Skip navigation

Daily Archives: April 16th, 2009

John Garnaut, Beijing
April 16, 2009 – 5:31PM

Update China has posted the lowest annual GDP growth in at least 17 years thanks to a 20% contraction in exports during March quarter.

But China still recorded growth of 6.1% despite economic contraction across the world as the government’s stimulus flowed through to higher investment in roads, railways, power generators, mining and real estate.

Fixed asset investment, which makes up more than two-fifths of Chinese GDP, surged 28.6% in the year to the March, up from 26.5% in the previous two months.

Railway construction has more than tripled since a year ago.

The surging investment has been fuelled by direct government spending and a government-driven explosion in new lending which, in turn, has lifted demand for cement, steel and other industrial products.

The closely watched industrial production figure rose from 3.8% growth in the year to January/February to 8.3% in the year to March, as flagged earlier by Premier Wen Jiabao.

And the rising industrial production has boosted commodities markets across the world in recent months, including exports from Australia.

”Major infrastructure projects are being implemented at an accelerated pace,” wrote Jing Ulrich, China economist at JPMorgan.

But Ms Ulrich said private sector real estate construction will remain subdued as the market works off excess supply.

Australian impact

News of slower economic growth in China pared gains on Australia’s stock markets and sent the Australian dollar briefly lower as investors assessed the effects on Australia. China may overtake Japan this year as the country’s largest trading partner.

Slower Chinese growth ”provides stark evidence of the impact of the global recession on the mining boom which supercharged Australia’s economy in recent years,” Treasurer Wayne Swan said in statement.

”The simple fact is that a global recession, and deep downturns for our key trading partners, make it certain that our own forecasts for growth and revenue in the budget will be substantially worse than in UEFO (Updated Economic and Fiscal Outlook released in February),” Mr Swan said.

Holding up

China’s growth, though, remains among the fastest in the world.

“The overall national economy showed positive changes, with better performance than expected,” Li Xiaochao, spokesman for the National Bureau of Statistics, said at a news conference.

Still, Li said the drop in exports was leading to falling corporate profits, reducing government revenues and increasing difficulties in creating jobs.

Economist Ray Attrill of 4Cast said China’s economy showed signs of holding up despite the slowdown.

”Industrial output was up 8.3% on the year (in March), which was a fair bit better than economists were looking for,” he said. ”And fixed asset investment is pretty strong.”

Both of those are the sub-components of GDP that have the most impact for the Austalian economy, he said, because ”both are linked to demand for resources.”

”In both those respects we’ve actually got pretty strong numbers.”

Investment in fixed assets grew 28.8% year on year, the National Bureau of Statistics said. Industrial output was 5.1% higher for the first quarter as a whole, implying production quickened last month.

Stimulus efforts

China’s economy shows signs that Premier Wen Jiabao’s 4 trillion yuan ($815 billion) stimulus plan is working, fueling a surge in bank lending and spurring the Shanghai Composite Index to an eight-month high. The State Council said yesterday that it will cut export taxes for some electronics products and offer cheaper credit to manufacturers to spur shipments overseas.

”The recovery is still at a very fragile stage,” said Yu Song, an economist at Goldman Sachs Group Inc. in Hong Kong. ”The tug of war between upside risks from domestic investments and downside risks from weaker external demand will continue.”

Today’s report coincides with a statement from US Treasury Secretary Timothy Geithner that China isn’t a currency manipulator. His stance eases pressure on China to allow its currency to rise, hurting efforts to revive exports.

From July 1 to the end of last year, the yuan rose just 0.4% against the US dollar. Its value has been little changed since the beginning of the year, closing yesterday at 6.8325 per US dollar.

Global Recessions

China’s expansion lagged behind its 9% growth for all of 2008 and 13% gain in 2007. It also contrasted with recessions in economies around the world. The Organization for Economic Cooperation and Development predicts a 6.3% expansion for China this year, compared with a 4% contraction in the US and a 6.6% decline in Japan.

There are signs that other economies may have seen the worst. The Federal Reserve said yesterday the US contraction slowed across several of the nation’s biggest regional economies last month. In Japan, economists from Morgan Stanley and Macquarie Securities Ltd. increased their GDP forecasts, saying the economy would contract less-than-expected after Prime Minister Taro Aso announced a 15.4 trillion yen ($215 billion) stimulus package.

Confidence in the global economy rose to an 11-month high, a Bloomberg survey of users on six continents showed yesterday.

Share market rally

The Shanghai Composite Index of stocks has climbed 39% this year, making it the second-best performer among 88 indexes tracked by Bloomberg.

Some of the statistics in today’s report pointed to a recovery. Industrial production expanded 8.3% in March, compared with 3.8% in the first two months. Urban fixed- asset investment climbed 30.3% in March.

Spending on real-estate development grew 4.1% in the first quarter, up from a 1% gain in the first two months, a report showed this week.

