BHP Billiton's (ASX: BHP) drive to cut costs and unnecessary expenditure has come as an enormous blow to a number of its staff members, who have either been made redundant or forced to move to other sections of the business.
Thirty employees have been affected in the restructure, all of whom were located in the energy coal corporate office in Sydney, with plans to instead integrate into a single business in Brisbane. Recognising that the mining boom is now over, BHP's focus under its new CEO, Andrew Mackenzie, has been to cut costs in order to more effectively manage the company's cash and assets and to ensure the future remains sustainable for the company. According to The Australian Financial Review, the restructure is not yet complete, leaving the future of further employees in doubt.
Last month, Mackenzie confirmed to investors that it intended on cutting costs back from a peak of more than $22 billion to $18 billion by the end of next year, with sights of further cuts to follow.
As the mining sector continues to struggle, Rio Tinto (ASX: RIO) has also been forced to change its structure as costs become a primary focus, aiming to cut up to $5 billion in spending by the end of 2014. Like BHP, Rio Tinto has been hacking at its asset portfolio and divesting in its non-core activities and underperforming mines. Rio recently cut up to 50 jobs from its iron ore business, in which some will be relocated within the business whilst many will be made redundant.
Foolish takeaway
After a decade of driving the Australian economy, investors are now steering clear of the mining sector as commodity prices and demand fall, taking company profits with them. Just yesterday, Fortescue Metals Group (ASX: FMG) announced that it would not meet expected production levels, in a sure-sign of the slow-down.
Whilst BHP and Rio Tinto are worthy of a place on your watchlist, it would be best to wait until the volatility begins to subside before putting your hard-earned money to work with them.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.
