Update: Another nail in Australia’s prospects

Insightful Insights | Comments (42)

Update: Another nail in Australia’s prospects

Is it true that Woolworths have given marching orders to hundreds of Dan Murphy managers around Australia? Is it also true 200 managers at Dan Murphy’s in Queensland have been given six months notice with similar notices received around the country as the company reduces the number of managers per store from 4 to 3?

Queensland can hardly afford to lose more employees, what with the situation facing many in the coal sector.

Australia’s engine just keeps on slowing. Just see what Lynne Fraser had to say about the state of WA here.

What have you heard? Do you know anyone that has lost or is losing their job, being shifted to part time or temporary status?

Post Script: Following the above Post being published, Dan Murphy’s contacted yours truly to provide the following update:

A Dan Murphy’s spokesperson said:

“Dan Murphy’s is implementing a reorganisation to focus our team on delivering an improved service level to our customers.

About 100 staff members (out of an overall workforce of more than 4,500 employees) are currently involved. These staff will be selected to continue to improve in their current role or offered support and the opportunity to move to another role within Dan Murphy’s, or another part of the Woolworths business.

We do not anticipate any job losses.”

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Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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42 Comments

  1. Kelvin Ng
    :

    Hi Roger, many congratulations on your call on MMS recently. Not only was the call correct, but the analytical process behind it was very illuminating.
    Thank you for sharing!
    Kelvin

  2. Yavuz Atasoy
    :

    Hi Roger,
    On another but relavant subject. You must be pretty happy with your decision to increase investment in MMS recently. I hope it was at the lowest price and plenty.
    Yavuz

  3. savetruckloads
    :

    The reason you need to be cautiously optimistic is because: the ASX 200 is where it was 7 years ago (bargain sale!!!), we haven’t had a recession in 21 years; US steadily improving for quite a while now; China not falling off a cliff as the journalists have been preaching (to aid newspaper sales); Europe seems to have made it through the worst; if you piled into the market just before the GFC, you are now ahead despite the worst crash since WWII; and even if most Aussie Blue Chips only tracked sideways for the next 10 years, you’d still get a tidy 5.5% dividend plus franking credits! Hope you didn’t miss the 30% gains in Australian and International equities over the last 2 years by listening to the largely ill-informed financial media! Neuro-economics tells us ‘fear’ is given a much greater weighting in our minds than ‘positive’ messages! I think I’ll follow Buffet’s advice

    • Roger Montgomery
      :

      OK. I hear you. Could be right. I will be writing a reasonably detailed piece about the US, The Fed, QE and China in the next week and give a couple of scenarios that include outcomes based on whether Summers or Yellen take the Chair at the Fed. One of those scenarios looks a lot like what you have described above.

  4. josh.maunder1
    :

    Hi Roger

    I have read through your publications for a long time now. I recently graduated with an hons degree in urban and regional planning with a secondary major in environmental management. I spoke to maybe 150+ companies who all said if they had an active project would put me on. I was lucky enough to find full time work with the State Government but I know plenty of people who are struggling. That being said, I have actively invested on your advice over the past 5 years and recently bought myself a block of land well under market value. I consider myself very lucky and wonder when the day will come that I can not be scared about loosing my job due to budget cuts…
    Josh

    • Roger Montgomery
      :

      Thanks for the comments Josh. Please keep our comments in perspective. They are musing more than advice. We could very easily be wrong frequently and badly. Seek personal and professional advice before trading any securities. Nothing here or anywhere else amounts to advice. You can read our disclaimers and warnings throughout the site.

  5. James S
    :

    I run a financial planning practice in Brisbane. I have several small business clients who have had 30+ employees. Many have recently made at least 2 thirds of there employees redundant so they can run a leaner meaner machine just to make ends meet. It’s not easy out there at the moment for many SME’s not to mention the staff who have lost their job!

  6. nick.rossetto
    :

    The problem is high land prices strangling the economy. This flows into high rents for business. Change the tax system – move tax off labour and business and in to land and resources. Simple really but the elite will not allow it.

  7. Matthew
    :

    Lost my job at a major resource company as they want to outsource complex roles like Tax to India to save cost. For me it is between the devil and the deep blue sea. If the Libs take away redundancies (if not for it I would be living in my car now) should this happen again I will be finished. If Labour doesn’t pick up its game it will be harder to get any jobs. It is not that simple and there are lots in my situation. By the way when my company says managerial roles they are lying it is just to make people not complain about the job losses. I didn’t know I was management until i was shot by management. There are more job losses on the way. I wonder the former competition is doing it they havent announced major job losses. For starters at least they didn’t declare a loss this year.

  8. Robert Cameron
    :

    I see many businesses struggling to find top line growth and therefore focussing on improving staff productivity and trying to squeeze out an increase in ebit margins. Hopefully the lift in productivity leads to an improvement in the Australian economy over time helping to create new jobs for the ones that have been lost in the process

  9. shane watson
    :

    I work in the pilbara region for one of the 2 major iron ore producers. We have had an external hiring freeze on since towards the end of last year. There has been fair bit of talk on from management about productivity gains etc. & a few contractors have been let go, mainly in the office. During a quarterly update with upper management about 3 months ago the question was raised about the slowdown ect & we were told we will need to start really worrying if the iron ore price drops to around $35 per ton. This was when aud\usd was still above parity.

      • shane watson
        :

        They do not anticipate the price reaching this level within the next 10-15 years. Pilbara iron ore mines owned by the big 2 are the most profitable in the world and would pretty much be the last to close.

