Random Analytica

Charts, Infographics & Analysis without the spin

Tag: Workforce Planning

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).

Peak Jobs and HR Automation

During a recent recruitment discussion on #NZLEAD I brought up the concept that not only could most of the recruitment process be automated but there was a body of evidence that was proving this methodology was now successfully competing with traditional (human) practices.

What quickly became apparent was that the HR and recruitment crowd partaking in the conversation were very uncomfortable with the idea of any sort of replacement but especially by robots. A follow-up review of the #NZLEAD Recap Recruitment Processes ignored any discussion on automated process and concentrated on human inputs only.

It’s not just the recruitment process that is susceptible to an augmentation and automation overhaul. Many components of the Human Resources role could and can be downsized via augmentation or replaced by automation. It might even be argued that after automating most of the payroll function away in the 1980’s that HR itself has reached its next ‘peak job’ phase as its functions get outsourced or further automated.

So here is my ‘Good Read Guide’ on the subject of HR automation in recent times. Got one you think I have missed? Shoot me a comment with a link as I’d love to include more HR automation stories.

HR Automation – Good Read Guide

Laurie Ruettimann: Cold Reading: Sylvia Browne, Amanda Berry & Recruiters

I thought I would get kicked off with an article that sums up the topic without realms of detail and given that it’s written by the Cynical Girl it’s also a very punchy start to my reading guide. Laurie suggests that the methodology of recruitment is little better than an “unsophisticated psychic trick”: and “that technology can solve for bias and discrimination in the hiring process”.

Naomi Bloom: HRM Analytics – Dashboards, Cockpits And Mission Control

1 - NaomiBloom_1992

One item that keeps coming up in my ongoing conversation with HR is that I believe all things can be measured (but not all things should be as you should look for value against effort). There is always lots of discussion about this in the HR space. Naomi Bloom believes that all things HR should be measured. In an earlier 2009 piece she stated:

“If the real purpose, the only purpose, of HRM is to achieve organizational outcomes, then we’d better be able to measure the effects of specific investments in HRM on those organizational outcomes. Otherwise, why would anyone trust us with a budget?”

I reached out via Twitter to Naomi Bloom, given that she has spanned the entire modern HR journey between old and new (the picture is a copy of her 1992 opus on the subject which she kindly sent me). She suggested the above recent analytics article as a primer. It’s worth a read given that analytics is a key augmentation step and who does robots better than NASA!

The Ladders: Keeping an eye on recruiting behavior

Here is a resume service provider using eye tracking technology to highlight where recruiters spend their “four to five minutes per resume”. Don’t think resume writing or reviewing can be automated…. Think about it as a series of transactions and then ask yourself, can each of these transactions become automated?

Fiona Smith (via the Australian Financial Review): Driven by data: moneyball recruitment takes away all the guesswork

On the subject of recruitment Carol Howard suggested this piece by Fiona Smith on using data and analytics to take the guess work out of the hiring process. The case study utilised is Sears Holdings Corporation which put all of its applicant data against its employee data and found that their “best employees did not come from their previous talent pool”. If robots aren’t in the process of taking over the job of recruiters, big data is certainly going to assist in the downsizing of that role.

John Sumser: The perils of Automation

Before I leave you with links to a HR future that might not need (much less) humans in it I came across this thoughtful 2012 piece by John Sumser. Very wisely John suggests that “Automation strips the fuzzy stuff out of relationships to turn them into transactions. In that process, things get much more efficient. It’s less clear that we understand what we’re leaving behind.

David Creelman (via HRVoice.org): Unending Automation

Maybe the role of HR won’t be in looking after your current employee’s but assisting those who are technologically displaced prior to their own exit. David Creelman suggests:

“Many countries do not require organizations to protect workers from technological change. If self-driving vehicles can replace your truckers then perhaps you can just send them a note wishing them luck finding another job. However, ethically we have a responsibility to at least inform workers about their longer-term prospects and preferably find ways to help. Ways to help could include early retirement, job-sharing, or retraining. HR should explore all those options.”

