Making sense of a Maelstrom! (Well trying to)

Because of the wild ride of the last 12 months, for our first newsletter of 2009 we have tried to put some of the consequences into context.

Because of the wild ride of the last 12 months, for our first newsletter of 2009 we have tried to put some of the consequences into context. In particular we’ve tried to make sense of the mining industry employment market.

Some of the large amount of media reporting (particularly since September 2008) – Dec 2008) added to the mania rather than providing balanced information.

That said I believe the general public and general media were still largely unaware of the impacts on the mining industry until early this year when higher profile announcements have now started to catch everyone’s attention. I was actually quite amazed with the number of people I spoke with during the Christmas and New Year period who would ask:

“Is the mining industry being affected much by this down-turn?”

When you are right in the middle of it as we are of course, this comes across as quite an incredible question. Those kinds of questions though should remind all of us of the fact that:

“While the mining industry is significant in terms of it’s contribution to Australia and the world, because most mines are in remote places unseen by the general public, the industry often goes relatively unnoticed. This brings with it a range of issues as well as a responsibility to do the right thing often away from the public gaze, but it also often means that when things get tough, the industry does tend to have to tough it out alone.”

So without repeating all of the financial issues that led us here, we’ve tried to report on what we are starting to see and what we think that might mean to you, as you make plans for your next project or job over the coming weeks and months.

Firstly The Up:

For 2-3 years we saw strong gradual rises in most commodity prices. Many mines started or expanded, much exploration was done and many projects were studied.

  • Demand pressures resulted in a gradual rise in most costs. Salaries increased; we estimate doubling over a 4 year period. Graduate salaries increased the most in relative terms.
  • Rosters shortened, meaning companies were paying the same or a higher salary for less days at work. This resulted in more total workers being required which added further to candidate shortages.
  • Older workers came out of semi-retirement (or put retirement off).
  • For most mining companies profit margins increased despite higher costs.
  • The general press promoted the mining boom relentlessly causing student intake for most minerals industry courses to increase over the past few years.
  • Some people ended up in jobs that they really weren’t capable of doing.
  • 457 Visa worker numbers increased and with that came an increase in cultural training needs.

Now The Down:

  • 2008 saw most open market commodity prices retract over the 12 month period and this firstly started to bite into small to medium producers.
  • Then came a global credit crunch – this process was anything but gradual. Some will say they saw it coming but few predicted its harshness and speed. Pretty much any company that didn’t yet have an income found their source of funds turned off overnight.
  • On top of all this we’re just now seeing the major bulk commodity producers making serious noises about reducing production and cutting staff as their overseas customers reduce demand for their raw material and argue coal and iron ore prices down. Project studies for all but the most robust of projects have stopped.
  • Exploration has largely stopped, other than for some near mine targets and in particular gold where there is a high chance of success.
  • Many small to medium scale, high cost producers have closed or scaled back.

The longer term picture:

Without attempting to be an economist but simply drawing on some engineering logic, we can all observe a process that has begun whereby billions of people around the world are being gradually moved from subsistence lifestyles to modern towns. I find it difficult to imagine that this won’t represent a driving force for 20-30 years or so!

This same logic suggests there will be solid demand for mining industry staff for decades to come!

Admittedly, operating mines will continue to employ relatively lower numbers of technically trained people as a consequence of efficiency drives and automation processes generally, but this is a very gradual generational shift and people who gain a technical education should continue to be well rewarded so as to motivate them to go and work in a remote place away from family and friends.

What about the here and now?

Economic forecasting aside, what most people are far more interested in is:

“How will all of this affect me or my company in the next year or two?”

In an attempt to provide some answers here we have further researched the market and again surveyed all of MPi’s key staff to come up with their views as to what this is already meaning as far as the mining industry employment market is concerned.

For employers:

  • Your younger employees have never experienced anything but a permanent boom! Ensure you know who your brightest and best are and stay close to them and listen to their concerns.

  • Some of your older staff who came out of semiretirement won’t be able to leave their job and will be extremely nervous having seen their retirement savings (and therefore potential annuity income) significantly reduced. Stay close to them and keep them informed.

  • The boom accelerated the trend towards employing older workers. Despite recent events smart employers won’t stop this as they realise these people add valuable diversification and experiences and they are motivated to stay in the workplace and work. As always if you are assessing an older candidate for a job ensure you understand their unique skills and experiences, most likely some of which you won’t find in some of your younger employees, even some of your younger managers. 

