Random Analytica

Charts, Infographics & Analysis without the spin

Tag: Employment

Random Analytics: Abbott’s Promise. 1-million jobs in 5-years (to Jan 2014)

“The next Coalition Government will create one million jobs in five years and two million jobs in 10 years,” he said. “This pledge is achievable given our record and policies.” Tony Abbott (27 Nov 2012)

First of all, Labor side should be commended for its employment story during its term in office (2007-2013) where 955,200 jobs were created. Saying that one of my key criticisms of the then Employment Minister, Bill Shorten was that the spotlight was always on total job creation rather than looking at full-time and part-time job breakdowns. During the Labor years 450,400 part-time jobs were created against 504,800 full-time ones.

Currently, there is a lot of discussion in Australia around employment and unemployment at the moment. In the past month many companies have announced large job cuts either in the immediate or near future. Recent examples with direct jobs lost include Holden (2,900), Toyota (2,500), Forge (1,400), Rio Tinto (1,100), Qantas (1,000), Electrolux (544) and just today Alcoa (980). The seasonally adjusted unemployment rate hit 6% for the first time since July 2003 (when it peaked at 6.1%).

The RBA is has for some months forecast that the unemployment rate would hit 6.25% during 2014, then steadily improve from 2015. That view remained unchanged in its most recent Economic Outlook.

Thus it would be unfair to immediately thrust blame on to Tony Abbott and the recently elected Coalition government as many in the opposition camp are doing.

To that end I thought I might shine a light on the Abbott promise. 1-million jobs in five years. Here is a look at the data for the first four months to January 2014.

1-AUSEmployGainsLossestoJan2014_140218

First chart is a look at employment gains and losses since the Coalition took power in September 2013. Two points:

  • The total jobs are slightly negative, that is 9,949 jobs lost; and
  • The sample size is way too small to start analysing and unemployment figures from the ABS are generally considered a lagging indicator.

2-JobCreationtoJan2014_140218

Second and last chart looks at job creation in three parts. Total job creation (green), full-time employment (blue) and part-time employment (maroon).

In effect there have been 56-thousand full-time jobs lost against 46-thousand part-time jobs gained for a gross loss of 9,949 jobs.

Final Thoughts

Bill Shorten’s recent commentary around 54,000 job losses (or one job every three minutes) might make a good sound grab but actually only reflects full-time employment losses over a very short timeframe.

I think it’s disingenuous of him as the former Minister to use total employment figures then but now only concentrate on one set of numbers.

That aside I wonder if the RBA has underestimated the unemployment nadir at 6.25% which will make it much harder for Tony Abbott to hit his 1-million jobs in five years promise.

Only time will tell. I’ll keep you updated.

Random Analytics: PeakJobs – Australian Full-time vs. Part-time Employment (to Oct 2013)

Alan Kohler wrote and excellent piece for the Australian Broadcasting Corporation titled: What jobs will be left once the machines take over? He finalises with:

In Kerry O’Brien’s riveting interview with Paul Keating, the former treasurer and prime minister said the people who lost their jobs in the “recession we had to have” (1991) ended up getting better ones. That’s what the optimists say about automation: that the machines are just replacing unpleasant machine-like jobs with better ones. Except that this is not a recession – employment is going backwards while the economy is booming. Maybe jobs growth will catch up with capital expenditure and GDP later, but it’s hard to imagine the definition of full employment getting back to what it was before the rise of the machines.

I posted some thoughts and charts on this very subject back in February (see Random Analytics: Peak Employment (Part I): Australia) but I thought it might be worthwhile having another look at the updated data and republishing the full-time/part-time charts. I’ve also included a new chart looking at how full-time employment and part-time employment has progressed since the Global Financial Crisis (aka Global Recession).

1 - 131204_FTvsPTEmployment_1978-2013

The first phase of peak employment was not due to ‘the rise of the machines’ but to the rise of China. Machine like jobs, such as manufacturing were not immediately automated but rather offshored to less developed parts of the world. Since 1978 as Australia’s economy has moved from labour intensive industries to one dominated by service and digital employments there has been a 59.4% increase in full-time employment and a massive 285.4% increase in part-time work. As the above chart shows part-time employment has been steadily increasing, even through the last Australian recession of 1991-1992. At the same time full-time employment has atrophied during recessionary periods (1983, flat-lined 1987, 1991-1992, 2008 and currently flat-lined since 2011).

2 - 131204_FTvsPTEmploymentIncreases_1978-2013

To emphasise the rise of part-time employment the next chart looks at new job creation since 1978. As you can see, when times are good the full-time employment numbers spread increases above part-time employment. During two of the last three recessions (1983, 1991-92) the full-time employment numbers have collapsed back under  the part-time line. Between 1995 – 2005 both employment types grew at an even pace but as the last big boom kicked on past 2004 the spread increased substantially. The start of the GFC saw full-time employment decrease substantially but dual local and Chinese stimulus packages allowed Australia to avoid recession.

3 - 131204_FTvsPTEmploymentIncreases_GFC

This is the new inclusion and my favourite chart. Since the collapse of Lehman Brothers the Australian economy has created two part-time jobs for every new full-time job created. At the bottom of the crisis Australia shed 189,300 jobs at the same time creating 198,800 part-time employees.

