Bond James Bond
July 31st, 2004, 08:45 AM
The Wall Street Journal
Wednesday, July 21, 2004
Mining Boom Leaves Vein of Resentment In Australian Towns
Jobs Go to Transient Workers As Companies Cut Costs; Rusting Pipes in Newman
By Robert Guy Matthews
NEWMAN, Western Australia - Chartered planes buzz over this little town, bringing crews to to mine rich deposits of muddy brown ore. As they land, quarter-mile-long trains carrying the ore rumble toward the sea, where it will be put on By boats to China.
An isolated corner of northwestern Australia is once again a hive of activity, 40 years after speculators discovered one of the world's largest reserves of iron ore here.
But the mining companies that make up a big part of Australia's economy don't operate as they did in the 1960's, when they built up entire towns from scratch. Today, the thinking goes, it's cheapest to fly in workers for short periods of hard work and good pay, while keeping most of the management in Perth, 600 miles away.
The result: Former boom towns are going bust - even as the mines around them prosper. Newman, population 3,500 and this region's biggest city, is running a deficit equivalent to about US$880,000. The nearby town of Tom Price, named after an American who scouted the area for iron ore only to die at his desk in 1963 before the mine opened, can't repair its roads. Doctors and dentists are fleeing.
John Moore, 36 years old, left Newman a year ago, but came back to work in the mine here. He takes a two-hour chartered plane flight to his former hometown and spends the next 12 to 14 days living in company-owned housing and operating grading machinery. Then he flies back to Perth for 10 days.
"I know it doesn't make sense," he says. "But I had to ask myself, why would I continue to live in Newman when I could move to the city and fly back to Newman to work at better pay?"
Mike Everest moved out of Newman a few years ago because he and his wife wanted better schools for their daughter but was lured back by the chance to earn a base salary of $1,270 a week, up from $675 a week during his earlier stint in mining. He decided to commute to the mines while his family stays in a Perth suburb.
Newman today offers an unusual twist on the outsourcing boom that is displacing workers all over the world. While using "fly-ins" might seem costly and cumbersome, mining officials say it's more efficient to hire at a single office in Perth, with a population of 1 million, than at a half-dozen towns spread out over hundreds of miles.
In Perth, companies can tap a better-educated work force able to run computerized machinery. Plus, when the workers are flown in, companies don't have to pay for permanent homes in the mining towns. While base salaries for workers are much higher than before, the total cost of their wages and benefits may be the same or even less.
"We had to cut costs and become more competitive or there would be no mining at all in Australia," says David Parker, director of the Chamber of Minerals and Energy of Western Australia Inc., an umbrella group that represents the interests of big mining companies and many of their contractors.
White settlers long found this region, called Pilbara, inhospitable and left Aboriginials to live here without interference. Summer temperatures hang at 118 degrees as hot winds blow in from the Great Sandy Desert. The cyclone season brings torrential rains.
When iron ore was discovered in Pilbara in the late 1950's and early 1960's, companies built towns and offered high salaries, swimming pools, free housing and plenty of air conditioning to workers. They planted thousands of trees and built hospitals, schools, shopping centers and banks.
People came. Many bonded with the red-and golden-hued land and clear endless blue sky, got married and had children. Sharon Theil came to Newman 15 years ago to visit her sister, intending to stay for just six months. She changed her mind after seeing the potential for a quiet, settled and prosperous life.
"It was a young town and there were a lot of young families and everybody knew everybody. There was plenty of sport and and people would come to your house and hang out at the barbie," says Mrs. Thiel, who got a job with a mining company in administration and still works there.
When Mr. Everest lived there, he drove a dump truck for the company now called BHP Billiton Ltd. and had a house with a pool that was paid for by the company. It even threw in $30,000 for home improvements. "It was a great deal," he says.
Last year, this mining area produced about $6.1 billion of sold goods, most of which are minerals. Of that the government took $313 million as royalties - essentially taxes. The mining towns received $5 million, but most of the royalties went to the big cities where the majority of Australia's 20 million people live. The minerals are considered the nation's mineral wealth, not the property of any one region.
Originally, mining towns didn't need much tax revenue because mining companies built the roads, sewers and parks. But when mining hit a recession in the late 1980's, the companies got out of the business of administering towns. Over time, the towns began falling apart. Cyclones whip through each year, back up sewers, washing out roads, and shutting down electricity.
"The pipes are rusting and there is a gaping hole in the middle of the road," says Allen Cooper, chief executive officer for the eastern section of Pilbara, which encompasses Newman and Tom Price. "The 30-year-old public toilets need to be fixed or bulldozed." The town swimming pool is closed because the town can't afford its keepup.
