When Train Drivers Are Paid More Than Surgeons

We last discussed the rise of the robot (as a a replacement for human labor) six months ago, pointing to the implicit (and large) deflationary bust that this entails and nowhere is this more evident today than in Australia’s outback. As Bloomberg reports, the 400-plus workers employed by Rio Tinto in the remote Pilbara region (driving train-loads of mined minerals) are the highest-paid train-drivers in the world. The decade-long mining boom down-under has sucked up skilled workers, raising wages for engineers to drivers to an average $224,000 per year – as much as a surgeon in the US. This ridiculous situation has led, unsurprisingly, to the mining companies replacing them with robot locomotives.


Via Bloomberg,

Train drivers employed by Rio Tinto Group to haul iron ore across Australia’s outback make about the same money as surgeons in the U.S. It’s little wonder the mining company will replace them with robot locomotives.


The 400-plus workers in the remote Pilbara region who earn about A$240,000 ($224,000) a year probably are the highest-paid train drivers in the world, according to U.K.-based transport historian Christian Wolmar. Australia’s decade-long mining boom has sucked up skilled workers, raising wages for engineers to drivers at Rio, the second-largest exporter of the mineral, and its closest competitors, Vale SA (VALE) and BHP Billiton Ltd.



“All producers are chasing better margins and stronger returns,” said Chris Drew, an analyst in Sydney with Royal Bank of Canada. “Rio is ahead of the competition in terms of automation of trucks and trains,”



The pace of automation is picking up as the seaborne market is poised for at least four years of gluts. The price of ore, which rose as much as eightfold in the past decade as China added $6.8 trillion to its gross domestic product, will drop to $80 a ton in 2015, according to a Goldman Sachs Group Inc. forecast. It closed yesterday at $131.40 a ton.


Rio, which last year approved spending of $7.2 billion to expand the iron ore operations, is aiming to have the world’s first, fully automated, long-distance and heavy-haul rail system operating in 2015.



Rio’s rail, port and truck movements are all watched over from a control center in the Western Australia state capital of Perth, 1,500 kilometers to the southeast, that has about 250 controllers working three shifts a day. The rail automation is part of the company’s push to use technology to improve productivity and safety and wring out extra capacity from existing assets



Rio also plans to automate about 40 percent of its Pilbara truck fleet by 2016. The goal is to reduce costs to $15.60 a ton by 2020, from $23.10 a ton in the first half of this year



Each train driver earns about A$240,000 a year, according to Credit Suisse. Surgeons based in the U.S. earned a mean annual wage of $230,540 last year, according to data from the Bureau of Labor Statistics. New York state lawyers on average earned $151,000, according to the data. Rio spokesman Bruce Tobin declined to comment on train drivers’ salaries and the potential cost savings from the company’s automation drive.



“The position we’ve taken is that you’re never going to win the argument against technology,” said Gary Wood, Western Australia district secretary for the Construction, Forestry, Mining and Energy Union, which covers the drivers. “We’re going to work to be involved the protection of as many jobs as possible as a result of any changes in technology.”



“Once Rio has cracked it, I wouldn’t expect BHP to be that far behind,”


Is it any wonder this chart continues to diverge…




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