sales and service workers accounted for almost 32 % of employment Intermediate Clerical, Sales and Service Workers (17%), Elementary Clerical, Sales and Service Workers (12%), Advanced clerical and Service Worker (3%).

· Taken together professional, clerical, sales and service workers represented two thirds of employment (63%) in Sale.

· Tradespersons and Related Workers accounted for 16% of employment.

This pattern is in contrast to other cities in the Gippsland Region (eg. Traralgon 16%, Bairnsdale 15% Morwell 13%) where Professionals comprise a lower percentage of employed persons.

Table 4. Employment by Occupation - Sale and Other Cities Occupation Sale Traralgon Bairnsdale Morwell No % No % No % No % Managers and Administrators 305 5.7 688 6.4 623 7.4 432 5.6 Professionals 971 18.0 1,705 15.8 1,287 15.3 1,028 13.3 Associate Professionals 691 12.8 1,346 12.5 1,175 13.9 830 10.8 Trades persons and Related Workers 842 15.6 1,679 15.6 1,115 13.2 1,222 15.8 Advanced Clerical and Service Workers 142 2.6 307 2.8 272 3.2 194 2.5 Intermediate Clerical, Sales and Service 901 16.7 1,760 16.3 1,245 14.8 1,307 16.9 Workers Elementary Clerical, Sales and Service Workers 646 12.0 1,151 10.7 958 11.4 937 12.1 Intermediate Production and Transport Workers 336 6.2 1,085 10.1 681 8.1 853 11.1 Labourers and Related Workers 446 8.3 850 7.9 894 10.6 734 9.5 Inadequately described 36 0.7 86 0.8 71 0.8 66 0.9 Not stated 65 1.2 128 1.2 118 1.4 112 1.5 Total 5,386 10,785 8,439 7,715 Source: ABS 2001 Census

2.3.3 Unemployment

A good indicator of the impact of change in the economy is a comparison of unemployment rates between 1996 and 2001.

The changes that occurred in the early 1990's (particular Esso) and their ongoing impacts up to the mid 1990’s are reflected in:

· Unemployment in the region rising to 10.8% in 1996 (ABS Census data).

· Some improvement occurred in the late 1990s with the unemployment rate for Wellington Shire and Sale falling to 7.8% by 2001 (ABS Census Data).

· Further falls in unemployment to around 7% during 2002

Any significant reductions in activity in the key sectors in the region would see unemployment levels rise again. Table 5. Unemployment Levels June 2001 – Sale and Wellington Region Number Unemployed Unemployment Rate Males Females Persons Males Females Persons Sale 246 209 455 7.7% 7.9% 7.8% Wellington Shire 793 533 1,326 8.3% 7.1% 7.8% Source: ABS 2001 Census

Table 6 shows the changes in unemployment numbers between September 2001 and September 2002. Table 6. Unemployment – Sale Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Unemployment rate (%) 7.05% 6.91% 6.77% 6.96% 7.05% Unemployment numbers (persons) 426 410 393 394 401 Labour force 6,046 5,935 5,806 5,660 5,690 Source: Department of Employment and Workplace Relations - Economic and Labour Market Analysis Branch

2.4 Sale – A Service Economy

2.4.1 Key Characteristics

Sale has developed as the service centre for the broader region of Wellington Shire. It has a number of unique characteristics.

With population size of almost 13,000, and compared with other cities in Gippsland and other comparable cities in regional Victoria, Sale is characterised by:

· A higher percentage of the workforce in retail, business services and other services

· A significantly lower percentage of the workforce in manufacturing industry

· A larger and diverse retail sector for a city its size

· A significant business services sector · A higher percentage of persons in professional occupations

· High quality education services (public and private)

· Significant regional health services

· Government as a significant sector of employment (Defence, Local Government, State Government Agencies)

These characteristics are the direct result of the impact of several major activities which are the major drivers of growth in the region. These are:

· RAAF Base East Sale – in terms of direct employment, service contracts, and expenditure of trainees.

· Oil and Gas Sector – the operations of Esso and at its suppliers and contractors.

· Significant agriculture (dairy, beef), horticulture and forestry industries in the Shire and surrounding areas.

· The major concentration of regional health and education services.

Major employers such as Esso and the RAAF Base East Sale have provided relatively high and consistent incomes (compared to other sectors in regional Victoria) to Shire residents. This high income has underpinned the development of a substantial service based economy.

A combination of positive factors (the regional population size and industry mix; and higher wages and salary levels in the key sectors) means that Sale has developed as the retail and service centre for the broader region.

Each of these major drivers have shaped the long term pattern of development for the City and the Shire through creating a range of significant support industries that are supplying goods and services to the major industry sectors and to a broader Shire population.

2.4.2 Vulnerability to Change

While these factors are a positive for Sale, they also create a major vulnerability to change.

· Sale has a highly concentrated service economy. It does not have the broader industry base in manufacturing like many other regional cities, nor does it have the large market size of major regional cities like Ballarat, Bendigo, Geelong and Albury Wodonga.

· It is vulnerable to changes in the activity levels of its major employers, particularly the RAAF and Esso. The impacts of change were directly experienced in the early 1990s with the transfer of Esso headquarters to Melbourne and with the earlier closure of the National Safety Council.

The Esso changes had major impacts on the level of activity in the region that were reflected in a decline in retail and other business activity and a significant downward impact on housing prices in the Shire. These impacts were particularly felt during the year following the move and in subsequent years. These changes were amplified in the regional economy through the indirect multiplier effects and through impacts on business and community confidence.

3 Major Industries and Employers

3.1 Key Sectors

Table 7 shows data from the 2001 Census. The data is the industry of employment of persons resident in the location. We use this measure as a proxy for the industry employment mix of the region. In our analysis we have grouped the data into several categories.

· Goods Producing Industries (Agriculture, Manufacturing, Mining, Electricity Gas, Water, Construction)

· Goods Related Services (Wholesale Trade, Retail Trade, Transport and Storage)

· Knowledge-based/Business Services (Communication Services, Finance and Insurance Services, Property and Business Services)

· In-Person Services (Accommodation, Cafes and Restaurants, Education, Health and Community Services, Cultural and Recreational Services, Personal and Other Services

· Government and Defence

This structure allows for an analysis of the industry base of the region and the extent to which the industry structure is linked to broader (national and international) markets or to the delivery of local services to a local market.

The analysis for Sale shows the dominance of industry which is servicing mainly local markets (or major local customers). In particular it shows the dominance of goods related services and in-person services.

Sale accounts for around 33% of the Shire’s population and workforce.

· Only 8% of person are employed in manufacturing · Retail accounts for 19%

· Health accounts for 12% of employment

· Education accounts for 8%

In total, 33% of employment is in In-person Services – services that are delivered to a local market.

When we look across a number of the other industry categories (Business Services and Goods Related Services), it shows that 70% + of the employment is in organisations that are primarily servicing the local market.

Table 7. Employment by Industry Sector Persons – Wellington Shire and Sale 2001 Industry Sector Wellington Sale Wellington Sale Shire Shire Persons Persons Percent Percent Goods Producing Industries Agriculture, Forestry and Fishing 2,576 134 16.4 2.5 Mining 235 114 1.5 2.1 Manufacturing 1,248 409 7.9 7.6 Electricity, Gas and Water Supply 290 94 1.8 1.7 Construction 984 340 6.3 6.3 Total Goods Producing 5,333 1,091 33.9 20.2 Goods Related Services Wholesale Trade 517 158 3.3 2.9 Retail Trade 2,413 1,044 15.3 19.4 Transport and Storage 510 132 3.2 2.5 Total Goods Related Services 3440 1334 21.8 24.8 Knowledge-based/Business Services Communication Services 148 48 0.9 0.9 Finance and Insurance Services 250 122 1.6 2.3 Property and Business Services 966 449 6.1 8.3 Total/Knowledge/Business 1364 619 8.6 11.5 Services Industry In-Person Services Accommodation, Cafes and 698 317 4.4 5.9 Restaurants Education 1,216 439 7.7 8.2 Health and Community Services 1,559 640 9.9 11.9 Cultural and Recreational Services 253 98 1.6 1.8 Personal and Other Services 646 286 4.1 5.3 Total In-Person Services 4372 1780 27.7 33.1 Government & Defence Government administration and 868 469 5.5 8.7 Defence Non-classifiable economic units 82 23 0.5 0.4 Not stated 270 70 1.7 1.3 Total 15,729 5,386 Source: ABS Census Data 2001 and Buchan analysis.

3.2 Major Employers

3.2.1 A Service Focus

Major employers in the region are the RAAF Base East Sale, Esso, Australasian Correctional Management, Central Gippsland Health Centre and Gippsland Centre Sale (total employment in businesses located in the Centre). Other major employers are diverse and include Wellington Shire Council, Murray Goulburn Co- operative Ltd, Neville Smith Timber and Nylex.

The service sector dominates major employers in the region. Of the 3,800 jobs in the 19 largest employers, 3,520 (93%) were in services and 1,282 were in other sectors (including 600 at Esso). An estimated 2,500 – 3,000 people are employed on farms in the Shire.

Table 8. Major Employers – Wellington Shire Company Location Industry Employees (estimates) Central Gippsland Health Services Sale, Maffra, Heyfield Hospitals and health 1,300 (70%) part time services RAAF Base East Sale East Sale Defence 700 Esso Longford Oil and Gas 600 Gippsland Centre (Retailers in the Sale Shopping Centre 744 (ft, pt, casuals) Centre Australasian Correctional Management Fulham Correctional Services 230 Neville Smith Timber Heyfield Timber Products 180 Murray Goulburn Co-operative Ltd Maffra Dairy Products 170 Manufacture Wellington Shire Council Sale Local Government 160 Gippsland Grammar Sale Primary & Secondary 130 School Rosedale Leather Rosedale Leather 122 East Gippsland TAFE Sale Vocational education and 120 (ft, pt) training Department of Natural Resources and Heyfield, Maffra, State Government 120 Environment Yarram Department Sale Secondary College Sale Secondary School 120 Southern Rural Water Maffra Rural water supply 90 Maffra Secondary College Maffra Secondary School 80 Sale Catholic College Sale Secondary School 70 Nylex Sale Plastics Manufacturing 75 GBG Sale Concrete Products 75 G&S Machining Sale Engineering Manufacturing 60 Source: Buchan Analysis

3.3 Key Sectors

Major regional industry clusters exist in several sectors including:

· Oil and gas sector – including Esso and its contractors and suppliers

· Agribusiness – dairy, beef and horticulture products · Timber and timber processing – based on softwoods and hardwoods

· Aerospace – a cluster of aviation companies has developed at West Sale Aerodrome and through the provision of services to the RAAF Base

3.3.1 Oil and Gas

The oil and gas sector has a dominant impact on the region in terms of: economic activity, direct jobs, indirect jobs through the engineering companies and other businesses servicing Esso, and the multiplier effects on retail and service employment.

Current publicly available estimates indicate that oil supplies will be available from the Gippsland fields until 2020. Gas supplies from the fields are regarded as “infinite”.

· Esso employs six hundred people – 250 offshore on the oil and gas production platforms, 300 at the Longford gas plant and 50 at the Longford Heliport.

· More than 600 hundred cont ractors work directly for Esso both offshore and onshore.

· There are a number of local engineering firms and other companies that provide products and services to Esso and its major contractors. The engineering firms have specialist expertise, and represent a major part of the region’s manufacturing capability. Employment in the 24 firms with contracts is estimated at 387 persons. These include 11 local engineering firms, 7 other local firms and 6 local subsidiaries of national and international firms.

The estimated value of contracts that are serviced by local firms or subsidiaries of international firms with a presence in Sale is $100 million.

3.3.2 Agribusiness

Agribusiness employs around 2,600 people in the Shire. Major sectors in agribusiness are:

· Milk – the major agricultural activity, the region produces around 9% of the national milk production. Milk represents over 50% of regional agribusiness activity.

· Beef – a major activity, accounts for around 20% of regional agriculture.

· Horticulture – crops and plants. Some new horticulture activities are developing including walnuts, olives, grapes, carrots, broccoli, potatoes, sweet corn, cabbage, lettuce and cut flower production. These products are distributed in export and domestic markets.

Dairy is a significant activity in the region with Wellington Shire being located in one of Australia’s richest dairy areas – Gippsland. An estimated 2,000 persons are located on approximately 1,000 dairy farms in the Shire. Murray Goulburn has a major processing operation at Maffra that employs around 175 persons.

Milk production is primarily concentrated in the south-east corner of Australia, with Victoria accounting for 62% of total output (Australian Dairy Corporation statistics 2000). Over 90% of Victorian milk is used for manufacturing and Victoria accounts for 80% of Australia’s dairy exports.

Milk Production by State

Source: Australian Dairy Corporation

The following chart shows the location of the dairy industry in each State.

National Dairy Production Regions

Source: Australian Dairy Corporation

Table 9 shows the major locations of the industry in Victoria, New South Wales and Queensland. Table 9. Dairy Regions and Towns State Dairy Region Locations Victoria Goulburn Murray Shepparton, Echuca, Cobram Gippsland Sale, Maffra, Korumburra, Leongatha Central Highlands Ballarat South Western Colac, Corangamite, South Grampians New South Wales Riverina Griffith Southern NSW Nowra, Bega Central NSW Bathurst, Kempsey Queensland South East Queensland Nerang, Ipswich, Toowoomba Central Queensland Mackay, Maryborough Source: Australian Dairy Corporation

The industry has undergone a major rationalisation over the last two decades. The number of dairy farms in Australia has declined over the last two decades, from over 30,000 in 1975 to fewer than 13,000 currently. This rationalisation in farm numbers is largely attributable to a reduction in government support given to the dairy industry over this period, and an accompanying increase in exposure to market forces. In order to keep pace with rising costs and falling or static returns, Australian dairy farms have generally become larger and more efficient.

3.3.3 Timber and Timber Processing

The timber industry sources softwoods (as plantation pine) and hardwoods (as eucalypts) from both plantation and forests.

The harvested softwoods are used for pulp and paper production at Maryvale Mill, sawn timber is processed through mills, and treated pine is produced in various manufacturing plants in the region. Timber products are produced for both domestic and export markets. Neville Smith Timber Industries is one of the nation’s largest processors of hardwoods.

Within Wellington Shire there are seven timber mills, two treated pine mills and processing plants and two large trucking cartage contractors that service the timber industry. The timber industry employs nearly 400 persons (including casual labour).

The timber industry is undergoing substantial change as a result of new forestry policies and this will impact on some of the smaller operators in the region.

3.3.4 Aerospace

There is a cluster of aerospace companies and services based around the RAAF Base East Sale and the West Sale Aerodrome.

This sector is a major priority area for development in Wellington Shire.

The Council is working in concert with neighbouring municipalities and the Victorian Government on development strategies.

The Victorian Government, Wellington Shire and Latrobe City are seeking to develop West Sale Aerodrome and Traralgon Airport as a linked industry cluster for aerospace development. 1

West Sale

West Sale Aerodrome is owned and operated by Wellington Shire Council. The aerodrome serves as a regional facility for commercial, general and military aviation purposes. The main users are the oil and gas industry, air ambulance and emergency services, commercial charter operations, private business, recreational flying and civilian and RAAF flight training.

Infrastructure includes three runways (one sealed, two grass), extensive sealed aprons, a terminal building, lighting, and fuelling. There are no passenger services operating due to limited demand.

According to the West Sale Aerodrome Business Plan, the aerodrome currently contributes an estimated $1.74 million directly to the region each year. 2

RAAF Base East Sale

The economic impacts of the RAAF Base on the region are substantial. The RAAF Base is the second largest employer in the region and has been a major contributor to economic growth. This is driven by direct employment and by the expenditure of trainees during their stay in the region.

1 Wellington Shire Council 2 Wellington Shire Council, West Sale Aerodrome Business Plan 2000 - 2004

A recent study completed by Buchan Consulting (December 2002) estimated the economic impacts of the Base. The economic impact of the Base on regional income and employment is substantial.

· Direct employment of 700 (350 RAAF Personnel, 350 civilians) at the Base accounts for 4.5% of employment in Wellington Shire and 13% in Sale.

· Taking into account both the direct employment and the induced jobs (indirect employment), the Base accounts for accounts for almost 17% of employment for Sale (second only to the retail sector) and 6% of employment for Wellington Shire. In other words the Base is responsible for a minimum of 1 in every 6 jobs in Sale.

· The Base generates an annual direct injection of spending into the community of an estimated $15 million per year.

· When indirect effects are taken into account, on conservative assumptions the Base generates an additional 210 jobs and $6.8 million in annual expenditure.

· When family members are taken into account, the Base represents a population of 2,100 or 16% of Sale’s population. Table 10. Summary – RAAF Base East Sale Employment Impacts Employment Sale Wellington Shire Total as a % of Total as a % of Total as a % of Total as a % of Employment Population Employment Population Current RAAF Base Employment Impacts Direct Jobs 700 13.0 5.4 4.5 1.8 Indirect Jobs 210 3.9 1.6 1.3 0.5 Total 910 16.9 7.0 5.8 2.3 Total Employment Loss from (104) 1.9 0.8 0.7 0.3 Outsourcing of Aircraft Servicing RAAF Base Employment Impact 2004 806 15.0 6.3 5.1 2.1 Relocation of Officer Training School – 117 2.2 0.9 0.7 0.3 Total Employment Impact Base Employment Impact with 923 17.2 7.2 5.9 2.3 Relocation of OTS 2005

While the presence of the RAAF Base has contributed to the development of a large service economy, relative to the total population size of the region, this also creates vulnerability when any reduction in activity occurs.

Wellington Shire Council is currently pursuing a major campaign to ensure that the promised relocation of the Officer Training School takes place.

4 Trends – Population and Employment

4.1 Population

It is important to understand the impact of population on the region and its future.

We examined long term population projections for the region. Tables 11 and 12 are 20 year projections prepare by the Department of Infrastructure. They show:

· An ageing of the population in both Sale and Wellington Shire

· A stabilisation in the population of Sale

· A continued contraction in the population of Wellington Shire

While the total population is declining, the number of households is projected to increase reflecting smaller household sizes and the consequent demand for increased housing (Tables 13 and 14). The estimates over the 20 year period are for an increase of 3300 dwellings in the Shire with approximately 1,000 of these being located in Sale.

Table 11. Population Projections Persons – Sale Age Group Year Growth % 2001 2006 2011 2016 2021 2001/06 2006/11 2011/16 2016/21 2001/11 2011/21 2001/21 0-14 3,346 3,100 2,764 2,593 2,513 -7.4 -10.84 -6.19 -3.09 -17.39 -9.08 -24.90 15-19 991 1,042 1,028 864 767 5.15 -1.34 -15.95 -11.23 3.73 -25.39 -22.60 20-24 742 746 744 718 615 0.54 -0.27 -3.49 -14.35 0.27 -17.34 -17.12 25-29 955 851 875 871 854 -10.89 2.82 -0.46 -1.95 -8.38 -2.40 -10.58 30-34 1,015 933 838 871 866 -8.08 -10.18 3.94 -0.57 -17.44 3.34 -14.68 35-39 1,080 1,015 930 835 869 -6.02 -8.37 -10.22 4.07 -13.89 -6.56 -19.54 40-44 1,090 1,081 1,013 927 836 -0.83 -6.29 -8.49 -9.82 -7.06 -17.47 -23.30 45-49 1,027 1,058 1,042 977 897 3.02 -1.51 -6.24 -8.19 1.46 -13.92 -12.66 50-54 811 920 960 956 927 13.44 4.35 -0.42 -3.03 18.37 -3.44 14.30 55-59 590 752 849 901 908 27.46 12.90 6.12 0.78 43.90 6.95 53.90 60-64 518 603 769 861 909 16.41 27.53 11.96 5.57 48.46 18.21 75.48 65+ 1,940 2,185 2,467 2,872 3,328 12.63 12.91 16.42 15.88 27.16 34.90 71.55 Total 14,105 14,286 14,279 14,246 14,289 1.28 -0.05 -0.23 0.30 1.23 0.07 1.30 Source: Department of Infrastructure www.doi.vic.gov.au Table 12. Population Projections Persons – Wellington Shire Age Group Year Growth % 2001 2006 2011 2016 2021 2001/06 2006/11 2011/16 2016/21 2001/11 2011/21 2001/21 0-14 9,811 8,685 7,426 6,784 6,472 -11.5 -14.50 -8.65 -4.60 -24.31 -12.85 -34.03 15-19 2,992 2,955 2,865 2,322 2,027 -1.24 -3.05 -18.95 -12.70 -4.24 -29.25 -32.25 20-24 1,904 1,956 1,952 1,921 1,638 2.73 -0.20 -1.59 -14.73 2.52 -16.09 -13.97 25-29 2,132 1,846 1,919 1,907 1,869 -13.41 3.95 -0.63 -1.99 -9.99 -2.61 -12.34 30-34 2,767 2,371 2,096 2,179 2,152 -14.31 -11.60 3.96 -1.24 -24.25 2.67 -22.23 35-39 3,176 2,906 2,548 2,284 2,375 -8.50 -12.32 -10.36 3.98 -19.77 -6.79 -25.22 40-44 3,451 3,213 2,949 2,622 2,361 -6.90 -8.22 -11.09 -9.95 -14.55 -19.94 -31.59 45-49 3,338 3,430 3,210 2,958 2,664 2.76 -6.41 -7.85 -9.94 -3.83 -17.01 -20.19 50-54 2,999 3,259 3,364 3,171 2,970 8.67 3.22 -5.74 -6.34 12.17 -11.71 -0.97 55-59 2,245 2,970 3,223 3,359 3,205 32.29 8.52 4.22 -4.58 43.56 -0.56 42.76 60-64 1,870 2,206 2,908 3,152 3,289 17.97 31.82 8.39 4.35 55.51 13.10 75.88 65+ 5,788 6,364 7,125 8,400 9,667 9.95 11.96 17.89 15.08 23.10 35.68 67.02 Total 42,473 42,161 41,585 41,059 40,689 -0.73 -1.37 -1.26 -0.90 -2.09 -2.15 -4.20 Source: Department of Infrastructure www.doi.vic.gov.au

Table 13. Housing Projections – Sale 2001 2006 2011 2016 2021 Households (occupied private dwellings) 5,507 5,775 6,013 6,241 6,459 Total private dwellings (including vacant) 5,773 6,034 6,285 6,529 6,752 Persons in occupied private dwellings 13,810 13,977 13,953 13,896 13,889 Persons in non - private dwellings 295 309 326 350 400 Source: Department of Infrastructure, Victoria in Future 1996 - 2021

Table 14. Housing Projections – Wellington Shire 2001 2006 2011 2016 2021 Households (occupied private 15,918 16,512 17,051 17,532 17,989 dwellings) Total private dwellings (including 18,881 19,700 20,483 21,316 22,029 vacant) Persons in occupied private dwellings 41,020 40,667 40,045 39,459 38,983 Persons in non - private dwellings 1,453 1,494 1,540 1,600 1,706 Source: Department of Infrastructure, Victoria in Future 1996 - 2021

4.2 Employment

Table 15 analyses the employment mix for Sale for 1996 and 2001, and changes in jobs over this period.

· The major growth in employment over the period was in Retail trade (180), Property and business services (91), Health and Community Services (82).

· Major falls were in Mining (148), Government Administration and Defence (118), Wholesale Trade (70).

