The high paying fly-in fly-out (FIFO) jobs on Australian mining sites, so lucrative during the resources boom, are going the way of iron ore prices — down.
The mining industry now needs its employees to work longer for the same wages or less. Those big jobs, available at the height of the boom, offering $120,000 a year to drive a truck can’t be found anymore.
Ryan Hathrill, the Perth director of recruiters Robert Walters, says all numbers are shrinking, including the number of jobs, the wages and the benefits.
“We’ve got two very tough years ahead of us,” he told Business Insider. “With iron ore, the demand is down and the price is down. The same can be said for workers, the demand for labour at all levels from executive all the way down to the bottom.”
The same is happening with oil and gas. “It used to be cuts in mining and engineering but now it’s cuts across the entire resources space,” he says. “I would say the gloss is off resources completely, not just mining.”
Fortescue Metals today announced it was ending its, eight days on, six days off roster system – highly-prized by workers – for a more industry standard two weeks on, one off.
The change brings good cost savings to Fortescue, with an employee base of 4,600. The pure play iron ore miner is under considerable and growing cost pressure as prices for ore keep falling.
The new roster means FIFO workers will be working 66% of the time rather than almost 56% under the old, more generous system.
Or looking at it from the point of a mine worker, they will be home only one-third of the time in a work cycle. Under the old system it was more than 42%.
This means Fortescue will get the benefit of keeping their workers at mine sites longer before having to move them back home. Their workers will be at the site longer for the same pay.
“I commend FMG (Fortescue) for doing this,” says Hathrill of Robert Walters. “I think this is a really good move.
“Everybody knows iron ore is in for a tough time in the next two years and everyone knows they are going to have to cut their costs while ore prices are the worst they’ve ever been.”
The alternative is to mothball operations, just like Atlas Iron, a move which put 600 out of work and is likely to trigger knock-on effects with mining services suppliers losing big business.
Atlas’s margins have been destroyed by iron ore price which have fallen 60% over the past 12 months to lows of around $46 a tonne, well below the company’s break even price of around $60 a tonne.
The bigger miners have a lower cost per tonne but further big falls would make even the largest producers, such as BHP, unprofitable for iron ore.
“There is an impact on the family lives that FIFO workers have in terms of how much they time they spend at home (with the new rosters),” Hathrill says. “But it’s saving Fortescue money. It’s actually making them more efficient but at the same time the FIFO workers will be on two weeks and off one week … but they will be working.
“If they lost their jobs, like the ones at Atlas, where to from there?”
His sentiment is echoed by many FIFO families who are generally concerned about the impact of family life and children but happy to be still working.
One woman said: “Happy he still has a job. We’ll roll with it. Only problem I can see is that they are being kept on the same pay. Working more, but same pay. I understand trying to keep costs down, but thought pay would increase slightly to account for extra work.”
Another said: “Trying to look at silver linings like him still having a job but very sad to be honest, I miss my hubby on 8/6, 2/1 is gong to be a big adjustment, and the poor kids are going to miss their Dad so much more.”