        There is also still a large amount of fat they can cut if need be. Wages could be cut by 10-20% pretty easily as we are all very well remunerated. Of course we would prefer they didn’t but if there was absolute carnage in the market, I don’t know anyone here who wouldn’t still prefer 20% less in their pay packet as opposed to 100% less.

        They could also increase productivity by 20-30%. There is a real crisis of management & supervision in the mining, construction, heavy engineering industries in this country. We have a highly skilled and hardworking labour force in this country but the organisation and deployment of them could be greatly improved. A lot of time and resources are wasted by poor planning, bad processes failure to prioritise correctly etc etc. I am certain this is due to the rosy operating environment that we have experienced for the last 15-20 years. It has produced inefficient management who are used to booming prices ect to paper over their average performance.

  10. Alicia Yoong
    :

    I worked in the recruitment industry for more than 25 years and I am thankful that I am currently retired. I live in Perth and I can assure you that the unemployment rate is NOT 4.9% in WA or whatever they are reporting in the media. I know of IT professionals, engineers, marketing consultants who have been made redundant and are struggling to find a job not to mention administrative service personnel. I can remember a time during the Howard years when an employer looking for blue collar workers asked me to send him anyone as long as they have two arms and two legs and a brain is optional! How times have changed. We have to get this election right. Unfortunately Colin and Troy Buswell are not making the right calls in WA and they are contributing to the situation.

  11. Yavuz Atasoy
    :

    I came to Australia 21 years ago (remember the recession we had to have? That was the time). Being from a non-English speaking background really struggled to get a job (any sort of job, including washing dishes) for a long time. I ended up in Kalgoorlie and was offered a job in one of the premier mines there ( I am and was qualified engineer). Never looked back since then. Maybe other parts of the countrry did not see it, but we survived through the periods when the price of gold crushed to $250/oz, many projects were cancelled, drill rigs lef the town, house prices crushed by about 25%. I did not believe they would ever come back. All those projects re-started a few years later. Now we know where we are, and where I am, uniterrruped employment with an average 10% annual compound increase in my salary since then. I could not ask any more from WA and Australia. It does not mean that it will stay like this, but I have well prepared myself and my family for what the future might bring financially as well as mentally.

  12. Michael
    :

    I believe that Australia’s best days lie ahead.

    Over 90% of people have a job and this will continue to be the case. Interest rates are low for those paying mortgages. Inflation is low.

    In these times, ask not what your country will do for you, but what you will do for your country.

    • Roger Montgomery
      :

      Faith is good and I also believe Australia’s best days could lie ahead provided we can invest in education (australian kids are getting relatively weaker in competition with global peers), compete on the world stage (we are expensive and uncompetitive) and reduce our reliance on sending dirt overseas at the expense of everything else. It would also be handy if we import a few smart young people to replace our ageing population of retiring golfers.

      If you think of China as a cow, its tail as its slowing economic growth and Australia as a fly on its rump, when the tail comes to swat the fly, it will be of no consequence to the cow but the fly is dead.

      I can hear people reading your comments saying; “Now that I have lost my job manufacturing cars, working in the coal industry or in mining services, I will do what I can Michael.”

  13. tom k
    :

    Hi Roger,

    I work in a financial planning firm in Melbourne’s green-leafy inner east (where the median house prices are $1 million+) and the shopping strip here is quite dead. The only businesses with a pulse are: us, an alternative medicine clinic & 2 cafes. There is also a “big 4” bank branch but last time i had a visit it had only 3 people manning the fort instead of 10. Vacancy rates are bout 30%

    Unemployment rate is so not 5.7%

  14. Ronald Williams
    :

    It had to happen sooner or later – Brisbane one of the most expensive countries in the world.
    Prices here higher than most of the west.
    Person on average wage cannot buy a home.
    So different when I came 30 years ago.

  15. Ian Giraud
    :

    I am a young engineer working in the WA oil & gas industry. Luckily the company I work for is not currently seeing a slow down. However, I know 3 young engineers in the mining and civil works sector who have been made redundant. For one of the unfortunates, who worked in the mining sector, this is the second time they have been made redundant in 18 months.

  16. Michael Donohue
    :

    My uncle lost his job as a contractor in a Queensland coal wash plant (was part of 300 or so who lost their jobs) with Xstrata/Glencore to announce more job losses in the coming months. A very noticeable amount of people have left the nearby mining town of Glenden.

  17. PROPLAN
    :

    We run a 9 staff financial planning business in Brisbane and recently advertised for a part time (24 hour) admin position, we received over 100 applications.

  19. garry howlett
    :

    An employee of monadelphous group with a managerial position was telling me that the company is all but finished the oilsearch project in PNG (4 to 6 weeks), and the quandary the company now has is where to relocate the staff. Some will be given back office jobs???, while others will or have been laid off. Looks as though even the strong are finding headwinds.

  20. Tom Smith
    :

    As a student in Queensland employed (barely) by the Woolworths liquor division, I have been privy to some of the changes in Dan Murphy, moving towards a new store management structure and changes to convenience liquor (BWS). The motivation in reducing store mgmt at Dan Murphy was to provide more customer service on the floor in the form of casual employment. Further, the convenience liquor in at least the Brisbane Metro area have been cutting wages budgets very aggressively, lots of significant underemployment all round. For WOW, wages and staff are simply a friction and a cost that needs to be reduced at any (social) cost.

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