MRG featured in Business in Vancouver

Business in Vancouver December 2-8, 2008; issue 997

Mining downturn hitting workforce hard

Recruitment survey finds 90% of companies have had to change business plans because of the rapid drop in global demand for raw materials

Krisendra Bisetty

‘Tis the season to be looking for another job?

That seems to be the case in B.C.’s once hot mining and mineral exploration industry, which is rapidly thinning out its ranks as it enters survival mode.

A new survey released exclusively to Business in Vancouver reveals that a lack of investment capital and falling commodity prices are starting to take a massive human resources toll.

For the past three years, trying to find candidates for the booming industry was “like pulling teeth” for Andrew Pollard, president of the Mining Recruitment Group.

“Now my phone’s been ringing off the hook,” said Pollard, whose Vancouver-based company is Western Canada’s only exclusively mining-focused recruitment agency. “That’s what motivated me to do this survey, because I wanted to get an accurate representation of what’s going on in these companies.”

Canvassing approximately 700 senior executive contacts within the industry, about 10% of whom had responded, Pollard found that:

85% have scaled back on their exploration and development plans;
68% have reduced their marketing and investor relations budget;
60% have already begun laying off employees;
40% have implemented company-wide hiring restrictions;
34% noted a reduction or elimination of incentive pay; and
32% have made salary cuts.

With drastic cost-cutting measures implemented and a fear of the availability of capital, 78% of respondents do not expect to recruit over the next six months, said Pollard.

“Geologists, mining engineers, the investor relations people – those are the ones who are really feeling it right now. They are the ones getting laid off,” he said in an interview. “They are the ones who are scared.”

At some Vancouver mining head offices, there’s been an almost clean sweep of non-executive positions.

Grosso Group Management Ltd., a Vancouver-based holding company that runs four publicly traded junior resources companies – Amera Resources Corp., Blue Sky Uranium Corp., Golden Arrow Resources Corp. and IMA Exploration Inc. – has laid off almost half its 70-employee global staff in recent weeks, including about a third in Canada.

“It’s one of those terrible things that an administrator’s got to face,” said group president Joseph Grosso. “It’s greater to expand, but it is very, very painful having to contract. Unfortunately, we owe that to the people that trust us with their money.”

Some company executives are also fleeing jobs that, up until a few weeks ago, were considered high-flying and high-paying.

“The people at the helm of these companies have been through these [downturns] a number of times and a lot of them were riding the wave up,” said Pollard. “Now the short-term outlook for a lot of these people is pretty bleak over the next year. So they think now’s a good time to transition out.”

Pollard is battling to find jobs for laid off non-executive employees, although those with transferable skills like investor relations staff are having better luck.

“There’re dramatically fewer job opportunities at the moment,” he said. “I have to find the really exceptionally person in the pack right now and then go find companies that can create an opportunity, because no one’s really hiring right now.”

While the short-term sentiment looks bleak – only 12% of respondents thought that the mining sector would perform better in 2009 as compared with 2008 – the level of optimism of those on the inside track picks up thereafter.

Sixty-three per cent of respondents showed a marked difference on their perspective over a three-year period after 2009, 4% remained bearish while 33% had a neutral view.

When asked how the current economic conditions have affected their short-term business objectives, 39% admitted that their companies have been forced into survival mode.

Only 10% said that current conditions have had no effect on their plans.

For Pollard, that was the most startling aspect of the survey.

“That means 90% of companies operating within the industry have had to change plans,” said Pollard. “That’s quite a revelation.”