Table 15. Sale Employment Analysis 1996 and 2001 Sale - Employment/Industry 2001 1996 1996-2001 Change Industry Sector Males Fe males Persons Males Females Persons Males Females Persons No % No % No % No % No % No % No No No Goods Producing Industries Agriculture, Forestry & Fishing 99 3.4 35 1.4 134 2.5 78 2.6 25 1.1 103 2.0 21 10 31 Mining 102 3.5 12 0.5 114 2.1 234 7.9 28 1.2 262 5.0 -132 -16 -148 Manufacturing 341 11.6 68 2.8 409 7.6 318 10.8 78 3.4 396 7.6 23 -10 13 Electricity, Gas & Water Supply 79 2.7 15 0.6 94 1.7 43 1.5 7 0.3 50 1.0 36 8 44 Construction 296 10.1 44 1.8 340 6.3 301 10.2 40 1.7 341 6.5 -5 4 -1 Total Goods Producing Industries 917 31.3 174 7.1 1,091 20.3 974 33.1 178 7.8 1,152 22.0 -57 -4 -61 Goods Related Services Wholesale Trade 120 4.1 38 1.5 158 2.9 174 5.9 44 1.9 218 4.2 -54 -6 -60 Retail Trade 500 17.1 544 22.2 1,044 19.4 374 12.7 490 21.4 864 16.5 126 54 180 Transport & Storage 106 3.6 26 1.1 132 2.5 83 2.8 16 0.7 99 1.9 23 10 33 Total Goods Related Services 726 24.8 608 24.8 1,334 24.8 631 21.4 550 24.0 1,181 22.5 95 58 153 Knowledge Based/Business Services Communication Services 30 1.0 18 0.7 48 0.9 53 1.8 22 1.0 75 1.4 -23 -4 -27 Finance & Insurance 45 1.5 77 3.1 122 2.3 72 2.4 87 3.8 159 3.0 -27 -10 -37 Property & Business Services 252 8.6 197 8.0 449 8.3 200 6.8 158 6.9 358 6.8 52 39 91 Total Knowledge/Business Services 327 11.2 292 11.9 619 11.5 325 11.0 267 11.6 592 11.3 2 25 27 Services Industry/In-person Services Accommodation, Cafes & Restaurants 117 4.0 200 8.1 317 5.9 98 3.3 176 7.7 274 5.2 19 24 43 Education 133 4.5 306 12.5 439 8.2 144 4.9 311 13.6 455 8.7 -11 -5 -16 Health & Community Services 120 4.1 520 21.2 640 11.9 86 2.9 472 20.6 558 10.7 34 48 82 Cultural & Recreational Services 48 1.6 50 2.0 98 1.8 35 1.2 48 2.1 83 1.6 13 2 15 Personal & Other Services 166 5.7 120 4.9 286 5.3 123 4.2 105 4.6 228 4.4 43 15 58 Total In-person Services 584 19.9 1,196 48.7 1,780 33.0 486 16.5 1,112 48.5 1,598 30.5 98 84 182 Government & Defence Government Administration & Defence 329 11.2 140 5.7 469 8.7 457 15.5 130 5.7 587 11.2 -128 10 -118 Non-classifiable economic units 14 0.5 9 0.4 23 0.4 41 1.4 25 1.1 66 1.3 -27 -16 -43 Not stated 34 1.2 36 1.5 70 1.3 32 1.1 30 1.3 62 1.2 2 6 8 Total 2,931 100 2,455 100 5,386 100 2,946 100 2,292 100 5,238 100 -15 163 148

Table 16 shows data for Wellington Shire. For the total Shire:

· Major jobs growth was in Retail (355), Health and Community Services (191), Property and Business Services (124), Personal and Other Services (112)

· Major falls were in Mining (303), Agriculture, Forestry and Fishing (167), Government Administration and Defence (273), Wholesale Trade (67) Table 16. Wellington Shire Employment Analysis 1996 and 2001 Wellington - Employment/Industry 2001 1996 1996-2001 Change Industry Sector Males Females Persons Males Females Persons Males Females Persons No % No % No % No % No % No % no no no Goods Producing Industries Agriculture, Forestry & Fishing 1,683 19.2 893 12.9 2,576 16.4 1,757 19.6 986 15.0 2,743 17.7 -74 -93 -167 Mining 214 2.4 21 0.3 235 1.5 490 5.5 48 0.7 538 3.5 -276 -27 -303 Manufacturing 1,049 11.9 199 2.9 1,248 7.9 1,009 11.3 236 3.6 1,245 8.0 40 -37 3 Electricity, Gas & Water Supply 261 3.0 29 0.4 290 1.8 181 2.0 21 0.3 202 1.3 80 8 88 Construction 874 9.9 110 1.6 984 6.3 864 9.6 107 1.6 971 6.2 10 3 13 Total Goods Producing Industries 4,081 46.4 1,252 18.0 5,333 33.9 4,301 48.0 1,398 21.2 5,699 36.7 -220 -146 -366 Goods Related Services Wholesale Trade 377 4.3 140 2.0 517 3.3 458 5.1 129 2.0 587 3.8 -81 11 -70 Retail Trade 1,145 13.0 1,268 18.3 2,413 15.3 932 10.4 1,126 17.1 2,058 13.2 213 142 355 Transport & Storage 418 4.8 92 1.3 510 3.2 296 3.3 71 1.1 367 2.4 122 21 143 Total Goods Related Services 1,940 22.1 1,500 21.6 3,440 21.9 1,686 18.8 1,326 20.1 3,012 19.4 254 174 428 Knowledge Based/Business Services Communication Services 91 1.0 57 0.8 148 0.9 122 1.4 63 1.0 185 1.2 -31 -6 -37 Finance & Insurance 83 0.9 167 2.4 250 1.6 122 1.4 195 3.0 317 2.0 -39 -28 -67 Property & Business Services 502 5.7 464 6.7 966 6.1 433 4.8 409 6.2 842 5.4 69 55 124 Total Knowledge/Business Services 676 7.7 688 9.9 1,364 8.7 677 7.6 667 10.1 1,344 8.6 -1 21 20 Services Industry/In-person Services Accommodation, Cafes & Restaurants 238 2.7 460 6.6 698 4.4 234 2.6 383 5.8 617 4.0 4 77 81 Education 315 3.6 901 13.0 1,216 7.7 338 3.8 832 12.6 1,170 7.5 -23 69 46 Health & Community Services 286 3.3 1,273 18.3 1,559 9.9 216 2.4 1,152 17.5 1,368 8.8 70 121 191 Cultural & Recreational Servic es 120 1.4 133 1.9 253 1.6 84 0.9 108 1.6 192 1.2 36 25 61

Personal & Other Services 372 4.2 274 3.9 646 4.1 301 3.4 233 3.5 534 3.4 71 41 112 Wellington - Employment/Industry 2001 1996 1996-2001 Change Industry Sector Males Females Total Males Females Total Males Females Total No % No % No % No % No % No % no no no Total In-person Services 1,331 15.1 3,041 43.8 4,372 27.8 1,173 13.1 2,708 41.1 3,881 25.0 158 333 491 Government & Defence Government Administration & Defence 570 6.5 298 4.3 868 5.5 847 9.5 294 4.5 1,141 7.3 -277 4 -273 Total Government Administration & Defence 570 6.5 298 4.3 868 5.5 847 9.5 294 4.5 1,141 7.3 -277 4 -273 Non-classifiable economic units 55 0.6 27 0.4 82 0.5 125 1.4 62 0.9 187 1.2 -70 -35 -105 Not stated 135 1.5 135 1.9 270 1.7 146 1.6 128 1.9 274 1.8 -11 7 -4 Total 8,788 100 6,941 100 15,729 100 8,955 100 6,583 100 15,538 100 -167 358 191

Tables 17 and 18 show the employment changes in employment for Sale and Wellington classified by type of sector. Again, the results reflect the service focus of the economy and the local market orientation of businesses in the region. The key features were:

· Major declines in employment in Goods Producing Industries (particularly agriculture) and no growth in manufacturing employment

· Growth in Goods Related Services particularly retail

· No overall growth in Knowledge Based/Business Services but Property and Business Services have expanded

· Strong growth in In-person Services, particularly Health Services and Personal and Other Services, Accommodation, Cafes and Restaurants Table 17. Employment Trends by Sector Sector Primary Markets Trend Description Sale Wellington Goods Producing Industries Local, regional, National Decline Decline Falls in Agriculture, Forestry & Fishing and mining No real growth in manufacturing Goods Related Services Local Growth Growth Driven by growth in retail and transport and storage Knowledge Based/Business Local and Regional Static Static Contraction in Communication Services and Services Finance & Insurance offset by growth in Property & Business Services Services Industry/In-person Local and regional Strong Growth Strong Growth Driven by growth in Health & Community Services, Services Personal & Other Services, Accommodation, Cafes & Restaurants Government and Defence Decline Decline Contraction of defence and government employment

27 DRAFT 1 MARCH 25 2003

Table 18. Employment Analysis by Sector Sale and Wellington Shire Sale - Employment/Industry Wellington Sale 1996-2001 Change 1996-2001 Change Industry Sector Males Females Persons Males Females Persons no no no No No No Goods Producing Industries Agriculture, Forestry & Fishing -74 -93 -167 21 10 31 Mining -276 -27 -303 -132 -16 -148 Manufacturing 40 -37 3 23 -10 13 Electricity, Gas & Water Supply 80 8 88 36 8 44 Construction 10 3 13 -5 4 -1 Total Goods Producing Industries -220 -146 -366 -57 -4 -61 Goods Related Services Wholesale Trade -81 11 -70 -54 -6 -60 Retail Trade 213 142 355 126 54 180 Transport & Storage 122 21 143 23 10 33 Total Goods Related Services 254 174 428 95 58 153 Knowledge Based/Business Services Communication Services -31 -6 -37 -23 -4 -27 Finance & Insurance -39 -28 -67 -27 -10 -37 Property & Business Services 69 55 124 52 39 91 Total Knowledge/Business Services -1 21 20 2 25 27 Services Industry/In-person Services Accommodation, Cafes & Restaurants 4 77 81 19 24 43 Education -23 69 46 -11 -5 -16 Health & Community Services 70 121 191 34 48 82 Cultural & Recreational Services 36 25 61 13 2 15 Personal & Other Services 71 41 112 43 15 58 Total In-person Services 158 333 491 98 84 182 Government & Defence Government Administration & Defence -277 4 -273 -128 10 -118 Non-classifiable economic units -70 -35 -105 -27 -16 -43 Not stated -11 7 -4 2 6 8 Total -167 358 191 -15 163 148

4.3 Comparing Sale and Regional Victoria

Table 19 compares the employment structure of Sale and Wellington Shire with Non Metropolitan Victoria and Metropolitan Melbourne. It highlights some of the unique features of the Sale economy, particularly the service nature of the local economy.

Compared with Non-metropolitan Victoria it shows that Sale:

· Is under-represented Goods Producing Industries particularly in manufacturing (Sale – 7.6% c/f Non-Metro Victoria 13.4%)

· Has a higher percentage in Retail (Sale – 19.4% c/f Non-Metro Victoria 15.3%)

· Has a higher percentage in Property & Business Services (Sale – 8.3% c/f Non- Metro Victoria 6.6%)

DRAFT 1 MARCH 25 2003

· Has a higher percentage in Government Administration and Defence (Sale – 8.7% c/f Non-Metro Victoria 3.3%)

· Has a higher percentage in In-person Services (Sale – 33.1% c/f Non-Metro Victoria 28.6%) Table 19. Comparing Industry Employment - Sale and Non-Metropolitan Victoria Employment/Industry 2001 (Persons) Wellington Sale Non-Metro Melb Vic Industry Sector No % No % % % Goods Producing Industries Agriculture, Forestry & Fishing 2,576 16.4 134 2.5 11.2 0.8 Mining 235 1.5 114 2.1 0.4 0.2 Manufacturing 1,248 7.9 409 7.6 13.4 16.0 Electricity, Gas & Water Supply 290 1.8 94 1.7 1.1 0.4 Construction 984 6.3 340 6.3 6.7 6.5 Total Goods Producing Industries 5,333 33.9 1,091 20.2 32.8 23.9 Goods Related Services Wholesale Trade 517 3.3 158 2.9 4.4 6.0 Retail Trade 2,413 15.3 1,044 19.4 15.3 14.6 Transport & Storage 510 3.2 132 2.5 3.5 3.9 Total Goods Related Services 3,440 21.9 1,334 24.8 23.2 24.5 Knowledge Based/Business Services Communication Services 148 0.9 48 0.9 1.3 2.3 Finance & Insurance 250 1.6 122 2.3 2 4.6 Property & Business Services 966 6.1 449 8.3 6.6 13.1 Total Knowledge/Business Services 1,364 8.7 619 11.5 9.8 19.9 Services Industry/In-person Services Accommodation, Cafes & Restaurants 698 4.4 317 5.9 4.9 4.1 Education 1,216 7.7 439 8.2 7.5 6.9 Health & Community Services 1,559 9.9 640 11.9 10.8 9.3 Cultural & Recreational Services 253 1.6 98 1.8 2 2.8 Personal & Other Services 646 4.1 286 5.3 3.4 3.3 Total In-person Services 4,372 27.8 1,780 33.1 28.6 22.3 Government & Defence Government Administration & Defence 868 5.5 469 8.7 3.3 2.9 Total Government Administration & Defence 868 5.5 469 8.7 3.3 2.9 Non-classifiable economic units 82 0.5 23 0.4 0.5 0.6 Not stated 270 1.7 70 1.3 1.8 1.8 Total 15,729 100 5,386 100 100 100

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5 Assessing the Region

5.1 Industry Survey

As part of the assessment of the Sale Region and its business prospects, interviews were held with a sample of businesses and other organisations. The sample covered all major sectors and also included relevant government agencies. The interviews were held either face to face or by telephone. Table 19 shows the number of interviews in each category.

A total of 60 local interviews (Sale and Wellington Shire) were held and these included a discussion of regional issues and future business opportunities.

This section analyses the results of these interviews. A focus of the interviews was on identifying strengths and weaknesses, opportunities and threats to the development of the Sale Region.

An additional nine interviews were conducted with government agencies and other organisations that have some involvement with the Sale region.

In addition to the individual interviews, discussion sessions on business opportunities were held in late February 2003 and early March 2003. These sessions covered: Manufacturing – Metals and Engineering; Tourism; Services; Aerospace; and Primary Industries. Information papers were circulated to participants prior to these meetings. Table 20. Interviews by Category Category No of Interviews Percentage Goods Producing Industries Dairy /Food Processing 2 2.9 Timber 2 2.9 Horticulture 4 5.8 Oil and Gas 2 2.9 Metals and Engineering 6 8.7 Aerospace 3 4.3 Other Manufacturing 1 1.4 Total 20 29.0 Goods Related Services Retail 4 5.8 Transport 1 1.4 Agriculture Services 1 1.4 Total 6 8.7 Knowledge Based/Business Services Business Services 7 10.1 Telecommunications 1 1.4 Employment/Training Services 2 2.9 Industry Associations 2 2.9 Total 12 17.4 Services Industry/In-person Services Education 4 5.8 Health 2 2.9 Tourism & Hospitality 10 14.5 Correctional Services 1 1.4 Total 17 24.6

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Category No of Interviews Percentage Government Administration & Defence RAAF 1 1.4 Wellington Shire Council 8 11.6 Government Departments/Agencies 4 5.8 Total 13 18.8 Total Interviews 69 100

5.2 Regional Strengths

A range of regional strengths were identified with the major ones being:

· Lifestyle factors – quality of life, regional attractions (natural and recreational).

· Industry base – oil and gas sector, RAAF, dairy industry.

· Services quality – particularly health, education and business services.

· Location – access to Melbourne, central location in a broader region

The strengths identified largely reflected a recognition of the major drivers of economic growth in the region and the importance of services to the local economy.

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Table 21. Strengths – Sale and Region Strengths Number Percent (n=60) Industry Base Oil Sector 12 20.0 RAAF 7 11.7 Dairy Sector 7 11.7 Timber 4 6.7 Rural Sector 3 5.0 Good engineering skills 4 6.7 Total Industry 37 61.7 Local Market Stable Market 5 8.3 High income market 3 5.0 Market growth last 3 years 2 3.3 Total Local Market 10 16.7 Workforce Stable workforce 6 10.0 Country Work Ethic 2 3.3 Lower Wages Costs 4 6.7 Total Workforce 12 20.0 Lifestyle Quality of life/lifestyle 11 18.3 Clean and Green Area 5 8.3 Climate 6 10.0 Regional Attractions – natural and recreation 13 21.7 Community spirit/support 4 6.7 Total Lifestyle 39 65.0 Services Quality Education 7 11.7 Health Services 7 11.7 TAFE 3 5.0 Good business services/commercial centre 5 8.3 Good retail 3 5.0 Total Services 25 41.7 Infrastructure Good infrastructure 5 8.3 Water available 1 1.7 Good roads 4 6.7 Total Infrastructure 10 16.7 Location Factors Accessible to Melbourne 9 15.0 Central location 2 3.3 Compact city 3 5.0 Lower land cost 3 5.0 Total Location 17 28.3 Transport Train Access 2 3.3 Good transport/freight 4 6.7 Total Transport 6 10.0 Other Good support for industry 4 6.7 Total Other 4 6.7

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5.3 Regional Weaknesses

A range of weaknesses of the region were identified and these included:

· Workforce issues – particularly recruitment of skilled labour (this was particularly the case in the metals and engineering industries).

· Tourism – lack of major attractions and the current tourism offering not well enough defined.

· Infrastructure – concerns about the quality of industrial estates and concerns about of aspects of city design and layout.

· Lack of business leadership – a concern that the business community is not active enough on economic development issues.

· Industry mix too narrow – worries about the narrowness of the business base and the vulnerability that this creates.

· Council issues – a concern that Council is not proactive enough on development issues and that engagement with business is not active enough.

Most of these issues also came through strongly in the discussion sessions on business opportunities. Table 22. Weaknesses – Sale and Region Weaknesses Number Percent (n=60) Business Leadership Business Sector not organised 4 6.7 Lack of regional leadership 3 5.0 Business not work together 2 3.3 Community too insular 4 6.7 Total Business Leadership 13 21.7 Market Market too small 2 3.3 Not enough business look for wider markets 2 3.3 Total Market 4 6.7 Workforce Skilled Trades Shortage 11 18.3 Professionals recruit problems 3 5.0 Loss of young people 4 6.7 Total Workforce 18 30.0 Industry Mix Limited manufacturing 4 6.7 Not enough emphasis on manufacturing 4 6.7 Retail nor diverse 1 1.7 Small Retail fragile 1 1.7 Total Industry Mix 10 16.7 Cost Factors Freight costs - road/air 4 6.7 High cost residential land 2 3.3 Total Cost Factors 6 10.0 Infrastructure Industrial Estates poor 5 8.3 Lack of broadband 2 3.3 Water Availability 2 3.3

DRAFT 1 MARCH 25 2003

Weaknesses Number Percent (n=60) Poor design of city 4 6.7 Infrastructure Poor 1 1.7 More house blocks needed 1 1.7 Total Infrastructure 15 25.0 Location Distance from Melbourne 4 6.7 Total Location 4 6.7 Transport No public trans port 2 3.3 No air transport 3 5.0 Total Transport 5 8.3 Council Council not entrepreneurial/active enough 3 5.0 Council not understand business/communicate 4 6.7 Council not active enough on tourism 2 3.3 Total Council 9 15.0 Tourism Tourist product not defined 3 5.0 Tourism marketing disjointed 2 3.3 Lack of tourism attractions 9 15.0 Accommodation not geared to tourism 5 8.3 Not a focus on tourism 2 3.3 Total Tourism 21 35.0

5.4 Threats

A number of persons interviewed identified threats to development in the region including:

· Contraction of key sectors – especially Esso, RAAF

· Lack of effective tourism strategy

· Competition from other regions

· Population decline

· Council not being pro-active enough

· Absence of business leadership

These issues were similar to those identified as current weaknesses. They also point to the need to marshal business and local government around an agreed development agenda for the region. This issue is explored in more detail later in this report.

DRAFT 1 MARCH 25 2003

Table 23. Threats – Sale and Region Threats Number Percent (n=60) Key Sectors Esso Contraction 7 11.7 RAAF Contraction 4 6.7 Total Key Sectors 11 18.3 Competition Retail competition – Bairnsdale and Traralgon 4 6.7 Regional competition other Areas 5 8.3 Total Competition 9 15.0 Tourism No effective tourism marketing 5 8.3 Tourism fragmented 4 6.7 Lack of identity 1 1.7 Total Tourism 10 16.7 Other Water Costs 4 6.7 Skill shortages 3 5.0 Limited town land 3 5.0 Total Other 10 16.7 Population Population Decline 3 5.0 Ageing population 3 5.0 Total Population 6 10.0 Business Leadership Business organisations leading 3 5.0 Business not develop new opportunities 2 3.3 Total Business Leadership 5 8.3 Council Council not pro-active enough 7 11.7 Council planning policies 3 5.0 Total Council 10 16.7

5.5 Sale Assessment – Advantages and Disadvantages

Table 24 brings together this analysis and summarises the key advantages and disadvantages for the Sale Region.

Table 25 examines some of the perceived growth constraints by sector.

These constraints largely reflect the concerns about the narrow specialisation of the regional economy, vulnerability to change because of this and a perception that there is not an active strategy to develop new opportunities in the region.

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Table 24. Sale and Region – Business Advantages and Disadvantages

Table 25. Growth Impediments by Industry – Sale and Region

Agriculture Manufacturing Retail Tourism Business Other Issues Services Council not Competition from Competition Lack of attractions - Mainly focused on Lack of strategy focused on the other areas - between areas - development of local market that is endorsed agriculture sector metals and Bairnsdale & Port important by business engineering Traralgon No feasibility plans Competition from Too reliant on No effective Highly dependent Issues with for new industries major regional RAAF and Esso tourism strategy on health of key planning and centres sectors and approvals population growth Investment Limits to industrial Vulnerable to Industry Vulnerable to Young people requirements and land industry changes fragmented and industry changes leaving capital availability and population not active and population falls for that sector falls Limited industry Sale on the way to Business mix some where else organisations not active enough and providing leadership Limits on aviation Need for more capability housing blocks

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6 Future Directions

The main economic challenge for rural regions is how to integrate agricultural into broader complementary activities including value-added food, fibre and other manufacturing, higher order services and diversification into tourism.

Source: State of the Regions Report 2001 p37

6.1 Facing the Future

Sale, like many other parts of regional Australia, faces major challenges in developing its long term future. These challenges involve:

· Reducing the long term reliance on the key sectors – particularly oil and gas and RAAF. There is the prospect of some scaling back of activities in each of these sectors over the next decade.

· Widening the markets of current manufacturing industries (particularly the engineering sector which comprises the major segment of manufacturing).

· Developing new areas of strength in agribusiness and related value added processing – this includes developments in horticulture and related processing of vegetables.

· Positioning Sale (and Wellington Shire) as an attractive place to live, work and operate a business.

· Creating new areas of comparative advantage for the region, through development of a tourism offering that positions Sale as a regional hub.

· Strengthening local businesses (through business development and improvement programs) and widening the markets that they are involved in. This is particularly the case with business related services.

· Building on the current strengths as a service centre (including health and education) and broadening the market that is being serviced.

Sale cannot afford a passive approach of reacting to future change. The passive approach will leave Sale and Wellington Shire in a slow growth environment with limited capacity to respond to major shocks.

Rather, Sale must develop and pursue an active strategy to shape the long term future for the region. This involves:

· An economic development strategy that is supported by business and the community.

· Creating an active economic development group that can provide leadership to business and the community.

· Council providing a strategic role in facilitating economic development, through the development and implementation of clear and consistent strategies.

While the full impact of changes in the key sectors may be occurring in a medium term time-frame (eg. 5 – 10 years), any programs to diversify the economy need to commence now.

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Council can create the right environment for business and facilitate development programs. However future investment and the pattern of development will result from individual decisions that are made by a range of businesses and organisations.

6.2 A Partnership Approach

Diversifying the regional economy and strengthening its future will require new approaches to economic development. It will require programs that are developed with the business community and that involve business in a sustained way.

Council has to take the lead role in this as there are no other institutions that can play this regional role for Sale and Wellington Shire:

· Local business organisations do not have the resources.

· The major national and state industry associations are not active in Sale beyond delivering some services to their members.

· Government agencies are a source of funding or a delivery agency for particular programs, they can not lead the development push for Sale and Wellington Shire.

6.3 Strategic Directions

The new strategic directions for Sale need to cover:

· An active program to secure the RAAF Base and improve its integration with the Region.

· Programs to develop existing businesses and widen their markets.

· Strategies to develop new industries – including agriculture, horticulture and related processing.

· Strategies to develop Sale and Wellington Shire as a hub for regional tourism.

· Investment attraction activity to position Sale as a major business location and as a significant regional centre for the delivery of government services.

6.4 Future Business Opportunities

6.4.1 Key Sectors

A number of areas provide significant future opportunities for the Sale Region. The key industry areas for concentration are:

· Manufacturing – particularly specialist metals and engineering that is currently focused on the oil and gas sector and that is based around aerospace.

· Agribusiness – including agriculture, horticulture and related processing activity.

· Tourism – development of Sale as a regional hub for visitors.

· Services – including Business Services, Health Services and Education Services.

These areas were identified in our analysis and also in consultations with business in the region. While building off the current industry base is important for Sale, expansion in each of these specific areas will require new approaches to business development.

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6.4.2 Identified Opportunities

Persons interviewed were asked to identify major future opportunities. Those identified (Table 26) were in a number of categories and these include:

· Tourism – develop Sale as tourism hub, Port of Sale development, better tourism promotion.

· Agribusiness – further development of dairy activity, horticulture – new crop types, food processing plants.

· Industry – develop engineering including oil and gas, heavy engineering and aerospace and aviation related services.

· Services – expansion of regional health services (including aged care services), education services (including primary, secondary and TAFE).

Tourism related development, agribusiness expansion and manufacturing industry were the three areas that were identified most frequently as offering major potential for future business development.

Most people also recognised the importance of building on the current industry base. They also saw the potential to attract other businesses when a critical mass is reached in terms of specialist industry clusters.

There was a general recognition that there are not a large number of footloose major firms that are looking to relocate their operations to regional Victoria.