To summarise.

As was recently discussed in a Business Spectator piece the Australian automotive industry is in crisis, with 150,000 automotive manufacturing jobs on the line. According to Bernard Salt, the entire Manufacturing Sector could further decline by 300,000 over the next decade.

Robert Gottliebsen believes the tapering of mining sector investment will cost another 150,000 jobs, penalty rates and a move to online trading will see another 150,000 jobs go from retail. The public service is also cutting back on employment, especially full-time thus up to half-a-million jobs are on the line over the next few years.

To summarise, the first phase of peak employment was the offshoring of machine like jobs, the next phase which is currently underway is as Alan Kohler points out the ‘rise of the machines’.

It doesn’t mean the end of employment, but…

The future global employment story will be one that will be dominated by reducing full-time employment, an explosion in part-time, contingent, contractual and freelancing structures and the ongoing integration of robots and algorithms into our workforce.

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

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).

Random Analytics: Mining Workforce Planning Scan (Jul 2013)

The Mining Workforce Planning Scan is a mixed quantitative/qualitative report card built from relevant online industry magazines and media sources. Utilising 14 category metrics the scan collates relevant stories over a period of time (in this case a calendar month) to give a picture of how the industry is positioned from a workforce planning perspective.

Discussing Automation (again)

Although Augmentation/Automation only had four stories for the month of July (representing 3.9% of total inputs), the subsequent robust discussion on several forums captured the attention on many industry commentators. University of Queensland’s Centre for Social Responsibility in Mining (CSRM) set off the debate when it released its Exploring the social dimensions of autonomous and remote operation mining: Applying Social License in Design report.

I discussed the subject on LinkedIn via the MiningIQ forum. It’s a lengthy discussion but my comments in relation to employment, posted 24 July 2013 included:

As welcome as this report is, I actually believe the authors are not fully recognising the full downside risks of a fully automated mining environment. Mining currently only employs around 264,000 persons (via Skills Info and correct as at Feb 2013). A cut of 50% in an open pit environment would not necessarily be picked up on the automation side, nor through large scale production increases thus you could start forecasting a peak jobs horizon for mining employment numbers in Australia in the short to medium term.

I also believe that the 50% number of open pit reductions is probably conservative. Just thinking about an Operator Hauler FIFO 14/7 shift with 3 groups in my mind’s eye I can immediately conceive of an 80% reduction as a baseline once an automated system was implemented!

I also commented on the safety issue 27 July 2013:

Within a decade I see a case where it will start to become MORE (not less) expensive, at least from an insurance perspective, to choose to operate heavy machinery with only human inputs. Let me be very clear here. As data mining becomes more commercially aware (intrusive) insurance companies will eventually overcharge or refuse to insure those industries which fail to incorporate strict augmentation and robotic controls on industries that utilise heavy equipment including miners.

Many people see automation as an all or nothing argument. That is its robotics and automated systems over all human inputs. This is not the case. My final comments on the forum, added 31 July 2013 covered that as well:

At no time has anyone on this forum discussion or myself stated that there will be no employment in mining. There will always be a requirement for onsite operational and maintenance employee’s, just the numbers will be much lower and the KSAOC’s will need to be much higher. (FYI: Knowledge, Skills, Attributes & Other Capabilities).

Megan Edwards (Editor and Director of MiningIQ) did a good write up of the main points, including some of my comments via Cost Reduction, Automation and Change Management – a Natural Trifecta? (Note: You will need a sign-on to access the story).

Here are the analytics and analysis from July.

Workforce Planning Categories

2 - Mining_Categories_Jul2013

The following chart is an 18-month look at 14 mining related workforce planning categories and the amount of times it features as a story.

Employment was the leading category with 42-stories (41.2%), the sixth consecutive month as lead category and almost unchanged in terms of weighting from the June with 38-stories (41.3%).

For the sixth month WH&S (Work Health & Safety) was the second leading category with 14-stories (13.7%). AOD/Crime was third with eight stories (7.8%).

This is the first time AOD/Crime has finished in the top 3 as a category with data going back to January 2012. Its elevation is due to a noticeable rise in incidents plus an increased willingness for mining companies to report, whereas in the past they may have not discussed these matters publically. An example of a recent incident is an act of sabotage which occurred on a Bechtel worksite on Curtis Island, Queensland. It should also be noted that the ICAC Commission did not feature in my AOD/Crime data as it never impacted on workforce planning or employment.

I’ve also included some key time periods which underline the 18-month story. July 2012 was the commencement of the commodity crash and the first phase of job and cost cutting which saw a spike in Employment related stories (mainly negative). By December 2012 the commodity prices had stabilised somewhat but off peak pricing. At the time I thought that the mining sector had returned to Business-As-Usual (BAU) but from mid-February I’ve picked up another round of job and cost cutting impacting on Employment. This second phase is currently still ongoing and deeper in terms of time period, negative sentiment and employment impact than the first round (Jul-Oct 2012).

Positive/Negative Index

3 - Mining_PosNegIndex_Jul2013

The next chart is an 18-month look at 14 mining related workforce planning categories and their positive or negative weighting.