Steve Boese: Virtual HR, or, ‘Did you ask the HR chatbot’

2 - Ivy

My final link (and my favourite) is from Steve Boese, not only a HR technology professional but also someone with a keen interest in how technology is transforming work. In this blog Steve looks at Intel’s incorporation of Ivy, the virtual HR agent who at the time of publishing could respond in 4,331 ways to staff interactions. On the subject of HR automation Steve states:

“Most of us, (admittedly me too), say of think things like ‘My job is just too complex and ever-changing for it to even be outsourced to a less-expensive human (much less a robot).’

The criticism of this potential HR future was summed up nicely by David Gordon, a recruiter, who replied to my original tweet/link with “@gmggranger it is a good read – still not fit for purpose for recruitment (yet?!), Ivy answers factual questions, recruitment is subjective”.

I’ll agree with you David (at the moment). Yet, a journey starts with a single step…

Final Thoughts

Human Resources are being asked to assist in the transition of human workforces to augmented or automated workplaces. From automated trucks in the mines, DIY checkouts at the supermarket or robotics augmenting people on the factory floor every industry is under increasing competitive pressure.

Yet HR itself seems totally against a conversation about HR automation.

I get it. You’re a knowledge worker and the things that you do for the organisation are just too complex to be replaced by SkyNet.

But maybe its time for HR to review this thinking. As Steve Boese states:

But it also seems likely that given enough time, access to ever-improving technologies, and the right economic incentives, there are enterprising people and organizations that even if they couldn’t completely automate or robot-icize everything you do, chances are a fair amount of even what we creative types do is already routine enough that the robots could do a passable, if not better (and cheaper and will less of a bad attitude), than we do.”

The kind of hollowing out of HR, last seen when payroll was automated from the 1980’s is already starting to impact on the HR function and recruitment seems to be the current automation focal point.

Better start getting involved in the conversation people!

It’s going to happen with or without you.

 

Acknowledgements: In an effort to shine some light on this subject I started tweeting HR automation stories from various writers. My twitter-sphere colleague Michael Carty of XpertHR suggested it might be good to compile these into a single resource. Great idea Michael and I hope you like the post!

Special Note: For those who have not read any of my previous articles on peak jobs and need a little background. ‘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.

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)

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: Manufacturing Workforce Planning Scan (Mar 2013)

Still a Tough Old Road

In my most recent analysis of the mining sector the March data highlighted a return to positive employment sentiment for the first time in nine months backed by a series of increasing commodity price gains across most mineral commodities. Unfortunately for manufacturing the Workforce Planning Scan has shown a steep decline since commodities withdrew from historical highs (around May/June 2012). I’m sure the sector would be happy with a return back to the period when the data was at best flat or when it experienced its last Australian employment increase (up by 5,300 according to the ABS data from November 2011 through to February 2012).

Looking at the positive/negative index for Employment over the past 13-months you can easily identify the flat, almost neutral period prior to End-Of-Financial-Year 2011/2012 and the subsequent decline since July 2012. January 2013 was the worst month on record while February and March saw a small improvement (all tracked via the 3-point polynomial trend-line). It should be noted however that any indicator which records <5 negative readings is in a very poor state.

1 - Manufacturing_PosNegIndex_Mar2012~Mar2013_EmployOnly

An almost 5:1 ratio of bad over good news stories saw Employment continue to lead the story count, the seventh consecutive month and counting. Engagement (20%) came in a close second with 11-stories, mainly focussed on what seems to be an annual March-April conference season (something I intend to look at in detail next month). Third was Learning & Development/Research & Development (16.4%) tracking a little bit higher than its 12-month average of 10.2%.

2 - Manufacturing_WFPScan_Mar2013

Learning & Development/Research & Development with a sentiment score of +3 was the only positive indicator for manufacturing in March! L&D/R&D generally tracks positively and March saw some good news from ongoing research and an extension of the Apprentice Kick-start Initiative by the federal government with the hope of boosting new entrants into building, construction, and engineering.

As mentioned previously Employment continued to disappoint with a -7 sentiment for March. Migrate/Visa finished the month on -2 after the Prime Minister, Julia Gillard, contentiously raised the issue of 457-visa’s (skilled workforce quota).

It is my view that this indicator would have finished with a greater proportion of stories and a more negative sentiment; however the 21st March internal Labor spill that didn’t really occur robbed the government of its 457-topic momentum. Remuneration also finished weaker on -2 after reports of weaker wages growth.