As well as commenting on specific activities and sectors, some individuals made comment on actions that may be needed to realise specific opportunities (eg. better tourism promotion, better city promotion). Table 26. Sale Region Business Opportunities Opportunities Number Percent N=60 Agribusiness Agriculture 3 5.0 Dairy Value added 6 10.0 Dairy Processing 1 1.7 Food Processing 2 3.3 Vegetable processing 3 5.0 Horticulture - fruit, vegetables, grapes, buckwheat, rye wheat 7 11.7 Wildflowers 2 3.3 Hydroponic vegetables 1 1.7 Total Agribusiness 25 41.7 Tourism Develop Sale as tourism hub 10 16.7 Port of Sale 11 18.3 Better tourism promotion 11 18.3 Self Drive Tour market/coastal drive 5 8.3 Eco Tourism 4 6.7 Develop city attractions (eg wetlands) 4 6.7 Hospitality services 4 6.7 Promote Roulettes 2 3.3 Develop Accommodation 2 3.3 Develop regional events 3 5.0 Total Tourism 56 93.3

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Opportunities Number Percent

Timber Timber processing (Heyfield) 6 10.0 Total Timber 6 10.0 Retail 0.0 Retail Franchises 1 1.7 Highway Commercial/retail Activity 1 1.7 Total Retail 2 3.3 Industry 0.0 Develop industry clusters - engineering 4 6.7 Develop industry clusters -aviation 5 8.3 Heavy Engineering - water, power, construction, paper 5 8.3 Oil & Gas international/national markets 4 6.7 Need to have a niche market - specialists eg oil & gas 2 3.3 Total Industry 20 33.3 Services 0.0 Health - specialist centre 4 6.7 Education 2 3.3 Age Care/services 3 5.0 Call Centres 1 1.7 Total Services 10 16.7 Business Leadership Need for a strong economic development group 1 1.7 Need to develop a manufacturing group 1 1.7 Total Business Leadership 2 3.3 City Promotion 0.0 Prospectus on the Town/promote area 3 5.0 Better promotion 2 3.3 Total City Promotion 5 8.3 Other 0.0 RAAF Expansion 11 18.3 Beautify city 1 1.7 Improve staff training 1 1.7 More regional cooperation by Councils 2 3.3 Total Other 14 23.3

6.5 Major Business Opportunities

The remainder of this report scopes the major business opportunities that Sale should pursue. These opportunities are considerable and include:

· Manufacturing – engineering related products and services in oil and gas, heavy engineering , aerospace

· Primary industry – including agriculture, horticulture and related processing

· Tourism – development of city infrastructure and positioning as a regional hub

· Services – expansion of regional markets for business services, education and health

Table 27 summarises the market opportunities and the programs required to develop them. More details on each of the sectors follows in subsequent chapters.

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Table 27. Summary of Business Opportunities – Sale and Region Sector Competitive Advantage Opportunity Markets Development Funding Sources Program Requirements Manufacturing Metals and · Specialist skills and · Targeting of other oil and gas · National markets · Industry Taskforce · Commonwealth - Engineering quality standards Sustainable Regions sector work · International markets – Asia · Market Development developed for Esso Pacific and Middle East consultant (eg. ISO or private Program · High level of capability consultant) · AusIndustry programs · Seek funding for the project (eg. State Government or · State Government – Commonwealth Government) DIIRD New Manufacturing Program · High level precision · Target other sectors · National infrastructure · Industry Taskforce · Commonwealth - engineering skills including – electricity, water projects · Market Development Sustainable Regions and pulp and paper industry consultant (eg. ISO or private Program consultant) · State Govt – DIIRD – New Manufacturing · Heavy engineering · Major construction projects · National projects · Seek funding for the project Program capacity (eg. State Government or Commonwealth Government) · AusIndustry progs Aerospace · West Sale Aerodrome · Expand range of businesses · National Aerospace market – · Industry Taskforce · Commonwealth - · Small cluster of at West Sale. servicing general aviation. · Develop industry strategy – · Sustainable Regions specialist capability · Encourage Research and · Development of products for aviation consultant and local Program · Government support development and new product international markets in industry · State Government – for development of development. general aviation · Market Development consultant DIIRD –Aviation industry in Gippsland · Develop capacity for specialist · Development of national and (eg. ISO or private consultant) Program · RAAF East Sale training involving TAFE and international training market · Business planning advice private providers presence and activity · Development of Sale as the · Applications for R&D funding · Develop Air show into an national general aviation expo · Esso – largest private · Seek funding for the project (eg. event every two years – helicopter fleer and trade show State Government or develop Sale event as replacement for Aviex Commonwealth Government) (Bankstown) – general aviation trade show

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Sector Competitive Advantage Opportunity Markets Development Funding Sources Program Requirements Primary Industry Primary Industry · Clean, green, disease · Increase agricultural · Export – Asia, Middle East, · Rural Industries Taskforce – · Commonwealth – free, good climate, production following the Europe develop sub groups for Dairy AFFA and good soils, quality direction of strategy from the · National and Horticulture Sustainable Regions water, rural farming Wellington Environmental & · State · Commit Council resources and Program skills, diversity Biophysical Study staff to agriculture as a major · State Government – · Strength in dairy, and · Diversify into new and industry and employer DIIRD, Agriculture other farming emerging agriculture such as · Develop networks in each and SRD flowers (including hothouse), agricultural sector and · Support from ornamentals, oils, flavours, participate in industry sector industry groups herbs, honey bees, native discussions · Regional Innovation plants, wildflowers, and the · Seek government support and Technology like including technical Adoption Program · Undertake new or support · Identify future needs for water feasibility studies particularly in horticulture, specialised rural industries, grain (including feed grain) and value added opportunities · Investigate intensive animal and poultry development · Add value to existing production Dairy · Water, climate, soils, · Develop new opportunities · Export – Asia, Middle East, · Create dairy industry subgroup · Commonwealth – large skill networks, within dairying Europe · Investigate new opportunities dairy restructure technical advice · Increase productivity · National for increasing productivity, farm program and ACC available · Large sector in the region · State management, environment etc · UDV · Well established, providing opportunity for · Seek program funding · Geoffrey Gardiner strong processing research into better practices Dairy Foundation sector Grant

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Sector Competitive Advantage Opportunity Markets Development Funding Sources

Horticulture · Clean, green, disease · Develop new opportunities · Export – Asia, Middle East, · Create a horticultural sector · ANZ Charitable free, good climate, within horticulture types of Europe subgroup Trust good soils, quality produce, Asian vegetables · National · Review outcomes of reports in · State Government – water, local skills and emerging horticulture · State Gippsland including the soon to SRD and Agriculture · Encourage new ways to · Food processors be released report prepared by · Commonwealth – produce such as hydroponics the Gippsland Vegetable AFFA programs and hothouse Growers · Link production to value added manufacture and processing Forestry · Major area for forestry · Ensure industry is · Existing markets – domestic · Political support to the industry consolidated in the region and international to ensure core activities · Plantation Timber maintained and developed · Value added wood products · Council to continue dialogue · Other Timber Production with the industry Services Business Services · High quality business · Expand to broader regional · Broader regional markets – · Business development and · Cooperative services markets. Gippsland and surrounding improvement program with program Council and · Wide range of · Expand regional role regions. TAFE Telstra services · Develop call centres · E-commerce program with · Feasibility study with Telstra Country-wide – Telstra Country-wide continue – call centres · Work with Telstra on feasibility of call centre Heath Services · Large and high quality · Regional health role · Broader Regional market · Consultation with Central · Council work with service · Expansion of services to Gippsland Gippsland Health Services Central Gippsland service ageing population Health Services to secure expansion of services

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Sector Competitive Advantage Opportunity Markets Development Funding Sources

Retail · Significant and diverse · Capture larger share of local · Broader Regional market · Development of retail strategy · Council, Traders and retail sector market - reduce leakage to Gippsland with Gippsland Centre, Gippsland Centre other areas Business Association and · Develop specialist retailing Traders · Improve retail areas Education · Well serviced all levels · Develop as a regional centre · Broader Regional market · Ensuring that levels are · Council involved in – primary, secondary - secondary education Gippsland maintained representations to and TAFE State Government · TAFE Institute with · TAFE - develop specialist · Broader Regional market · Consultation with TAFE and · Industry and TAFE good industry links regional role to support Gippsland local industry industry development · TAFE - develop specialist · Greater involvement in local · Consultation with TAFE and · Industry and TAFE regional and industry role and regional market local industry to strengthen · Council – facilitator TAFE role · Identify ways in which TAFE can support industry initiatives Source: Buchan analysis.

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7 Business Opportunities – Manufacturing

7.1 Overview

Manufacturing industry in the Sale Region has several unique characteristics.

· The manufacturing sector is small and narrowly based – only 8% of persons are employed in manufacturing.

· In comparison with other regions, it has limited manufacturing industry activity (outside of the specialist engineering companies supporting Esso and the aerospace cluster).

· The Esso work has encouraged the development of a high quality engineering industry that specialises in the requirements of the oil and gas sector.

· There appears to be limited number of manufacturing firms involved in export located in the area. Most businesses have largely developed around servicing local markets.

While current manufacturing is limited, it provides a base from which to develop. The industry is recognised for its innovation and its high skill levels. Due to the dominance of Esso as the primary customer for many of these local firms, have not needed to develop other markets.

Planning for the future will require bringing a number of companies together in an industry cluster and implementing a market development program that is aimed at building new opportunities through market diversification activities.

7.2 Manufacturing in Australia

Fewer people are now producing more products and more companies are selling on international markets.

It is useful to review the broader prospects for manufacturing in Australia. Despite the dramatic change in manufacturing over the last decade, there are still significant opportunities in both domestic and international markets.

Manufacturing industry has undergone a major transformation over this period. Change has been driven by a combination of technological change, shifts in demand patterns, reductions in protection and the development of global markets and new areas of manufacturing specialisation.

· The manufacturing sector in Australia still remains large and comprises 45,000 business providing over 1 million jobs; the sector invests $9 billion a year in plant and equipment; undertakes 60% of Australia's private sector R&D; now produces one third of Australia's exports; and accounts for 12 % of GDP.

· Manufacturing in 2002 employs less people and is made up of a smaller number of enterprises than it did at the beginning of the 1990’s.

· International markets are now more significant compared with the manufacturing sector of the late 1980's. It is now more export orientated. The export focus has increased, with the export propensity increasing from 17% to 24%. Manufacturing exports more than doubled from $7.1 billion in 1990/91 to $18.5 billion in 2000/01.

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· At the same time import penetration has increased: in 1990 one in five manufactured products bought in Australia was made overseas and by 2000 this had increased to almost one in three.

· Manufacturing’s share of GDP fell from 15% to 12% during the 1990’s.

· The last decade as seen a substantial lift in productivity, new skill requirements to manage new technologies and significant changes in the workplace, including major changes in the organisation of work and associated skill requirements. Table 28. Manufacturing Indicators June 1991 and June 2000 - Australia Indicator June 1991 June 2000 Exports (as % of sales) 17.3 24.0 Imports Penetration (imports as share of total supplies) 20.1% 29.8% Effective Rate of Protection 15.5% 5.5% Manufacturing Turnover as % of GDP 14.8% 12.2% Source: Australian Industry Group. Competitive Industry April 2002

7.3 Growth Industries

The average annual growth in manufacturing turnover over the 1990's was 3.4%.

· The highest growth rates were achieved in three sectors: Food and beverages; Wood and paper products; Printing and publishing.

· Lower growth was experienced in: Petroleum and chemicals; Metal products; Machinery and equipment. Table 29. Growth Trends in Manufacturing 1990/91 – 1999/00 High Growth Average Growth Low Growth Contraction Food & Beverages Non Metallic Minerals Petroleum, Coal TCF (major increase (major boost in 3.4% Chemical products in imports) major falls exports) 4.3% (major increase in import in employment - penetration/some growth 0.41% in exports) 2.8% Wood and Paper Other Manufacturing Metal Products Products (boosted by (declining exports) (some increase in strong building and 3.5% exports; major increase construction) 4.6% in import competition) 2.2% Printing & Publishing Machinery & Equipment (major increase in (note major increase in activity & employment) exports/ highes t import 6.0% penetration - 53% 2000) (strong boost in R&D) 2.4% Source: Australian Industry Group. Competitive Industry April 2002

The growth in exports has a major effect on industry. The drive by many major companies to develop global markets has placed pressure on those companies that supply them to also lift their competitiveness. Major companies have been implementing supply chain programs to improve efficiency, lift quality, reduce cost and boost competitiveness.

Leading edge industries like the automotive industry have reshaped their supply chains and developed clusters of suppliers around them. A similar pattern has developed in the oil and gas sector.

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7.4 Manufacturing in Victoria

Manufacturing is the major employment sector in Victoria accounting for 15.8% of the workforce compare with 12.3% for Australia.

· Victoria has the largest manufacturing sector of any State: It comprises 18,000 enterprises; employs 340,000 people or 15% of the workforce; accounts for 60% of Victoria's exports; generates 16% of state GDP; and undertakes 50% of business R&D spending.

· In the last 8 years manufacturing industry's employment share fell from 17.2% to 15.8% in Victoria. Table 30. Some Manufacturing Indicators – Victoria 2002 Indicator Enterprises 18,000 Production 33% of Australia's manufacturing production State GDP Contributes $23 billion to Victoria's Gross State Product (GSP) 16% of GSP Employment 340,000 people 15% of labour force Exports $18.5 billion 60% of Victoria's exports Business R&D spending 50% of R&D Source: ABS Data

The last decade has also seen some new emerging industries in manufacturing.

These industries have a number of attributes: significant commitment to research and development; focus on developing products for export markets; use high technology equipment; high level of specialist knowledge; tendency to invest in development of specialist skills; more likely to be medium sized companies; have aspirations to grow in a world market; and make use of science, engineering and information technology skills.

· Clusters of these firms have developed in: automotive components; aerospace equipment; medical and scientific equipment; precision engineering; electronics and electronics equipment; metal fabrication; building products; food processing; biotechnology; information and communications technology (ICT).

· Victoria is well represented in most of these sectors.

These trends are important for the industry in Sale, they show what highly skilled firms can achieve in global markets.

There is strong government support for manufacturing reflected in the Victorian Government's Manufacturing Strategy – Agenda for New Manufacturing launched in June 2002. The initiatives announced in the package complement the national programs being delivered by the Commonwealth Government (under its Backing Australia’s Ability Innovation Plan), through AusIndustry and Austrade.

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7.5 Metals and Engineering Sector - Victoria

Victoria has a major concentration of businesses in the metals and engineering sector.

The Victorian manufacturing industry is specialised in a number of key sectors. Several of these sectors are heavy users of engineering skills (shown in bold). Table 31. Key Sectors Victorian Manufacturing Food processing (especially dairy, fruit and Industrial machinery and equipment vegetables) Automotive and automotive components Fabricated metal products Medical and scientific equipment Paper and paper products Telecommunications equipment Textiles clothing and footwear Precision engineering Aerospace

Victoria has a significant industry in the metals and engineering sector. The major sector, metal fabrication employs around 28,000 persons in over 2600 firms.

The Victorian Government has developed Strategic Plans for several sectors including metal fabrication, medical and scientific equipment, and precision engineering. These sector plans were released in June 2002. Table 32. Engineering Industry Victoria – Selected Sectors Sector Enterprises Employment Metal Fabrication 2,600 28,000 Medical and Scientific Equipment 200 2,700 Precision Engineering 350 3,500

Sale has a significant cluster of businesses in Metal Fabrication and Precision Engineering. It also has a concentration of engineering capability in the aerospace sector.

7.6 Gippsland Region

There is a considerable engineering industry in the broader Gippsland Region. A recent study (Clusters Asia Pacific Consortium, Achieving Lift-Off Gippsland Engineering and Aerospace Industries 2001 pages 8–9) identified a total of 140 Engineering organisations in Gippsland (see Appendix A for a list of firms). These comprise:

· Around 10 major fabricators with large scale capacity.

· 10 mid sized companies with 20 + employees that are linked to power industry in Latrobe Valley or oil and gas in Sale.

· 70 – 80 jobbers with clients across a range of sectors including energy, farming, forestry, fishing.

· 10 specialists in high technology areas with significant R&D activity.

· Support services – including engineering consultants, architects, surveyors, Monash Engineering School, Gippsland TAFE.

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The industry is focused in three major locations:

· Latrobe Valley – major concentration of companies focused on power and some oil and gas.

· Sale/Bairnsdale – oil and gas sector specialists. Also engineering companies involved in dairy, forestry and aerospace.

· West/South Gippsland – concentration of smaller firms in Warragul and Leongatha. Many servicing the dairy sector.

The Achieving Lift-Off report confirmed that there is little interaction between most of the firms and that industry association activity is weak (outside of industrial relations). These factors were also confirmed in the consultations with industry in the Sale region conducted as part of this study.

There is limited information available on the industry in the Sale region. At present there is no industry capability directory for Sale and Wellington Shire which identifies firms, their activities and their capability.

7.7 The Oil and Gas Sector

7.7.1 Overview of the Sector

Esso Australia Pty Ltd is one of Australia's major oil production operators and a major gas producer. In its joint venture with BHP Billiton, Esso is the operator, providing technology and personnel for 21 offshore platforms and installations and large scale onshore oil and gas processing facilities.

Bass Strait is a major source of Australia's crude oil requirements. The area supplies gas to Victoria, New South Wales and in future to Tasmania. Over 3.5 billion barrels of oil and five trillion cubic feet of gas have been produced in Bass Strait since offshore oil and gas production began.

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Esso's Bass Strait infrastructure includes:

· Processing plants located at Longford (near Sale in Gippsland) and Long Island Point (on Westernport Bay)

· Marine terminal and supply depot at Barry Beach (South Gippsland)

· Bass Strait platforms are connected by an underwater pipeline network to the processing plants at Longford and Long Island Point.

In the three years since 1999, there have been significant upgrades of the Longford Plants. This has included more than $500 million in expenditure on restoring and upgrading facilities and a further $100 million on ongoing projects.

Bass Strait reservoirs are expected to produce crude oil and natural gas until at least 2030. The volumes of oil are forecast to decline substantially over the next 10 -15 years. This shift in the output mix has substantial impacts on the level of maintenance and capital spending, and therefore will have major effects on those firms servicing the sector.

7.7.2 Oil and Gas Sector – Impacts on Sale

The oil and gas sector has a dominant impact on the region in terms of economic activity, direct jobs, indirect jobs through engineering companies servicing Esso and the multiplier effects on retail and service employment.

· Esso employs 600 people – 250 offshore on the oil and gas production platforms, 300 at the Longford gas plant and 50 at the Longford Heliport.

· More than 600 hundred contractors work directly for Esso both offshore and onshore.

· There are a number of local engineering firms and other companies that provide products and services to Esso and its major contractors. The engineering firms have specialist expertise, and represent a major part of the region’s manufacturing capability. Local employment in the 24 firms with contracts is estimated at 387 persons. These include 11 local engineering firms, 7 other local firms and 6 local subsidiaries of national and international firms.

7.7.3 Industry Supporting the Oil and Gas Sector

The 24 firms in the region involved with the oil and gas sector account for almost 400 jobs and represents around 30% of manufacturing and related employment in Wellington Shire. Table 33. Estimated Local Employment Associated with Oil and Gas Sector Category Estimated Employment Metals and Engineering 150 Other Contracts 72 Drilling and Well Services 165 Total 387 Source: Buchan Analysis

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Table 34. Types of Firms Supporting the Oil and Gas Sector Category Number Metals and Engineering (Local Firms) 10 Metals and Engineering (other-local branch) 1 Other Contracts (local) 7 Drilling and Well Services (international - local 5 branch) Drilling and Well Services (local) 1 Total 24 Source: Buchan Analysis

Table 35. Sale and Region - Engineering and other Companies in Oil and Gas Sector 2002 Company Location Product Engineering Baker Oil Tools Sale Engineering services Fernbank Engineering Stratford Valve Repairs Eastern Instrument Services Sale Instrument Servicing G&S Sale Heavy Engineering Maffra Sheet Metal Maffra Sheet Metal Fabricator Stainless Steel Marcus Engineering Sale Metal Turning Quetada Sale Consulting Engineers, work hire Stalfab Sale Sheet Metal Survivor Offshore Systems Yarram Service safety equipment Union Hydraulics Sale Hydraulic fittings, fire equipment servicing Worley Engineering Melbourne with Sale office Design and build of plants Drilling & Well Services Halliburton (international co) Sale Drilling International Snubbing Services(ISS) Sale Well and platform work (international co) Maesk (international co) Sale Hydrogen Sulphide gas monitoring Schlumberger (international co) Sale Well Servicing Brown & Roote Sale Construction of Offshore Rigs, design and (international co) (part of Halliburton) Engineering Global Offshore Sale Diving services, underwater maintenance Source: Buchan Analysis

7.8 Major Manufacturing Employers

Major employers in the Region in terms of employment size are the RAAF Base East Sale, Esso, Australasian Correctional Management, Central Gippsland Health Centre and Gippsland Centre Sale. The balance of employment is spread across a large number of small and medium enterprises.

Table 36 shows employment in Esso and in major manufacturers in Wellington Shire. It shows that:

· The four largest manufacturers account for around 500 jobs (Neville Smith, Murray Goulburn, Rosedale Leather, Nylex)

· Another 400 manufacturing jobs are associated with the oil and gas sector

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Table 36. Major Manufacturing and Oil and Gas Employers – Wellington Shire Company Location Industry Employees (estimates) Esso Longford Oil and Gas 600 Neville Smith Timber Heyfield Timber Products 180 Murray Goulburn Co-operative Ltd Maffra Dairy Products Manufacture 170 Rosedale Leather Rosedale Leather 122 Nylex Sale Plastics Manufacturing 75 GBG Sale Concrete Products 75 G&S Machining Sale Engineering Manufacturing 60 Other Metals & Engineering (oil and Sale, Maffra Engineering Manufacturing & 330 gas related (total) Services Total Manufacturing 1,612 Source: Buchan Analysis

7.9 Industry Strengths

7.9.1 Regional Strengths

The consultations, conducted as part of this review, identified a number of major strengths of the Sale Region (Chapter 5). These included: Lifestyle factors – quality of life, regional attractions; Industry base – oil and gas, RAAF, Dairy; Services Quality – health, education, business; Location – access to Melbourne, central location. Table 37 shows the recognised importance of the oil sector and the engineering base. Table 37. Strengths of Sale Strengths No. Industry Base Oil Sector 12 RAAF 7 Dairy Sector 7 Timber 4 Rural Sector 3 Good engineering skills 4 Total Industry 37 Local Market Stable Market 5 High income market 3 Market growth last 3 years 2 Total Local Market 10 Workforce Stable workforce 6 Country Work Ethic 2 Lower Wages Costs 4 Total Workforce 12 Source Buchan Analysis

7.9.2 Engineering Strengths

There were a number of specific industry strengths identified by engineering companies involved in the oil and gas sector. These included:

· Substantial specialist work provided by Esso contracts.

· Development of high level oil and gas sector expertise over an extended period.

· Significant heavy engineering capability.

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· Core of specialist engineering skills that have been developed due to requirements of Esso.

· High efficiency, quality, and safety standards due to the high standards required by Esso.

These were seen by most companies as equipping them to secure work in other engineering markets.

7.10 Constraints

7.10.1 Regional Constraints

The major weaknesses for industry were identified as: Workforce – skilled labour recruitment; Infrastructure – industrial estates, city design and layout; Lack of business leadership; Industry mix too narrow; and Council not active enough. Table 38. Constraints – Sale and Region Weaknesses Business Leadership Business Sector not organised 4 Lack of regional leadership 3 Business not work together 2 Community too insular 4 Total Business Leadership 13 Market Market too small 2 Not enough business look for wider markets 2 Total Market 4 Workforce Skilled Trades Shortage 11 Professionals recruit problems 3 Loss of young people 4 Total Workforce 18 Industry Mix Limited manufacturing 4 Not enough emphasis on manufacturing 4 Total Industry Mix 8 Cost Factors Freight costs - road/air 4 Total Cost Factors 4 Infrastructure Industrial Estates poor 5 Lack of broadband 2 Water Availability 2 Poor design of city 4 Infrastructure Poor 1 Total Infrastructure 15 Location Distance from Melbourne 4 Total Location 4 Source Buchan Analysis

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7.10.2 Engineering Constraints

There were a number of specific industry weaknesses identified by engineering companies involved in the oil and gas sector. These included: · Narrow (though significant) market focused on Esso requirements. · General competitive pressures and impacts on margins. · Limited involvement of companies in broader markets. · Ongoing skill trades shortages – problems in recruiting high quality tradespersons. · Concerns about ability to attract younger people to the sector. · Limited capacity to market their services to broader markets. · Competition from other engineering firms in other market segments. · Costs associated with work in other markets – travel costs, time, freight costs. · Industry associations not active in Sale and not providing business development and export programs (eg VECCI, AiG).

7.11 Identified Business Opportunities

Our analysis identified a number of future opportunities for the engineering sector. These included:

· Oil and Gas Sector – work associated with other locations in Australia and in international markets.

· Heavy engineering work associated with major construction and maintenance in the electricity, water and the paper industry.

· Engineering work associated with other major construction activity.

· Developing capability for other specialist engineering markets.

· Research and development of new engineering products and processes.

Seve ral companies were already involved in undertaking work in several of these market segments.

· This included work in the Melbourne metropolitan area, other interstate markets and some international project work.

· While this activity was being undertaken, Esso still remained the major customer of each company.

· There was a clear recognition that a cluster of highly specialist engineering expertise had developed in Sale and this provided a strong foundation for developing work in other markets. Table 39. Identified Business Opportunities Opportunities Industry Develop industry clusters - engineering 4 Develop industry clusters - aviation 5 Heavy Engineering - water, power, construction, paper 5 Oil & Gas international/national markets 4 Need to have a niche market – specialists eg oil & gas 2 Total Industry 20 Source Buchan Analysis

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7.12 Threats to Business Activity

Major threats to the engineering sector in the region were seen as:

· Any significant contraction in Esso activity or loss of specific contracts.

