In light of today’s unstable mine commodity market and current labor trends, it’s time for mines to rethink training and labor development. The mines that will survive and thrive will be those that take a fresh look at their operations today. Reconsider how you hire, train and manage your people in today’s uncertain environment. You’re almost certain to find some significant room for improvement.
According to a recently-released study from Ernst & Young (EY), entitled Productivity in Mining: A Case for Broad Transformation, mine productivity has declined significantly since 2000. It contends that mines need to radically rethink the ways in which they do business - including how they hire and train people.
The problems caused by the "supercycle"
In the last decade and a half, many mines have profited greatly by single-mindedly pursuing production growth, often at the expense of cost efficiency. In other words, mines were quick to expand production as much as possible when commodity prices were high, with little regard for production costs. This extended upturn became known in the mining industry as the "supercycle."
As a result, according to the report, inefficiency has become part of the institutionalized DNA of many mines. Tumbling commodity prices are squeezing profit margins, leaving many mine managers who were hired during the supercycle to figure out how to operate in a marginal environment - something many of them have never experienced before.
Traditional cost cutting is no longer enough
To remain profitable in a marginal cost environment, mines must turn their attention to eliminating waste and inefficiency in extraction and production operations, so they keep their costs below the price of the commodities they’re mining. But the EY report contends that the usual litany of cost-cutting moves isn’t enough to turn the mining industry around. What’s needed is an end-to-end transformation of the ways in which they do business.
Labor challenges in the downturn
According to EY’s research, the average decline in labor productivity for U.S. mines from 2007 to 2012 was 44%. A major contributor to this problem is an "inadequate skills mix brought on by the skills shortage (during) the boom time."
In other words, the extended boom resulted in many new mining projects coming online, which needed to be staffed and managed. Mines hired people wherever they could, even if they didn’t have the right mix of skills. Competition for scarce labor has driven up wages in many parts of the world. High commodity prices meant that many mines were very profitable, even if their processes and procedures were inefficient. To paraphrase an old business adage, "When you’re busy making money, you don’t stop to look at how much you’re leaving on the ground." The labor situation has been exacerbated by the retirement of large numbers of baby boomers.
"Lack of organizational capability... is a challenge caused by the increasing number of projects globally, increasing technical difficulty, and the retirement of a generation of professionals," the report explains. EY makes it abundantly clear that many people working in the mining industry aren’t equipped to handle this perfect storm of declining mineral prices, rampant inefficiency and labor turnover: "Many survey respondents recognized that due to the prevailing skills shortage in the boom time, many people who are currently in the sector do not have the right skills to operate under a cost-constrained environment. And indeed, labor inefficiency in large operations is a major cause of productivity problems... The greatest challenges identified (by survey respondents) are with experience, coordination and supervision, and so a higher level of skills development is needed to enable long-term success."
What does this have to do with training? EY makes the point very clearly: Mines must take a fresh look at skills development - from new-hire training to preparing workers to become supervisors and managers. "New ways of thinking need to be considered to analyze and assess the level of improvements the industry needs... (including) standardization of work procedures." This informative report recommends several questions you should ask about your own mine operations and the need for end-to-end transformation to power sustainable growth: Are your initiatives adding to the long-term bottom line or just moving the problem? A case in point with mine training: Ineffective computer-based training, where new hires don't retain enough knowledge when they transition to field training, simply pushes the problem downstream. Field trainers and supervisors must then conduct remedial training in order to help these new hires to reach an acceptable level of competency. Inconsistencies in training lead to inconsistencies in operator performance, which tends to have a negative impact on a mine’s production. Why not solve the underlying training problem by rethinking HOW you train? Here are some questions you ought to ask:
Are you taking into consideration the unique needs of adult learners?
Have you identified the key pieces of knowledge they must learn?
Are you using blended learning to ensure that, no matter what a trainee’s preferred medium of learning is, they’ll understand and retain the knowledge they need to be safe, productive workers?
How can you tie training more strongly to your current business needs? Optimizing training can lead to faster on-boarding, improved use of your field trainers’ time and a more consistent level of production from your equipment operators. We have data to prove it (click here to access our report on the results we achieved with our TruckLogic™ haul truck operator training curriculum at Suncor's Millennium Mine). Are you thinking about the problem conventionally or with a value-chain view? Map out the process of training, from the time a new hire enters the property until he or she is approved for independent operation. What steps aren’t adding value to the process? Don’t just consider your part of the process; look at the upstream and downstream steps, too. For example, the places where new hires are handed off from one person to another are often where disconnects in communication and inefficiencies happen.
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