PriceWaterhouseCoopers warns that cost-cutting is not the entire solution to the iron-ore industry's productivity problems. Picture: Colin Murty Source: The Australian
RAPID fire cost-cutting in Australia's iron ore and coal industries spurred a long-needed productivity burst in the three months to December, a report says.
But the report by global consultancy PricewaterhouseCoopers warns austerity is not the entire solution to the sector's productivity puzzle.
It calls for an overhaul of corporate structures and a rethink of business processes, including increased automation, as it says businesses should make more from existing assets.
The report says the most immediate evidence of the productivity shake-up producing results was the radical shortening of hours worked, with the coal sector having an almost 40 per cent drop in the second half of last year.
Hours worked also dropped in the iron ore sector by 10 per cent in the last quarter of the year.
Resource companies also made savings through deferring major projects and by instituting short-term austerity measures. The report comes amid a flurry of cost cutting in the sector.
PwC's Energy, Utilities and Mining leader Jock O'Callaghan said productivity improvements would continue this half, but cautioned against industry taking a stringent "austerity" approach.
Mr O'Callaghan argued savings would be unlocked through a "greater investment in processes" and "changing the way the industry does business".
"Cost-cutting should mark the first phase in a long-term plan to improve productivity."