· Flow on effects of any contraction in RAAF activities.

· Competition from other firms in the Latrobe Valley and other areas.

· Lack of cooperation between firms in the industry – recognising that cooperation will be necessary to develop any new market opportunities.

7.13 The Way Forward

7.13.1 Developing the Industry

There are a number of key issues that come out of the analysis of the oil and gas sector and the related engineering industries:

· There is a need to link the specialist expertise to broader markets.

· A process needs to be put in place for the identification of future market opportunities for the sector.

· There is a need to develop an active cluster of companies as a basis for cooperation on developing new market opportunities. There was a recognition that cooperation is required if the industry is to develop.

· This clustering would also assist the identification of development needs for the sector – including skills development requirements and the need for business advice.

· There is a need to develop a regional strategy plan for the sector as the basis of a planned program of industry development.

· The strategy should also identify how companies can access market development support and business development support through government programs (both State Government and Commonwealth Government programs).

The implementation of these directions will require active facilitation by the Council and the formation of a local Engineering Industry Taskforce. Table 40. Business Opportunities – Metals and Engineering Competitive Opportunity Markets Development Program Funding Sources Advantage Requirements · Specialist skills and · Targeting of other oil · National markets · Industry Taskforce · Commonwealth quality standards and gas sector work · International markets · Market Development - Sustainable developed for Esso Regions – Asia Pacific and consultant (eg. ISO or private Program Middle East consultant) · Seek funding for the project (eg. State Government or Commonwealth Government) · High level precision · Target other sectors · National · Industry Taskforce · State engineering skills including – electricity, infrastructure projects · Market Development Government – water and pulp and DIIRD –New consultant (eg. ISO or private · paper industry Manufacturing consultant) · Heavy engineering · National projects Program · Major construction capacity · Seek funding for the project projects · AusIndustry (eg. State Government or programs Commonwealth Government)

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7.13.2 The Next Steps

The following are the steps that are required to progress these industry development initiatives.

Council needs to play the role in the formation of an industry taskforce and in securing access to funds for the development of the industry strategy and for the funding of a new market development initiative. Table 41. Developing the Opportunities Activity Actions Involves Council Formation of an Engineering Industry · Contact firms · Council and Firms Taskforce · Secure business support for the Taskforce · Support for establishment through Council Economic Development Unit Government Support · Ensure that Shire obtains maximum · Council to seek funding from: available support from government Ø State Government programs – State and Federal. Ø Commonwealth - Sustainable · For example, seek funding for Regions Program; AusIndustry strategy development, industry programs, Austrade programs development and feasibility studies. Development of New Business Strategy · Council to work with firms on · Council and Firms development of strategy · Strategy – a 5 year program to develop the industry Industry Formation of Taskforce Secure industry involvement in Council and Firms Taskforce Strategy · Participation in strategy · Council and Firms development process Business Development Consultant · Appoint business consultant to · Council to seek funding for the position assist firms with market development or, · Develop program with Industrial Supplies Office (ISO) Business Opportunities · Scope and identify new business · Business Consultant, Firms opportunities – markets and projects · Implement program to pursue opportunities Identify business development needs · Identify need – eg. marketing · Business Consultant, Firms advice, skills development, · Council to facilitate access to technical advice government programs Business Capability Directory · Develop business capability · Business Consultant, Council, Firms directory · Develop industry marketing · Consultant, firms, Council collateral

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8 Business Opportunities - Aerospace

8.1 Overview

The aerospace sector has potential for development in Sale.

· Sale has a major asset in the West Sale Aerodrome and the cluster of aerospace firms that are located there.

· The presence of the RAAF base at East Sale is of strategic importance and needs to be secured.

· There is major potential to develop the industry cluster.

· There is potential to expand the Air Show into a regular industry event, which would position Sale in the general aviation sector.

Future development will require:

· A business development strategy for the industry cluster.

· Involving the firms in the development of the strategy through the formation of an industry taskforce.

· Targeting available industry support programs to the firms in the sector.

8.2 Aerospace in Australia

Australia’s aerospace industry operates in both the civil and defence aerospace markets and covers a range of operations from international, domestic and regional airlines, sport and recreational flying, commercial and private operations, to fixed and rotary wing aircraft.

The industry is diverse, comprising a few large aerospace companies (subsidiaries of multinationals such as Boeing) and a significant number of SMEs.

The industry can be broken down into to following segments: Table 42. Aerospace Sector - Industry Segments Manufacture Services and Support Large aerostructure design, manufacture and Precision engineering services testing Light aircraft design and manufacture Maintenance and logistics support Helicopter design and manufacture Air Traffic Management (ATMs) systems Unmanned Aerial Vehicle (UAV) design and Education and training manufacture Light engine design and manufacture Software and systems integration, design and development Simulation Program/Project management

The Department of Defence is the largest single customer of the Australian aerospace sector accounting for more than one third of its turnover.

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The recent downturn in the air transport industry associated with the collapse of Ansett and the September 11 terrorist attacks has caused a reduction in activity in the aerospace manufacturing industry. However, medium term prospects are good. Aerospace manufacturing value added is expected to grow at a moderate rate of 1.8% per year between 2001-02 and 2003-04. This growth rate is forecast to increase to 2.6% in each of the following three years, with value added reaching $1 billion in 2006-07. 3

Recent ABS data shows that growth in the Australian aerospace industry has slowed, with employment remaining static at about 12,000 people for several years, and annual exports of value added products falling from $825 million in 1998/99 to $656 million in 1999/2000, with a slight improvement to $706 million in 2000/01.

8.3 Aerospace in Victoria

Victoria’s aerospace industry has an annual turnover of $600 million ($300 million from exports)4 and supports over 5,000 employees.

About 150 aerospace companies operate in Victoria, representing 24.3% of total Australian industry establishments5. However in output terms, Victoria represents half of the total Australian industry (reflecting the concentration of some of the larger players based in Victoria). A core location is the Fishermans Bend precinct in Port Melbourne.

The main focus of the industry in Victoria has been in the Melbourne metropolitan area, however recent initiatives reflect the growing interest in the development of a regional aerospace industry. Eastern Victoria has been the focus of these developments.

The Victorian Government has an active development program for the industry with assistance programs covering: investment attraction; site location, planning approvals and infrastructure services; recruitment and training; best practice and technology transfer; R&D and workplace innovation; and export development.

There are several aerospace education and training facilities in Victoria. RMIT University offers technician, undergraduate and postgraduate aerospace courses while Monash University offers a double degree for aerospace engineering/business.

Kangan TAFE’s Aerospace Industry Training Centre provides training courses for aircraft technicians and trades people, tailored to the specific requirements of aviation organisations in Australia and off shore.

3 DITR website, January 2003 4 Office of Manufacturing, Aerospace Industry brochure, 2002 5 IBIS World C2824 – Aircraft Manufacturing in Australia, October 2002

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8.4 Regional Victoria

The extent of general aviation activity in the State is reflected in the 29 licensed airports operating throughout regional Victoria in 23 separate local government areas. The majority of these are in the North West of the State. Table 43. Licensed Public Airports – Victoria South East Region North East Region Latrobe Valley, West Sale, East Sale Wangaratta, Benalla, Corryong (RAAF) Bairnsdale, Orbost (unsealed), Mallacoota (unsealed) Central Region North West Region Shepparton, Bendigo, Echuca, St Arnaud, Ararat, Stawell, Horsham, Nhill, Swan Maryborough Hill, Mildura, Kerang, Warracknabeal, Hopetoun, Robinvale, Birchip, Donald South West Region Ballarat, Warrnambool, Portland, Hamilton Source: Regional Victoria’s Licensed Public Airports: Infrastructure Study and Operational Review 2001, Department of Innovation, Industry and Regional Development

Activity level trends vary between locations and are analysed in Table 44. Latrobe Valley is described as having steady activity and West Sale as having increasing activity. Table 44. Aircraft Movements At Victorian Regional Airports - Estimated 5 Yearly Trend (1996 - 2001) Decreasing Activity Steady Activity Increasing Activity Maryborough, Latrobe Valley, Mildura, West Sale, Hamilton, Ararat, Nhill, Shepparton, Bairnsdale, Mallacoota, Kerang, Wangaratta, Benalla Warrnambool, Swan Hill, Bendigo, Echuca, Robinvale, Ballarat, Horsham, Stawell Orbost, Donald, Birchip, St Arnaud, Corryong, Warracknabeal, Hopetoun, Portland 17% of Total 48% of Total 35% of Total Source: Regional Victoria’s Licensed Public Airports: Infrastructure Study and Operational Review 2001, Department of Innovation, Industry and Regional Development

8.5 Gippsland Region

There are three major aerodromes operating within the Gippsland region - Latrobe Regional Airport, West Sale Aerodrome, and East Sale RAAF Base. The three are all within a 60 kilometre radius.

Based between Morwell and Traralgon, Latrobe Regional Airport is the largest in the region (considered the second busiest in regional Victoria) and is the only airport delivering RPT services. The airport is a development priority for the State Government.

In addition to the main three, there are a number of other aerodromes and airstrips operating in the region including: Leongatha Aerodrome – privately owned; Bairnsdale Aerodrome – small terminal, limited infrastructure; Yarram – airstrip only plus one charter operation; Lakes Entrance – soon to be completed private aerodrome; Mallacoota – airstrip only; and Gabo Island – airstrip for lighthouse maintenance only.

Esso operates the largest Australian offshore helicopter service between Longford and its Bass Strait platforms.

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Regional Express (REX) operates flights out of Latrobe Airport. REX is the only RPT carrier in Eastern Victoria. The airline’s focus is the south eastern seaboard of Australia.

In 2002, REX introduced a twice daily service Monday to Friday between Melbourne and Merimbula effectively doubling capacity; and a daily service between Traralgon and Sydney via Merimbula. The Melbourne Service was discontinued after several months. A service to Sydney is currently available via Canberra.

8.6 Sale Region

Wellington Shire is home to two main aviation sites with a cluster of aerospace companies and services based at each.

8.6.1 RAAF Base East Sale

The RAAF Base East Sale is the main post-graduate flight training base of the Royal Australian Air Force and has a range of support services.

The RAAF Base East Sale has major strategic importance for the region’s aerospace industry, and is the only remaining operational RAAF base in Victoria.

In 2001 the Federal government announced the relocation of the RAAF Officer Training School from Point Cook to East Sale. This relocation would result in increase opportunities for the sector and a greater concentration of activity in the region. Major representations are being made to the Commonwealth Government because of delays in acting on the decision.

8.6.2 West Sale Aerodrome

Located 10 kilometres outside of Sale, West Sale Aerodrome is owned and operated by Wellington Shire Council. The aerodrome serves as a regional facility for commercial, general and military aviation purposes. The main users are the oil and gas industry, air ambulance and emergency services, commercial charter operations, private business, recreational flying and civilian and RAAF flight training.

Infrastructure includes three runways (one sealed, two grass), extensive sealed aprons, a terminal building, lighting, and fuelling. There are no current passenger services operating due to limited demand.

The major revenue sources are predominantly property and ground leases and an annual usage charge on Esso.

According to the West Sale Aerodrome Business Plan, the aerodrome contributes an estimated $1.74 million directly to the region from employment and current business activity.6

The Victorian Government is working with Wellington Shire and Latrobe City to develop West Sale Aerodrome and Traralgon Regional Airport as a linked industry cluster for aerospace development.

6 Wellington Shire Council, West Sale Aerodrome Business Plan 2000 - 2004

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Commuter Services have been sporadic over last 5 years due to levels of passenger demand. A series of airlines have operated services (eg. Canberra/Sydney; Albury/Sydney; Sale/Melbourne). In the late 1990’s Hazelton operated services for two years – Albury/Sydney/Launceston. Other airlines have investigated the market, however profitability and consistent demand levels are major issues.

8.6.3 Activities at West Sale Aerodrome There are 13 major tenants at the West Sale Aerodrome. Several of these are not aerospace related: Country Fire Authority, East Gippsland Institute of TAFE, Esso Sea Survival Training Centre. The aerospace tenants are mainly involved in aircraft maintenance, parts servicing or flight services. Table 45. Tenants West Sale Aerodrome Tenant Business Type Country Fire Authority Regional training facility East Gippsland Institute of TAFE Education services Edge Aviation Aerospace manuals, Aerospace consultancy ESSO Sea Survival Training Centre Training Gippsland Flight Centre Flying school Hookway Aerospace Aircraft hanger HRD Enterprises Own aircraft and light aircraft maintenance Rudy's Aero Engines Aerospace equipment and maintenance Sale Aircraft Maintenance Aircraft Maintenance South East Aviation Aerospace charter and rentals Sports Aviation Group Recreational flying Yungur Aviation Services Aerospace equipment and maintenance Charter and lease Source: Buchan Analysis Council has recently rezoned 14 new lots adjacent to the airport for further business development opportunities for the sector. A major Air Show is being held on April 13th 2003.

8.6.4 Aircraft Usage The major flight use of the airport relates to Esso corporate flights, civil training, recreational flying and military training flights. Table 46. Annual Aircraft Movements Use of Aerodrome Number of Movements Commercial Aviation Scheduled Passenger Services 0 Esso 1,456 Charter 320 Air Ambulance & Emergency Services 485 Helicopters 380 Total 2,641 General Aviation Training Civil 1,540 Recreation & Private 1,450 Total 2,990 Military Training 1,100 Total Movements 6,731 Source: West Sale Aerodrome Business Plan 2000-2004

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8.7 Regional Competition

Wellington faces considerable competition from Latrobe Regional Airport as the largest facility (and most recently refurbished) in the area. The airport is the home of Gippsland Aeronautics and is the only RPT operator in the region. Recently, it has been the focus of several State Government industry development initiatives.

Latrobe Council has a number of plans in progress for the airport including the development of an Airpark, accommodating the expansion plans of Gippsland Aeronautics, the relocation of the Helimed One Helicopter Ambulance and Rescue Service into a dedicated headquarters at the Airpark, and other related developments. The Victorian State Government has committed $2 million on land acquisition and infrastructure for the Airport (aviation focused industrial estate).

Recent improvements include: one sealed strip, one gravelled all-weather strip, terminal buildings, sealed access roads, radio navigation beacon, runway lighting (24 hour light activated landing facility).

The airport has approximately 30 tenants. A list of current tenants reflects a smaller amount of fixed wing and rotary maintenance facilities compared to Sale. Table 47. Tenants Latrobe Regional Airport Tenant Business Type

CHC Helicopters Australia Aircraft Charter & Rental Services Operate Helimed 1 (helicopter rescue service) Flying Museum Museum Gippsland Aeronautics Aircraft design and manufacture Aircraft maintenance East Coast Aviation Maintenance Latrobe Valley Aeroclub Recreational Flying SES Emergency services Valley View Tandem Skydives Skydiving School (no infrastructure at airport) 20 – 25 small operators Variety of uses

The establishment of a privately run licensed operation based in Lakes Entrance could pose a threat in terms of recreational activities.

8.8 Business Opportunities

8.8.1 Aerospace Cluster

In 2001, a feasibility study was completed on the establishment of an aerospace/engineering precinct based in Gippsland to build the aviation industry in the region. The report, Achieving Lift Off, highlighted the potential for Gippsland to be a key location of aerospace activity based around the cluster concept. 7 It highlighted several issues:

· The clustering of regional aerospace activities into a Gippsland Aerospace Precinct (Latrobe, West Sale and East Sale RAAF) could service the education and training, flight, and manufacture, R&D, and maintenance on a regional, domestic and international level.8

· A recognised precinct would have the ability to give niche suppliers access to wider national and international markets by improving knowledge sharing and cooperation, and creating economies of scale. In addition, the precinct would help to maximise any local content opportunities associated with activities at RAAF Base East Sale.

7 Clusters Asia Pacific Consortium, Achieving Lift Off: The Gippsland Engineering/Aerospace Industries, 2001 8 Clusters Asia Pacific Consortium, Achieving Lift Off: The Gippsland Engineering/Aerospace Industries, 2001

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8.8.2 Capabilities

In November 2002, the Ambidjii Group- Gippsland Aviation Academy (GAA) Feasibility Study identified several potential markets for rural based education and training needs.

The opportunity exists to utilise existing facilities and capabilities located on or near West Sale to develop a number of niche products or services. Potential markets include regional airlines, agricultural, sport or ultralight sectors. Capabilities that were identified were wide ranging and are summarised in Table 48.

Additional opportunities were also identified in the consultations conducted as part of this study. Table 48. Summary of Capabilities and Opportunities West Sale Aerodrome Manufacturing Operations Education Other Opportunities Aircraft and component Helicopter operations and Rotary wing training at West Aviation museum Manufacturing engineering Sale Light aircraft design and Rescue and firefighting Fixed wing flight training at both Aviation residential skypark manufacture at both West Operations West Sale and Latrobe Sale and Latrobe Piston engine overhaul Tourist market specialising Helicopter underwater escape Biannual air show in flights over the regions training concentrating on general natural attractions aviation and military aircraft (First Show April 2003) Component manufacture Other Industry Pilot licence theory instruction Aircraft modification Non-aviation light industrial Business economics and industry electronic commerce Maintenance Sale and lease of nearby General aviation management land in support of aviation related opportunities Industrial aircraft Support Services Rotary aircraft Computer software development and applications Ultra light aircraft Engineering certificates Research & Development Aviation R&D Component R&D Source: Ambidjii Group – GAA Feasibility Study and Buchan Consulting Analysis

Table 49 summarises the Gippsland Aerospace Precinct Strategy. The issues raised in this broader strategy are also relevant for developing West Sale. Table 49. Gippsland Aerospace Precinct Strategy – Summary of Key Elements Focus Core Segments Commitments Developing the precinct Component Manufacture Quality Clustering and developing Component R&D Innovation supply chains Develop regional innovation Aircraft maintenance Marketing Develop product quality Aircraft modification Supply chain development Bring business , government Pilot training Infrastructure and education together Maintenance training Education and Training Leasing Aero agriculture – crop dusting, inspection, imaging Source: Clusters Asia Pacific Consortium, Achieving Lift Off: The Gippsland Engineering/Aerospace Industries, 2001

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8.9 Strengths Sale

Sale is seen as having a number of advantages for aerospace activity. These primarily relate to existing infrastructure, the cluster of businesses located at West Sale and regional lifestyle advantages. Table 50. Strengths Aerospace - Sale Location Infrastructure Good location for business Concentration of aerospace firms in the area Uncongested airspace in the region East Sale RAAF Base Competitive rental costs compared to Longer runway allowing for larger aircraft than metropolitan airports Latrobe Regional lifestyle Land availability at West Sale Business Factors Unique skill base Niche market opportunities Untapped markets

8.10 Constraints Sale

A number of constraints have been identified. These primarily relate to market size and firm size, location, capital requirements and the capacity of the local industry to expand. Table 51. Constraints Aerospace - Sale Market Skill Availability Civil Aviation contracting Emerging skills shortage Small scale of current companies Industry aversion to risk Quality Assurance Lack of current collaboration Supplier pre-qualification is required to gain access to the supply chain Aircraft maintenance sector is small and fragmented Commuter Flights Distance from Melbourne Limited demand to sustain a service Research and Development Infrastructure Financial returns long term - can take up to 10-20 years Upgrade required at the Aerodrome for an aero-component supplier to recoup a complete return on investment Current capacity for precinct modest Current planning controls and restrictions Environmental concerns and requirements for the area Location Cost of Operation Remoteness from major markets Costs of realising business development opportunities in the area (Aerodrome currently costs Council around $200,000 p/a9) Impact of freight costs Projected capital works requirements – compete with other Council priorities Clustering Advice and Support Lack of integrated approach Business Planning Advice needed Lack of marketing experience and the ability to complete Innovation support needed on a global level Education and Training Competition No specific track record to claim expertise Competition with Latrobe No demonstrable infrastructure in terms of ready aircraft Competition with metropolitan aerodromes and instructional staff at West Sale to attract the interest of potential candidate airlines

9 Wellington Shire, West Sale Aerodrome Business Plan 2000 - 2004

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8.11 The Way Forward

8.11.1 Opportunities

There are a number of opportunities that can be developed for the aerospace sector. These are outlined below. Table 52. Aerospace Opportunities Competitive Advantage Opportunities Markets Development Programs Funding Sources Requirements · West Sale Aerodrome · Expand range of businesses at · National Aerospace market – · Industry Taskforce · Commonwealth - Sustainable · Small cluster of specialist West Sale. servicing general aviation. · Develop industry strategy – Regions Program, AusIndustry capability · Encourage Research and · Development of products for aviation consultant and local Programs · Government support for development and new product international markets in general industry · State Government – DIIRD – development of industry in development. aviation · Market Development Aerospace Program Gippsland · Develop capacity for specialist · Development of national and consultant (eg. ISO or private · RAAF East Sale presence and training involving TAFE and international training market consultant) private providers · activity · Development of Sale as the · Business planning advice · Develop Air show into an event national general aviation expo · Esso – largest private · Applications for R&D funding every two years – develop Sale and trade show · Seek funding for projects (eg. helicopter fleer event as replacement for Aviex State Government or · Significant specialist (Bankstown) – general aviation Commonwealth Government) engineering sector (oil and gas trade show related) · Air Show Feasibility · Business development program

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8.11.2 The Next Steps

While there is a need to take a broader Gippsland area approach in the development of the sector, it is also important that there is an active engagement with the industry at West Sale.

A key component is the preparation of a development strategy for the industry in Sale. This is not a business plan for the aerodrome, but a detailed plan that scopes the capacity of the current industry to expand, and the requirements for expansion (eg. business planning and advice, capital requirements, infrastructure needs etc). It would also identify the other activities that could be attracted to the site. The active industry involvement needs to be secured through the formation of an industry taskforce that involves businesses in the current cluster and other local business people with specific expertise. (eg accounting and business advice). The development of the sector will not occur if there is only reliance on the individual resources of the current firms, who are all small businesses. Council therefore needs to play a facilitation role and provide leadership in the formation and servicing of the Taskforce.

Activity Actions Involves Council Formation of Aerospace Taskforce · Contact firms · Council and Firms · Secure business support for the Taskforce · Support for establishment through Council Economic Development Unit

Government Support · Ensure that Shire obtains maximum Council to seek funding from: available support from government · State Government - IIRD programs – State and Federal. · Commonwealth - Sustainable · For example seek funding for strategy Regions Program; AusIndustry development, industry development programs, Austrade programs and feasibility studies. Development of Aerospace Business · Council to work with firms on · Council and Firms Strategy development of strategy · Strategy – a 5 year program to develop the industry Air show · Review outcomes of April 2003 air · Council, Air show consultant, firms, show. Develop feasibility study on Victorian Government replacing Aviex as a general aviation trade show. Industry Formation of Aerospace Taskforce · Industry involvement in Taskforce · Firms and other local experts Aerospace Business Strategy · Participation in strategy development · Develop by Taskforce process Business Development Consultant · Appoint business consultant to assist · Concept and funding requirements to firms with business improvement be developed market development or, · Council to seek funding for the position · Develop program with Industrial Supplies Office (ISO) · Consultant would require some specialist aerospace experience Identify business development needs · Identify need – eg. marketing advice, · Business Consultant and Firms skills development, technical advice · Council to assist with applications for support

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Business Opportunities Scope and identify new business Business Consultant, Firms opportunities – markets and projects Implement program to pursue opportunities via firms working with the consultant Business Capability Directory Develop business capability directory Business Consultant, Firms Could be developed as part of a broader business directory

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9 Business Opportunities – Primary Industry

9.1 Overview

In considering primary industry in the Sale Region, there is a need to examine the broader Wellington Shire.

· Victoria has a strong agricultural base and the State Government has set ambitious targets.

· Wellington Shire has a significant concentration of dairy and beef production. · Horticulture is a smaller but expanding sector in the region – the region is well suited to a further expansion of horticulture.

· Wellington Council needs to become more active in its engagement with the rural sector.

· Industry cooperation is required to pursue opportunities in the horticulture sector.

· Dairy will remain a major activity in the region. There may be opportunities for additional dairy processing.

9.2 Primary Industry – Australia

Australia produces a wide range of agricultural products both for export and domestic markets. Agricultural products from Australia are internationally recognised as being pest and disease free and its location in the Southern Hemisphere is ideal for export to the Northern Hemisphere in their winter.

The warm climate, clean environment and technical expertise are ideal for producing the high quality products that Australia is known for. Table 53. Value of Agricultural Commodities Produced (VACP); Australia, year ended 30 June 2000 Commodity Value $ million Grapes 1,118 Wool 2,149 Milk 2,845 Sheep & lambs slaughtered 1,054 Cattle & calves slaughtered 5,048 Buffaloes slaughtered 0.37 Pigs slaughtered 792 Other livestock slaughtered 19 Poultry slaughtered 1,031 Eggs produced for human consumption 321 Honey & beeswax 38 Fruit excluding grapes 1,761 Crops 16,922 Nurseries, flowers & turf 708 Total 33,806 Source: ABS Statistical Information Service

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9.3 Primary Industry – Victoria

Victoria has a temperate climate, good soil quality, clean water and skilled farmers which create an excellent position for export. There are 37,000 farmers in Victoria who produce over $15 billion of food annually.10

The Victorian dairy sector produces over 60% of the fresh milk and 75% of the manufactured dairy products within Australia. Victoria produces high quality beef and sheep and contributes close to 20% of beef production and 40% of lamb production in Australia. The Victorian beef industry has 10% of the nation’s beef cattle and achieves 20% of gross production.