Employment continues its highly negative trend with a further dip in July. At -18 it’s not at its worst level on record which was -20 in September 2012 but it is close enough to warrant further investigation.

At the other end of the scale Engagement recorded a +4, the tenth time in 18-months that it has been the most positive indicator.

Mining Employment Gains & Losses

4 - Mining_Employment_Jul2013

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

July is the fourth month this year where reported employment losses were greater than 1,500. With the Queensland Resources Council stating that more than 7,000 mining jobs were lost in Queensland alone the question that I’ll be looking at later this month in a separate article will be “has mining reached its peak jobs number”.

Here’s a look at the July data.

5 - Mining_Data_Jul2013

Story of the Month

Did you know that helium is used in the production of semi-conductors and utilised for Magnetic Resonance Imaging (MRI) devices? I was not aware that the United States had a Federal Helium Reserve and that rationing of the gas has already happening. Nothing to do with workforce planning but a great article by Brent McInnes and the pick of my mining reads for July.

Final Thoughts

Last month I stated that if we had another bad set of Employment numbers in July we would be in a period similar to the commodities crash of July to October 2012.

Upon reflection I’d say that we have now exceeded the commodities crash in terms of employment friction.

Production numbers are certainly up. With more supply capacity coming on-line in coming years and some companies still locked into forward contracts (which means they are shipping commodities, namely coal at less than the total price of production) you won’t see an immediate rebound in pricing.

The risks, especially for employment are on the down side.

This is going to mean further job shedding as companies continue to tighten fiscal belts and this second phase of cost cutting looks to be ongoing, at least in the short term.

Thus more friction and workforce planning pain for both employers and employees.

Note: My previous Mining Workforce Planning Scan can be found at Random Analytics: Mining Workforce Planning Scan (June 2013).

Random Analytics: Mining Workforce Planning Scan (Jun 2013)

The Mining Workforce Planning Scan is a quasi-quantitative report card built from relevant online industry magazines and media sources. Utilising 14 category metrics the scan collates relevant stories over a calendar month period to give a picture of how the industry is positioned from a workforce planning perspective.

Body Count

After last month’s poor Employment numbers which dipped below -10 negative sentiment for the first time since the commodities crash of August through to October last year I stated that if this route were to continue then I would be very concerned, especially if the numbers being cut were more than just peripheral cost cutting.

The numbers were bad all month but the last week of Financial Year 2012/2013 was especially brutal for coal which reported a loss of more than 1000-jobs in a single week. Gold was also very negative with more jobs and reviews being shed globally.

I’m also not convinced about the big operational employment numbers forecast to come out of future mega-mines such as Kevin’s Corner (QLD) or refining capacity like the Curtis Island facility.

Looking at a recent example of refining from Portugal José Manuel Fernandes stated:

Last April, GALP [a Portuguese energy conglomerate] inaugurated a renovated refinery in Sines. At €1.4bn, it is the biggest industrial investment in the history of Portugal. It will have a huge impact on our balance of payments, because we will export diesel fuel. All of this is excellent, except when it comes to the impact in terms of jobs. Only a hundred people will benefit. That is next to nothing, and it is an example reveals the dilemma of modern economies. Huge investments, including investments in heavy industry, are capable of having a significant impact on competitivity and on the trade balance, but they create very few jobs. Sometimes they even reduce the number of employees. What is true of GALP is also true for most of the industrial sectors in Portugal, as well as for the rest of Europe.

It’s been a tough month for mining and I’m not convinced we have seen an end to the bad news.

Categories

Employment was the leading category with 38-stories (41.3%), the fifth month in a row and a record high over 18-months of data analysis. The next highest Employment tally was September 2012 with 36-stories (39.6%).

Like April, WH&S (Work Health & Safety) was the second leading category with 14-stories (15.2%) and IR (Industrial Relations) and FIFO/DIDO were equal third with 9-stories (9.8%).

If you want to get a feel for where mining is going there have been no stories recorded for SkillsShort (Skills Shortages) in June and only one article, thus far, in 2013. For context during the period Jan-Jun 2012 there were six SkillsShort stories.

What this is telling me is that mining is cutting employee’s quickly enough that new ventures have enough candidates to fill most of their hard-to-fill and critical roles and the operational critical roles (generally only around 5% of a workforce) are holding onto positions rather than risk a move.

2 - Mining_Categories_Jun2013

Positive/Negative Index

From a +4 in March Employment has been on a steady reversal in terms of sentiment. Returning a -4 in April (-8 points) it has continued its rapid decline with -11 recorded in May (-7 points) and most recently a -16 (-5 points). Only September 2012 was more negative when a -20 was recorded.

On the positive side both Engagement & FIFO/DIDO recorded the monthly high of +3. Engagement usually tracks pretty well but FIFO/DIDO as the best indicator for the month comes as a surprise. Looking at the detail there was only one negative story which looked at FIFO mental health and four positives. Two of the positives looked at changing the FIFO/DIDO workforce to better suit local conditions, one was a response to the negative press FIFO has received and another was a FIFO support consultancy which is owned and operated by a miner’s spouse.

3 - Mining_PosNegIndex_Jun2013

Mining Employment Gains & Losses

May was the second month that saw 2013 new employment numbers fewer than 1,000, although there were some employment projections as far out as 2020.