3 - Manufacturing_PosNegIndex_Mar2013

Here is a look at the indicator data for March.

No entries for Augmentation and Australian Made in March. The lack of Augmentation stories especially is interesting, given that there is now some consensus that the high Australian dollar is here to stay and productivity via technology is a must-have option.

Another interesting point. So far in 2013 there hasn’t been a single Diversity, Recruit/Retain, Skills Shortage or Work/Life story recorded which reflects the sectors weakened state and its inability to compete for employees due to high cost inputs and global competition.

4 - Manufacturing_Data_Mar2013

March was the first month of 2013 when jobs lost did not top the four-figure mark, although the monthly average is still over 1,100.

Given the trend at the moment a loss in the hundreds is much better than in the thousands.

5 - Manufacturing_Employment_Mar2013

It wasn’t the manufacturing hubs which dominated the story count this month. New South Wales topped the list with 16-stories (10.9%) followed by Victoria and South Australia at 11-stories apiece (7.5%) and the mining states of Queensland and Western Australia with nine each (6.1%).

National stories were aplenty with Australian topics recording 66 (44.9%). Of the final international Workforce Planning stories, four (2.7%) were global, seven were European (4.1% with 3 from that continents manufacturing powerhouse, Germany), four were Asian (3 from China) and New Zealand recorded two.

6 - Mining_WFPStoriesByState_Q1

The story of the month was in relation to the death of a glass worker at Wollongong. This was the third consecutive month with a reported death, two of which were in glass manufacturing and the second in New South Wales this year. It run could have been worse, as a tonne of glass fell on a worker in Queensland in December causing severe injuries and three other Australian workers were killed in separate incidents during October and November.

Manufacturing can be dangerous so be careful out there.

Final thoughts and two indicators to watch…

Outside of some recent talk about increased productivity as business starts to respond to the high Australian dollar and creates efficiencies to counteract global competiveness I can see no reason why anyone would be even remotely optimistic about manufacturing in this country.

Possibly one of the best guides on how poorly the sector is performing was Manufacturing Australia’s own call for cheaper energy via Sue Morphet, effectively a request for industry subsidies. Sue replaced Dick Warburton in March as the Chairman for Manufacturing Australia and did not deny the sectors woes during her 7.30 interview.

Having ‘structurally adjusted’ Pacific Brands as its CEO with the loss of 1,850 Australian manufacturing jobs (to Asia) why would any other CEO credibly listen to her asking them to save Australian positions?

The attacks by the Labor government recently of the 457-program which is a skilled visa entry rather than a more detailed discussion on Enterprise Migration Agreements (effectively a non-skilled program) could make Migrate/Visa an indicator to watch. I hope that I am wrong and sanity returns to that area.

Employment plus the jobs gained and lost is still the only important manufacturing indicators at the moment. One can only hope the numbers going forward will be kinder than the ones we have seen over the past 12-months.

I’m still very bearish about Australian manufacturing and I very much doubt that we have reached the end of the current negative cycle.

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 Workforce Planning Scan (Feb 2013)

In January I raised the prospect that mining had returned to Business-As-Usual (BAU), although its return heralded a much more ‘leaner and meaner’ approach. With the second month of data for 2013 completed, the trend around employment which commenced in November has continued, confirming that we had commenced a new normal. What is more interesting is that current producers are emphasising cost cutting, while future projects or producers are trying to complete works as fast as possible. Thus the slight negativity we are seeing in employment sentiment is not reflected in the employment gains, even when like this month the employment losses recorded neared 2000.

An obvious example of this was the Rio announcement of the $3.1-billion dollar Pilbara expansion program that will employ 1,500 this year in the infrastructure phase and another 700 ongoing positions when it moves into its operations phase. 2,200 new positions sounded great but it’s a shadow of its 2012 program which had started to recruit for 6,000 expected roles but was quietly axed without explanation. In the same month Rio announced 350 positions would be going at the Argyle diamond mine, mainly from its contracting staff. There are no mixed messages here, Rio is repositioning out of Africa expanding only where it can be assured of good margins, while any of its assets that are marginal (I’ve been aware of Argyle being marginal for about a decade) are being cut or cutback.

