BHP Billiton backflips on contractors due to safety concerns
Posted on February 16, 2010
BHP Billiton has been throughout the business newspapers over the last week following statements from the CEO, Marius Kloppers, but there was a fascinating article in the Australian Financial Review on 15 February 2010 (only available online through subscription. There is a link to the ABIX abstract HERE )
The article discusses the deaths that have plagued BHP Billiton but not its Australian rival Rio Tinto. Rio Tinto does not use contractors, BHP does. BHP Billiton has decided to cut 7,000 contractor positions in the Pilbara and replace them with employees, even though there is a skilled labour shortage in the region. This decision is seen as the company giving in to pressure over the use of contractors as. compared with the example of RIO Tinto, employees are safer.
No mining corporation is going to perform such a backflip purely on safety grounds, much as we would like. Other pressures include reducing the labour-related costs of BHP merger with Rio Tinto.
One risk is that increasing staffing levels may provide an “in” for unions under the new industrial relations regime. Paul Howes of the Australian Workers Union has identified the Pilbara region as a target. In terms of safety, the risk is small. For the corporations and, perhaps shareholders, the longevity of the anti-union stance Rio Tinto adopted in the 1990s is likely to be tested. The integration of the IR cultures and processes will be very interesting.
The article by Jo Clarke says that BHP’s move to contractors in the first place was an acknowledgement that it could not manage its unionised workforce. This makes the change back even more fascinating.
In the article, Phil Dight of the Australian Centre for Geomachanics is quoted:
“I have not seen the evidence to support the contention that contractor mining today is less safe than owner-operator”.
It is fair to assume, though, that such a major and costly decision by a huge mining corporation suggests that such evidence does exist.
The question that other corporations must now ask is “if BHP Billiton believes employees are safer than contractors, even though the labour costs may be higher, should we persist with onerous contractor management issues?”
Revisit the labour costs in light of BHP Billiton’s decision, the changed industrial relations and OHS climates, and the increased focus on workplace fatalities and make your own decision.
Cost of a Near Miss
In October 2009, the Olympic Dam copper and uranium mine operated by BHP Billiton had a malfunction with its hoist. The hoist fell hundreds of metres and cut production at the mine by 75%. On 11 February 2010, the cost of that incident has been estimated by the company at almost $A230 million.
There were no injuries associated with the failure of the braking system on the hoist but the opportunity to allocate a cost to a near-miss industrial incident occurs rarely and this incident should be logged in the minds of OHS professionals.