‘Big role’ for automation in tight labour market

Demographic preferences, continuous training should be considered before making move
By Amanda Silliker
|Canadian HR Reporter|Last Updated: 01/16/2012

The Iron Ore Company of Canada (IOC) operations in Labrador City, N.L., are undergoing an expansion that will bring annual production up from 18 million tonnes to 24 million.

Although IOC has turned to larger equipment — such as construction shovels and trucks — that require fewer operators than using several smaller shovels and trucks, it’s still having difficulty filling about 200 positions, said Glenn Andrews, senior human resources business partner at IOC.

“Automation obviously has reduced the number of people that we’re actually looking for but, because of the growth we’re experiencing, there’s a significant number of resources (that we’re lacking) even leveraging the automation — it’s not necessarily helping us cope with the vacancies we have on the books,” said Andrews.

But if the company hadn’t adopted automation and new technology, those 200 vacancies might have been 2,000, he said.

Many companies share similar views as automation becomes more prevalent in the workforce, said Richard Alexander, executive director of the Newfoundland and Labrador Employers’ Council (NLEC) in Mount Pearl, N.L.

“Automation will be playing an even bigger role as we move forward as labour starts to increase and employers start to shift to capital,” he said. “In our province, that normal process has been accelerated as a result of a tight labour market… We’re seeing a lot of employers making that shift from labour to capital much more readily.”

The government of Newfoundland and Labrador has predicted there will be 77,000 job vacancies in the province by 2020.

IOC already uses automatic, driverless trains to move ore from the mines and it’s closely watching certain initiatives at the operations of its parent company, Rio Tinto, in Australia, such as using driverless trucks, said Andrews.

“They just doubled their number of driverless trucks (in Australia), it’s progressing
really well over there, so obviously we’re going to pay close attention to that,” he said.

At bottle recycling company Ever Green Environmental in St. John’s, N.L., customers have the option of using a self-checkout, said Mike Wadden, president and COO of the 45-employee company.

Interested customers are given a card to swipe at a self-serve kiosk and they input the number of bags of containers they have to receive barcode stickers. These are put on each bag, which are left at the facility. Later, employees count the containers and scan the barcodes, and an email is sent to the customer indicating a cheque is ready.

“The more efficient we get at doing a task, it creates the opportunity for us to do another task — it’s all about creating value,” said Wadden. “And instead of (employees) having to do tasks that are lower value, they can do things that are higher value, like improve customer service.”

Self-service kiosks are being experimented with in the retail sector across Canada to varying results, said Sally Ritchie, vice-president of communications and marketing at the Retail Council of Canada in Toronto. While they are being tested in grocery and hardware stores, Canadians’ stance on self-service is still being assessed — but American customers don’t like it very much, she said.

“It depends on how the consumer takes to it. If it works for them, yes, you will see more of it going forward; if the consumer doesn’t like it, then I don’t think you will see it,” said Ritchie. “Retailers have to satisfy their consumers.”

Demographics may play a big role in the adoption of this form of automation.

“We know older people — 60-plus — don’t tend to gravitate toward new technology,” said Ritchie. “Some people will take to it more than others and as demographics shift, we might see some shift in consumer behaviour.”

Retail and service industries are the most likely to experiment with automation technology because they have lower wages and a high demand for labour, said Alexander. Radio frequency identification — which embeds a small radio receiver in products so customers can fill up their cart and go through the checkout, where the items are scanned by the machine — is another avenue of experimentation for this sector.

“A lot of employers are talking about that now because they just can’t find the employees to do it, so they’re getting to the point where they’re going to have to make that shift from labour to capital and invest in these systems in order to maintain their production levels,” said Alexander.

It’s inevitable this technology will be used more frequently over the next five to 10 years, especially by some of the big, national retailers, he said.

To prepare for automation and new technology, employers need to conduct a 360-degree assessment to determine if their current business situation reflects where they want to be in five to 10 years, said DetryCarragher, principal of Streamline Consulting in Charlottetown. Automation of a business process can range from incremental changes to completely overhauling the way a business operates, she said.

Employers will need to consider what training and skills development will be needed. Continuously training employees to keep them up-to-date with system changes is a main focus at IOC, said Andrews.

“The reality is you constantly have to be upgrading, training and updating documents and training material — all that kind of stuff — but that’s the nature of improvement.”

Employers also need to consider if layoffs are imminent as a result of the change and, if so, whether a phased approach would be feasible, said Carragher. In the retail sector, Ritchie hasn’t heard of anything along the lines of layoffs due to the self-serve kiosks, she said.

“This is something that will enhance the experience for the customers and if the customer is happy, they’re going to spend more time in the retailer’s location, which means they’re going to be spending more money, which means they will need more staff,” said Ritchie.

Automation can result in cost savings as the price of labour increases, said Alexander.

“It becomes more economical for employers to invest in technology and shift to capital instead of labour,” he said. “It takes a lot of time and effort to manage people, recruit and retain and stuff like that so if you shift to capital, you get all those associated savings.”

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