Companies are also reporting how the stimulus package is helping. Beijing-based General Steel Holdings Inc. said its main factory in Hancheng city, Shaanxi province, signed contracts to sell 560,000 metric tons of steel for stimulus-related projects by late March, an amount equal to 30% of total output last year.

Car sales

General Motors, the biggest overseas automaker in China, raised its forecast for the nation’s auto sales this year after the government took steps to spur demand and provided subsidies in rural areas.

China’s GDP in the first quarter was pulled lower by sinking exports as a global recession cut demand for textiles and electronics, prompting thousands of factories to close and leaving more than 20 million migrant laborers without work.

”Exports will continue to drag on growth at least until the final quarter of the year,” said Mark Williams, an economist with Capital Economics in London. If there is a recovery this year, it will ”be lackluster at best.”

Today’s report contrasts with a year ago when the economy expanded 10.6% and Premier Wen said that inflation running at more than 8% was the nation’s biggest problem.

Consumer prices fell 1.2% in March from a year earlier, compared with a drop of 1.6% in February.

Borrowing costs

Cooling inflation provided the People’s Bank of China with space to lower the one-year lending rate by 216 basis points to 5.31% last year and reserve requirements by 2%age points to 15.5% for large banks.

The bank also lifted caps on lending toward the end of 2008. As a result, new loans jumped more than six times to 1.89 trillion yuan in March from a year earlier, raising concern among some economists that the cash flowing into the economy will inflate asset bubbles, and promote wasteful spending.

”The next policy move needs to be taming credit growth and local governments’ investment drive,” said Wang Tao, an economist at UBS AG in Beijing. ”This is needed to reduce the risk of massive resource misallocation, asset price bubbles and damage to the banking system.”

Another 15 jobs have been lost from South Australia’s manufacturing sector, with the collapse of engineering firm Clyde-Apac.

The Woodville-based company makes wheels and casters for trolleys and other products.

Joe Kane from the Australian Workers Union says the 15 workers were sacked after the company was placed into administration.

“Mostly the financial crisis, cash flow orders not being, lack of orders and eventually they got into debt and have gone under,” he said.

He says workers are owed two weeks’ pay plus entitlements and will have to apply to the Federal Government’s assistance scheme to recoup any money.

Clyde-Apac was dealt a major blow two years ago when it lost its contract with Ford.

Since that time it ceased to supply any of Australia’s car makers.

16 April 2009 8:32am

Redeploying workers instead of cutting headcount during tough economic times can save your business millions of dollars in employment costs, according to Human Capital Management Solutions CEO, Trevor Vas.

“Companies that make knee-jerk reactions, such as retrenching staff without considering redeployment first, don’t realise that they could actually be increasing their employment costs, rather than slashing them,” Vas says.

Redundancies, he notes, cost companies an average of $30,000 to $40,000 per employee, not including sick- and annual-leave payouts.

Employers, therefore, must carefully weigh up the cost of retrenchments against the costs of maintaining headcount and, most likely, keeping or building a happy and engaged workforce, Vas says.

“By redeploying staff, organisations can become more agile and better equipped to respond to changing conditions,” he says, “while increasing productivity by redeploying engaged staff that already have knowledge about the company and the work that needs to be done.”

Redeployment guises
Redeployment comes in a number of different “guises”, says UK-based TPI director, Sarah Seabury, in Managing Employee Redeployment – Creating Value through Opportunity.

These include:
internal redeployment or mobility;

transfers to an outsourced service provider or subsidiary;

flexible working schemes, such as part-time work or job sharing;

early or partial retirements;

retraining in other areas of business; and

traditional redundancies accompanied by outplacement services.
A “positive redeployment culture”, Seabury says, will not only reduce redundancy costs but should increase retention of “expensively recruited and trained staff”, reduce future recruitment costs, protect the organisation’s brand and minimise the potential for unfair dismissal claims.

One multinational oil-products business saved millions of dollars in “redundancy cost avoidance”, she says, by moving 420 employees either into positions previously held by contract staff, transferring them to an outsourced service provider or allowing for natural attrition.

However, Seabury notes that a redeployment strategy can be viewed as a threat by employees (who are wary of involuntary changes to their circumstances) if the “negative connotations” of redeployment aren’t mitigated through careful management and communication.

Managers, she says, must always:
include contractors and temps in their analysis. Contractors can often be replaced with permanent staff. Also, in some jurisdictions temps or contractors may be legally deemed as employees if engaged for a certain period of time. All positions must be considered when analysing headcount or cost savings;

check corporate policies before embarking on any action. Rules on leave of absence, training allowances or other factors that might limit the flexibility to redeploy can be amended if addressed early enough;

document relevant meetings, and ensure that documents are signed off by all parties;

be aware of legal requirements and other factors, such as trade-union agreements that might restrict or facilitate redundancies, retirements or redeployment; and

listen to any and all advice from employees, employee bodies, consultation groups and executives. “These stakeholders are often the source of very good ideas,” Seabury says.
Redeployment specialists key
Vas agrees that communication and consultation on redeployment is vital.