In 2000, Victorian meat exports were valued at $1.03 billion. Meat exports have increased from $522 million in 1990. Meat now accounts for around one fifth of all Victorian food exports.

Victorian grain production has increased by an average of 4.7% a year for the last 20 years.

The gross value of production for Victoria is $1 billion a year which represents 8.2% of Australia’s total grain production. Increased production is expected in Victoria’s high rainfall areas.

The horticultural industry in Australia has a total production value of approximately $3.5 billion, with Victoria’s share being around one third of this ($1.3 billion) per annum. Horticulture is a significant industry in Victoria, DNRE estimates that horticulture in Victoria supports 8,500 enterprises employing 50,000 full time people and up to 100,000 during harvest periods. Table 54. Value of Agricultural Commodities Produced (VACP) Victoria – Year Ended June 30 2000 Commodity Value $ million - 2000 Crops 2,997 Nurseries, flowers & turf 217 Vegetables 542 Fruit excluding grapes 427 Grapes 333 Wool 409 Milk 1,571 Sheep & lambs slaughtered 362 Cattle & calves slaughtered 863 Pigs slaughtered 245 Other livestock slaughtered 6 Poultry slaughtered 273 Eggs produced for human consumption 80 Honey & beeswax 9 Source: ABS Statistical Information Service

10 DNRE 2002

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9.4 Wellington Shire

Wellington Shire is part of Gippsland and has a major comparative advantage in agriculture.

The temperate climate, natural resources including a high rainfall and high quality soils will enable agriculture to continue to be a major activity within the Wellington Shire. There are also prospects for significant future growth.

· Dairying dominates agriculture in Wellington Shire and forms a significant part of the Victorian dairy industry. Dairy processing is centred on Maffra with a major Murray Goulburn plant.

· Beef production is a major industry in Wellington.

· Horticulture is an expanding industry in the area, with opportunities for vegetables, fruit, flowers, vines and other horticultural crops. At present Wellington Shire does not have significant production levels although there are some individual operations in various segments of the horticulture industry (eg. flowers).

· Intensive animal industries which include pigs, poultry and other intensive agricultural pursuits are currently not significant activities in Wellington Shire.

Table 55. Value of Agricultural Commodities Produced (VACP); Wellington Shire, Year Ended 30 June 2000 Commodity Value $ ‘000 Grapes 19 Wool 5,941 Milk 143,707 Vegetables 12,241 Sheep & lambs slaughtered 3,782 Cattle & calves slaughtered 42,144 Other livestock slaughtered 86 Poultry slaughtered 4 Eggs produced for human consumption n.p. Honey & beeswax 2 Fruit excluding grapes 19 Crops 28,830 Nurseries, flowers & turf 5,173 Source: ABS Statistical Information Service

9.5 Overview of Opportunities

9.5.1 Government Strategy Context

The Victorian Government has set a target for $6 billion of food exports in 2003 and aims to increase this to $12 billion by 2010. Consequently there is major support for the food industry within the State. This will enable Wellington Shire to undertake significant redevelopment or redeployment of land use as part of its economic development strategy.

Particular opportunities relate to horticulture and intensive animal industries which make better use of water, generate higher returns on water used, reduce waste into the catchment management systems and a have higher potential for employment.

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With the Victorian Government’s initiative to increase food products, there also comes an opportunity for Council to tap into programs that may support alternative intensive agricultural operations which will in turn increase investment and employment opportunities within the municipality.

The region also has the advantage of East Gippsland TAFE which provides a foundation for training programs and continued support for skills development in areas associated with agricultural production.

9.5.2 Dairy

The dairy industry within Wellington Shire is efficient and well established, with a range of technical and other support mechanisms.

The major challenges for the future is how the dairy industry is going to: continue to increase herds without expanding acreages; increase food production for the herds; reduce any waste to the environment from increased dairy herd sizes.

The need to meet these requirements may lead to a new industry being developed around a type of hard lotting for dairy herds which will require new types of animal food production including grain. This form development would also result in the expansion of other technical services to the dairy sector.

9.5.3 Intensive Animal Industries

At present intensive animal industries are not located in the Shire. These industries are experiencing significant growth in Australia. For example intensive production of chickens continues to grow strongly due to the continued growth in consumption (consumption increasing of 5%+ per year).

9.5.4 Horticulture

Australia has an opportunity to deliver vegetables into North Asia and other markets, which have a growing food requirement during the northern winter. As a result, the opportunities for vegetable production should continue to be a major focus of the agricultural community within the Wellington Shire.

· Different types of horticulture, particularly potatoes, have a potential for significant growth.

· New and emerging industries such as Asian vegetables also create some significant opportunities within the Shire.

· The ornamentals industry, which includes cut flowers, has a significant opportunity for growth within the municipality

9.5.5 Grains

Grains (although not significant at this present stage), also provide an opportunity for some further growth particularly in the feed grain area. This may assist the growth of dairy and other intensive animal industries. The Shire has been identified as suitable for growing buckwheat and red wheats.11

9.5.6 Meat

Beef cattle is a significant activity in the Shire, with potential for further growth through intensive farming practices.

11 Wellington Environmental & Biophysical Study – July 2001

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9.5.7 Emerging Industries

New and emerging farming enterprises, that include non-mainstream agriculture, currently represent only a small part of agricultural production value in Wellington Shire.

In 2000, the Victorian Government estimated this specialised rural industry to be valued at $500 million. This industry sector includes oils, flavours, hemp, herbs, honey bees, wildflowers, green tea, native plants, functional foods (foods containing special health benefits) and cut flowers.

There is potential for development of a number of these activities in Wellington Shire.

9.6 Assessment of the Region

9.6.1 Advantages

Wellington Shire is seen as having a range of major advantages for rural industries, including existing industry mix, climate and skilled labour. These provide a foundation for consolidation and future growth. Table 56. Advantages – Wellington Shire Advantage Description Infrastructure Established research capacity within the region for agriculture (Ellinbank) Good Transport Access to major markets Skills and Training Significant workforce already trained in agriculture High quality workforce with excellent work ethic Well developed TAFE system that can provide additional skills for any new industry development Environmental Resources High quality water High quality soils which are capable of growing a range of horticultural products and/or feed for animal husbandry/dairy Temperate climate Excellent environment which enables the Wellington Shire to be able to produce products that is generally free of any contamination

9.6.2 Constraints

The major constraints relate to infrastructure, specialised skills, capital availability and the capacity to change. Table 57. Constraints - Wellington Shire Constraint Description Infrastructure Difficulty in being able to package water and land into packages of a suitable size for developing new types of agriculture. Need for new extension services to be delivered to farmers Skills Skills are generally transferable but mainly limited to dairy, beef and sheep. Problems in obtaining farm labour Current Structure Difficulty in changing established farm practices based around dairy, beef and sheep. Capital Redevelopment costs Investment attraction - attracting investment to the area into new agricultural pursuits is difficult due to current limitations of land and water availability.

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9.7 The Way Forward - Primary Industries

A major challenge for the future is securing the necessary investment and skills development in other agricultural pursuits, given the continued strength of the dairy sector in the region.

· Dairy - the dairy industry remains a strong and viable industry with future growth potential. Council should continue to link closely to developments in the dairy industry where hard lotting for dairy cattle appears to be a possibility. If dairy herds continue to rise then opportunities for new and alternative methods for animal husbandry are likely to contribute to increased employment and additional skills, creating a new industry within Wellington Shire.

· Vegetable production - there is an opportunity to use land in certain areas where the soils are more suited to vegetable production or horticultural development. Such organisations as Covino’s at Longford provide evidence of potential within the region.

· With water such a critical issue for the future growth of agriculture, issues relating to ground water loss to other industries such as Esso and to water harvesting for Melbourne requires a major review.

· There is a need to examine processing and other value added opportunities for horticultural products. This would mean that local producers do not need to rely solely on the fresh market for sale of their product.

· The horticultural industry also provides an opportunity for higher intensive industries such as hydroponics which would enable major growth of a horticultural sector on a very small acreage. Horticultural operations such as Flavorite at Warragul employ approximately 120 people on an area of approximately 3 hectares (7 acres) producing tomatoes.

· In addition, opportunities relating to other intensive activities such as poultry should be considered.

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Competitive Opportunities Markets Development Programs Funding Sources Advantage Requirements Primary Industry · Clean, green, · Increase agricultural production · Export – Asia, · Create Rural Industries · Commonwealth – disease free, good following the direction of Middle East, Taskforce and sector AFFA and ACC climate, good soils, strategy from the Wellington Europe subgroups (Dairy and quality water Environmental & Biophysical · National Horticulture) · State Government – · Rural farming skills, Study · State · Commit Council Agriculture and SRD · Diversity, strength · Diversify into new and emerging resources and staff to in dairy, and other agriculture such as flowers agriculture as a major · Sustainable Regions farming (including hothouse), industry and employer Program ornamentals, oils, flavours, · Develop networks in herbs, honey bees, native each agricultural sector · Support from industry plants, wildflowers, and the like and participate in groups · Undertake new or support industry sector

feasibility studies particularly in discussions · Regional Innovation horticulture, specialised rural · Seek government and Technology industries, grain (including feed support including Adoption Program grain) and value added technical opportunities · Identify future needs for · Investigate intensive animal and water poultry development · Add value to existing production

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9.8 Next steps

There is a need for Council to become more involved with agriculture and horticulture opportunities in the Wellington region.

The development of a Rural Industries Strategy will require additional work on technical research and feasibility studies. These studies would include analysis of:

· Developing a viable horticultural sector (particularly vegetables) that caters for intensive broad acre and alternative crops such as Asian vegetables.

· Developing value added processing to the complement any agricultural development particularly in horticulture.

· Opportunities relating to intensive animal husbandry. This should include poultry.

· Developing a grains sector – particularly feed for dairy, as a support to maintain/increase intensive animal husbandry.

· The future of the dairy sector. Council needs to maintain regular contact with the sector to ensure that it can work with the industry to deal with any potential impediments.

· Developing specialised rural industries that include flowers and turf.

· Future long-term water requirements in the Shire.

The Rural Industries Taskforce will allow better planning for the future. This would be complemented by specific sub groups covering horticulture, dairy and other agriculture.

The future of primary industries is fundamental to Sale and Wellington Shire’s future. It is a major regional activity, generates growth in the services sector and is a major employer in the region. For these reasons Council needs to play an active role in shaping the longer term future of the sector.

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Activity Actions Involves Council Formation of Rural Industries · Contact farmers, growers and · Council , industry , stakeholders and Taskforce manufacturers and others (eg government agencies TAFE) · Secure industry support for the Taskforce · Establishing sub groups – dairy, horticulture and other agriculture · Support for establishment through Council Economic Development Unit Government Support · Ensure that Shire obtains Council to seek funding from: maximum available support from · State Government - Agriculture government programs – State · Commonwealth - Sustainable Regions and Federal. Program; AFFA · For example seek funding for strategy development, industry development and feasibility studies. Development of Rural Industries · Council to work with firms on · Council and Industry representatives Strategy development of strategy · Feasibility studies to be undertaken in dairy and horticulture Industry Formation of Rural Industries · Industry involvement in Taskforce · Firms and other local experts and Taskforce · Sub-groups on Dairy, Council Economic Development Unit Horticulture, other Agriculture Rural Industries Strategy · Participation in strategy · Develop by Taskforce development process Industry Development Consultant · Appoint business consultant to · Council and industry to develop concept assist businesses with business and funding requirements improvement and market · Council to seek funding for the position development Business Opportunities · Scope and identify new business · Business Consultant, farmers and opportunities – markets and growers projects · Implement program to pursue opportunities via businesses working with the consultant

9.9 Dairy Industry

9.9.1 Dairy in Australia

The dairy industry is Australia’s the third largest rural industry with farm gate production value exceeding $3 billion. 12 The industry is a major regional employer both the farms and in regional areas due to extensive value adding processing.

Although the number of farms has decreased from 30,000 farms in 1975 to under 12,000 currently, the production of milk in Australia is increasing due to improved pasture, feed and herd management techniques.13

12 Australian Dairy Corporation 13 Australian Dairy Corporation 2001

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Australia’s dairy processing is dominated by three farmer owned cooperatives which account for nearly 75% of milk output. These cooperatives are Murray Goulburn Coop Ltd, Bonlac Foods Ltd and Dairy Farmers Group. International companies processing milk in Australia include: Nestle, Kraft, Meiji, Parmalat.

Industry deregulation has occurred across Australia in recent years.

9.9.2 Dairy in Victoria

Victoria is the dairy State in Australia producing over 60% of fresh milk and 75% of manufactured dairy products. The industry in Victoria is focused on the production of milk for manufacturing, whereas in other States most production is going to the fresh milk market.

The dairy industry in Victoria is internationally competitive, it is largely pasture based and has an international reputation for being clean and green.

Victoria’s temperate climates and natural resources enable year round grazing on quality pastures utilising low cost irrigation or rainfall.

Victorian farmers are considered the most innovative and use new and approved technologies for milk production. The 4 main dairying areas are Gippsland, South West Victoria (both based on natural rainfall pastures), Goulburn Valley (irrigated pastures) and Central Highlands.

· Victoria produces 62% of Australia’s total milk output, 91% of Victoria’s milk produces 80% of Australia’s dairy exports.

· The total Value of Agricultural Commodities Produced value of milk produced in the year ending 30 June 2000 was $1,571 million. Table 58. Australian Dairy Industry 2001 2001 NSW VIC QLD SA WA TAS AUST Number of dairy farms 1,430 7,559 1,305 587 357 638 11,876 Dairy cows milk and dry 284 1,443 187 132 72 160 2,281 (‘000 head) Average annual milk 4,682 4,696 4,065 5,293 5,467 3,685 4,624 production per cow (litres) Average farm size 235 180 315 362 387 230 Average dairy herd 234 267 180 243 310 279 Total farm income ($) 251,570 229,390 200,390 276,489 380,940 257,970 Total cash crops ($) 175,210 176,070 138,680 219,320 271,330 193,190 Cash operating surplus ($) 76,360 53,320 61,710 57,169 109,610 64,780 Milk income per cow ($) 1,586 1,139 1,623 1,617 1,735 1,009 Source: ABARE Farm Survey

9.9.3 Dairy in Wellington Shire

The Gippsland dairy region includes the major locations of Sale, Maffra and Korumburra. Environmental sustainability, established infrastructure and relatively low production costs makes this area well suited for continuing dairy activity.

The significance of dairying to the Wellington Shire is reflected in the value of industry gross product - $144 million in 2000.

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Table 59. Milk Produced; Year ended 30 June 2000 Australia Victoria Wellington Milk – value $ million 2,845 1,571 144 Milk cattle– total number 1,893,161 171,610 Source: ABS Statistical Information Service

9.10 Opportunities and Trends

9.10.1 Industry Trends

The number of dairy farms in Australia has declined over the past 2 decades from 30,000 to 12,000 currently (2001). Victoria, accounts for an estimated at 7,600 of the 12,000 farms in Australia. The number of dairy cows in Victoria is estimated at 1.443 million of the total Australian herd of 2.281 million. (2001)

The Australian Dairy Corporation has indicated that an average herd size has increased from 77 cows in 1975 to 190 in 2001. It is now commonplace that farm herds are growing to well over 250 cows.

These trends place pressure on the industry is to improve herd genetics and to increase pasture management through supplementary feeding regimes. This has resulted in the average yield per cow increasing from 2,750 litres to 4,624 litres over the same period (1975-2001).

The rationalisation of farm numbers has also been attributable to the reduction in government support given to the dairy industry.

Australia is also one of the most efficient farming sectors being able to continually improve the quality of herds and breeding programs. Australian farmers have access to some of the best genetic material in the world with most farms (70%) regularly recording herd performance in order to continuously improve productivity.

While on farm costs and income structures vary between States, Victorian farmers have been able to cope better with the changes, since drinking milk which was the most regulated sector, was less significant. This resulted in the movement of the industry into export which has been able to balance the farm returns and produce a more solid base for long term growth.

In Wellington Shire, Murray Goulburn has provided a strong base for processing at Maffra.

9.10.2 Market Trends – Domestic and Export

Product lines have shifted with an increase in exports of cheeses and whole milk powder and a shift away from butter and skim milk.

Australia’s dairy milk output continues to expand at a faster rate than domestic consumption allowing an increased proportion destined for export markets. Overall, Australia exports more than 50% of its annual milk production and more than 60% of manufactured products are exported to a range of countries overseas. Australia has an estimated 16% of the total international market.

The other major players in the export market are New Zealand (31%) and the European Union (36%).

Most of Australian exports are concentrated in Asia with Japan and South East Asia accounting for more than half of Australia’s exports. This is a reflection of Australia’s geographic position in these markets.

The drinking milk sector has continuously changed to more specialty milk types such as low fat and UHT. The modified fat milks are increasing their share of the

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market at the expense of fresh white whole milk with most sales centred on the supermarket channels. A recent development in the milk category has been the continued increase in branded milk specialty products.

Cheese is also a major product of Australian dairy industry that has export sales of over 200,000 tonne valued at around $750 million. Research indicates that Australians consume around 12 kilograms of cheese per head annually. Again, changes are occurring in the types of cheese with reduced fat cheeses becoming an increasingly important segment reflecting consumer concerns about fat in their diets.

Other products include butter which is an important export product and milk powders which are also mostly exported.

9.11 Assessment of the Region

9.11.1 Advantages

There are a number of strategic advantages for the dairy industry in Wellington Shire. These include: scale of the industry, environment, quality of support services, and presence of Murray Goulburn. Table 60. Advantages Dairy Industry - Wellington Shire Advantage Description Environment Good water Good climate High rainfall supporting pastures for dairy Good soils Skills Significant skills networks Technical advice and support Support Government support through research activity in the region Community understanding of dairy and the importance of dairy to the community Facilities Well established and comprehensive support networks for dairy in the region Well established support networks for the dairy industry (supplies, services and equipment) Processing Strong manufacturing sector within region – Murray Goulburn Access to processing facilities

9.11.2 Constraints - Dairy Industry

Key constraints relate to the impact of future change in industry and skill issues. Table 61. Constraints Dairy Industry - Wellington Shire Constraint Description Regulation Future impact of deregulation not fully known Workforce Concerns of farmers who are required to maintain high hours of work input Shortages of farm labour Costs Rising costs have increased concerns for future viability of smaller farms Scale Rising number of larger farming operations, may limit the possibility of new entrants to the industry

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9.12 The Way Forward – Dairy

9.12.1 Key Issues

The national strategy for dairy focuses on future sustainability. The major elements are listed under 7 themes and are summarised in the following table. These elements provide both a direction for industry involvement with their communities and for Council engagement with the industry. Table 62. Dairy Industry Strategy - Sustaining Our Natural Resources - Dairying for Tomorrow

Theme Elements Examples Communication Better communication within the Example of regional actions – forming industry and with the community communication plans to promote the industry roles in the community and the environment: plan a wide range of communication actions that target both industry and wider community interests. Adoption of best management Defining and promoting principles Example of regional actions - promote water use practices and practices to increase profitable efficiency: implement practices to improve water production and maintain the use efficiency for irrigation: foster the condition of the environment development of a set of tools that will assist farmer utilising fertiliser management strategies: provide on farm support for whole of farm management: plan for dairy farms incorporating intensification guidelines, grazing management and management of soil chemistry. Research, development and Better understanding of how farm Examples of regional actions – quantifying capacity building management interacts with environmental impacts of dairying under different catchment health management systems: initiate research into reuse of effluent: research alternative systems of irrigation: research into effluent management on different soil types. Policy development Further development of policies and incentives to support on-farm investments that generate environmental gains for community benefit.

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Theme Elements Examples Monitoring and evaluation Investigating and adopting the Examples of regional actions – monitoring means to record good practice to adoption rates for existing standards and best promote consumer confidence in management practices: developing systems of dairy products monitoring and evaluating dairy farm performance: developing effective monitoring standards as part of the whole of farm planning for sustainability indicators on natural resource management. Catchment and community The provision of information and Examples of regional actions – explain the use planning guidelines to help regional dairy of whole farm planning as a basis for local interests contribute to local government certification of land use change and planning processes development: encouraging increased representation of dairy farmers in decision making processes in the community: work in partnership with local catchment groups to implement the mutually agreed targets for water quality. Coordination and revision Assign accountability for actions Examples of regional actions – support farmer and develop closer working representatives on natural resource relations within the industry management panels, committees and other representatives that have information for dairy industry: develop stronger links between the dairy industry and catchment planning authorities. Source: Sustaining Our Natural Resources - Dairying for Tomorrow 2001

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Table 63. Dairy Industry Opportunities Competitive Advantage Opportunities Markets Development Programs Funding Sources Requirements Dairy · Water, climate, soils, · Develop new · Export – Asia, Middle · Create dairy sector · Commonwealth – dairy skill networks, opportunities within East, Europe subgroup restructure program technical advice dairying · National · Investigate new and ACC available · Increase productivity · State opportunities for · UDV · Well established, · Large sector in the region increasing productivity, · Geoffrey Gardiner processing sector providing opportunity for farm management, Dairy Foundation Grant research into better environment etc practices · Same as for Primary Industry

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9.12.2 Next steps

While the dairy industry is well organised, it is appropriate for Council to meet with the dairy industry in Wellington to determine what actions are appropriate for the long term sustainability of the dairy industry in the region.

· There are major issues of adjustment with some farmers exiting the industry and some consolidation of farms

· Development of new activities associated with hard lotting for herds and dairy/ environmental management.

· Discussions should occur with the dairy industry on processes for farmers who wish to leave the dairy industry and to transfer their experience into other agricultural pursuits (eg horticulture).

Activity Actions Involves Council Formation of Rural Industry Taskforce · Contact farmers and farmer · Council , farmers, farm organisations, and Dairy Industry Sub Group representatives TAFE , Murray Goulburn · Secure support for the Taskforce and sub groups · Facilitation through Council Economic Development Unit Development of Regional Dairy · Analysis of trends in the local · Council and group members and farmer Information paper industry organisations · Identification of issues and opportunities Industry Formation of Rural Industry Taskforce · Industry participation and · Farmers and other local experts - Dairy Sub Group involvement in Taskforce and Sub Group Future development issues · Ongoing program with Council on · Council and industry representatives industry development · Identification of future processing opportunities Business Opportunities · Scope and identify new business · Council, business, consultant opportunities – markets and · Farmers and processors projects · Implement program to pursue opportunities

9.13 Horticultural Industry

9.13.1 Horticulture – Australia

Australian horticulture is labour intensive, seasonal and includes many small family farms that grow a range of crops. There are 60,000 people employed in growing fruit, vegetables and nuts for both domestic and export markets. A further 11,300 people are employed in fruit and vegetable processing. 14

14 Commonwealth Department of Agriculture, Fisheries, Forestry – Australia 2003

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The Horticulture Australia Council (HAC) was established in 2000 to provide resources to all horticultural industries. In 2001 the Commonwealth Government established Horticulture Australia Limited (HAL) to take on the functions of both the Australian Horticultural Corporation and the Horticulture Research and Development Corporation. HAL assists the industry by providing research and development, marketing and promotion services and administers export control arrangements. Table 64. Value of Agricultural Commodities Produced (VACP); Australia, year ending 30 June 2000 Commodity Value $ million Grapes 1,118 Fruit excluding grapes 1,761 Nurseries, flowers & turf 708 Source: ABS Statistical Information Service

The value of fresh and processed horticultural product exported in 2001-2002 was $1,840 million. Other products (dried fruit, cut flowers and nursery products), accounted for $780 million of exports.

9.13.2 Horticulture - Victoria

Victoria’s horticulture industry has experienced growth in both the export and domestic markets due to increased consumer interest in fresh produce, new technology to improve shelf life and improved management systems for control of pests and diseases. New varieties of produce have added value and diversity to the markets.

The value adding processes of canning, preserving and packaging of fruit and vegetables in regional Victoria add substantially to the economies of those areas.

DNRE estimates that horticulture in Victoria supports 8,500 enterprises employing 50,000 full time people and up to 100,000 during harvest periods. Table 65. Value of Agricultural Commodities Produced (VACP); for the year ending 30 June 2000 $ million Nurseries, flowers & turf 217 Vegetables 542 Fruit excluding grapes 427 Grapes 333 Source: ABS Statistical Information Service

9.13.3 Horticulture - Wellington Shire

Proximity to raw materials, access to markets, good growing climate with high rainfall and quality soils, convenient position and the available infrastructure and transport all contribute to making Gippsland a prime horticulture region. Gippsland is perceived as having a clean and green image when it comes to horticultural products.

Vegetable, fruit and orchard crops contribute to the Gippsland economy. There is a developing organic industry in the region and the Gippsland flower industry contributes 15% of the value of the Victorian industry.15

15 Gippsland Development Ltd 2003

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In Wellington Shire vegetables accounted for $12.2 million of production and flowers $5.1 million of production in 2000.