While the producers continue to increase production while driving down costs, those that are not producing or have assets that are not in play are looking to get them completed ASAP. In this case though, it’s the lack of stories that I find interesting.

So, in terms of employment I’ll be interested in following updates (or lack thereof) from small to medium operators who are not producing at the moment, anything in Queensland that is not producing and as an aside, the highly leveraged FMG assets which are still in an expansion phase. Given all the cuts to mining staff across Australia I will also be following stories about mining contractors, given the amount of movement in the market currently. Contractors squeezed profits due to a retraction from these services has me guessing that we might see some go to the wall over the next quarter or two. Like a game of musical chairs, those who don’t have a chair when the music stops will be out of business permanently!

The last item of note for February was the publishing of the FIFO ‘Cancer of the bush or salvation for our cities’ Report by the Standing Committee on Regional Australia, chaired by the Independent Member for New England, Tony Windsor. As the name suggests, the Committee were not big fans, making 21 recommendations to government and 14 to industry to improve the practice. Although I cannot say that this report is as even handed as it should have been (there are both issues and opportunities presented by FIFO/DIDO practice) it does reflect some negativity in the reporting that I’ve been able to capture over the past 14-months of data (see Figure 3).

Now, let’s look at the data. The three dominant mining Workforce Planning stories for January were Employment (22.9%) closely followed by WH&S (19.3%) and IR (14.5%).

1 - Mining_WFPScan_Feb2013

Figure 1: Australian Mining Workforce Planning Scan (Jan – Feb 2013). Source: Australian Mining. Some stories have been verified against primary resources.

Diversity and Engagement both received a (+2) positive reading while IR received a (-6), WH&S (-5) followed by Employment and FIFO/DIDO both received a (-4) negative sentiment.

2 - Mining_PosNegIndex_Feb2013

Figure 2: Australian Mining Workforce Planning Positive/Negative Index (Jan – Feb 2013). Source: Australia Mining.

The Employ category which tracks employment gains, losses and general sentiment was the leading Workforce Planning indicator for February but only just at 19-stories (22.9% +1.6%mom/+4.5%yoy). There was a 4210-jobs gain but a spike in jobs lost which sat at 1,994 which goes some way to explain a slightly higher negative sentiment (-4 or -1mom). As previously mentioned, Rio’s revised announcement of 2,200 new positions was the best employment gain for the month but a newly approved Venture Minerals proposal in an opened Tarkine could provide up to 1,000 positions in the depressed Tasmanian economy. UGL announced 1,000 positions will go globally with 700 to be cut from its Australian operations alone, while Bradken, a mining and rail manufacturer posted a $46.7-million half-yearly profit (up from $43-million the previous year) after cutting its staff by 500.

WH&S which tracks Work, Health and Safety incidents and initiatives came in as the second leading indicator for February with 16-stories (19.3%, -19%mom/-8.3%yoy). Only one Australian was reported injured when after a Mount Isa underground incident required an aero evacuation. Near misses and complaints of conditions ensured WH&S finished the month with a (-5) negative sentiment. One story that is worth reading and highlights the dangers of the sector is of the 4th mining related death in just a fortnight in West Virginia. (For the record, injuries or deaths that occur outside of Australia do not count toward the positive/negative index).

IR or Industrial Relations was the third leading indicator for February at 12-stories (14.5%, +8.1%mom/steady from 2012). Ongoing industrial disputes with Pacific National Coal, lockouts at BHP and a walkout at Hanson Quarry gave IR a (-6), the most negative index reading for February.

Diversity which looks at female, indigenous and disabled participation (although other subject groups would not be ruled out) finished the month with 2-stories (2.4%, -1.9%mom/+0.2%yoy). Both stories looked at the sectors female participation this month. The need for mining to increase its female participation from the current 15% to the 25% by 2020 is my pick for the month.

FIFO/DIDO (or Fly-In Fly-Out/Drive-In Drive-Out) is a mining specific engagement indicator. As previously mentioned FIFO/DIDO with just five stories for February had a negative reading of (-4). Looking at 14-months of data, this negative sentiment has only been reached once before, in June 2012 when the sector was still (for all intents and purposes) booming and the FIFO enquiry was in full swing. Generally the indicator has been negative, averaging 1.5 over the past 14-months although the stories softened from September through to November, which corresponds to last year’s commodity crisis.

