THE resource industry’s efforts to enhance productivity levels during a commodity price downturn and wavering investment is reflected in annual data on multifactor productivity (MFP) recently released by the Australian Bureau of Statistics (ABS).
According to the ABS Estimates of Industry Multifactor Productivity 2014-15 (cat. 5260) data, the mining industry recorded the most significant MFP growth (+5.5%) of 16 market sector industries.
This is the largest growth for mining MFP since 2000-01 and the first positive MFP growth since 2006-07. It was influenced by the strongest recorded decrease in labour input of all industries (-12.0%), together with a significant rise in gross value added growth (+7.6%).
Overall, the ABS reports that nine market sector industries recorded positive multi-factor productivity growth on an hours and quality adjusted worked basis. The second highest MFP growth was found in the information, media and telecommunications industry, at +4.5%.
Nationally, on an hours-worked basis, market sector multifactor productivity grew 0.3% in 2014-15 reflecting a 2.2% increase in gross value added and a 1.9% increase in total labour and capital inputs.
“Without doubt, a priority of resource companies has been to increase labour and capital (multi-factor) productivity levels as the resource industry endures survival-of-the-fittest market conditions,” comments AMMA senior industry policy adviser, Tristan Menalda.
“This has been led by suppressed and falling commodity prices, such as iron ore which is trading today at decade rate lows – in the high $30s (62% FE Fines cfr) which is 75% below its peak in just six years.
“To help protect and safeguard their margins, mining companies have spent considerable time and capital assessing, changing, implementing and embedding productivity improvement initiatives. This includes use of automation, adoption of ‘Lean and Kaizen’ principles such as cutting non-essential tasks and focusing on continued improvement, right-sizing, and optimising life-of-mine models.
“With volatile market conditions set to continue throughout 2016, the mining sector will continue to lead the way in enhancing multi-factor productivity growth, on an hours and quality adjusted worked basis.”
Click here to view the ABS Estimates of Industry Multifactor Productivity, 2014-15.