Table 66 shows volume measures of production. Table 66. Value of Agricultural Commodities Product (VACP); Wellington Shire, year ending 30 June 2000 Commodity Value $ ‘000 Grapes 19 Vegetables 12,241 Fruit 19 Nurseries, flowers & turf 5,173 Source: ABS Statistical Information Service

Table 67. Horticultural Production Volume; Wellington Shire year ending 30 June 2000 Commodity Measure Potatoes for seed (tonnes) 3,100 Potatoes harvested before 30 June (tonnes) 5,614 Asparagus (tonnes) 566 Beans – French & runner – total production (kg) 80,243 Broccoli (kg) 570,968 Cabbages (tonnes) 188 Capsicum chillies & peppers (kg) 23,235 Carrots (tonnes) 6,131 Cauliflower (tonnes) 640 Leeks (kg) 18,307 Lettuce (tonnes) 51 Onions spring (incl. shallots) (kg) 73,781 Onions white & brown (tonnes) 37 Pumpkins triambles & trombones (tonnes ) 109 Source: ABS Statistical Information Service

9.14 Opportunities and Trends

9.14.1 Horticulture

The Victorian Government initiative to increase the export of horticultural produce over the next 10 years, provides an opportunity for the Wellington Shire to develop horticultural opportunities, with a specific target of export markets.

Council should link into government programs and other support packages.

· Opportunities exist in the Sale area because of the greater annual rainfall, and therefore water supply through the catchments, rather than the concerns which continuously confront vegetable growers along the Murray River region.

· The current drought has focused the need for growers to be able to develop large scale farming practices, requiring significant capital investment, in areas such as Sale where there is more reliability for water supply.

· In addition, the water supply issues and water rights together with cost and availability means that new farm practices are being designed to make best use of the water. This is now a major consideration for the farming operations.

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Work undertaken by Wellington Shire indicates that there are considerable areas of land suitable for the development of: pome fruits (apples, pears, quinces); brassicas (broccoli, brussel sprouts, cauliflower, cabbage, kale etc); carrots and parsnips ( to lesser degree); potatoes; cool climate grapes; and warm climate grapes.16

Other horticulture which provides future opportunities for the Sale area include flowers and native wildflowers. There is already a small but significant sector in the Shire. This means that new growers moving into the area have some existing support.

The State Government has developed a number of development programs which encourage growers to work with exporters, agents and freight forwarders.

Any major growth of the horticulture industry will create additional opportunities for support services in the Shire (business support, technical expertise, marketing). The regional impacts of the sector are significant, with estimates by DNRE in 2001 indicating that 1,000 hectares of horticultural activity will produce 180 jobs and utilise 6,000 megalitres of water.

9.14.2 Specialist Crops

Opportunities also exist in the region for developing production of organic food. There is a growing demand for these products both in the domestic market (which is increasing at approximately 20% per annum), and in international markets.

The government has also undertaken state-wide projects in supplying and developing quality branded vegetables for export.

In recent times Australian horticulture has seen an increased focus on the production of vegetables that suit the Asian market. These have major opportunities in both export and domestic markets.

The Victorian government provides support in: developing export markets; improving the range and quality of product; targeting import replacement; developing cultural practices; developing processed and fresh products for export markets; and addressing food safety issues

Some experience already exists in the East Gippsland area for the growing of Asian vegetables such as Chinese cabbage. Current work is being undertaken on projects to: extend the current supply season; identify the best yielding cultivars; identify the most suitable late production cultivars; and investigate methods to extend the production season.

9.14.3 Hothouse Production

Opportunities exist for the development of hothouses for year round production of vegetables and flowers.

The example of Flavorite (Warragul) demonstrates the viability for high density practices and that there is an opportunity for the development of these facilities near to Sale. It could also be possible to have these developed on industrial estates.

16 Wellington Environmental & Biophysical Study – July 2001

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Discussion with the industry indicate that hothouses may require as little as 10-15 acres. The operators are efficient users of water through the reuse of drainage water. With most water authorities now having to comply with new regulations relating to the disposal of waste water, the opportunities for hothouse growth or the development of the vegetable/flower industry in and around these facilities is considered an important local development opportunity.

9.14.4 Vegetable Processing

Processed vegetables continue to show strong growth with the major export products of minimally processed tomatoes, vegetables and salad mixes increasing 100% in 3 years to $19 million in 1998/99. 17

The Region also has excellent opportunities with a major processing facility (Vegco) already drawing on vegetable products from within the Sale area. Advice from the firm indicates significant potential for increasing the purchase of vegetable products from within the Region since there is a ready and expanding market for processed vegetables.

The development of vegetable processing within the Wellington Shire area would provide significant new job opportunities.

9.15 Assessment of the Region

9.15.1 Advantages Horticulture

There are a number of key strategic advantages that make the region suitable for expanded horticulture. These include climate, water and land and expertise. Table 68. Advantages Horticulture Industry – Wellington Region Advantage Description Environment Good quality water supply Excellent climate which offers advantages in horticultural production with more temperate conditions Clean fresh reputation for the production of food for a global community Excellent soil diversity with most types of soil existing from sandy flats to heavier soils in the upland regions Generally has frost free winters in areas south of Sale Vegetables can utilise drainage water Land Price of land is generally competitive to other regions Market Support Significant government support for the development of horticultural products Significant support in research, development and marketing Markets Established markets both domestic and international Processing Access to major processors such as VEGCO that has proven markets Skills Already possesses local expertise and skills in the area Existing experience in a wide range of horticultural activities that form the basis of development Skilled and efficient farming community, that providing it is given support, is able to adapt quickly to new opportunities

17 Institute of Horticultural Development “The Vegetable Industry Overview” 2002

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9.15.2 Constraints Horticulture

Key constraints relate to investment costs, land availability, water supply and skill issues. Table 69. Contraints- Horticulture Industry – Wellington Shire Constraint Description Environmental Issues relating to water supply and the need to be able to access sufficient water Land Availability of large land packages suitable for larger producers Support Previous lack of general community support due to strong dairy sector Investment Costs High cost of investment in establishing horticulture Skills Ability to attract growers to the area with expertise or to train local farmers to diversify into horticultural produce

9.16 The Way Ahead – Horticulture

9.16.1 Key issues

Horticulture provides significant opportunities for the Sale area, particularly having regard to the significant recent developments in other regions. There are a number of key issues:

· The development of horticulture has the support of processors such as VEGCO that would provide a ready market for quality products from within the Sale area.

· Established domestic and export markets reduce the risk associated with initial industry development and expansion.

· There is significant support from the Victorian Government for horticultural development.

· Increased production in horticulture within the area, also brings the likelihood of new jobs from associated support industries and the longer term possibility of a processing plant being established.

· Flower production has well established and expanding markets, with significant export opportunities in Northern Hemisphere markets where premiums can be charged for Australian flowers.

· There is scope for the development of hothouse production of flowers and vegetables in the region.

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Business Opportunities Horticulture Sector Horticulture Clean, green, · Develop new · Export – Asia, Middle · Create a horticultural · Commonwealth - AFFA disease free, good opportunities for Asian East, Europe sector taskforce · ANZ Charitable Trust climate, good soils, vegetables and · National · Review outcomes of · State Government – DIIRD and quality water, local emerging horticulture · State reports on the Gippsland Department of Agriculture skills · Encourage new ways to region including the soon · Food processors – produce such as to be released report hydroponics and VEGCO and others prepared by the hothouse production Gippsland Vegetable · Link production to value Growers added manufacture and processing

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9.16.2 Next steps

There are a number of steps that are required in developing horticulture in the region.

· Wellington Shire allocates resources within its Economic Development Unit to assist with development of the horticultural sector within the Shire.

· Initiatives are undertaken to ensure that there is implementation of the Wellington Environmental and Biophysical Study July 2001.

· A major product focus is placed on: pomme fruits, brassicas, carrots and parsnips, potatoes and cool and warm climate grapes.

· Council develops a strategy to develop opportunities for the flower industry ( cut and wildflowers).

· Council develops a program to target potential investors in horticulture (in particular large scale operations).

· Council develops an intensive agriculture policy and implements opportunities associated with intensive horticultural pursuits (such as hydroponics).

Activity Actions Involves Council Formation of Rural Industry Taskforce · Contact growers and Vegco · Council , growers, TAFE , Vegco and Horticulture Industry Sub Group · Secure support for the Taskforce and Horticulture Sub-group · Facilitation through Council Economic Development Unit Development of Horticulture · Analysis of trends in the local · Council , growers, TAFE , Vegco Information paper industry · Identification of issues and opportunities Feasibility Studies – hydproponics and · Prepare applications for project · Council specific crops funding from government programs – AFFA and Agriculture Industry Formation of Rural Industry Taskforce · Industry participation and · Council , growers, TAFE , Vegco - Horticulture Sub Group involvement in Taskforce and Sub Group Future development issues · Ongoing program with Council on · Council and industry representatives industry development · Identification of future processing opportunities – vegetables · Commission feasibility and technical studies Business Opportunities · Scope and identify new business · Business Consultant, farmers and opportunities – markets and processors, State Government agencies projects · Implement program to pursue opportunities

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9.17 Forest Industries

9.17.1 Forest Industries – Australia

The forest industries are undergoing major change in Australia.

Regional Forest Agreements, supported by both State and Commonwealth Governments, have been established and have three objectives: protect environment values; encourage job creation and growth in forest based industries; and manage all forests in an ecologically sustainable way.

The forestry industry in Australia employs 86,000 people and has an annual turnover of $12.2 billion. The forestry industry and wood industries combined have a turnover of $14 billion and employment in these industries has increased 45% in the last 10 years.18

The forestry industry consists of the following products: sawn timber, pulp and paper, panel products and woodchips. Exports of wood products are worth $1.8 billion and imports are worth $3.8 billion. 19

9.17.2 Forest Industries – Victoria

The forestry industry turnover in Victoria in 1999/2000 was $540 million, directly employed over 4,000 people and indirectly employed a further 6,000. 20 The overall contribution to the Victorian economy was estimated at $1.8 billion per annum.

9.17.3 Forest Industries – Wellington Shire

Timber Plantations

The Central Gippsland Forest Management Area includes the major rural centres of Warragul, Traralgon and Sale.

Of the 22.7 million hectares of land in Victoria, Central and East Gippsland comprise 3.2 million hectares of parks, reserves, plantations and other land associated with forestry. Of this figure, 1.138 million hectares is in private land plantations.

Recent discussions within the timber industry and decisions by the Victorian Government restricting access to forest timbers has seen some change to the overall direction to the timber industry.

However, in it appears that much of the Gippsland timber industry around Sale will not change significantly, with Heyfield continuing to be a major timber centre.

Processing

The timber industry is the mainstay of communities in the Gippsland area and in particular locations such as Heyfield. The Neville Smith Plant at Heyfield provides significant value adding to timber products for the furniture and building industry, whereas much of the other plantations in the area are used for pulp wood.

Recent policy statements by the Victorian State Government indicate that there are going to be significant changes to the forest resource available for the timber industry which may have some effect on the timber industry.

18 DNRE 2002 19 DNRE 2002 20 DNRE 2002

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The importance of the timber industry remains significant and has major multiplier effects in the regional economy.

Local industry sources in Heyfield indicate that this may not have a significant effect on their operations. Larger millers appear to be able to still be able to access sufficient timber to continue their current operations and to achieve some growth.

Industry discussions indicate that value added timber processing is highly competitive since the major metropolitan firms are high volume/low unit cost operations with close market ties to their clients. This creates a very difficult position for new entrants to the market.

9.18 Market Opportunities

There are several potential opportunities for the region.

· Plantation Timber – there is a possibility to rapidly increase the supply of plantation timber over the next decade (only 4 or 5 ot her countries in the Pacific Rim are able to do this on a sustainable level). Increased global demand for timber is outstripping supply.

· Value added wood products – manufacturing activity is expanding in Australia. Sustainable timber harvesting is seen as environmentally friendly alternative to other products (eg. steel, plastic).

· Opportunities for value adding using specialty skills may be an option in the Sale region, subject to there being access to a range of timbers which could easily be transported into the area.

· Timber Production - the principal opportunities for timber possibly rely on additional farm forestry.

9.18.1 Advantages - Forest Industries

Wellington Shire is seen as having a range of major advantages, including existing industries, climate and skilled labour. Table 70. Advantages Wellington Shire Advantage Description Environment Gippsland has a good climate, soil and rainfall for timber production. Industry The timber industry is well established and understood within the community. There is capability, suitability and profitability within the timber industry. Farm plantations provide potential returns. Market There appears to be a well entrenched market for wood products. Employment The timber industry is a significant employer in the region. Value adding timber has a high employment multiplier.

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9.18.2 Constraints – Wellington Shire

The major constraints relate to infrastructure, specialised skills, capital and the capacity to change. Table 71. Constraints Wellington Shire Constraint Description Cost and Returns Poor initial cash flows for farm forestry. Timber Types Limited types of local timber for value adding processing. Farm Forestry Reluctance by farmers to have farm forestry on their properties. Reluctance of farmers to undertake farm forestry for high value timbers due to the longer period to secure a return. Regulation Restrictions on public land use of forests for the timber industry Industry Attraction Difficulty in attracting high value adding businesses in the timber industry.

9.19 The Way Ahead - Forest Industries

9.19.1 Key Issues

The key issues for the timber industry in Wellington are whether the State Government will permit continued licenses for some of the major industries such as Neville Smith.

· This is primarily a political issue with Council needing to ensure that opportunities remain. The impact of change would be significant in Heyfield, and have effects on Maffra and Sale. The transport industry would also significantly suffer if there was a major contraction in the timber industry.

· However, opportunities in terms of license consolidations within the timber sector would enable some businesses to do well and it is expected that this would happen with Neville Smith Timbers in Heyfield.

· Opportunities exist for value added processing even though some of the timbers are not available within the Gippsland region.

· With this antique industry already well established in Sale the possibility of bringing high quality artisans in timber to Sale to complement the industry may have some advantages and produce additional business opportunities especially in the commercial areas along the Princes Highway.

9.19.2 Next Steps

· Council needs to monitor the timber industry in order to support the industry in the region. At this stage it appears that the timber industry is well organised and is managing its major issues with the Victorian Government.

· Prospects for value adding to timber, including high quality furniture production need further investigation.

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10 Business Opportunities Tourism

10.1 Overview

This chapter analyses the prospects for tourism development in Sale and the broader region. It highlights a number of key issues:

· While Sale is not currently a major tourism centre, the consultations undertaken by Buchan indicated a significant recognition of the potential of tourism for the region.

· In particular the consultations identified the importance of developing Sale as a regional tourism hub.

· In looking at tourism opportunities, the approach needs to be focused on Wellington Shire, not just Sale.

· A common theme emerging was the need to define the tourism offering and to better market the region. The Port of Sale development was seen as important for the development of tourism in the region.

· A key component of our recommendations is ensuring that industry is a major part of a long term strategy to develop the sector.

It should be noted that Wellington Shire has developed a 3 year tourism strategy (Wellington Shire Council Tourism Strategy Plan 2002-2005 June 2002). This report is well presented and identifies key markets segments, directions for development and sets out a short term work plan. In reviewing the opportunities for the Sale Region we have drawn substantially on this document.

10.2 Tourism in Australia - Key Market Trends

Recent research and analysis shows that there are a number of changes occurring in the market, that have major implications for tourism products. (Bureau of Tourism Research 2002).

· Australia’s population is ageing. The growing seniors market is an affluent market that has the time, money and good health to travel.

· The 1990s have seen an increasing emphasis placed on physical fitness and healthy living. A more holistic approach to leisure time has been adopted which considers a balance of mind, body, and spirit. As a result, the demand for nature based or outdoor activities, indulgence products and short trips will increase over the next 10 years.

· More frequent, shorter trips are now becoming more popular than long holidays. People are condensing their holidays into intense weekends or short trips. Spontaneous travel, for shorter periods with less lead times is increasing.

· Residential population movement to coastal areas and accessible country areas are driving forces behind urbanisation, increased services, and cultural change in these regional communities.

· There is increased interest in and an emphasis on ecological/environmental issues and sustainability.

These trends have implications for regional tourism across Australia.

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10.3 Tourism in Victoria

The Victorian market is being influenced by these national trends. The compact nature of the State and the diversity of its attractions mean that it can offer visitors a range of options, particularly for short breaks.

Analysis of the National Visitor Survey 2001 (Bureau of Tourism Research, 2002) shows that Victoria’s tourism market is driven by:

· Victorians travelling within their own State.

· Interstate visitors.

· International visitors - Victoria attracts around 25% of these visitors to Australia.

· It shows that the short stay market is becoming increasingly important.

10.4 Regional Tourism - Victoria

10.4.1 Tourism Regions

Tourism Victoria divides the State into 13 regions. Each region is responsible (in conjunction with Tourism Victoria) for the marketing and promotion of their own region (in line with Tourism Victoria’s strategic plan). Table 72. Tourism Victoria Regions Tourism Victoria Regions 1. Melbourne 8. Macedon Ranges & Spa Country 2. Goldfields 9. Melbourne's Bays & Peninsulas 3. Goulburn Murray Waters 10.Mildura Murray Outback 4. Grampians 11. Murray River 5. Great Ocean Road 12. Phillip Island & Gippsland Discovery 6. Lakes & Wilderness 13. Yarra Valley, Dandenongs & Ranges 7. Legends, Wine & High Country

10.4.2 Phillip Island and Gippsland Discovery Region

The Region

Sale is located within the Phillip Island and Gippsland Discovery region and is adjacent to the Lakes and Wilderness Region.

The Phillip Island and Gippsland Discovery Region (PIGD) is a broad region located south east of Melbourne and includes two of Victoria’s most recognised and unique tourist destinations – Phillip Island (penguins) and Wilsons Promontory National Park (nature tourism).

The region is characterised by its mountain ranges, forests and hinterlands, lakes and coastal areas. This variety of natural attractions gives the region its distinct point of difference from other regions.

A key opportunity/growth area is seen as nature and eco tourism.

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Market Size

Some recent data show the extent of tourism in the PIGD Region. However it needs to be recognised that visits to the Region are dominated by two major attractions - Phillip Island and Wilsons Promontory National Park.

· In the year to June 30, 2002, there were approximately 5,474,000 domestic and international visitors to the region

· In 2001 there were 1,661,000 overnight visitors to the PIGD Region with a total overnight expenditure of $328.6m.21 Total day expenditure exceeds $205m.22

· Domestic overnight expenditure represents over 90% of the market 23

· Over 75% of visitors to the Region originate from Melbourne and are on self drive trips. 24

· Average number of nights per stay in PIGD is 2.9 (compared to Victorian average of 3.1%)25

10.4.3 Key Attractions

Wildlife, natural attractions, recreation and sport, and being a family destination are attributes most associated with the PIGD Region. 26

Although research indicates that Sale has a high recall rate (third after Phillip Island and Cowes) among those familiar with the Region, it is not considered a prime tourist destination.27

Penguins and seals, and the Motorcycle Grand Prix are the region’s main identified attractions.

Based on visitor numbers, the PIGD region is ranked seventh out of the 13 Tourism Victoria regions primarily due to the popularity of Phillip Island 28

A major focus of PIGD strategies are on Phillip Island as a key intrastate, domestic and international visitor destination.

10.5 Tourism in the Sale Region

Sale is the major city in Wellington Shire and is a major service centre for the broader region based on the Shire and adjacent areas.

Wellington Shire has a number of natural attractions within its borders. These include: Great Dividing Range, the High County, Tarra Bulga National Park, Gippsland Lakes, Ninety-Mile Beach and Bass Strait.

A significant range of attractions are within a one hour drive from Sale.

Wellington Shire refers to its tourism industry as ‘developing’. It currently lacks icon attractions and visitor appeal. 29

21 National Visitor Survey 2001, Bureau of Tourism Research 22 National Visitor Survey 2001, Bureau of Tourism Research 23 National Visitor Survey 2001, Bureau of Tourism Research 24 PIGD Committee 25 National Visitor Survey 2001, Bureau of Tourism Research 26 Roy Morgan, PIGD research, 2001 27 Roy Morgan, PIGD research, 2001 28 National Visitor Survey 2001, Bureau of Tourism Research 29 Wellington Shire Council Tourism Strategy Plan 2002 - 2005

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Our research and consultations show that:

· There is not a high level of awareness of the Shire’s Tourism Strategy in the business sector.

· There are no clear and consistent messages being communicated about Sale and its region. There are differences in language and approach between Tourism Victoria, Department of Sustainability and Environment, and the Central Gippsland Visitor Information Centre.

10.6 Tourism Resources – Sale

Wellington Shire has a number of resources linked to tourism:

· Wellington Shire’s has developed a tourism strategy (Wellington Shire Council Tourism Strategy Plan 2002 – 2005).

· The Shire also has a dedicated Tourism Manager reporting to the Economic Development Manager.

· A major regional visitor information centre is based in Sale.

· Online information – there is considerable information available online about what to do in and around Sale and the Shire (http://www.gippslandinfo.com.au, www.gippsland.com). However the information listed is inconsistent and many activities listed lack broader market appeal.

10.7 Accommodation Sector

10.7.1 A Business Market

Sale’s tourism market is in the early stages of development.

Sale has a significant business visitor market (related to Esso, RAAF, travelling sales representatives, and to a lesser degree TAFE). This has meant that most of the motel accommodation sector is geared to this business market (both the offering and the pricing). Reflecting this focus on the business traveller, occupancy rates are generally high during the week and are low at weekends.

There is only a very small tourist market in Sale at present. Discussion with motel owners indicate that approximately 85% of overnight visitors (in motel accommodation) are in Sale for business purposes.

Within the accommodation sector there has been little effort to develop the tourist market.

· The accommodation and hospitality sector is split between those who see the potential to develop Sale as a regional tourism hub and those who see the lack of any major attractions in the City as constraining any future development in the sector.

· The Port of Sale Development along with the Wellington Entertainment Centre were seen as important for Sale’s future.

Sale is also currently seen as a highway stop. This is reflected in data on average stays in accommodation. The average number of nights per stay is 1.2 (compared to Victorian average of 3.1 and PIGD region average of 2.9)30 which highlights the ‘passing through’ nature of many visitors to Sale.

30 National Visitor Survey 2001, Bureau of Tourism Research and data from Sale Motor Village Caravan Park TBC

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10.7.2 Accommodation Mix

Current accommodation in Sale accommodation consists of: 10 motels/ hotels, 2 caravan parks and 2 B&Bs. There is a wider range of accommodation in other parts of Wellington Shire. Table 73. Accommodation in Sale Accommodation Rates $ per night * Motel/Hotel King Avenue $152 Princeton $119 Hacienda $93.50 Aspen $88 Midtown Motor Inn $77.55 Sale Motel $68 Ace Swan Motel $66 Riverstay $66 Captains Lodge International $60 Gippsland Hotel $40 Caravan Park Sale Motor Village Caravan Park $22/$80 Thompson River Caravan Park $17/$50 Bed and Breakfast Bon Accord B&B $154 Kilmany Park B&B $150 Source: Buchan Survey of Motels - *Rates at January 2003

10.8 Current Visitor Activity

10.8.1 Current Market Positioning

Sale’s current contribution to the Victorian tourism strategy is primarily seen as part of the Sydney - Melbourne touring route.

