02/07/2008 - 22:00

Big contract wins validate local focus

02/07/2008 - 22:00

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Three manufacturing companies in Perth with exposure to the booming resources sector have reported good news this month, despite having to contend with increased competition from Asian suppliers.

Big contract wins validate local focus

Three manufacturing companies in Perth with exposure to the booming resources sector have reported good news this month, despite having to contend with increased competition from Asian suppliers.

Engineering and steel fabrication companies Ausclad Group and United Industries have enjoyed strong growth.

United has completed a $15 million expansion of its Henderson factory base and outlined plans for further expansion, with another $15 million to be spent over the next three years.

Sydney-based United Group, which originated in Western Australia, has also reported further growth for its rail car manufacturing arm.

Ausclad, a wholly owned subsidiary of Singapore Stock Exchange-listed AusGroup Ltd, recently announced a 42 per cent increase in revenue to $280 million for the nine months ending March 31.

It has since been awarded a $21 million contract for the fabrication of a rail car dumper and other equipment for unloading of iron ore wagons at Port Hedland.

United Group was awarded new railway contracts worth $100 million last week.

Under the contract, United Group will supply BHP Billiton with 315 iron ore wagons for its Pilbara operations, while also supplying leasing group CFCL Australia with 10 locomotives and an option to produce a further 30.

In mid 2006, United Group - which historically had operated its own fabrication workshops in WA - and Ausclad formed an unincorporated joint venture with Park Engineers and Fremantle Steel, in an effort to bid for major projects and keep them from going offshore to cheap labour options in China.

Local steel fabricator and industrial services company United Industries is winning plenty of work but has also observed many big contracts awarded offshore.

Managing director, Guy Gelati said that without government intervention or import duties, big contracts would continue to be lost to cheap labour alternatives offshore.

"We want to maintain as much work as we can in WA, but the big boys are still going to China," Mr Gelati said.

"There's plenty of capacity here, there's no need to go to China."

The company's expansion in Henderson will allow it to carry out duties for the mining and oil and gas industries, such as pipe works, fabricated tanks, structural steel work, pressure vessels and grate works.

Mr Gelati said with the current and future expansions at Henderson, the company will double its number of employees to 300 over the next three years.

Industry and Enterprise Minister Francis Logan said the company's investment supported the current strength of the WA economy.

"Support services such as those offered by United Industries are necessary for the resource industry to grow, expand and generally function," Mr Logan said in a statement.

"WA has a dynamic and resilient manufacturing and fabrication industry, and the state government is very keen to see local industry participation increase in the state's major projects."

United Industries' factory base is located at the Australian Marine Complex, with Mr Logan saying its proximity to the AMC will help enhance the capabilities of manufacturers that service the petroleum, marine and defence industries.

"United Industries is now conveniently located close to the AMC's Common User Facility and will be able to take advantage of the large scale fabrication and wharf services the facility provides," Mr Logan said.

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