4 - Mining_Employment_Jun2013

Here’s a look at the June data.

5 - Mining_Data_Jun2013

Story of the Month

FIFO is a tough business, especially for families so it was nice to see the story on Anna Rushton (I’ve linked the original story via The West Australian) who has started her own little consultancy FIFO Success. As a mum and wife to a FIFO miner she obviously could see a business opportunity!

Final Thoughts

If we have another set of -10 or worse numbers for Employment sentiment in July we are then in a period similar to the commodities crash from August last year.

Given that production numbers are starting to ramp up (especially as coal and iron ore capacity comes on line), there is softening demand (especially from China) and declining commodity prices I wouldn’t be surprised if we continue to see more bad news for mining and miners.

 

Note: My previous Mining Workforce Planning Scan can be found at Random Analytics: Mining Workforce Planning Scan (May 2013).

Updates (10/07/2013)

Peak Jobs, Disruption and Micro-Enterprise

Outside of the Cloud and Big Data there is a word that is over utilised and often miss-purposed in modern employment (plus unemployment or underemployment) parlance.

That word is Disruption.

Looking at the modern meaning of the word via freedictionary.com

1. To throw into confusion or disorder.

2. To interrupt or impede the progress, movement, or procedure of.

3. To break or burst; rupture.

Having a look at some of the mainstream HR discussions taking place at the moment you would think that the disruption taking place in our modern workplaces only offers opportunities and that the liabilities of disruption and disruptive technologies can only ‘revolutionise’ tired industries.

Rachel Botsman will be discussing disruption at one of Australia’s largest HR conferences this year. Specifically she will talk about:

“Publishing, music, retail and travel have all been revolutionized by digital technologies. Who’s next in line? In this big-picture speech, Rachel explains the need and radical opportunity for industries, from education to finance to manufacturing, to reinvent their business model over the next decade to get ahead of the great disruption. As more industries ‘blow up hierarchy’ and move towards reaping the benefits of collaboration, how will it change the way employees think about work and what does this mean for the HR industry? Participants will be inspired by examples from all around the world that are challenging the status quo, and using technology internally and externally to stay relevant in an age of unprecedented change.’

What does disruption look like (macro-view)?

Malcolm Farr wrote an excellent piece about micro enterprises in 2011 titled ‘Australia shuts up shop: the effect the GFC has had on your local stores’. Although I would suggest that the GFC is not the major reason for the slide in Australian micro-business some of the interesting findings in his piece include:

  • According to the Australian Parliamentary Library the amount of small businesses in Australia that employed 1-4 persons decreased from 528,669 to 497,191 between 2007 and 2011 (impacting between 31,528 to 126,112 persons or 0.2 – 1.2% of the participatory population during that time).
  • During the same period small businesses which employed between 5-19 persons increased from 227,883 to 233,832 an increase equal in-line with economic growth.

This is what disruption really looks like (micro-view):

1 - Photo (Civic Video Jun 2013)

That photo, taken only this week was one of two DVD micro-businesses left in Gympie, a small regional city of around 20,000 souls some two-hours north of Brisbane Queensland. It’s been operating for around 20-years, is a family run business and employed around half-a-dozen first time workers in a part-time capacity. There would have been an extensive list of maintenance and supply-chain inputs which allowed this business to run and assisted other small enterprises who provided those services.

Next month there will be one less family run micro-business in this small regional town which can ill afford the loss of any business. That family will now be looking for other employment as will the part-time workers and all the inputs required to run will now be less one client.

What will replace this business?

If you believe Rachel the business has been revolutionised, much like Blockbuster UK was recently revolutionised! What is actually happening is that the model was expensive and out-dated and has been replaced by a number of options all requiring much less in cost input terms, including employment in source countries although there may be employment in digital supply chains. Options which are commonly replacing bricks and mortar micro-enterprises such as this one:

  • DVD vending machines (same cost without the service);
  • Bundled digital options (with bundled extended bill each month on your phone or pay TV carrier service);
  • Online (PAYG, assisting global corporations while helping multi-nationals such as Amazon avoid their tax burdens);
  • Outright piracy;
  • Turning the telly off.

Final Thoughts

‘Peak Jobs’ is the idea that technology is replacing jobs faster than it’s creating them. For those more technically inclined it can also be attributed to the finalisation of the increased growth in average output (and income) per labour unit due to technological change since the 1820’s as put forward by Robert Solow (1956) or the commencement of technological unemployment as put forward by John Maynard Keynes (in the 1930’s) without the opportunity to transition into new roles as productivity increases but global employment declines.

For Australia this meant that not only was there a movement by larger businesses toward part-time or flexible work options but also a Darwinian attrition of small businesses. This was especially impactful on micro-businesses which employed 1-4 persons since the GFC and now is impacting on the next tier in the SME chain. All of this without a likelihood of same-for-same employment transition across the economy as disruptive (read technological) replacements are sourced, placed and deployed.

Publishing, music, retail and travel are just the tip of the spear.

Wait until disruption really starts to squeeze.

