BCITO research proves that training apprentices generates profit by conducting an in-depth research project that showed that for every $1 spent on training a carpenter, a business will benefit by $4.70 in increased profit up to a 10-year period.
This was the first time the exercise has ever been undertaken in New Zealand.
The research showed that there’s a misconception held by some that training an apprentice costs a business money, with little or no return. It proved that, in the long run, that’s wrong.
Investing in industry training is not just a cost to be minimised — it’s an investment that can grow your business.
Obviously the return on investment doesn’t kick in immediately. The break-even point is three to four years — about the same time as completion of an apprenticeship — which is when the cost of training is offset by the extra profit generated by training.
This extra profit keeps increasing the longer the trained person remains with the firm. So, yes, staff retention is a factor in this equation — the longer an employer keeps trained staff, the more profitable they become.
With the construction industry still remaining woefully short on skilled tradespeople, the BCITO needs more businesses to come on board and train young people.
“With this research completed, we can clearly prove that training an apprentice is a positive investment for employers,” BCITO group manager, stakeholder engagement, Greg Durkin says.
As part of the project, carpentry business owners were asked about their firms’ structure, in terms of the number of people working there and what roles they were in.
From this information a model of an average firm in the industry was developed.
While the payback period for trained and untrained workers appears similar, the positive return from training is sustained well into the future, increasing the cumulative benefit each year.
Other findings of the project showed that when compared with a business that doesn’t invest in industry training, a carpentry firm that trains all staff will:
• grow 6% faster,
• charge $0.44 more per hour per person,
• estimate work 3% more accurately, and
• do 2% fewer hours to complete the same task or project.
The methodology used in the project works back from a measure of economic return, such as cumulative firm profits over time.
The drivers of profitability were broken down to identify individual attributes of a firm’s performance, and to evaluate the relative importance of these.
The impact of a team’s trade and management proficiencies on these attributes was then considered. Finally, the contribution of training to an individual’s proficiency was weighted relative to the contribution from experience.
Most business owners involved in the research project agreed that, on average, trained workers become fully proficient between six to 10 years after starting work in the industry.
On average, untrained workers take a much longer time to be fully proficient, and will only ever be 60% to 70% proficient, whereas trained workers become “fully billable” in a much shorter period of time.
In terms of the cost of training an apprentice, the research has taken into account BCITO fees, the Government’s subsidy for industry training, apprentice salary, and the cost of supervising and training an apprentice.