5 - Mining_PosNegIndex_FIFO_Jan2012toFeb2013

Figure 3: Australian Mining Workforce Planning FIFO/DIDO Positive/Negative Index (Jan 2012 – Feb 2013). Source: Australia Mining.

Here is a closer look at the February data.

3 - Mining_Data_Feb2013

Table 1: Data for Australian Mining Workforce Planning Scan (Feb 2013). Source: Australian Mining.

Finally, here is a look at the Mining Employment Gains/Losses tracker for 2013.

4 - Mining_Employment_Feb2013

Table 2: Mining employment gains and losses for 2013. Source: Australian Mining.

Update 1 (5/03/2013): The Commonwealth Bank released an economics update on the 25th February which I only had a chance to read today (many thanks to Andrew Duffy (@ajduffs) for passing it on). Its findings, especially in relation to cancelled projects for 2012 and CAPEX decisions for 2013 are most interesting.

Update 2 (6/03/2013): New infographic. Rather than more information via a table or a graph I thought I might show the breakdown of Australian stories via a map of Australia. I’ll include this as a standard graph from March onwards.

5 - Mining_WFPStoriesByState_Feb2013                      

Figure 4: Australian Mining Workforce Planning Australian stories by State (Feb 2013). National stories represented by the AUS figure. Source: Australia Mining and ABS. Software utilised: Stat Planet (non-commercial).

Random Analytics: Manufacturing Workforce Planning Scan (Feb 2013)

The Australian manufacturing sector continued to retract with another month of job losses and negative sentiment even after the federal government stepped in, announcing approximately $1 billion in support of a number of initiatives including dedicated manufacturing hubs and local content requirements for major projects. R&D tax concessions would be cut to offset the costs of the new programs.

The announcements made by the Prime Minister, Julia Gillard and the Minister for Industry and Innovation, Greg Combet were largely drowned out by more Labor leadership speculation. That being said, any announcement that concerns manufacturing with its long implementation lead times has the upcoming federal election (due on the 14th September 2013) as a backdrop. Further to that, any announcement made by the current government also has to be considered very carefully by the sector given that with most polls now showing Labour has a 2-party preferred of just 31% they would be suffering a devastating defeat.

Let’s have a look at this month’s data:

1 - Manufacturing_WFPScan_Feb2013

Figure 1: Australian Manufacturing Workforce Planning Scan (Jan – Feb 2013). Source: Manufacturing Monthly. Some stories have been verified against primary resources.

2 - Manufacturing_PosNegIndex_Feb2013

Figure 2: Australian Manufacturing Workforce Planning Positive/Negative Index (Jan – Feb 2013). Source: Manufacturing Monthly.

The four most dominant Workforce Planning issues for February were Employment (30.2%), IR (15.1%), then Engagement and WH&S both of which finished at 11.3%. Only Engagement (+3) and L&D/R&D (+1) finished the month in positive sentiment territory while Employment again finished negatively (-12) followed by WH&S (-4).

The Employment category which tracks employment gains, losses and general sentiment continued to dominate the manufacturing news. Representing 30.2% of all WFP stories (-17.2%mom), this included 11-negative stories offset by just 3-positives. This month the job losses were 1600 compared with just 42-added. I did include the 650-jobs which might have been created by Fresh Bins which were targeted for Victoria. According to the company’s founder, Paul Sewell, a lack of support from local and state governments forced him to relocate to Texas. With my Manufacturing Workforce Planning Scan data going back as far as May this is the 9th consecutive month of negative employment sentiment in which time 8,590 jobs have been lost, an average of 954 per month.

IR which tracks all aspects of industrial relations was the second leading category for February at 15.1% (+4.6%mom) due in large part to ongoing commentary and engagement by union leaders (4-stories) and two negative stories which were linked to medical manufacturing. The story which was most notable was Alan Kohler’s discussion on Inside Business with Cochlear CEO, Chris Roberts. I’m a big fan of Inside Business and an avid watcher so I was struck by Chris Roberts carefully worded criticism of Australian IR and productivity. Although he would not be directly called on offshoring I got the sense that it’s a decision on his and the Cochlear Board’s mind.