“Often this is a very emotive and complex area to work in and it is important that employers and their redeployment teams view staff as assets rather than liabilities and treat them accordingly,” he says.

“Having a dedicated and trained team of redeployment staff is the key to achieving positive results. It’s not something that can be done effectively ad hoc.”

Recruitment departments will eventually become recruitment-and-redeployment departments, Vas says, as more and more employers see the value of reshaping their workforce as opposed to letting much of it go.

Many employers, he says, are starting to get the balance right.

“We are seeing companies within the private and public sectors finding more creative ways of repositioning themselves to bounce back [from the economic downturn].”

Some employers, for example, are reducing employees’ hours to four days a week, redefining roles and re-training staff to work in different departments.

Advertisement: Trevor Vas will co-chair a workshop on maximising ROI through effective redeployment strategies with Human Capital Management Solutions director David Bell at the Australasian Talent Conference in Sydney next month.

Lauren Wilson | April 16, 2009
Article from: The Australian

ABOUT 200 Victoria Police officers, some on horseback, held the fort under Melbourne’s West Gate Bridge so construction firm John Holland could send less than a dozen non-union workers on a bus through an angry picket line yesterday.

Even before dawn broke in Melbourne, police were braced for a violent scuffle between the union members and the handful of non-union workers — or “scabs”, as they were referred to on the picket line — who had been bussed in to the site by John Holland to continue work on the West Gate Bridge project.

It was a clear demonstration of force by Victoria Police, which came less than 24 hours after John Holland’s human resources manager Stephen Sasse had publicly criticised the authorities for not doing enough to help the construction company to resume operations on the site.

The heavy police presence signalled a further escalation in the bitter industrial dispute between John Holland and members of both the Construction Forestry Mining and Energy Union and the Australian Manufacturing Workers Union.

The giant construction firm sacked 39 union workers in December after they refused to accept a contract that included lower base pay and reduced penalty rates.

For the past six weeks, the CFMEU and AMWU members have picketed the West Gate Bridge, a move John Holland is claiming as unlawful in proceedings before the Federal Court.

The dispute has attracted the criticism of Australian Building and Construction Commissioner John Lloyd, who said he remained concerned about the deterioration of conduct on Victorian building sites, especially the West Gate Bridge strengthening project.

“The ABCC continues to monitor the project,” Mr Lloyd said yesterday.

“Any breaches of the workplace laws will be thoroughly investigated.”

The workers and their families picketed the Holland site all day, chanting that they wanted their jobs back.

They found impromptu and involuntary support from a bus driver, whose failed attempt at a three-point-turn wedged his vehicle lengthways across the road that the union members had attempted to block only with their bodies.

But regardless of the twist of fate in favour of the unionists, John Holland, with the help of Victoria Police, managed to escort the non-union workers on to the site through a side entrance.

Scuffles broke out hours later as CFMEU members tried to block rental vans carrying the non-union workers from the site.

A spokesman for the CFMEU said: “There was a bit of argy-bargy, but no-one was injured in the incident.

“The picket line will be back on tomorrow.”,25197,25340264-5013404,00.html

Miriam Steffens
April 16, 2009

RUPERT MURDOCH has stepped up his cost-savings push across News Corp’s media empire to blunt the effects of the advertising recession, creating a new unit to let the company’s newsrooms around the world share content and resources to cut costs.

The media mogul has appointed John Moody, a senior editorial executive at his Fox News network, to oversee a company-wide portal that will pool news stories from its various TV stations and print newsrooms.

Mr Moody will report directly to Mr Murdoch and work with News Corp’s news chiefs worldwide “to improve news gathering efficiencies and identify areas of cost savings,” the company said.

The move will see newsrooms of papers such as The Australian and The Daily Telegraph share stories with The Wall Street Journal in New York, The Times in London and the Fox News television network. While many of the publications are already sharing copy, the content portal is expected to formalise and intensify co-operation across the company’s news outlets.

A spokesman for News in Sydney, Greg Baxter, said he didn’t expect the content sharing push would result in job losses or the closure of foreign bureaus, saying it was more likely to target savings by cutting back on external suppliers.

As part of his brief, Mr Moody will review the company’s worldwide contracts with newswires. His appointment comes two months after Mr Murdoch signalled more cost cuts for the company, with “the worst global economic crisis” since he started building his media empire expected to lead to a 30 per cent fall in profits this year.

While Mr Murdoch has said there was no job-cut edict in Australia, it’s understood there have been redundancies at its regional, community and metropolitan newspapers.

by Irina ShamaevaApr 15, 2009, 5:29 am ET

In short, new technologies might create a whole new role, look and process for resumes…

Read this interesting article at