Note: My previous posts on Peak Jobs can be found at:

Random Analytics: Mining Workforce Planning Scan (May 2013)

One Step Forward, Two Steps Back

There has been a marked decrease in mining industry Employment sentiment since the recent high experienced just three months ago in March, returning to levels I have not seen since the commodity crash of mid-2012. At the same time as Employment sentiment is hitting worrisome levels the discussion about skills shortages in the mining sector has been null and void for 2013, potentially reflecting an industry that is waning even faster than the pundits are suggesting by the reducing FDI (Foreign Direct Investment) figures.

To highlight this issue Coffey announced 54 projects that it had projected consulting on were either delayed or cancelled with a Q4 reduction in revenue of nearly $14-million (see Geosciences Contracted Projects Delayed or Cancelled and thanks to Andrew Duffy for tweeting this prior to his overseas trip). This loss of revenue may well result in the loss of around 150-jobs from the Australian Geosciences and Project Management business.

1 - Coffey-Projects-Cancelled

While some of the figures look grim, projects are still going ahead. During the month an iron ore junior, Sherwin Iron got the nod while discussions are progressing on all the mega-coal mines in Queensland are still progressing (although whether its momentum carrying it forward may be a question worth asking). Even while coal struggles, juniors, such as Taroborah Coal are still moving ahead on community consultations.

It really is a case of one step forward, two steps back.

Categories

Employment was the leading category with 24-stories (25.5%), the fourth month in a row. Of the past 12-months, Employment has been the leading category nine times centred around the commodity crash from mid-2012 and in the New Year as continued cost cutting has impacted on jobs.

Like April, WH&S (Work Health & Safety) was the second leading category with 23-stories (24.5%) and IR (Industrial Relations) was third with 11-stories (11.7%).

If you want to get a feel for where mining is going there have been no stories recorded for SkillsShort (Skills Shortages) in May and only one article in 2013. What this is telling me is that mining is cutting employee’s quickly enough that new ventures have enough candidates to fill most of their hard-to-fill and critical roles and the operational critical roles (generally only around 5% of a workforce) and holding onto positions rather than risk a move.

2 - Mining_Categories_May2013

Positive/Negative Index

For the first time since October 2012, Employment has returned to being the most negative indicator. With five positive and 16-negative stories which resulted in a minus -11 reading for May. What is more concerning is that just two months ago this category had its highest reading in a year and looked to be on an improved trend-line.

For the third consecutive month and with three positive stories and nothing negative reported L&D/R&D (Learning & Development/Research & Development) finished as the most positive indicator. Given that it looks at mainly positive stories about mining L&D investment or education programs over the past 12-months this indicator has been the most positive on six occasions.

3 - Mining_PosNegIndex_May2013

Mining Employment Gains & Losses

May was the first month that saw 2013 numbers fewer than 1,000 (with no employment opportunities discussed in 2014). With just 1,190 jobs new positions reported over the next five years it was also the worst month in terms of employment projection on record for this year.

As discussed in the introduction there were three articles where the number of infrastructure and operational jobs on offer exceeded 100. They were Sherwin Iron (600), Taborah Coal (330) and Northern Platinum (200 from 2015). On the negative side Coffey were looking to cut 150 followed by Transfield (113), BHP Iron (100) and Boggabri (106). Controversially, the job losses which hit Boggabri in NSW were featured on ABC 7.30 as local workers were cut over 457-visa employees.

4 - Mining_Employment_May2013

Here’s a look at the May data.

5 - Mining_Data_May2013

Story of the Month

My pick of the month is a story of three parts. It’s a story of a company trying to de-unionise its workforce by recruiting cleanskins. Based on the numbers it’s also a fantastic recruitment story for a 100% FIFO workforce. Again, based on the numbers it’s also a tale of how hard it must be to break into the mining industry without relevant experience.

After taking 14,000 applications for the 750 jobs on offer for Brisbane residents in its Bowen Basin mines, BMA closed off its Cairns recruitment campaign after receiving 8,000 applications for just 250-positions. This means that for Brisbane there were 18.7 applicants per position, while for North Queensland the ratio was 32 to one.

With this level of positive attraction in the recruitment campaign (and even with a potential 15-25% turnover for FIFO workers) it would now seem reasonable to suggest that the union campaign against BMA waged through to 2012 was misjudged to the detriment of local workers. Obviously the tier one miners will accept more expensive deployment models and malleable staff over instability.

It will be interesting to see how the IR story plays out in coming months if the mining sector continues to ease.

Final Thoughts

In my February Mining Workforce Planning Scan I stated that the mining sector had returned to Business As Usual, although cost cutting would be ongoing. Now that we are in the first week of June with End of Financial Year just around the corner you can just see the hint of troublesome currents.

Although a minus -11 Employment sentiment is awful, it’s not as bad as September 2012 when the commodity decline saw that number down as low as minus -20.

If we were to see a similar or worse number in June I would then be starting to get really concerned, especially if we started to see more than just cost-cutting numbers come through.

But then again, things could just return back to normal.

Note: My previous post on Mining Workforce Planning Scans can be found at Random Analytics: Mining Workforce Planning Scan (Apr 2013)

Random Analytics: Mining Workforce Planning Scan (Apr 2013)

Robotic Replacement expands in Australia

I spend a lot of time analysing either the stories with the most content or with the most positive or negative impact. Some categories don’t get the coverage in terms of either content or impact that they deserve.