Equal third on 11.3% for February were Engagement (-2.9%mom), which includes items such as exhibitions and staff awards and WH&S (+0.8%mom) which covers all aspects of Work, Health and Safety. For a sector in trouble, manufacturing loves award ceremonies and conferences and this was reflected again in this month’s positive +3 Engagement sentiment (steady from January). Unfortunately, the -4 WH&S sentiment included another factory death, this time in Western Australia (the second consecutive month were a death has been reported) and a serious injury of a worker in a mushroom factory in Melbourne.

Here is a look at the February data.

3 - Manufacturing_Data_Feb2013

Table 1: Data for Australian Manufacturing Workforce Planning Scan (Jan – Feb 2013). Source: Manufacturing Monthly.

Finally, here is a look at the Employment Gains/Losses tracker for 2013.

4 - Manufacturing_Unemployment_Feb2013

Table 2: Manufacturing employment gains and losses for 2013. Source: Manufacturing Monthly.

Random Analytics: Peak Employment (Part II): UK

I recently published a blog looking at Australian Peak Employment. Given some very good feedback and responses from the UK especially I thought it might be useful to have a similar look at the situation there.

Although the Office of National Statistics longitudinal depth was not as good as the Australian Bureau of Statistics in breaking down full-time and part-time employment pre 1992 there was some very good data not readily available in legacy ABS data captures, especially in areas like the self-employed.

Although I could only get data as far back as 1992 the picture it tells is as interesting as the Australian story (with data going back as far as 1978).

Here are the analytics.

1 - UK FT & PT Employment 1992-2012

Figure 1: UK Full-Time and Part-Time Employment (Mar – May 1992 to Oct-Dec 2012). Source: ONS.

Like the Australian example, the first graph highlights the almost identical increase in contingent (part-time) and full-time employment over the past decade. Since early 1992 full-time employment has increased by 10.3% (2.021-million) while part-time employment increased by 34.5% (2.072-million).

2 - UK FT & PT Employment Increases 1992-2012

Figure 2: Increases in UK Full-Time and Part-Time Employment (Mar-May 1992 to Oct-Dec 2012). Source: ONS.

Like the Australian example the increases in both full and part-time employment are identical. Unlike the Australian example which has not seen a downturn since 1991/92 the UK data shows a massive 1-million full-time jobs disappearing post GFC but over the past 12-months or so that has improved by around 400,000 new positions. Additionally, the start of this data series showed negative full-time employment through to early 1994 as the UK struggled out of the late 1980’s and early 1990’s downturns (oh, how I wish I had the data going back to 1987).

3 - UK Employment vs. Working Age Labour Force 1992-2012

Figure 3: Overall UK Employment versus Working Age Labour Force (Mar-May 1992 to Oct-Dec 2012). Source: ONS.

Here’s a look at the differential between total employment creation and the UK defined, economically inactive numbers. The UK created an additional 4.093-million new jobs; from 25.635-million in early 1992 to a record 29.729-million jobs at the end of 2012 (the pre-GFC high was 29.572-million in Mar-May 2008). The UK has steadily increased its working age population since 1992 (due to a combination a slightly lower than replacement fertility rate plus a higher immigration to migration ratio) which has left it with 3,734,000-million less jobs than that required to employ the 7.828-million increase in the working age labour force.

A quick point on the above. Like my previous article on this subject (avoiding wonkish angst) it should be noted that my Working Age Labour Force number in this graphic has been worked out utilising the ONS economically active rate data rather than my preferred method of using actual population statistics (you can see an example of this in my 2012 Abbott’s Promise piece).

In conclusion looking at the UK ‘employment type’ data is further confirmation of a global trend toward greater reliance on part-time employment, which on one hand is increasing employment to record levels while at the same time decreasing the amount of work available.

Has the UK reached peak employment yet? I’m not convinced it has but the more I look at the global data the more I am convinced we are reaching that point in the next decade. As I stated in my initial Australian analysis:

With an increasing working age population and a growing gap between jobs available the future is looking anything but certain, especially with the rise of labour augmentation and robotics replacing jobs quicker than they can be created.