Sale is defined by Tourism Victoria as a Level 3 market (destinations that attract significant intrastate visitation and demonstrate potential interstate appeal, or are important touring and accommodation hubs). 31

According to analysis contained in the Wellington Shire Tourism Strategy, the largest visitor groups to the Shire are: · Shoppers from other parts of Gippsland attracted to the Sale Central Business Area (around 300,000 per year) · People travelling through on their way to Melbourne or other destinations such as East Gippsland, and the NSW South Coast · Holiday-makers, mainly from Gippsland and SE Melbourne, visiting 90-Mile Beach and Lake Victoria (150,000 visits per year – Parks Victoria) · High Country visitors (20,000 visits per year - Parks Victoria) · Day-trippers, mainly from Gippsland to Tarra-Bulga National Park (80,000 per year – Parks Victoria) · Business travellers to Sale · Visitors for local events 32

31 Tourism Victoria 2002 – 2006 Strategic Plan pp84-85 32 Wellington Shire Council Tourism Strategy Plan 2002 - 2005

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Based on statistics collected by the Gippsland Visitor Information Centre at Sale, one third of visitors to Sale are from Melbourne and another 27% are from country Victoria. Table 74. Sources of Visitors to Sale Residential Location Percent Melbourne City and suburbs 33% Victorian Country regions 27% New South Wales [principally along coastal route] 14% International 13% Queensland 4% South Australia 3% Western Australia 1% Tasmania 1% Source: Wellington Shire Council Tourism Strategy Plan 2002 - 2005

10.8.2 Sale Attractions

The following are activities and destinations that are listed as of interest for visitors by Wellington Shire, the Central Gippsland Visitor Information Centre and Gippsland online. The events list is indicative of a range of local events held during the year. Table 75. Sale Attractions Listed Attractions Description

Heritage Features Historic Swing Bridge Historical bridge Heritage Buildings Drive or Walk Historic buildings tour. Audio tape available for $5 Includes St Pauls Cathedral, Sion College, and historic homesteads and gardens Sale Powder Museum Built in 1864-65, the Sale Magazine served the needs of North and East Gippsland Sale Historical Museum Hosts collection of local government paper based records and original council furniture and collection of photographs of Sale, military objects, textiles and household devices. Sale Cemetery Historical references Sale Historical Society Museum on Sundays Wetlands, and Tours Sale Common State Game Refuge 300 hectare wetlands located off the Sth Gippsland Hwy (Wetlands) Lake Guthridge Walk Informal walking tour of Lake Guthridge Howitt Bicycle trail Starting point of trail Bataluk Cultural Trail Starts Sale Wetlands Port of Sale Walk, cruise or boat hire Natural Attractions Blue Pool Natural attraction Tarra Bulga National Park Natural attraction National Parks Natural attraction 90 Mile Beach Natural attraction Pearsons Point Natural attraction Glenmaggie Weir Natural attraction The Channel at Avon Weir Natural attraction

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Listed Attractions Description

Aviation Roulettes Aerobatics Flying Team RAAF West Sale Aerodrome Joy flights over regional attractions Industry ESSO/BHP Gas Plant and Offshore Industry Platforms Other Gippsland Equestrian Centre Horse riding Golf Club Local golf course Wellington Shire Library Local community library Art, Antiques and Craft Gippsland Art Gallery Art gallery Redcoat Soldier Antiques Antique store Nambrock Antiques Antique store Sale Pre-Loved Furniture Antique store Australian Wildlife Art Gallery Art gallery Wellington Fine Art & Craft Gippsland Art and Craft work Cristal Folk Art Local Craft and Woodwork Janet K Handcrafts Local Craft Sales and Supplies Raquael K Local Craft Sales and Supplies plus Classes Events Sale Cup February, Sale Heyfield Market First Saturday of the month, Heyfield Rosedale Speedway Racing Racing throughout the year at Rosedale Speedway Yarram Market First Sunday of the month, Yarram Jazz on the Lakes Festival February in Paynesville Sale Croquet Competition Annual event held in February, Sale Sale Rock & Role Festival Feb/March, Sale 9th National Historical Machinery Rally Heyfield Victorian Square Dancing Association March, Sale 34th State Convention Maffra Mardi Gras March, Maffra Wellington Harvest Festival March, Wellington Shire Long Lunch March (as part of the Harvest Festival) Stratford Sister Cities World Reunion March, Stratford Gippsland Ballooning Festival March, Rosedale Gippsland Harvest Festival April, Warrigal RAAF East Sale Open Day 12 April, Sale Sale Air show April, West Sale Aerodrome Dargo Walnut Festival April, Dargo Tarra Festival April, Yarram Shakespeare on the River Festival April, Stratford International Archery Competition June, Sale Women's National Gymnastics Clubs September, Maffra Championships Bulga Park 100th Anniversary October, Ballock Great Victorian Bike Ride December – passing through Sale Wetlands Classic (bush races) October Agricultural Show October Gippsland International Show Jumping December Championships Source: Buchan Analysis of Websites and other information.

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10.9 Market Assessment -Sale and Region

10.9.1 Tourism Advantages – Sale

A detailed SWOT assessment is included in the Wellington Shire Tourism Strategy.

Sale has a number of advantages related to both location and infrastructure. These are summarised below. Table 76. Tourism Advantages Sale and Region Location Proximity to a diverse range of accessible world class natural attractions, features and activities available in the Gippsland and neighbouring regions provides Sale with a prime opportunity to act as a tourism base/hub for the region

Parks, the High Country, lakes and beach are all within driving distance Range and type of natural attractions help balance traditional seasonality issues, reducing demand peaks and troughs Compactness and proximity to Melbourne and high population regional centres Proximity to other key destination areas such as Wilsons Prom and Philip Island Sydney – Melbourne touring route destination Good level of both passive and active activities available within the region ‘Undiscovered’ nature tourism destination Proximity to Gippsland's food and wine region Infrastructure Strong regional service/commercial centre Service infrastructure (eg. retail and other services) is well developed to cater for additional visitors Good infrastructure and facilities due to RAAF and Esso Regional access (airports, roads and signage)

10.9.2 Tourism Constraints - Sale

Major constraints identified in the Wellington Strategy relate to location, infrastructure and marketing and business involvement in the tourism sector.

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Table 77. Constraints on Tourism Development - Sale and Region Location Infrastructure Low international and interstate awareness of regional Lack of quality accommodation Victoria. Lack on natural attractions and visitor appeal in town Inadequate signage centre Limited range of quality product compared to other Lack of a wide range of high-yielding, identifiable regions with similar proximity to Melbourne accommodation and hospitality product in the region (4/5 star and boutique accommodation facilities) Marketing Business Low awareness of Victoria’s natural attractions in key Limited focus on tourist market interstate and international markets Poor competitive market positioning of Victoria as a Limited industry leadership in the region strong nature based destination in relation to Northern Territory, Queensland and Tasmania Limited knowledge of product and experiences by retail Lack of cohesion among operators travel agents, wholesalers and inbound operators. Lack of market awareness compared to other higher Hospitality and tourism staff recruitment and profile destinations within region (Phillip Island and retention rates Wilsons Prom) Perception of lack of marketing support from Council Increasing competition from other entertainment and leisure activities Lack of coordinated communication in the region Inconsistent service delivery levels Disjointed online marketing effort for promotion of the Community Awareness region Low community, awareness of the value of tourism Concern about lack of attractions

The business consultations conducted by Buchan as part of the Business Opportunities Review, highlighted similar issues. These are summarised below.

Major concerns were:

· Lack of attractions

· An accommodation sector that is not geared to tourism · Tourist product not defined

· Absence of a local business and community focus on tourism Table 78. Tourism Weaknesses Sale and Region Weaknesses Number Tourism Tourist product not defined 3 Tourism marketing disjointed 2 Lack of tourism attractions 9 Accommodation not geared to tourism 5 Not a focus on tourism 2 Total Tourism 21 Source Buchan Consultations 2002/2003

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Major threats were seen as fragmentation and the absence of effective marketing. Table 79. Tourism Threats - Sale and Region Threats Number Tourism No effective tourism marketing 5 Tourism fragmented 4 Lack of identity 1 Total Tourism 10 Source Buchan Consultations 2002/2003

10.10 Competition

The Wellington Tourism Strategy analyses in detail the competition for Sale and Wellington. The following is an extract from the study.

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Areas of significant competition were seen as adjacent regions (eg. Bairnsdale, Traralgon) and other destinations with similar proximity to Melbourne (eg. Great Ocean Rd Mornington Peninsula). Table 80. Areas of Competition with Sale and Region Competition Comment Other Gippsland Bairnsdale Also considered within close proximity to the diverse Traralgon range of natural attractions and have stronger infrastructure and facilities Other Destinations Great Ocean Rd Other destinations within similar proximity to Melbourne Mornington Peninsula Source Buchan Consultations 2002/2003

The following charts show strong brand awareness for PIGD Region and top of mind recall of destinations. It shows that the PIDG Region is a well recognised brand (mainly Phillip Island and Wilsons Promontory).

Brand Name Awareness

100

90 80

70 60

% 50

40 30

20 10

Goldfields Murray River The Grampians Murray Outback Great Ocean Road Lakes & Wilderness Goulburn Murray Waters

Melbourne's Bays & Peninsulas Legends, Wine & HighNot Country aware of any brand names Macedon Ranges & Spa Country Phillip Island & Gippsland Discovery

Yarra Valley, Dandenongs and the Ranges

Source: Tourism Victoria

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Top of Mind Holiday Destinations

25 Interstate Intrastate 20 15

Bright Lorne Mildura Ballarat Bendigo Geelong Melbourne Phillip Island Grampians Apollo Bay Warrnambool Lakes Entrance Echuca/Moama Great Ocean Road Mornington Peninsula

Dandenongs Ranges/Mount

Source: Tourism Victoria

10.11 The Way Forward

10.11.1 Future Opportunities

Developing the tourism market for Sale and Wellington Shire will involve some new approaches, including developing some core attractions, marketing Sale as a regional hub, and creating new events and other attractions. Better promotion of a defined product was seen as a major issue.

These issues were highlighted in the industry consultations conducted by Buchan. Table 81. Tourism Opportunities - Sale and Region Opportunities Number Tourism Develop Sale as tourism hub 10 Port of Sale 11 Better tourism promotion 11 Self Drive Tour market/coastal drive 5 Eco Tourism 4 Develop city attractions(eg wetlands) 4 Hospitality services 4 Promote Roulettes 2 Develop Accommodation 2 Develop regional events 3 Total Tourism 56 Source Buchan Consultations 2002/2003

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10.11.2 Market Segments

“The PIGD region’s traditional markets have been mostly low yield families from Melbourne, the Latrobe Valley, and Country Victoria visiting coastal and Alpine areas for a holiday break (staying at holiday homes, caravan parks, camping grounds, and holiday units), visitors on business staying at hotels and motels and visitors passing through on their way to Lake and Wilderness and NSW. High numbers of visitors stay in their own holiday homes or the homes of friends and relatives.”33

Wellington Shire has identified its market segments as part of its Tourism Strategy These are summarised below. Table 82. Summary of Market Segments Market Segment Description Segments Day-trippers and shoppers Travelling from within Gippsland Passing traffic en route to other destinations ie. South Coast NSW or East Gippsland from Melbourne, Sydney or Canberra Domestic short breaks Passing traffic touring en route to other destinations from Mainly Traditional Family Melbourne, Sydney Life, Conventional Family Life and Young Optimism Those attracted to up-market B & B’s from Melbourne and Mainly Visible Mornington Peninsula Achievement, Socially Aware and Traditional Family Life Business travellers Domestic longer stays Holiday makers from Latrobe Valley and SE Melbourne Conventional Family Life, suburbs Traditional Family Life, Basic Needs, A Fairer Deal and some Socially Aware Existing domestic niche Birdwatchers, Bushwalkers, 4WD enthusiasts, Sporting markets including Event participants and spectators, Luxury Getaways/Indulgent Weekend seekers, ‘Boaties’, Conference and Event participants34 International Self-drive market from UK, Europe and New Zealand Capture the increasing 45+ Backpackers self drive high yield market (Traditional Family Life) Potential niche markets Eco tourists, Cyclists, Cultural heritage seeker - maritime Capitalise on the region as and Aboriginal, Art and Crafts, People with disability, and a nature based tourism Solo travellers destination for Socially Aware, Visible Achievement and Young Optimism value segments

Source: Derived from Wellington Shire Council Tourism Strategy Plan 2002 - 2005

Two areas of major opportunity for Sale are Nature Based Tourism and Cultural Tourism. Wellington Shire has strategies in place for developing each of these areas.

10.11.3 Nature Based Tourism

Nature based tourism is the provision of a range of experiences associated with the natural environment, generally related to an outdoors type activity. The experiences can be educational, passive, adventure, cultural or heritage related, or a combination of several in the one trip. Examples of nature based tourism include a cruise on the Gippsland Lakes or a walk through the Tarra Bulga national park.

33 PIGD Regional Tourism Development Plan 2002 34 Wellington Shire Council Tourism Strategy Plan 2002 - 2005

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Eco-tourism is generally considered to be a niche component of nature based tourism where the focus is on education and interpretation of the natural environment and is managed to be ecologically sustainable. 35 An example of ecotourism tour could be a guided tour through the Sale Wetlands with a ranger.

Victoria (and Wellington Shire) is well placed to capture these markets as it has a diverse wealth of natural attractions, found in landscapes ranging from mountain, desert and coastal to riverine, alpine and rainforest within driving distance.

Apart from the Great Ocean Road, the Twelve Apostles and the Phillip Island penguins, there is very limited market knowledge about the quality, diversity and accessibility of Victoria’s natural attractions at an interstate and international level. Nationally, growth and decline in awareness has been directly related to the changes in marketing effort in those States.

There is significant opportunity to build a viable tourism market for Sale and Wellington Shire around the Gippsland region’s natural attractions.

10.11.4 Cultural Tourism

Cultural tourism is a growth area within the tourism industry which covers the performing arts, visual arts and crafts, museums and historical societies, historic sites and tourism interpretive centres (including industrial and agricultural), festivals and special events. Examples include local art galleries and museums and regional festivals.

Wellington Shire has considerable untapped potential in the way of cultural attractions in and around its boundaries. The advantage Sale has is that if it's potential as a base for activities is acted on, the town benefits from cultural activities linked to the Sydney – Melbourne touring route, Gourmet Deli tour and other activities further beyond its boundaries.

In addition, Wellington Entertainment Centre will help provide a facility for staging major cultural and entertainment events.

10.11.5 New Attractions for Sale

Sale and Wellington Shire needs to develop its offerings for visitors. The Port of Sale development and the new Entertainment Centre are important. Other areas of opportunity were identified in our consultations. Potential new attraction are summarised in the following table.

35 National Ecotourism Strategy, Commonwealth Department of Tourism.1994, p.17

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Table 83. Potential New Attractions - Sale and Region Attractions Market Segments Industry tourism – RAAF, Esso, Murray Goulburn, Development of Conference Market - Entertainment dairy farm (robotic) Centre, Race Course

Armed Forces Museum - move from RAAF Base Disabled tourism Airport – joy flights Promotion of Rail/Accommodation Packages

Old Sale Prison – develop as brewery/bakery/café Cycling tours (coastal beach to Seaspray)

Indigenous Culture - through Aboriginal Co-op Accommodation High Quality Bakery (eg. like Beechworth Bakery) Development of Caravan Park into a holiday park Antiques Centre/Precinct Country retreat accommodation Self contained holiday units Motels - upgrade Motel and conference facilities as part of Port development Source: Discussions with Wellington Shire Council

10.11.6 Developing the Industry

There are a number of key issues that will affect the development of tourism in the Sale Region. These are:

Strategy

· Developing a long term strategy that has commitment from the industry

· Involve business leaders (not just tourist sector) in the development of the strategy

· Set milestones and targets for achievement

· Secure industry support for the activities in the current three year strategy

Infrastructure

· Continue with the development of the Port of Sale

· Visitor Information Centre – continue support for the centre · Examine signage issues in the City

Industry Involvement

· Need for industry leadership

· Establish a Tourism Task Force to work on the long-term tourism strategy.

· Involve Taskforce on the marketing plan for the region

· Develop industry training options with TAFE

Events

· Events strategy – conduct a review of major regional events and identify scope for an iconic major event to attract visitors to Sale

· Plan program for Wellington Entertainment Centre

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Tourism Marketing

· Position Sale as a Hub

· Ensure current marketing efforts are cohesive and integrated

· Develop cooperative marketing initiatives

· Improve quality of information available – brochures and online information · Develop community recognition of importance of tourism

Government Support

· Ensure that Wellington Shire obtains maximum available support from government programs – both State and Federal

· Council to continue to seek funding for strategy development, industry development and feasibility studies

10.11.7 Issues and Actions

Tourism is important for the region's future. Tourism strategies need to be considered from a Wellington Shire perspective rather than be limited to Sale. The absence of major attractions within the city means that Sale needs to create some of its own advantages.

The focus of future actions should be on:

· Positioning Sale as a hub for a broad range of active recreation and nature tourism activities based around the region’s existing natural attractions

· Infrastructure development – Wellington Entertainment Centre and the Port of Sale are key projects. Other local attractions need to be developed.

· Developing regional events

· Develop industry and community commitment to tourism

· More effective marketing of the region

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Table 84 summarises the elements of in the development and implementation of a tourism strategy. Table 84. Tourism Strategy Elements Issue Description Actions Positioning Sale as a tourism hub · Sale as a regional hub for regional · Develop Tourism Strategy attractions · Secure industry involvement · Build on and promote the cultural · Local industry commitment heritage of the region · Marketing program · Access to natural attractions · Food and wine focus within the · The integration of product strengths to region provide a more holistic experience for the · Nature based tourism consumer. · Cultural tourism · Sydney – Melbourne Touring Route Infrastructure development Wellington Entertainment Centre · Operation of the Centre · Proactive management · Recognise regional role · Develop programming Port of Sale · Development of the Port and related · High quality development required facilities · Integrated facilities – right mix required · Creation of a tourism asset · Proactive management · Recognised by business community as a major initiative · Attract investment Regional Events · Review current events · Review of current events · Develop new events capable of · Develop an events strategy attracting visitors · Examine experience of April 2003 Air Show Industry and Community · Community split on tourism issues - · Develop an industry task force Commitment one view – no attractions; other view – · Community input into strategy need to build own advantages · Sell strategy to community · The integration of the tourism industry with other industry, business and community sectors. Marketing · Improve regional marketing · Develop marketing plan · Develop agreement on positioning · Improve consistency and quality of · Activate all segments of the industry in marketing materials promotion · Focus marketing on key targets · Socially Aware and Visible Achievement segments which are high yielding and have a high propensity to undertake a broad range of nature based activities offered in Victoria. · Traditional Family Life segment, which is characterised by available time and disposable income and a preference for more passive activity · Young Optimist segment, which is attracted to high-yield adventure activities. Government Support · Secure State and Commonwealth · Victorian Government Government support for initiatives · Commonwealth support

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10.11.8 The Next Steps

The following are the steps that are required to develop these initiatives. Table 85. Developing the Opportunities Activities Description Involves Council Port of Sale · Project development and secure project · Council investors Tourism Taskforce · Council to facilitate the establishment of the · Council and business Taskforce Tourism Strategy · Involve Taskforce in review of current strategy · Council and business and development of long term strategy Events Strategy · Review events and conduct a feasibility study · Council and consultant on major events with business input Signage · Review City signage · Council Tourist information · Upgrade quality and theming of information – · Council and business Council and indus try information Government Funding · Secure funding and support – State and · Council Commonwealth Industry Tourism Taskforce · Involvement in Taskforce · Business - tourism, accommodation, retail Tourism Strategy · Participation in strategy development · Business - tourism, accommodation, retail Marketing the Region · Input into marketing strategy and · Business - tourism, development of materials accommodation, retailers with Council Cooperative Marketing · Involvement of business in the program · Council to involve business

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11 Business Opportunities - Services

11.1 Overview

Sale is a major regional services centre for Wellington Shire.

This chapter analyses the prospects for services development in Sale and the broader region. The paper assesses the market prospects and the way forward for Sale to develop its activities in the sector. It draws on an analysis by Buchan Consulting of trends in the services sector and business interviews conducted as part of a consultation program.

Growth in the services sector will be based on expansion of other industries in the region, population growth and expanding the regional markets that businesses are servicing.

The future growth of the sector is dependent on:

· Achieving growth or stability in the regional population

· Maintenance of the RAAF Base

· Growth in the manufacturing sector

· Development of tourism activity

· Broadening of the markets being serviced by Sale businesses

· Ensuring its regional role in publicly funded services – ie health, education and government is maintained

A key component of our approach is ensuring that business is an active player in developing a long term strategy for the services sector.

11.2 Australia - Services Growth

The service sector dominates the Australian economy.

11.2.1 Drivers of Growth

The service sector dominates economic activity in Australia and accounts for more than 75% of the Australia's output and for four out of every five jobs.

Services growth is driven by:

· Increased consumer demand for services (income, demographics, lifestyle change);

· Higher business demand for services and greater use of outsourcing;

· Technological change/innovation and its impact on relative sector productivity; and

· The growth rates of the economy.

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11.2.2 Growth Trends

The following diagram shows the strong growth in services from the mid 1970's.

The fastest growing sectors over the last 25 years were: Property and Business Services; Finance and Insurance; Communications; Transport and Storage; and Health and Community Services Table 86. Output Growth Services Sectors 1975 - 2001 High Growth Average Growth Low Growth Communications Education Government administration and defence Finance and insurance Cultural and recreational Construction services Property and business Electricity, gas and water Wholesale and retail trade services Transport and storage Personal and other services Health and community services

Over the period 1974-75 to 2000-01, service sector output growth (real) was at a trend annual rate of 3.6% (c/f 2.3% for agriculture, 5.0% for mining and 1.7 per cent for manufacturing). All service industries grew over this period, although there was considerable variation in growth rates.

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Average annual growth of employment in services has also been higher than that for the economy. Over the period 1984-85 to 2000-01 employment in services increased by an average annual growth rate of 2.3% a year compared with 1.8% a year for the economy overall.

Growth rates have varied substantially between industries in the services sector. Table 87 shows the sectors that have experienced the highest growth rates in output and employment. Property and Business Services and communications were the strongest sectors for both output and employment growth. Table 87. Comparison of Growth by Sector 1975-2001 High Growth Sectors Output High Growth Sectors Employment Communications Property and business services Property and business services Communications Finance and insurance Community Services Transport and storage Health and community services

11.2.3 Major Service Industries

Table 88 shows employment and output shares by sector. Major sectors are: Property and Business Services; Finance and Insurance, Community Services, Retail Trade. Table 88. Employment and Output Share Service Sectors 2000/2001 Sector Share National Output Share National % Employment % Property and Business Services 13.6 11.6 Finance and Insurance 8.0 3.7 Community Services 6.8 9.6 Retail Trade 6.2 14.7 Construction 6.1 7.5 Transport & Storage 5.9 4.6 Wholesale Trade 5.7 4.8 Education 5.3 6.8 Govt Admin & Defence 4.4 4.0 Communications 3.6 2.0 Electricity Gas Water 3.0 0.7 Personal & other Services 2.6 3.6 Accommodation Cafes Restaurants 3.0 5.2 Culture & Recreational Services 2.1 2.5

11.2.4 Growth Outlook

Current forecasts predict some slowing in the rate of growth in services however sector growth rates still remain above that of other sectors (eg. agriculture and manufacturing).

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Source Productivity Commission Australia's Service Sector: A Study in Diversity 2002

11.3 Regional Employment - Service Industries

Service jobs are concentrated in the capital cities - 70% of service jobs in 2000/01 were located in the metropolitan area. Looked at another way, around 85% of the 6 million employed persons in metropolitan regions were in service industries.

However, around 30% of all Australian service sector workers are employed in non-metropolitan locations.

· Service jobs grew slightly faster in non-metropolitan regions — 2.4 per cent a year compared with 2.3% for metropolitan regions between 1984-85 and 2000- 01. (Source Productivity Commission Australia's Service Sector: A Study in Diversity 2002)

· Service workers dominate employment in non-metropolitan regions. They represent 75% of employment in the regions (2.3 million out of 3 million regional jobs in 2000-01).

Growth in services was the major component of regional employment growth across almost all regions over the period 1981 to 1996. Shares of service sector employment increased in all eight metropolitan regions, as well as 100 of Australia’s 105 non-metropolitan regions.

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Source Productivity Commission Australia's Service Sector: A Study in Diversity 2002

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11.4 Services – Victoria

11.4.1 Employment Trends

Victoria's experience with industry growth has been similar to the national pattern with strong growth in services output and employment.

In the last 8 years:

· Service sector growth continued with major jobs growth in business services, education, health, community services, and personal services

· Several sectors contracted - electricity, gas, water; wholesale trade; mining, agriculture

· Manufacturing industry's employment share fell from 17.2% to 15.8% in Victoria Table 89. Employment Trends 1993-2001 - Victoria Strong Growth (3%+) Slow Growth (<1%) Contraction Property and Business Services (7.7) Manufacturing (0.6) Agriculture (-0.5) Cultural and Recreational Services Finance & insurance Mining (-2.2) (6.4) (0.5) Accommodation Cafes, restaurants Education (0.7) Wholesale trade (-2.0) (4.8) Communication Services (4.2) Government Administration (-0.6) Construction (4.0) Electricity Gas & Water (-5.1) Health & Community Services (3.0) Table 90. Change in Employment by Major Industries, Victoria and Australia, 1993-2001 Annual rate (%) (1993-2001) Employment in Victoria Industry 2001 ('000) Victoria Australia Agriculture, Forestry & Fishing 92 -0.5 0.9 Mining 6 -2.2 -1.7 Manufacturing 371 0.6 0.3 Electricity, Gas & Water Supply 16 -5.1 -5.8 Construction 161 4.0 3.0 Wholesale Trade 106 -2.0 -0.8 Retail Trade 327 2.4 2.4 Accommodation, Cafes & Restaurants 104 4.8 3.7 Transport & Storage 103 2.2 1.9 Communications Services 56 4.2 3.8 Finance & Insurance 90 0.5 0.6 Property & Business Services 280 7.7 6.9 Government Administration & Defence 81 -3.0 -0.6 Education 150 0.7 1.6 Health & Community Services 216 3.0 2.9 Cultural & Recreational Services 62 6.4 4.3 Personal & Other Services 78 1.8 2.4 All industries 2 300 2.1 2.1 Source: ABS (2002b) CEET Demand for training: labour force changes, projected job openings for new entrants and workplace developments March 2002 Page 14

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11.4.2 Sector Employment Shares

Analysis for the period 1996 – 2001 shows a similar trend but indicates some recovery in public sector and community services employment over this period. Much of the employment growth is likely to have occurred since 1999. Table 91. Industry Employment Profile - Victoria and Australia, 1996 – 2001 Classification Victoria Australia 1996 2001 1996 2001 Industry ‘000 % ‘000 % ‘000 % ‘000 % Agriculture, forestry & fishing 98 4.7 92.1 4.0 424 5.1 429.4 4.7 Mining 4.3 0.2 3.9 0.2 87.5 1.0 78.3 0.9 Manufacturing 360.2 17.2 364.7 15.8 1103.8 13.2 1119.4 12.3 Electricity, gas & water supply 15.8 0.8 17.6 0.8 73.9 0.9 67.5 0.7 Construction 138.2 6.6 154.5 6.7 596.7 7.2 667.6 7.3 Wholesale trade 133.1 6.4 108.3 4.7 500.8 6.0 431.1 4.7 Retail trade 307.2 14.7 339 14.7 1256.8 15.1 1347.9 14.8 Accom., cafes & restaurants 91.5 4.4 102.5 4.4 377.5 4.5 465.1 5.1 Transport & storage 97.9 4.7 107.5 4.6 395.6 4.7 424.2 4.6 Communication services 52 2.5 57.4 2.5 166.3 2.0 188.5 2.1 Finance & Ins urance 80.4 3.8 92.5 4.0 321.6 3.9 353.9 3.9 Property & business services 208.1 9.9 262.8 11.4 802.3 9.6 1066 11.7 Government admin & defence 71.4 3.4 86.5 3.7 365.9 4.4 372.7 4.1 Education 134.8 6.4 154.2 6.7 596.2 7.2 629.2 6.9 Health & community services 183.6 8.8 222.4 9.6 767.7 9.2 909.9 10.0 Cultural & recreational services 42.7 2.0 57.6 2.5 178 2.1 224.6 2.5 Personal & other services 73 3.5 89.5 3.9 322.5 3.9 358.5 3.9 Total 2092.3 100.0 2313 100.0 8337.1 100.0 9133.8 100.0 Source: Derived from The labour force, Victoria, ABS cat no 6202.2 and the labour force, ABS cat no 6203.0, May 1996, 2001 NCVER Building skills for the future: - Key factors influencing the demand for skills 2002 Page 21 (Table 3)

11.5 Sale – A Service Economy

Sale has developed as the service centre for the broader region of Wellington Shire. This aspect was examined in detail in Chapter 3.