Even as the towns get more rundown, the industry that has supported them is flourishing, thanks to the rise of China. Already, China is Australia's third largest trading partner, behind Japan and the US. Earlier this year, BHP Billiton sealed a $9 billion deal to sell iron ore to four Chinese steel mills. Other mining companies are expanding here too, and they've created more than 1,000 new jobs.
Most of those are filled by transients who are flown in and out of the region. Indeed, many of the new high-paying jobs aren't even posted in the mining towns.
Businesses that cater to a transient work force are booming. The small airport bustles, with charter flights arriving every Thursday. The Pit Stop Deli, located at a junction near the mining camps, has never been busier, employees say.
Still, some local people resent the transients. Connie Drucker looks overhead at the chartered planes coming in with workers from hundreds of miles away. "These planes are robbing the fortunes out from under Newman," says Mrs. Drucker, whose former husband used to be a miner.
Workers flying in and flying out "are here to work long hours and don't hang around," says Ron Yuryevich, the mayor of Kalgoorlie, a gold-mining hamlet in the southern part of Western Australia that has been passed over by the recent boom. "They make their money here and then they spend it all when they get home."
Officials such as Mr. Yuryevich would like more royalty money from the mining revenue but the government says mining regions already get more than other places per capita. Some local legislators have even introduced bills that would restrict the number of "fly-ins," although they haven't come to a vote yet.
People in Newman have to drive nearly three hours to see a dentist, so the town built an office with new dental equipment. "For twelve months it has just been sitting there empty," says Rachel Helsby, who edits the town newspaper. "They thought that new equipment would attract a dentist. No one has come." :( :lol:
Mrs. Thiel, the 15-year resident of Newman, heads the Pilbara Sustainability Task Force, a group that pressures mining contractors to use local workers. But even she has conflicted feelings. Her husband, John, drives a hydraulic lift truck for BHP and they have three children, 12, 10 and 6. Their eldest is about to go to high school and the Thiels are thining of sending her to a boarding school, a $19,000 expense per year, because they don't think Newman's high school will offer the best education.
Meanwhile, Mr. Everest, who left Newman but was commuting back to the town, recently quit. "Three weeks is a long time," he said of his stints in Newman. "You work 12-hour shifts without a break. I was calling my wife twice a day just to hear her voice. All you do is go back to the room, watch TV and go to bed early. It was a pretty hard life."
Wednesday, July 21, 2004
Mining Boom Leaves Vein of Resentment In Australian Towns
Jobs Go to Transient Workers As Companies Cut Costs; Rusting Pipes in Newman
By Robert Guy Matthews
NEWMAN, Western Australia - Chartered planes buzz over this little town, bringing crews to to mine rich deposits of muddy brown ore. As they land, quarter-mile-long trains carrying the ore rumble toward the sea, where it will be put on By boats to China.
An isolated corner of northwestern Australia is once again a hive of activity, 40 years after speculators discovered one of the world's largest reserves of iron ore here.
But the mining companies that make up a big part of Australia's economy don't operate as they did in the 1960's, when they built up entire towns from scratch. Today, the thinking goes, it's cheapest to fly in workers for short periods of hard work and good pay, while keeping most of the management in Perth, 600 miles away.
The result: Former boom towns are going bust - even as the mines around them prosper. Newman, population 3,500 and this region's biggest city, is running a deficit equivalent to about US$880,000. The nearby town of Tom Price, named after an American who scouted the area for iron ore only to die at his desk in 1963 before the mine opened, can't repair its roads. Doctors and dentists are fleeing.
John Moore, 36 years old, left Newman a year ago, but came back to work in the mine here. He takes a two-hour chartered plane flight to his former hometown and spends the next 12 to 14 days living in company-owned housing and operating grading machinery. Then he flies back to Perth for 10 days.
"I know it doesn't make sense," he says. "But I had to ask myself, why would I continue to live in Newman when I could move to the city and fly back to Newman to work at better pay?"
Mike Everest moved out of Newman a few years ago because he and his wife wanted better schools for their daughter but was lured back by the chance to earn a base salary of $1,270 a week, up from $675 a week during his earlier stint in mining. He decided to commute to the mines while his family stays in a Perth suburb.
Newman today offers an unusual twist on the outsourcing boom that is displacing workers all over the world. While using "fly-ins" might seem costly and cumbersome, mining officials say it's more efficient to hire at a single office in Perth, with a population of 1 million, than at a half-dozen towns spread out over hundreds of miles.
In Perth, companies can tap a better-educated work force able to run computerized machinery. Plus, when the workers are flown in, companies don't have to pay for permanent homes in the mining towns. While base salaries for workers are much higher than before, the total cost of their wages and benefits may be the same or even less.