  • A recent mini-trend towards companies sourcing their own staff was fed by the ease of internet advertising. The ease of internet access does not make searching and screening activities any easier. Sometimes easier access, means many more candidates, all of whom need to be properly reviewed and dealt with professionally if you want to retain a reputation as a professional company and a good place to work.

  • The number of candidates available for some jobs has increased. At the same time, some companies have removed certain office support functions and collectively these two factors could create time pressure on line management. So be mindful to apply a proper amount of selection process before making hiring decisions. The biggest risk you had as an employer 12 months ago was being short of staff and not filling a key position. Large profit margins made it possible to employ some poor quality staff or no staff and simply accept the operational mistakes that came with this. Now, the biggest risk is making the wrong choice and hiring some of those people who are simply not up to scratch and should not have got the job they did 12 months ago.

    The fact that it says: “Manager” on their resume does not mean that they WERE a good Manager. In many cases they got the Managers job because there was simply no one else to choose from! Once again be careful to spend an appropriate amount of time on selection.

  • The general media did a terrific job of promoting our “booming” industry and by association most companies within it. Even companies with bad projects, bad culture and bad Management, were able to attract staff. Most of those though did not realise they were digging through a pool of the lower quality candidates. 

  • The best candidates still have options to choose from and so to attract these people into your company you must keep the process moving and be prepared to make decisions.

    Avoid having good candidates deal with people who have an inadequate understanding of the position you are trying to fill.
  • We’re now seeing some mines moving back to a longer roster. Effectively they are asking people to work a few more days a year for the same pay. This usually means that their total workforce is smaller. This is one element of some company’s cost cutting process.

  • Be willing to engage contract staff. At the start of tighter times, employers in the mining industry will often cut down on the use of contract staff as part of their cost cutting process. As conditions stabilize we often see a return to the view that contract staff represent lower risk because as a resource they can be turned on and off more easily as projects dictate. Inexperienced managers often frown on resumes showing numerous stints of contract activity but this misses the fact that many people actively choose to work in the resource industry, moving from one contract role to another because it suits them and their lifestyle requirements.

So to summarise things for employers, if you are a good company, with good medium to long life assets, a good cost structure and supportive culture, then NOW is an extremely good time to be recruiting for good people.

It may take less work to find A PERSON, but it will now require far more work to find the BEST PERSON

Just make sure that you apply a good amount of “selection” process to ensure you pick up the cream of the crop. Alternatively use a company such as Mining People International to run a professional consulting and search process for you.

Some additional points for job seekers

  • For a while it may take a little longer to find the opportunity that ticks all your boxes. Do not presume you will walk out of a job one day and into another the next. If your income source is critical to you but you need to change positions, then arrange your next role before resigning. If you don’t you might find yourself with an unexpected 3-6 month “gap”.

  • Be prepared to consider a contract role if that perfect permanent opportunity doesn’t present itself immediately. The mining industry has never frowned on people with stints of contract work embedded in their work history.

  • Those less scrupulous candidates that shopped themselves around with abandon and played one job offer off against another will be reminded of their poor behaviour. We consistently warned candidates against unwisely using this power over the last few years. Most listened but some didn’t. Many employers remain unhappy at the treatment they received and will look unfavourably at certain candidates that previously didn’t handle themselves well.

  • Be willing to consider a job, perhaps with a salary unchanged compared to previously, but requiring you to work more total days per year. We won’t see a return to the draconian 10 weeks on 1 week off from many years back, but the trends of very recent years have been unnaturally attractive in this regard and we are seeing a slight swing back on some sites already.

To summarise things for employees, there are many terrific jobs out there with excellent companies who are doing good things. Recruitment firms and other personal networks have just become far more important to you than they were last year. Present yourself to a small number of selected companies only and be prepared to be flexible in regards to what you seek. The industry has not crashed, it has retreated for sure but it is simply closer to normal than has been the case in the past few years. Whilst the total number of jobs available in the industry has declined, if you are committed to the industry for the long term then take heart from the fact that many people who joined the industry as green skins in the past 2 years did so because of unnaturally attractive conditions. Many of these people will leave the industry now meaning that while you may have fewer jobs to choose from for a while, there is also a lower total number of people competing for those jobs. This is not to deny that the balance has definitely swung back to employers, but for good candidates this does not need to be a bad thing. If on the other hand you are unsure that the industry is where you want to be for the long term then now is probably a good time to make that decision.