Random Analytics: Manufacturing Workforce Planning Scan (FY 2012-2013)

by Shane Granger

The Manufacturing Workforce Planning Scan is a quasi-quantitative report card built from relevant online industry magazines and media sources. Utilising 15 category metrics the scan collates relevant stories over a period of time (in this case a Financial Year) to give a picture of how the industry is positioned from a workforce planning perspective.

The Slow Atrophy

Before we look at the last 12-months of Workforce Planning data I thought it might be useful to look at the previous two decades of manufacturing employment and three possible future scenarios over the coming decade.

1 - Manufacturing_1994~2023

In 1976 Australia had approximately 1.7-million manufacturing workers, by 1994 this had reduced to 1.12-million and in February of 2013 this had reduced further to just 954,200. In the graph above the 1994-2013 data is represented by a black line (corresponding with ABS yearly averaging through to 2012 then SkillsInfo data as at Feb 2013. The SkillsInfo data parallels with the very early election timeframe as put forward by Julia Gillard, the previous Prime Minister).

Scenario One: The blue line shows an increase in manufacturing employment of 95,420 over a period of 10-years is a highly optimistic variant and goes against a four decade trend. Some of the reasons why this scenario is unlikely include continued off-shoring of Australian manufacturing, increased productivity without increased employment through Automation/Augmentation take-up and a continued slow decline in family business manufacturing.

Scenario Two: The green line shows a continued decrease of manufacturing employment by 8,375 per annum which is the 20-year average of atrophy in the manufacturing sector.

Scenario Three: The maroon line shows a hastened decrease of manufacturing employment by 35,420 per annum to just 600,000 in line with recent comments by Bernard Salt who stated:

“If you go back to 1976, that figure was around about 1.7 million so over a quarter of a century we have gone from 1.7 to under a million and in 10, 15 or even 20 years’ time, we’ll still be making stuff but we might not need 980,000 workers,” Salt says.

“We might only have 600,000 workers and we might be making bricks and beer, stuff that’s too hard to bring in from overseas at an effective rate, or it might be high tech products that only the Australian market can make.

“But in either case, the continued diminution of the manufacturing I would see – not elimination but continued erosion.”

In all fairness to Bernard he didn’t put a timeline on the reduction to 600,000 but it would be my guess that by 2023 the number of Australian’s employed in manufacturing will be somewhere between the green and red lines with a weighting toward the red line.

Here are the manufacturing analytics from financial year 2012 – 2013.

Workforce Planning Categories

2 - Manufacturing_Categories_2012~2013

The following chart is 12-month look at 15 manufacturing related workforce planning categories and the amount of times it features as a story.

Employment was the leading category for eleven months of FY 2012-2013 with 203-stories and a monthly average of 33.6%, slightly more than 1/3rd of all stories with relevance to workforce planning. With the constant atrophy of employment in the sector the weighting should have been greater (and more negative) but I believe there is an element of job-loss fatigue in terms of a sector theme.

IR (Industrial Relations) was the only other category to be a leading indicator, with 14-stories (31.1%) in August 2012. This corresponded with commentary on the Fair Work Australia and manufacturing reviews and strikes at BlueScope Steel, Volgren, Forgacs and ongoing tension with the Grocon development in Melbourne.

WH&S (Work Health & Safety) was another leading indicator, finishing as the second leading indicator six-times and in the top-3 on eight occasions. With all the emphasis on safety within Australia it’s often forgotten how dangerous a lot of manual, repetitive manufacturing work is. During the FY 2012-2013 period there were 1,302 deaths and 954 injuries reported including seven deaths in Australia. The most notable (and horrific) was the collapse of the Bangladeshi factory which killed at least 1,129.

Positive/Negative Index

3 - Manufacturing_PosNegIndex_2012~2013

The next chart is a 12-month look at 15 manufacturing related workforce planning categories and their positive or negative weighting.

Employment was the most negative sentiment for FY 2012-2013. Officially the decrease in manufacturing employment was just negative 0.3% for the period Feb 2012 – Feb 2013 and negative 1.6% over the past two years. The sentiment of stories that I’ve reviewed and the recorded job losses against job gains both paint a slightly darker picture.

On a more positive note L&D/R&D, which measures both Learning & Development and Research & Development indicators was the most consistently positive with 59-stories and a monthly content average of 10% it had the highest sentiment on seven occasions. One of the positive themes behind Australian manufacturing is that although it is under immense pressure there is a lot of good news in terms of adjusting the workforce for its new challenges and in developing new solutions for modern manufacturing. It probably should also be noted that I state ‘good news’ in terms of L&D/R&D outcomes rather than ‘effective news’, a much more difficult proposition.

Engagement, which looks at everything from engagement at the worksite through to industry engagement to promote employment had the highest sentiment reading for FY 2012/2013 with a +9 recorded in May 2013. This corresponded with the National Manufacturers Week and the Endeavour Awards and is a good indicator that these two events raise awareness of manufacturing.

Manufacturing Employment Gains & Losses

4 - Manufacturing_Employment_2012~2013_130830

The following table looks at the reported employment gains and losses. Reported job losses are actuals as reported by manufacturing industry sources but often do not reflect the total loss of employment as some companies choose to limit the amount of information in relation to redundancies. Employment gains are forecast only. . Often employment gains are overstated as they link to public relations exercises.

For every forecast job announced in manufacturing for the period July 2012 through to June 2013 there were approximately 9-times the amount reported lost.

A bellwether story for manufacturing over the past year is the Gladstone’s Boulder Steel project. Announced with great fanfare in November 2012 forecasting 3,800 jobs (2,000 construction plus 1,800 operational FTE’s) it was quietly shelved when the company went into administration just eight months later.

Final Thoughts

The overall theme behind FY 2012-2013 has been one of continued slow atrophy.

The biggest development of the year, that of Boulder Steel was announced and shelved within a couple of quarters even as the Australian dollar came down of a very long high. This was a big story and a ‘nothing ventured, nothing gained’ outcome.

Outside of Boral which cut more than 1,000 during the FY and Ford which will close down in 2016 with the loss of 1,200 FTE positions most companies reported losses in the scores and hundreds. All of this added up to a number greater than 11,600 and that’s just the reported count, not all the SME’s who are quietly cutting in the background out of the public eye.

I’ve talked and written often on peak employment but when it comes to manufacturing in Australia that is a moot argument (especially given the peak period of Australian manufacturing was four decades past us).

As Q1 FY 2013-2014 starts off with an election and an ideological battle between political parties over the fate of automotive manufacturing in Australia the real question will be where will be floor level of manufacturing employment be in Australia?


Acknowledgements: Although not the only sources utilised the Manufacturing Workforce Planning Scan’s primary data sources include Manufacturing Monthly and Business Spectator. If you are interested in other sector analysis my recent Mining Workforce Planning Scan can be found at Random Analytics: Mining Workforce Planning Scan (July 2013).