"We had to cut costs and become more competitive or there would be no mining at all in Australia," says David Parker, director of the Chamber of Minerals and Energy of Western Australia Inc., an umbrella group that represents the interests of big mining companies and many of their contractors.
White settlers long found this region, called Pilbara, inhospitable and left Aboriginials to live here without interference. Summer temperatures hang at 118 degrees as hot winds blow in from the Great Sandy Desert. The cyclone season brings torrential rains.
When iron ore was discovered in Pilbara in the late 1950's and early 1960's, companies built towns and offered high salaries, swimming pools, free housing and plenty of air conditioning to workers. They planted thousands of trees and built hospitals, schools, shopping centers and banks.
People came. Many bonded with the red-and golden-hued land and clear endless blue sky, got married and had children. Sharon Theil came to Newman 15 years ago to visit her sister, intending to stay for just six months. She changed her mind after seeing the potential for a quiet, settled and prosperous life.
"It was a young town and there were a lot of young families and everybody knew everybody. There was plenty of sport and and people would come to your house and hang out at the barbie," says Mrs. Thiel, who got a job with a mining company in administration and still works there.
When Mr. Everest lived there, he drove a dump truck for the company now called BHP Billiton Ltd. and had a house with a pool that was paid for by the company. It even threw in $30,000 for home improvements. "It was a great deal," he says.
Last year, this mining area produced about $6.1 billion of sold goods, most of which are minerals. Of that the government took $313 million as royalties - essentially taxes. The mining towns received $5 million, but most of the royalties went to the big cities where the majority of Australia's 20 million people live. The minerals are considered the nation's mineral wealth, not the property of any one region.
Originally, mining towns didn't need much tax revenue because mining companies built the roads, sewers and parks. But when mining hit a recession in the late 1980's, the companies got out of the business of administering towns. Over time, the towns began falling apart. Cyclones whip through each year, back up sewers, washing out roads, and shutting down electricity.
"The pipes are rusting and there is a gaping hole in the middle of the road," says Allen Cooper, chief executive officer for the eastern section of Pilbara, which encompasses Newman and Tom Price. "The 30-year-old public toilets need to be fixed or bulldozed." The town swimming pool is closed because the town can't afford its keepup.
Even as the towns get more rundown, the industry that has supported them is flourishing, thanks to the rise of China. Already, China is Australia's third largest trading partner, behind Japan and the US. Earlier this year, BHP Billiton sealed a $9 billion deal to sell iron ore to four Chinese steel mills. Other mining companies are expanding here too, and they've created more than 1,000 new jobs.
Most of those are filled by transients who are flown in and out of the region. Indeed, many of the new high-paying jobs aren't even posted in the mining towns.
Businesses that cater to a transient work force are booming. The small airport bustles, with charter flights arriving every Thursday. The Pit Stop Deli, located at a junction near the mining camps, has never been busier, employees say.
Still, some local people resent the transients. Connie Drucker looks overhead at the chartered planes coming in with workers from hundreds of miles away. "These planes are robbing the fortunes out from under Newman," says Mrs. Drucker, whose former husband used to be a miner.
Workers flying in and flying out "are here to work long hours and don't hang around," says Ron Yuryevich, the mayor of Kalgoorlie, a gold-mining hamlet in the southern part of Western Australia that has been passed over by the recent boom. "They make their money here and then they spend it all when they get home."
Officials such as Mr. Yuryevich would like more royalty money from the mining revenue but the government says mining regions already get more than other places per capita. Some local legislators have even introduced bills that would restrict the number of "fly-ins," although they haven't come to a vote yet.
People in Newman have to drive nearly three hours to see a dentist, so the town built an office with new dental equipment. "For twelve months it has just been sitting there empty," says Rachel Helsby, who edits the town newspaper. "They thought that new equipment would attract a dentist. No one has come." :( :lol:
Mrs. Thiel, the 15-year resident of Newman, heads the Pilbara Sustainability Task Force, a group that pressures mining contractors to use local workers. But even she has conflicted feelings. Her husband, John, drives a hydraulic lift truck for BHP and they have three children, 12, 10 and 6. Their eldest is about to go to high school and the Thiels are thining of sending her to a boarding school, a $19,000 expense per year, because they don't think Newman's high school will offer the best education.
Meanwhile, Mr. Everest, who left Newman but was commuting back to the town, recently quit. "Three weeks is a long time," he said of his stints in Newman. "You work 12-hour shifts without a break. I was calling my wife twice a day just to hear her voice. All you do is go back to the room, watch TV and go to bed early. It was a pretty hard life."