In summary, over 88% of the Sale workforce is employed in the service sector. The corresponding figure for Wellington Shire is 74 %. When we look across a number of the other categories (business services and good related services), it shows that 70% + of the employment is in organisations primarily servicing the local market.

Major employers in the region are the RAAF Base East Sale, Esso, Australasian Correctional Management, Central Gippsland Health Centre and Gippsland Centre Sale. Other major employers are diverse and include Wellington Shire Council, Murray Goulburn Co-operative Ltd, Neville Smith Timber, and Nylex.

The service sector dominates major employers in the region. Of the 3800 jobs in the 19 largest employers 3520 (93%) were in services and 1282 were in other sectors (including 600 in Esso). This compares with an estimated 2500 -3000 people that are employed on farms in the Shire.

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The level and structure of demand for services in the region is driven by: population size; population age structure; income levels; and level of business activity in the region.

11.6 Regional Assessment - Services

From a services perspective:

· Sale was seen has having high quality education and health services.

· Retail and business services were seen as good.

· A stable market and high income were seen as major drivers of growth.

Table 92. Service Advantages – Sale Service Advantages Heath Services Well established health programs High quality services New strategic business plan being prepared Government supporting rural health initiatives Strong financially and well resourced health services Specialist doctors and services available including aviation / oil and gas health and emergency services. Retail Diverse retail National chains in Centre Good recent growth Significant regional market Loyal population - restricts leakages RAAF and Esso - high income market Significant rural market Business Services Significant population Strong local business market Broad base of services Some growth in the market Education Significant Sector Reputation for quality Public and Private options TAFE

From a services industry perspective, the major concerns related to:

· The narrow industry base

· A focus inwards on the local market, rather than a broader outward looking perspective

· Limited business leadership on development issues

· Concerns about impacts of an ageing population

· Some leakage of demand to other areas

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Table 93. Service Constraints – Sale Service Constraints Heath Services Difficulty with government health policies Financial resources available to health services limited Some facilities within the Central Gippsland Health Service (buildings) need replacing The ability to identify and attract practical community assistance to address issues of delivering health services or responding to local health service needs Funding for new initiatives that meet local needs but fall outside government health policy restricts growth Slow changes to health policy that enable local response to future planning Doctor shortages Nurse Shortage Retail Leakages to other areas Competition - Traralgon, Bairnsdale Split retail area Limited growth Business Services Focus on local market Narrow market Sensitivity to change (RAAF/Esso) Education Ageing population Slow down in population growth TAFE Location No university

11.7 The Way Forward

11.7.1 Business Opportunities

Expansion in the services sector requires:

· Population growth

· Growth in other business sectors

· Wider market - becoming a service centre for a broader region

· Expanded tourism activity

Persons interviewed as part of the consultations were asked to identify major future opportunities. The opportunities identified were in a number of categories:

· Tourism – Develop Sale as tourism hub, Port of Sale, Better tourism promotion

· Agribusiness – Dairy, horticulture, food processing

· Industry – Engineering, aviation

· Services – Health, education, call centres

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In the case of services, the focus was on tourism, health services and education. These are identified in the following tables. Table 94. Identified Business Opportunities Services – Sale and Region Opportunities Tourism Develop Sale as tourism hub 10 Port of Sale 11 Better tourism promotion 11 Self Drive Tour market/coastal drive 5 Eco Tourism 4 Develop city attractions(eg wetlands) 4 Hospitality services 4 Promote Roulettes 2 Develop Accommodation 2 Develop regional events 3 Total Tourism 56 Retail Retail Franchises 1 Highway Commercial/retail Activity 1 Total Retail 2 Services Health - specialist centre 4 Education 2 Age Care/services 3 Call Centres 1 Total Services 10

Table 95. Business Opportunities – Sale and Region Service Description Heath Services Regional health role Expansion of services to service ageing population Retail Capture larger share of local market - reduce leakage to other areas Develop specialist retailing Improve retail areas Business Services Broaden markets Expand regional role Develop call centres Education Continue as a regional centre for secondary education TAFE - develop specialist regional role

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11.7.2 Threats A number of major threats to development in the region were identified and these included:

· Contraction of key sectors – Esso, RAAF

· Lack of effective tourism strategy

· Competition from other regions

· Population declines

· Council not being proactive enough

· Absence of business leadership

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Table 96. Service Sector Strategy Elements Sectors Competitive Opportunities Markets Development Programs Funding Sources Advantage Requirements Business Services · High quality · Expand to broader · Broader regional markets · Business development business services regional markets. – Gippsland and program with TAFE surrounding regions. · E-commerce program with · Cooperative program Council and Telstra · Wide range of · Expand regional role Telstra Country-wide - continue services · Develop call centres · Feasibility study with Telstra Country- · Work with Telstra on wide feasibility of call centre Heath Services · Large and high · Regional health role · Broader Regional market · Consultation with Central · Council work with Central Gippsland quality service Gippsland Gippsland Health Service Health Service to secure expansion of services · Expansion of services to service ageing population Retail · Significant and · Capture larger share · Broader Regional market · Development of retail · Council , Traders and Central Gippsland diverse retail of local market - Gippsland strategy with Gippsland Health sector reduce leakage to Centre, business other areas association and Traders · Develop specialist retailing · Improve retail areas Education · Well serviced all · Develop as a · Broader Regional market · Ensuring that levels are · Council in representations to State levels – primary, regional centre - Gippsland maintained Government secondary & secondary education TAFE · TAFE Institute · TAFE - develop · Broader Regional market · Consultation with TAFE · Industry and TAFE with good industry specialist regional Gippsland and local industry links role to support industry development

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11.7.3 Key Issues

There are a number of key issues that will affect the development of services in the Sale Region. These are:

Population

· Population size

· Population demographics - age structure

Industry Demand

· Trends in key industry sectors - oil and gas, agribusiness and their impact on demand for services

· Trends in the activities at the RAAF Base

· Development of new industries - eg. horticulture and its demand for specialist services

· Development of tourism activity

· Broaden the regional markets for - Education, Health services, Business services

· Develop new activities - including call centres and culture and entertainment

Strategy

· There is a need to develop a long term strategy for services that has commitment from the industry

· Involve industry leaders in the development of the strategy

· Set milestones and targets for achievement

Industry Development

There is a need for:

· Business advice services

· Training development

· Develop cooperative marketing initiatives

Government Support

Council needs to:

· Ensure that the Shire obtains maximum available support from government programs – State and Federal

· Provide leadership for the development of the sector Table 96 summarises the key elements of the strategy for the services sector.

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11.7.4 The Next Steps

The following are the steps that are required to develop these initiatives.

The priority steps for action are:

· Establish Service Industry Taskforce

· Develop strategy focused on new business opportunities

Activity Actions Involves Council Formation of Service Industry · Contact firms and other organisations · Council and Firms Taskforce (health, retail, education, business services) · Secure business support for the Taskforce · Support for establishment through Council Economic Development Unit Government Support · Ensure that Shire obtains maximum Council to seek funding from: available support from government · State Government - IIRD programs – State and Federal. · Commonwealth - Sustainable Regions · For example seek funding for Program; AusIndustry programs, strategy development, industry development and feasibility studies. Development of Services Strategy · Council to work with firms on · Council, Firms, TAFE and other development of strategy - covering taskforce members (health, retail, education, business services) · Strategy – a 5 year program to expand services sector Industry Formation of Service Taskforce · Industry involvement in Taskforce · Firms and other local experts · Selection of taskforce members Development of Services Strategy · Participation in strategy development · Develop by Taskforce with support from process economic development unit Business Development Programs · Develop business improvement · Council, Firms, TAFE and other programs with TAFE taskforce members Identify business development needs · Identify need – eg. marketing advice, · Business Consultant and Firms skills development, technical advice · Council to assist with applications for support Business Opportunities · Scope and identify new business · Business Consultant, Firms opportunities – markets and projects · Implement program to pursue opportunities via firms working with the consultant E-Commerce Initiative · Develop business opportunities for · Council and Telstra Country Wide SMEs through e-commerce · Continue the program Call Centres Program · Feasibility study on call centre · Council and Telstra Country Wide Health Sector Development · Consultations Health Service and · Council and Health Services Council Education Sector Development · Consultations Schools, TAFE and · Schools, TAFE and Council Council Business Capability Directory · Develop business capability directory · Business Consultant, Firms, Council for services sector · Could be developed as part of a broader business directory

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12 Directions for Economic Development

12.1 Overview

This report has identified the current vulnerability of the Sale regional economy and the need to develop strategies to strengthen the economy by widening its market base.

Realising the sort of change and development that is required cannot be achieved by Council alone. It can only be achieved if the business community is actively engaged in the development process in a meaningful and sustained way.

This engagement will require new advisory arrangements for Council combined with the formation of strategy and action focused task forces.

While the focus is on expanding on the current industry base and areas of competitive advantage, there is also a need to have an effective investment attraction program in place.

This chapter outlines some of the broader initiatives that need to be undertaken, to develop a stronger future for Sale and the broader region of Wellington Shire.

12.2 Investment Attraction

Council through its economic development unit is involved in investment attraction, investment facilitation and business development activities.

There is a need to develop a targeted approach to promoting the region. This includes targeting companies and positioning the region with investment facilitation agencies (Invest Australia; Business Victoria).

This process needs to be supported by a set of marketing tools – credentials and website.

There is a need to develop a flexible set of credentials materials that can be used to promote business and investment opportunities in Wellington Shire.

The regional prospectus would be useful in promoting the region to businesses that may be looking for a new location and also for underpinning the presentations on major development projects (eg. Port of Sale) that need to attract external investors.

12.3 Business Directory

The work undertaken for this project highlighted the limited information that is held on businesses in the region.

Wellington Council has recently developed an online community services directory.

There is a need to develop a business directory. This would be undertaken through an industry survey to collect the required information on businesses including contact details, product information, employment information and market information.

The information would be included in an industry database, with an annual update conducted to ensure accuracy of the information.

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12.4 Industry Infrastructure

12.4.1 Industrial Estates

Industrial estates are important for both current industry and for future industry expansion.

The Sale region has several industrial areas that are scattered in different locations around the city.

Industrial estates are located at:

· Wurruk

· Airport Road

· Dyer Industrial Estate (Longford Road)

· An area adjacent to the railway station

· A small pocket of industrial land also exists in the vicinity of the saleyards

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Table 97. Land areas zoned industrial (IN1Z) by location Town Zoning status Location Shown on Approx. Dimensions Estimated Comments P.S.Map Length (m) Breadth Area (ha) Heyfield IN1Z Heyfield-Jamieson Rd 10 80 70 0.6 Irregular IN1Z Tyson/Mary St corner 10 100 80 0.8 Irregular, milk bar IN1Z Davis Street 10 230 50 1.2 Shopping centre IN1Z Macfarlane Street 10 270 100 2.7 Tyre Sales IN1Z Traralgon-Maffra Road 10 120 80 1.0 Irregular, plaster works and Sales Subtotal 6.2 Maffra IN1Z Station Street 21 800 400 32.0 Murray Goulburn vicinity IN1Z Station Street 21 530 150 8.0 Murray Goulburn vicinity IN1Z Stratford-Maffra Road 21 570 400 22.8 Not well serviced or used Subtotal 62.8 Rosedale IN1Z Railway Station 36 800 300 24.0 Rosedale Leather Vicinity IN1Z Mill Lane 36 540 500 27.0 Logger, otherwise unused Subtotal 51.0 Sale IN1Z Princes Highway 40 800 200 16.0 Light industrial IN1Z Union Street 40 400 130 5.2 Saleyards vicinity IN1Z Dawson Street 40 600 400 24.0 Nylex Vicinity IN1Z Aerodrome Road (N) 44 520 500 26.0 IN1Z Aerodrome Road (S) 44 800 260 20.8

Subtotal 92.0 Stratford IN1Z Princes Highway East 22 800 100 8.0 Source: Nelson, English, Loxton & Andrews Infrastructure Study for Wellington Shire 1998

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There appears to be some current constraints in terms of industrial land:

· The industrial land sites are scattered within the Sale area.

· There does not appear to be sufficient land for any significant growth of industry.

· Industrial land is often adjacent to residential development.

· Consideration has not been given to a broad range of industrial activities and the availability of a range of small to large industrial allotments.

· The Wurruk Industrial Estate cannot expand further to the west due to a large development which has occurred at the western end of the industrial estate effectively truncating the road extension.

· The flood plains to the south of the Sale city affect development in this area.

12.4.2 Commercial Activity

Highway commercial activity is generally limited to the Princes Highway area within the Sale city limits.

The standard of commercial activity is generally not of a high quality and is not comparable to the high standard of commercial activity which exists on the Princes Highway in Traralgon. There is scope to try and influence the future pattern of development in the highway corridor.

There is scope to develop retail and commercial along the Princes Highway corridor. This would include expansion of some of the current activities:

· Car sales

· Convenience stores/petrol retailing

· Motels

· Equipment services hire

· Restaurants

· Hotels and bars

Other activities that would be suitable for highway location include: · Hardware stores · Commercial activities such as charter bus or car hire · Wholesaling operations · Agricultural services and equipment sales · Electrical equipment or gas equipment depots · Storage services · Food outlets · Floor coverings sales · Building services · Household appliances wholesaling and retailing · Industrial chemicals sales · Small scale printing and publishing activities · Boating and outboard motors sales and service

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Future planning decisions also need to take account of the type of industry that could be attracted to Sale and the future needs of businesses that are expanding in the region.

12.4.3 Council Support

Industrial infrastructure is important for both the expansion of current business activities and the attraction of new activities to the region.

In recent years, Wellington Shire has provided support for investment in the region. The following three examples represent a total investment value approaching $100 million for a Shire expenditure of less than $1 million. The Fulham correctional centre has created around 250 local jobs.

· Fulham Correctional Centre (private sector) – nature of assistance – provision of 66ha site, water and waste water infrastructure, office accommodation and upgrade of Hopkins Road · Sunwood Timber Pty Ltd – nature of assistance - provision of site, provision of site services and loan facility · Millicer Aircraft Industries – Nature of assistance – business planning and developmental package

12.4.4 Support Infrastructure

The support infrastructure required by businesses includes:

· Transport services, including road and rail infrastructure and transport services - highway from Traralgon to Sale is yet to be made a dual highway · Telecommunication services, including hard wired, mobile telephone services and broad band · Reticulated utility services, including electricity, natural gas, water supply and sewerage

Table 98 summarises the availability of services in the major towns in Wellington Shire. Table 98. Utility Services available by Location Transport Services Communications Utility Services Town Road Rail Bus Inter- Local call Digital 3 Natural Water Latrobe town Internet Mobile Phase Gas Supply Outfall Local power Sewerage Heyfield Main No Sparse Yes Yes Fringe Yes No Glenmaggie No Maffra Main No Sparse Yes Yes No Yes Yes Glenmaggie No Rosedale Hwy Yes Sparse Yes Yes Fringe Yes Yes Thomson Yes Sale Hwy Yes Sparse Yes Yes Yes Yes Yes Aquifer Yes Stratford Hwy Yes Sparse Yes Yes Yes Yes No Glenmaggie No Yarram Main No Sparse No No No Yes No Aquifer No Source: Nelson, English, Loxton & Andrews Infrastructure Study for Wellington Shire 1998

12.4.5 Future Infrastructure Development

The provision of infrastructure will:

· Enhance the potential for development of existing industries

· Redress current gaps in infrastructure provision

· Provide a contingency for the attraction of a large industry

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The development of industrial land is not a simple determination of whether there is a firm that intends to develop on a particular site. · It is generally accepted that regional Councils need at times to invest in industrial land and have sites available prior to there being any specific demand for a particular site.

· Some industrial sites can be planned based on potential future uses, as part of the long term development plan for the region. This includes provision for the relocation of existing firms or the attraction of new businesses to the region. · Future provision can also be based on a longer-term strategy for the future structure and layout of the City.

12.5 Business Links

12.5.1 A New Approach

It will be important to develop strong partnerships between business and Council if the major structural and development issues affecting Sale are to be addressed. This requires some new arrangements for industry engagement and involvement.

Businesses that we interviewed were prepared to play a role providing there were mechanisms for meaningful involvement and activity.

It will be important that Council is seen as a lead partner in economic development and not simply as a regulator or a deliverer of community services. The new arrangements that are required are:

· Establishment of an Economic Development Committee to advise Council

· Use of Taskforces to drive specific sectoral strategies and programs as outlined in this report

· Creation of industry cluster groups to engage business on sectoral development issues

12.5.2 Economic Development Committee

There are major benefits from creating an Economic Development Committee that involves business and Council.

An Economic Development Committee of Council would provide a focus for the development and implementation of strategy and programs, while providing a vehicle for industry engagement that does not exist at present.

This will be important if the new opportunities are to be developed for the region. The Committee would:

· Set the directions for the Shire’s economic development strategy

· Provide industry input on key strategic issues

· Be involved with Taskforces and development projects

· Be involved with representations to government on industry and community issues

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The committee would comprise:

· Council – 2 Councillors, CEO , Manager Economic Development

· Industry and Community Representatives - 10 representing Agribusiness (2), Manufacturing (2) , Business Services (2), Retail (2) , Education (1), Community Services (1)

· Support – provided by Council Economic Development Unit

12.5.3 Industry Clusters

There is a need to develop industry cluster groups as a vehicle for business development in the region. The initial groups would cover:

· Aerospace · Metals and Engineering

· Tourism

· Business Services

· Rural Industries

These cluster groups would:

· Each meet 3 times per year - each meeting would have a theme and a guest presenter (eg. Government agency, TAFE, business expert)

· Be a two way communication channel between business and Council

· Provide for direct communication with business on the sectoral development strategies.

· Be a conduit for business development programs

· Be supported by the Council's Economic Development Unit

· Industry Taskforce Members would be active members of these clusters

12.5.4 Industry Taskforces

There is a need to convene a series of special taskforces to develop strategy and initial programs as part of the sectoral business opportunity strategies outlined in this report. The taskforces in order of priority for establishment are:

1. Metals and Engineering

2. Rural Industries with Sub Groups in Dairy and Horticulture

3. Aerospace

4. Tourism

5. Services

The taskforces would have a minimum initial life of one year. Following this, activities would be transferred to the Industry Cluster Groups, unless the taskforce decided that it needed to continue its work.

Taskforces could also be convened to deal with specific issues. For example an informal group comprising business representatives has been active on issues related to the expansion of the RAAF Base at East Sale.

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12.6 Business Development Programs

There are a range of business development programs in marketing, export, business planning that are delivered by a range of agencies including government agencies, TAFE, Universities and Industry Associations.

The Economic Development Unit has a continuing role in identifying needs in the Region and facilitating industry access to these programs. This is an important part of strengthening local industry and encouraging growth.

This is particularly the case because the major industry associations are not active in Sale and the broader Wellington Shire area.

12.7 Securing Support

An important part of the role of Council is to ensure the region, industry clusters and individual firms have access to the range of support programs.

In the case of the Commonwealth Government:

· Regional development funding is available through the Sustainable Regions Program (funding of $12 million is being provided over 3 years (2003–2005) for a range of projects in Gippsland)

· AusIndustry - delivers a range of innovation and business improvement programs

· Austrade - delivers a range of export programs

· Invest Australia - is involved in international investment attraction programs · AFFA has a range of development and export programs for innovative agriculture , horticulture and the food industry

A similar spectrum of program support is provided through the Victorian Government via a range of Departments including Innovation, Industry and Regional Development; Agriculture; and Infrastructure.

A major part of Council's role is to make Sale and Wellington visible to these agencies and to facilitate local business access to relevant programs.

Other organisations including industry associations (VECCI, AiGroup) are involved in the delivery of industry development programs. The Council needs to engage with these groups to identify any opportunities to partner on program delivery to business in the region.

The Industrial Supplies Network (ISONet) is involved in working with companies to ensure local firms are able to supply to major projects in engineering and construction. The ISO is a potential partner for the Metals and Engineering and Aerospace programs outlined in this report.

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Appendix A Gippsland Region Engineering Organisations

Location Company Latrobe Valley Morwell ACES Bahcon Steel Central Gippsland Institute of TAFE Custom General Engineering Dan Cosic Dunrite Machining Electro Hydraulic Services Electro Hydraulic Systems F & T Fitting & Machining Furmonite Australia Geo-Engineering International Gippsland Bearings Supplies Gippsland Engineering Services Masterarc Industries Nilsen Electric Victoria Optec Primaweld Engineering Kingston Engineering Services Latrobe Valley Engineering Services Leighton Engineering Romlik Pty Ltd Siemens Westinghouse Technical Silcar Maintenance Stable Engineering Trustweld Engineering WBM Moe/ Newborough ATP Management Design Coalville Engineering Cybercorp Original Engineering Instumet Jamieson Engineering Lateral Technology Safetech V & K Engineering Yallourn Hydro Australia Skilled Engineering Traralgon Blackwood Engineering Chris O’Brien Consulting Engineers Coleman Welding Dardal E.D.R/ DRAFTCON Fisher Stewart Pty Ltd Fluor Daniel Gippsland Aeronautics Gippsland Bearings Supplies Gippsland Petroleum Group Gippsland Water

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Gippsland Watertech Services Industrial Supplies Office Lucon Lurgi Construction Mayfield Constructors NJ & NF Bransgrove Overport Nominees Pacific Power International PK Controls Rivera Civil Consultants JS Sheetmetal Pty Ltd Kluge Jackson Consultants Russell Wallace & Associates Shaw Aiton Australia Shayne Oates Shepherd Round Consultants Skilled Engineering Traralgon Engineering WA Moore & Associates Churchill Alten Electrics Churchill Maintenance & Fabrication EEA Group GREEN Inc. Monash Engineering – Engineering School Mirboo North Kiel Industries Mirboo North Precision Engineering Sale/ Bairnsdale Sale Fluor Australia G & S Machining Gippsland Bearings Supplies Osmac Qualitech Engineering Quetada Kluge Jackson Consultants Rod’s Hoses & Machining Rudy’s Aeronautics Union Hydraulics Yunger Aviation Longford Gippsland Soil Test Maffra Maffra Sheetmetal Barry Beach Barry Beach Engineering Bairnsdale Crosco Deva Engineering Fisher Stewart G.A Hutchinson & Associates Kennedy Aluminium Multi Maintenance ID & A Simon Anderson Consultants Simth’s Versatile Engineering Tibar Services

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Stratford Briagolong Engineering Fernbank Engineering Paynesville Paynesville Engineering West/ South Gippsland Warragul Choice Engineering Efficient Engineering Excel Engineering F.I.M.S. Engineering FM’s Pump Services & Machining Gippsland Precision Engineering Metal Form Industries Modra Miles Civil Design JA Engineering Kriesl & Co Shady Creek Engineering (Nilma) Warragul Mobile Welding Drouin CTC Quality Maintenance Drouin Machines and Maintenance GI Surman & Associates Ray Fielden Welding Korumburra Cade Systems GBE Australia Kerr Engineering Leongatha DMV Engineering Haywood Engineering Jumbunna Engineering Leongatha Sheet Fabricators Love & Associates Bunyip Bunyip Engineering Berwick Caduceus Consultancy Koo Wee Rup Cade Systems Inverloch Gippsland Sheetmetal Industries Nolen Engineering South Gippsland Machining Garfield Garfield Engineering Pakenham Littlejohn Heavy Engineering Poowong DR & CJ Adams GJ & LJ Connell Engineering Trafalgar De Haas Engineering Greg Dyer Consulting Engineer Wonthaggi Cableview

137 DRAFT 1 MARCH 25 2003

CM & VM Dann D & M Carr Yarram JW & BE Brennan Foster KJ Fleet & Associates

Source: Clusters Asia Pacific Consortium, Achieving Lift-Off Gippsland Engineering and Aerospace Industries 2001.

138