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Australia (2014) has a high cost, low productivity gas sector. Improving productivity of the work force holds out significant potential to support Australia's drive to become a world leading exporter of LNG. This presentation sets out recent global survey data on Australia's competitiveness, with specific focus on workforce related measures, and presents several case studies of how these productivity issues can be overcome.
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Improving
workplace
productivity
Steve Giles
Geoffrey Cann
26 November 2014
Cooperation in labour-employer relations 103
Flexibility of wage determination 135
Hiring and firing practices 137
Redundancy costs, weeks of salary 49
Effect of taxation on incentives to work 59
Pay and productivity 113
Reliance on professional management 11
Country capacity to retain talent 37
Country capacity to attract talent 17
Women in labour force, ratio to men 60
12 Pillars Score
Institutions 23
Infrastructure 18
Macro-economic Environment 25
Health & Primary Education 22
Higher Education & Training 15
Goods Market Efficiency 31
Financial Market Developments 7
Technological Readiness 12
Market Size 18
Business Sophistication 30
Innovation 22
The Australian workforce productivity challenge
Source: Global Competitiveness Report 2013/14 – World Economic Forum 2
12 Pillars Score
Institutions 23
Infrastructure 18
Macro-economic Environment 25
Health & Primary Education 22
Higher Education & Training 15
Goods Market Efficiency 31
Labour Market Efficiency 54
Financial Market Developments 7
Technological Readiness 12
Market Size 18
Business Sophistication 30
Innovation 22
12 Pillars Score
Institutions 23
Infrastructure 18
Macro-economic Environment 25
Health & Primary Education 22
Higher Education & Training 15
Goods Market Efficiency 31
Labour Market Efficiency 54
Financial Market Developments 7
Technological Readiness 12
Market Size 18
Business Sophistication 30
Innovation 22
Total Australia 21
12 Pillars Score
Institutions 23
Infrastructure 18
Macro-economic Environment 25
Health & Primary Education 22
Higher Education & Training 15
Goods Market Efficiency 31
Labour Market Efficiency 54
Financial Market Developments 7
Technological Readiness 12
Market Size 18
Business Sophistication 30
Innovation 22
Total Australia 21
Total NZ 18
How is LNG doing?
Labour costs:
• 35% higher than the US
• On par with Norway, the highest paid workers globally
• Labour shortage drove cost up
Productivity:
• Australian workers 65-70% productivity of US Gulf Coast workers
• Stand-around time as high as 40%
• 150 separate legislative acts governed by 50 agencies providing oversight to
the industry
Sources: Hays Oil & Gas Global Salary Guide 2013; APPEA 3
Cost comparisons on LNG projects
Queensland LNG projects have to remove ~$3/gj
to be equivalent in cost to Canadian LNG
4
Spot price
Costs drivers and productivity drivers must be
considered holistically
People Systems
Performance Organisation
Productivity
Assets
Processes
Supply Chain
5
Where’s the opportunity now?
Production
Construction Go
Live Operations Ramp Up
Post- FID Practical Completion
First Gas
Name-Plate
Production Achieved
Total
Workforce
How do we
reduce labour
cost while
safely meeting
commitments?
6
Case Studies
Lean culture change
Time
Pro
du
cti
vit
y
Shift Change
Post Lean
Pre Lean
Shift time wastage was
reduced. Unexpectedly
overall productivity also
increased
Illustrative Only
• Lean project focussed on productivity of specific activities
• Approach identified the need for behavioural and cultural changes
• Reduced shift change time by 10 minutes per shift, but also significantly
improved overall production
8
Measure what matters
• Traditional performance management practices alone will not work
• A factory mind-set must be adopted
NPAT ($)
Resource & Reserves
Volume
Price
Production Cost
SG&A
Income Tax
Property, Reserves & Resources
Plant & Equipment
Inventory
Receivables & Payables
Funds
Company Strengths
Business Continuity
Safety & Wellbeing
External Factors
Revenue Growth
Operating Margin
Asset Efficiency
Citizenship
Shareholder
Value
Task 1a
Task 1b
Part 1
Ready for
Task 2
Task 2
• Improve cycle time
• Remove bottlenecks
• Assign individual task accountability
• Measure performance
9
Show what you are measuring
10
The newest energy resource is also the
industry’s oldest – human
11
12
Geoffrey Cann is a Partner in the Deloitte Brisbane office,
where he focuses on helping energy and resources companies
address their growth, talent and productivity challenges. He
has twenty-four years of management consulting experience
gained through engagements in Canada, the United States,
Hong Kong, China, Japan, Korea and the Caribbean
[email protected] 0447 366 333
www.geoffreycann.com
Steve Giles is a Director in Deloitte’s Human Capital practice
and has a primary focus in supporting strategic human
resource initiatives in the energy and resources sector. His
experience includes operating model reviews, organisational
design, talent management and workforce planning and
strategies.
[email protected] 0414 824 778
