19/11/2008 - 22:00

Big end of town keeps things cool in the middle of national economic meltdown

19/11/2008 - 22:00


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REDEPLOYMENT has become the new buzzword in Western Australian human resources circles, most notably in the engineering services sector, which involves a number of the state's largest employers.

Big end of town keeps things cool in the     middle of national economic meltdown

REDEPLOYMENT has become the new buzzword in Western Australian human resources circles, most notably in the engineering services sector, which involves a number of the state's largest employers.

WA's biggest engineering firm, WorleyParsons Ltd, has already announced the redeployment of 180 staff and contractors, along with its decision to axe 70 jobs.

Many others in the sector are also thought to be sharpening their pencils as the outlook for major projects slows.

The driver for this stems from the mining sector, with several of the state's biggest employers among those reducing production and re-evaluating the need for breakneck expansions as commodity prices cool rapidly.

The massive iron ore operations of both Rio Tinto Ltd and BHP Billiton Ltd have been directly affected by the downturn, particularly falling demand from China. Neither has yet suggested any layoffs will occur after years of battling to recruit staff.

Alcoa of Australia Ltd has also redeployed staff involved in its $3 billion Wagerup refinery expansion, which the company has put on hold due to the global uncertainty and falling aluminium prices.

Wagerup would have created 1,500 jobs during the construction phase and around 3,000 jobs in the economy after completion, including 260 direct jobs within Alcoa, which currently has 4,200 staff and 800 contractors working for it in WA.

But Alcoa's not complaining. Wagerup had significant obstacles in front of it long before the global financial crisis, including the cost of energy, which had been driven to new highs due to world demand.

Alcoa HR executive director Kim Horne is one who can see a silver lining on the economic storm clouds.

"The current economic slowdown could actually mean there is a greater talent pool of potential employees, so we could see recruitment costs decreasing," Mr Horne said, pointing out that his company's turnover is lower than most in the sector due to its long-running efforts to create an attractive workplace.

The past few years of booming economic times have made talent scarce and the cost of finding new staff very high. More than a few companies expect tighter economic times to reduce both their needs and turnover of existing staff.

"We expect the slowdown will reduce turnover even more because more employees are likely to be keen to stay where they are," Mr Horne said.

Below the state's biggest companies there have been layoffs, with Mount Gibson Mining axing 190 jobs, Consolidated Minerals slashing 180 and Austal 100, as well as the flow-on effects from expansion or development delays at the likes of Fortescue Metals Group and Moly Mines, which directly hit WorleyParsons.

While the headline impact is likely to be in the resources and related services sectors, as well as financial services such as banking (see page 12) with the takeover of regional players such as BankWest (3,200 WA staff) by Commonwealth Bank and St George Bank being consumed by Westpac, the ripples are being felt across the state's biggest employers.

Not all those shockwaves are expected to be negative, however. Take for example the government sector, which has the two biggest employers in the state - the Department of Health and the Department of Education and Training.

Both DET and DoH have struggled to remain competitive during the boom, with both facing drastic shortages of front-line staff in recent years, prompting significant pay rises and the revision of workers' conditions.

Those efforts combined with the current market turmoil appear to be having some effect.

Teacher losses due to retirement and resignation for alternative careers have dropped significantly (see story page 14) in recent months.

Nursing is likely to be similarly affected as the attractions of leaving the profession diminish and concerns about household income rise.

While the shortages were not directly linked to the boom, some in the sector see the potential of experienced clinical staff returning to part-time work, especially in cases where the breadwinners in single income families find their workload cut or face unemployment.

Nursing and teaching are among a number of areas expected to benefit as those threatened by the economic outlook in volatile sectors seek more stable professions when it comes to post-school or mature-age education.

In general, the education sector appears to already be benefitting from the bleaker times (see story page 14) as university enrolments rise.

This is likely to have flow-on effects in academia, which has also had to deal with a boom-time competition for potential students and staff. All the public universities sit among the state's biggest employers.

These changes were evident at universities as early as August, which is a signal that the real economy was feeling the pinch well before the economic data showed up.

Just two weeks ago, the Australian Bureau of Statistics revealed that the state's unemployment rate had fallen from the previous month's 2.9 per cent, seasonally adjusted, to 2.2 per cent in October, with almost 13,000 jobs created in the month.

Yet, at the same time, business confidence was slumping.

The Commonwealth Bank-WA Chamber of Commerce and Industry Survey of Business expectations slumped to a seven-year low in September, with one third of respondents believing economic conditions in WA would get worse during the next 12 months.

However, the survey found business was still hiring, especially among the bigger businesses, and more than a third expected to recruit more staff in the future.

CCIWA chief economist John Nicolaou said the survey came off the back of very big highs and should be seen in that context.

"While there are some concerns about where we are at and questions are coming out in regard to hiring and firing, overall the [CCIWA] membership seems to be reasonably positive," he said. "The major projects are still proceeding, notwithstanding that you see bad news in the paper."

Mr Nicolaou pointed out that CCIWA is a big employer in its own right through its apprentice training operations and there had been no reduction in demand in that business, an area where business often cut first in difficult times.

"We still have a fundamentally sound economy," Mr Nicolaou said.

Another survey, by recruiting firm Hudson and released in early October, showed WA employer confidence at a two-year low, though they remained the most positive in the nation.

The Hudson survey showed that almost half were expecting to add staff while the bulk of the remainder thought they would maintain their headcount at present levels. Just 5.2 per cent expected to shed staff.

WA's biggest private employer, Wesfarmers, also showed that not all companies are necessarily focused on the short-term when it comes to dealing with employees.

Wesfarmers has almost 25,000 employees in WA, part of 200,000 nationally, having owned Coles for the past year. In a recent interview with WA Business News, Wesfarmers managing director Richard Goyder said he was focused on prudent management and did not believe in simply making cost cuts.

"I am not one for arbitrary targets, like taking 10 per cent of costs out because you hurt your business," he said.


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