The two sectors of the Australian economy that will shape the nation in 2013 are mining and manufacturing. Although mining has come under intense pressure in the latter half of 2012 it still has an enormous foreign direct investment (FDI) pipeline and is the envy of the world, especially the US and the European countries that have been battered by the Global Financial Crisis (or the North Atlantic Financial Crisis as I prefer to call it). On the other side of the coin is manufacturing which according to the ABS employed 935,897 people (correct as at end June 2011), although that number has been in decline for some years and it would be lower today and if you believe the data I’m about to present. The US Bureau of Labour Statistics (BLS) recently reported we have the worst manufacturing productivity amongst the most developed nations.
Australia has significant challenges ahead of it this year and these two sectors, so crucial to the economy but at opposite ends of the spectrum are worth close attention and scrutiny.
Since September 2012 I have been publishing Workforce Planning scans of the Mining industry which has assisted me in thinking ‘Big Picture’ about that sector, with all of its opportunities and liabilities. Over the Christmas break I have been busy looking at Manufacturing Monthly stories between July and December 2012 to get a sense about that sector and its Workforce Planning issues. Given more time I would like to add a second source of qualitative data to create more robust quantitative information but time doesn’t permit at this stage.
Building on my 2012 Mining scans I’ve created two new graphs and added a positive/negative column in the raw data. The first additional graph is a simple Positive/Negative index to show the relevant subject by its ratio of good and bad news stories. The second is a table which outlines job losses and job gains. Unlike most work in this area I’ve detailed the jobs gained by the year they are expected to occur. For manufacturing I’ve added two sector specific categories, that of ImportSub (Import Substitution) to capture employment gained or lost through CAPEX, factors of production and dumping then included AusMade where the Australian brand helps or hinders Workforce Planning issues.
So, here is the first Australian Manufacturing Workforce Planning Scan looking at the period July to December 2012.
Figure 1: Australian Manufacturing Workforce Planning Scan 2012 (Jul-Dec). Data sourced from Manufacturing Monthly Newsletter & News Archive. Some stories have been verified against primary resources.
Like Mining the weight of stories was predominately employment (and most of it negative but more on that later). Unlike Mining there was one month where Industrial Relations dominated the discussion, although you get a sense looking at the stories that the union movement is limited in their capacity to take more direct action, thus they make up the numbers by increased debate.
The other really interesting data that came out of this research is the lack of softer HR stories which permeate through the last half of 2012. In fact there were NO STORIES on Work-Life Fit (aka Work Life Balance) and Skills Shortages and only one story on Diversity! You just know a sector is in trouble when there is little or no talk around the ‘touchy-feely’ HR subjects.
Figure 2: Australian Manufacturing Workforce Planning Positive/Negative Index 2012 (Jul-Dec). Data sourced from Manufacturing Monthly Newsletter & News Archive. Some stories have been verified against primary resources.
For every month the weight of negative employment stories was depressingly high. July was the only month where it seemed that factories closing down or going into administration might not feature but the loss of 440-jobs at Ford after the Australian government gave the company $103M AUD in an attempt to keep people employed.
On a more positive note Learning & Development/Research & Development stories averaged 10.3% for the six months and were generally positive or at worst (October) at least neutral. Although the sector might be in decline both the Australian and Victorian governments (where a lot of Australia’s manufacturing base is located) are not about to give up on it. Of the two negative L&D/R&D stories one was linked to MYEFO budget cuts to funding and the other, ominously was RMIT pulling out of its manufacturing program, when it seems all universities want to add mining related courses (traditionally a very low employer).
Here is a look at the data breakdowns.
Table 1: Data for Australian Manufacturing Workforce Planning Scan 2012 (Jul-Dec). Data sourced from Australian Mining Newsletter & News Archive. Some stories have been verified against primary resources.
As noted previously the lack of softer HR data stories was very interesting and something to keep following through 2013. Also of interest was the decrease in overall Workforce Planning stories as compared to mining which averaged 55.3% for 2012.
Last graph, looking at the employment losses and gains through to 2016 and beyond (although this will be more relevant to analysis of the Mining sector).
Table 2: Employment losses and gains 2012 (Jul – Dec). Data sourced from Australian Mining Newsletter & News Archive. Some stories have been verified against primary resources.
Although on the face of it the jobs lost to those gained is 2.2:1 if you take out the projected gain of 1800 jobs in Gladstone Boulder Steel from 2014 the ratio increases to 7.1:1. Even worse, if you consider the jobs lost in the last half of 2012 to the jobs gained the ratio is an appalling 64.6:1! Obviously the data used here is not comprehensive but it does act as a good guide to how the industry is faring.
I’ll leave on a depressing note. As I finalise this piece Stephen Koukoulas, an Australian economist and former advisor to Prime Minister Julia Gillard just tweeted:
“I have changed my view on AUD. 1.20 or even 1.25 possible based on improving global news. Likely to be my Business Spectator column tomorrow”
He is not the first to mention an increased Australian dollar but he is now at least 5-cents higher than others discussing the subject. If manufacturing was suffering with the AUD at $1.05 then an even stronger dollar will mean very interesting times ahead.
Update 1 (10/01/2013): Stephen Koukoulas full 8th January 2013 Business Spectator article on the rise and rise of the Australian dollar (linked with his kind permission).