Inefficiencies and the resources industry

17 September 2009

The ABS 2008 year book contains some interesting data regarding the value adding of various industries within the Australian economy. Interestingly it is only the resources industry (mining and oil and gas) which has decreased in total value add (read efficiency) over the past 10 years.

The ABS takes total profitability and divides it by total man hours worked and our industry, despite our years of boom is somehow more inefficient – and by a significant margin – than every other.

Figure 1: note that the ABS categorises the oil and gas industry with the mining industry.

So why is this so? How can our industry go through one of the largest ever booms and become less efficient?

There are no doubt numerous opinions out there but surely the industry's ability to harness people has to be one of the leading causes. Our industry has the highest rate of turnover of all sectors within the Australian economy and due to the technical nature of our business the corporate knowledge costs along with the obvious recruitment costs associated with this are significant.

As an industry we need to be continuously on the look out for greater efficiencies, if we are to maintain and build on the community and investor goodwill the industry has built over the past 6 years. Remember there are numerous industries out there people can choose to support and we need to be at the forefront of developing ourselves to attract investor and community support.

It is my belief that people and specifically the next generation of professionals are the key to reversing our incredibly poor efficiency standing.