Hollowing out of Australian industry

hollowing out of Australian industryThe strong Australian dollar and high operating costs are taking their toll on Australian industry. So far this year, we have catalogued 36 major job loss announcements. The layoffs are especially prevalent in the manufacturing sector which is losing about 75 jobs a day, or roughly one every 19 minutes.

Major Job Cut Announcements
DateOrganisationJob LossesReason
13-Jan-13BlueScope Steel170Downturn in demand due to high $A
16-Jan-13Boral700To reduce costs to 'a more sustainable level'
21-Feb-13Telstra648Cost-cutting at its Sensis business
21-Feb-13Origin Energy350Falling profitability
21-Feb-13Iluka Resources200Response to sharp fall in full-year earnings
4-Mar-13QBE Insurance150Cost cutting at its Sydney operations
28-Mar-13Newcrest Mining150Cost cutting at Melbourne and Brisbane offices
08-Apr-13General Motors Holden500Production uncompetitive against imports
07-May-13SMR Automotive90Cutting contractors and voluntary redundancies
13-May-13BAE Systems100Defence spending cuts
14-May-13Coffey International150Project delays and weakening demand
22-May-13GlaxoSmithKline120Redundancies at its Boronia plant
23-May-13Ford Australia1,200Closure of Victorian car plants by 2016
24-May-13Golder Associates140'Changed economic and industry conditions'
27-May-13Crown50Reduction of admin and back office staff
11-Jun-13WA Newspapers100Declining circulation
12-Jun-13Target260Restructure of store support network
20-Jun-13ANZ70Off-shoring of call centre jobs
27-Jun-13Glencore Xstrata450Cost cutting at Newlands and Oaky Creek mines
22-Jul-13Rio Tinto78Contractors sacked at Argyle mine
22-Aug-13Murray Goulburn72Improve productivity and cost competitiveness
29-Aug-13National Australia Bank571Cost reduction strategy
10-Sep-13Elders Rural150Restructure of regional offices
17-Sep-13Yancoal60Production cuts due to falling coal prices
25-Sep-13CBH Resources51Low commodity prices and high production costs
25-Sep-13Telstra1,100Cost cutting in its Operations division
26-Sep-13Pfizer Australia140Closure of Sydney manufacturing plant
9-Oct-13Westpac Banking Corp65Cutting managers in retail network
15-Oct-13Toyota Australia100Voluntary redundancies at its plant in Altona
24-Oct-13Simplot Australia228Downsizing of Bathurst and Devonport plants
25-Oct-13IBM Australia1,000Restructure. Jobs to go in early 2014
25-Oct-13Electrolux544Closure of factory in Orange, NSW by 2016
06-Nov-13Caterpillar200Movement of production to Thailand
08-Nov-13CSIRO600Hiring freeze on non-permanent employees
08-Nov-13Qantas300Closure of Avalon maintenance facility in 2014
12-Nov-13Seven Group Holdings630Slowdown in mining industry
20-Nov-13BP Australasia300Cost-cutting at head office, fuel subsidiary
5-Dec-13Qantas Airways1,000Job cuts after warning of massive full-year loss
Last updated: 5 December 2013

In the near-term, it’s hard to see this situation improving. The gap between income per hour worked and productivity has developed into a chasm since 2002. The surge in incomes is much faster than in the previous decade and faster than in almost any other industrial country.

Income versus productivity

Unless productivity picks up dramatically, which is unlikely given recent trends in capital spending, incomes need to decline over the next several years. This is also a long shot which means that more layoffs are inevitable and more business closures and downsizing are on the horizon.

This has clear implications for the commercial property market, especially the demand for retailing and industrial warehouse space. In this regard, it is interesting that the S&P/ASX 200 Real Estate Index (A-REIT) has not bettered its mid-year peak of 1143.9, unlike the broader market which is at a five-year high.

Hollowing out of industry

If you know of other job cuts that are not on the list, or have other comments to make, let us know in the section below.

  • Robert Holt

    I know that BlueScope Steel cut a lot of jobs at Hastings earlier this year. I think it was about 200 or so.

    • staff

      Thanks Robert – we have now added that announcement.

  • R Bailey

    What about Holden and you might as well Toyota while you are at it. We just can’t compete with the costs that are imposed on businesses compared to other countries.