Although it only had two stories for the month of April the indicator Augment(ation), which tracks all things to do with work augmentation, automation and robotic replacement was the category with the most impact.

The first story was the announcement that Hitachi will commence trailing automated trucks at the Meandu coal mine in the between the Sunshine Coast and Wide Bay Burnett regions of Queensland (just 2-hours north-west of Brisbane). The first three EH5000 AC trucks were expected to arrive by the end of April with Stanwell running trails over the next three-years. This is also the first real robotic replacement deployment in Queensland within range of the most extensive coal deposits in Australia (the Bowen and Galilee Basins) and is an ideal recce for Hitachi who has plans to develop more autonomous equipment to the surface mining industry by 2017 (as some of the larger projects in Queensland come on-line).

The second story was a robotics replacement milestone reached in Western Australia. Rio Tinto announced that its driverless trucks had now moved more than 100-million tonnes from its West Angelas, Yandicoogina, and more recently the Nammuldi operations. That’s almost double the amount Rio moved when it featured on the 7.30 Report (21 Feb 2012) stating it had moved 57-million tonnes.

All of this as BIS Shrapnel revised its engineering and construction numbers down from its 2012 report, stating that the nadir will commence from 2014 and not 2015. Mining doesn’t employee big numbers compared to other sectors when in its operations phase, it does however employee big exciting numbers during its infrastructure phase (which is currently still ongoing). Anecdotally, I had a conversation with a colleague who runs a Job Services Australia office who told me that the only ‘tradie’ (Australian slang for construction worker) he has seen since 2008 are those who have lost their license.

1 - Mining_AutomatedMiningTruckSites_Apr2013

Categories

For the third consecutive month Employment was the leading category with 27-stories (32.9%) more on job cutting than employment creation this month. WH&S (Work Health & Safety) followed with 22-stories (26.8%) while IR (Industrial Relations) finished third with 9-stories (11%) after a quiet March.

No stories were recorded for AOD/Crime (Alcohol & Other Drugs) or SkillsShort (Skills Shortages) in April.

2 - Mining_Categories_Apr2013

Positive/Negative Index

With one positive and seven negative stories WH&S, at minus 6 was the most negative indicator for April. The articles included at least four significant injuries and another site-death; this time of a contractor who collapsed at the Wesfarmers owned Curragh Coal Mine.

After six positive stories, L&D/R&D (Learning & Development/Research & Development) finished as the most positive with plus 6, the best monthly positive indicator for the first four months of 2013. The stories included the mining industry detailing its $1.15Bn (AUD) spend on training over the past two years, updates on two new mining training facilities and the donation by the New Gold Peak Mine of a $100,000 dollar underground loader to Western Dubbo TAFE.

On that story, I wonder if I’ll be recording a negative input next year as Western Dubbo TAFE realises no CAPEX spend but several thousand dollars in ongoing maintenance and WH&S implementation costs.

3 - Mining_PosNegIndex_Apr2013

Mining Employment Gains & Losses

Although April saw another good set of employment numbers discussed there was also a loss of both actual and prospective positions headlined by Arafura Resources which pulled out of its proposed Whyalla Rare Earths processing plant. This development may have delivered 1,000 jobs and $1-billion in economic development to the South Australian economy.

On the positive side Rio Tinto Alcan talked up the prospects of building its bauxite mine near Weipa later this year (950 construction workers during infrastructure phase, with 1,346 total employees including contractors forecast for operations) and Gindalbie opening its Karara iron ore project (500 operation jobs).

Technical note: I have updated the February employment numbers, shifting 400 from February to April as NRW Holdings announced the signing of works on the Nummuldi iron ore mine. Overall the project was forecast to employ 1,500 during the infrastructure phase.

4 - Mining_Employment_Apr2013

Here’s a look at the April data.

5 - Mining_Data_Apr2013

Story of the Month

Fortescue Metals Group (FMG) announced this month that it would be replacing its ‘spread-sheet’ system of rostering (and managing labour costs no doubt) with Microster with the implementation to be managed by ComOps.

FMG owes around $12.6-billion dollars (roughly 4.7% of Australia’s Total Commonwealth Government Securities on Issue) and employs more than 2000 employees and is managing its labour by the manual manipulation of ‘Busted Ass Spread Sheets’ (BASS).

Hard to believe, but true.

Final Thoughts

I choose the term ‘robotic replacement’ with the full knowledge that many are uncomfortable with the term. It should be noted that both stories mentioned in the introduction either emphasise safety or integration with employees while avoiding the subject of technological replacement of human workers or even peak mining employment.

It’s a common stratagem of lots of organisations when dealing with problematic issues.

Yet, we are beyond imaging what the mine of the future is as it is already here and being deployed more progressively as each year passes. Western Australian and Queensland deployments this year, no doubt New South Wales or the Northern Territory next.

Australians are just going to have to get used to the gradual transition to the mine of the future. That future is one which is largely operated by robotics and technology by a limited number of highly skilled personnel, potentially from any point on the globe.

 

Note: My previous post on Mining Workforce Planning Scans can be found at Random Analytics: Mining Workforce Planning
Scan (Mar 2013)

Random Analytics: Mining Workforce Planning Scan (Mar 2013)

A Return to Growth

It has become apparent after 15-months of analysis and reporting that each month of mining workforce planning data has a theme. This month the theme is ‘A Return to Growth’ as the sector returned to pre-commodity bust norms in relation to employment. Like the most recent ABS data which showed an increase in Australian employment by 71,400 (the largest increase since July 2000) the Mining Workforce Planning Scan for March received its first positive reading after nine consecutive months in neutral or negative territory.

All of this comes at a time when most of the big-ticket minerals return to sustainable levels of pricing. Noting that the high-commodity price  period ended in late May 2012, iron ore has since returned to sustainable levels (>$110 per metric tonne) from October of last year while thermal coal has nudged past the $100 average in the past month. Less bullish is bullion as it continues its malaise with gold and silver trending down after highs experienced six-months ago.

To emphasise the return to growth the first graph is a positive/negative index looking only at the Employment data. I’ve included a three-point polynomial trend-line which tracks the high price commodity period (pre June 2012), commodity crash period (May 2012 – Feb 2013) and eventual return to growth this month.

6 - Mining_PosNegIndex_Jan2012~Mar2013_EmployOnly

More good news than bad from Employment gave it the highest content count for the second consecutive month while at least three Australian mining work-related deaths put Work Health and Safety (25%) a close second. In another positive sign for mining employment Diversity (9.7%) had several good stories this month which propelled it to third place. Generally, softer workforce planning indicators strengthen as the employment situation improves.

1 - Mining_WFPScan_Mar2013

At +5, Learning & Development was the most positive indicator for March with all five stories this month reflecting Australian research and being of a positive nature. Both Diversity and Employment closely followed with +4.

Reporting of ten Australian significant safety incidents, which included three fatalities and three major injuries against only one positive story propelled Work, Health & Safety to a -9 rating for March. Interestingly Alcohol & Other Drugs/Crime, at -4 was the second most negative indicator as miners featured in four stories including housing explosives at home, increasing use of drugs during downtime and a NSW miner who murdered his girlfriend.

2 - Mining_PosNegIndex_Mar2013

Here is a look at the indicator data for March. Probably worth noting that the Workforce Planning content has increased percentile wise month-on-month since January (25.1%, 34.4% and now 38.5%) but still remains on the low side compared to 2012 (averaging 44.8%).

Additionally any thought that the FIFO enquiry findings which saw the FIFO/DIDO indicator crash to a record -4 negative sentiment last month continuing into March were dashed as the topic was hardly raised during the month.

Goes to show you how much notice everyone (outside of Canberra) takes of Senate and Standing Committee reports.

3 - Mining_Data_Mar2013

March saw another set of good employment numbers reported with 2044-jobs added this year and the Shenhua Watermark Coal Project looking likely to construct another Western NSW mine in 2014. There is still cost cutting going on especially as coal continues to trim fat, reflected by the -317 jobs reported lost in March.

Notably Xstrata announced the closure of its Brisbane coal office (although the location is still visible on its web-site as at 29 March). This has to be seen as both a display of its lack of long-term confidence in its coal assets and potentially the pro-mining Queensland government which has been struggling with higher than average unemployment levels since it came to office in March 2012.

4 - Mining_Employment_Mar2013

The mining centric states of Queensland and Western Australia again dominated with 16-stories (22.2%) each. New South Wales had 10-stories (13.9%), then the Northern Territory and South Australia had one apiece 1.4%. On a national level there were 21 Australian stories (29.2%), two for China (coal-disasters), and one each for Indonesia, Namibia and New Zealand.

5 - Mining_WFPStoriesByState_Mar2013

On a humorous note the story of the month was a Recruit/Retain tale from Indonesia when coal miner Pt. Karya Bumi Baratama advertised for a receptionist asking specifically for “good looking” single females under 25 to apply. Having married into an family with an Indonesia background I have some empathy and can envisage the writing style in Indonesia. If we are honest with ourselves I can’t see much difference when companies request ‘well-presented’. Lucu banyaklah (Very funny indeed)!

To sum up, all the indicators now show that the mining sector has returned to its pre-June 2012 growth phase. Employment numbers look good this year and outside of a disaster in China or a collapsed US economy I can only surmise that these numbers will remain static for the rest of the year.

On that, it would be worthwhile keeping an eye on indicators like Industrial Relations, Migrate/Visa and Remuneration in coming months. A pick up in content and how it plays in terms of positive or negative sentiment will potentially highlight another sector increased wages demand cycle, a situation that the industry is continuing to downplay, even as some commodities return to reasonable margins.

Random Analytics: Mining the Economic and Labour Data

When it comes to Economics and Labour, Australia has more in common with countries such as Chile and Russia rather than the US, UK, or the more unfortunate economies of Spain and Greece.

Yet when it comes to political and business dialogue we are constantly swamped with examples of economies that have no resemblance to Australia’s. This is especially noticeable each month as the labour figures are released and anytime a politician or business group discusses the country’s finances.

Examples of this bias can be found in almost every aspect of political dialogue.

Federally, Labor will constantly compare any economic or labour data update against developed world. Most developed countries are service based or declining manufacturing based economies. Of the developed economies only Australia and Iceland have a greater than 40% mineral export exposure (using 2010 data). Although similar to Australia in many respects the next country in that group with high exposure to mineral exports is Canada with just a 11.9% exposure to the minerals sector.

The Liberal opposition will constantly emphasise saving economies such as Norway who consistently run budget surpluses. At the same time they won’t mention Norway’s prosperous welfare state including high levels of state ownership and high public service employment levels. In his most recent speech Tony Abbott was happy to disregard the bulk of the Global Financial Crisis, except where he could talk up the growth and prosperity of Australia which as he stated ‘happened for the last five or six years of the Howard Government’. Just to jog your memory this was the period 2002-2007, the crescendo of the pre-GFC boom times and mineral exports.

Business is not immune. One of Australia’s most prominent mineral exporters, Gina Rinehart recently stated “warned Australia risks becoming another ‘Greece, Spain or Portugal’ unless it cuts government debt and lifts its competitiveness”.

If you want to understand the Australian economy in a global context you are better served by looking at OECD level (or like) countries that are predominately commodity exporters (specifically minerals).

To that end I have listed five core countries plus Australia which I believe are better indicators of the Australian economy. They are Chile, Russia (non OECD), Canada and Sweden. I have also included the limited minerals exporter Norway (it is actually a prominent oil/LNG producer but a good comparison country all the same).

Table 1: Similar countries to Australia (ranked according to ICMM contribution)

01_MineralExporters                       

To begin, let’s look at two Labour indicators.

Labour – Unemployment

While unemployment is constantly compared by Federal Labor against the developed world the Liberal opposition tends to avoid direct comparisons. The reason for the difference is that Australia’s official unemployment has been very strong, even amongst other commodity producers. Here are two different views of the global unemployment rates, the first showing the six core mineral producers over the past decade (Figure 1) and to show how bad it could have gone a comparison of my best three mineral exporters by unemployment rate against Greece and Spain (Figure 2).

Figure 1: Mineral Exporters Unemployment Rates 2003 – 2013 (as a %)

02.1_MineralExporters_Unemployment

Figure 2: Unemployment Rates 2003 – 2013 (as a %). Norway, Australia and Canada against Greece and Spain

02.2_MineralExporters_Unemployment

Labour – Participation Rate

Both sides of the political divide and almost all business sectors talk about increased productivity, yet when we talk about participation rates we don’t discuss similar commodity economies but emphasise disparities with the US, UK, Japan or Germany (outside of academia or relevant government departments of course). If we look at similar economies data we still better than a fast closing Chile but are under-par Canada by 1-2% and around 12-14% under the long-term average of European competitors. Here is a look at how Australia compares against similar mineral exporting economies.

Figure 3: Mineral Exporters Participation Rates 2003 – 2013 (as a %)

03_MineralExporters_ParticipationRates

Now, let’s consider two economic indicators.

Economy – Balance of Payments

For a country that has done so well out of the Global Financial Crisis (in GDP terms at least) you don’t see that reflected in the political discussion or business surveys. Nor do you see it in the Balance of Payments data. Even with a positive once in a generation Terms-of-Trade position Australian has still outspent it’s earnings by a considerable factor. In fact, Australia has not been able to manage a positive Balance-of-Payment number since 1972-1973!

Figure 4: Mineral Exporters Balance of Payments 1991 – 2011 (in current $USD)

04.1_MineralExporters_BoP

Another fact that is often not discussed is that, unlike Norway Australia is a debtor nation (that is, it spends more than it earns). To emphasise this point let’s look at how Australia compares against Norway (a commodity saving economy) and the USA (a debtor nation). Australia, in my view, does not compare favourably with the USA.

Figure 5: Mineral Exporters Balance of Payments 1991 – 2011 (as a % of GDP)

04.2_MineralExporters_BoP

Economy – Debt

A lot of emphasis is made of the government debt positions, especially by the Liberal opposition and business. Yet, in Australia government debt is low in comparison to globally developed nations and even in relation to other commodity exporters. What is not talked about by both sides is the level of private indebtedness. In 2011 the Australia government was approximately 14% in debt (provisional) yet the private sector (mainly via housing and commercial debt) was 181.1%. Here is a look at the mineral exporter’s data plus Spain and Greece. A good word for Greece too, they were the only country represented in this graph with lesser private than government debt.

Figure 6: Mineral Exporters: Public & Private Debt (as a % of GDP)

05_MineralExporters_Debt

Ruslan Kogan, CEO of Kogan, stated on a recent Q&A that ‘97.4% of people make up the own statistics’. In some respects he is right; many people make up facts to suit a purpose. The intent of this article is not to suggest that politicians or high-level business people make up facts. Rather they generally emphasise certain data and disregard other information which does not support their argument.

You will always gain more insight and a better understanding on the Australian economy if you concentrate on parallel economies, such as commodity (specifically mineral exporters) over manufacturing or service based economies.

What I am also suggesting, if you want to understand the Australian economy you are better served by looking a little harder at the arguments and the data presented.

Note: This is a feature article I wrote for the Australian Mining which was published on the 11 March 2013.