05/11/2008 - 22:00

Consultants upbeat despite uncertainty

05/11/2008 - 22:00


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RUMOURS of the death of consulting engineering appear to have been greatly exaggerated.

Consultants upbeat despite uncertainty

RUMOURS of the death of consulting engineering appear to have been greatly exaggerated.

The market turmoil and its increasing impact on resources sector projects has fuelled speculation of big lay-offs across the engineering sector, especially among the more nomadic contractors who have extracted strong earnings and conditions in the previously tight market for skills.

But calls to businesses named in the rumours, as well as to numerous others, found only one firm admitting to cutting staff.

That was Western Australia's biggest player, WorleyParsons Ltd, which confirmed to WA Business News that it was shedding about 70 contractors after key client Fortescue Metals Group Ltd revealed it was decelerating its expansion drive.

Earlier this week, the sector was stunned to hear iron ore producer Mount Gibson Iron Ltd had cut 190 jobs and was selling iron ore at less than half of benchmark prices.

But even WorleyParsons, which employs about 4,000 people in WA, remained positive, pointing out that 180 staff had been redeployed to other projects where it had shortages.

Redeployment appears to already be a common practice, as projected work is put on hold or existing jobs are slowed down. One of the state's leading consultancies confirmed it had moved people to different projects as a result of some clients' reactions to the global situation.

"Where clients store or stop things we have redeployed," he said.

"Our clients are assessing the situation and that will obviously flow-on to us as a service provider, but as it stands at the moment we have plenty of work to engage our people."

One resources company focusing the attention of the market is Rio Tinto Ltd which, in the middle of defending a hostile takeover from BHP Billiton Ltd, has repeatedly warned that orders from China are slowing.

Rio Tinto has one of the state's most aggressive expansion plans, so the belief that it is reviewing all of its capital expenditure plans is focusing the minds of everyone in the sector, not just those with direct exposure.

Several consultancy leaders pointed out that the number of employment advertisements had remained high, even as recently as the weekend.

Association of Consulting Engineers Australia WA chairman David Porter said that while there had been a slowdown in some sectors, such as property development, overall the workload remained high.

"Everybody is still busy. They are still looking for staff, the right staff. The guys in the resources area have not seen a drop-off," Mr Porter said.

However, Mr Porter did highlight the concerns of some in the sector surrounding the intentions of the new state government which has yet to make clear which major projects would be shelved and where regional infrastructure spending would occur.

To date, Premier Colin Barnett has only indicated that the new Subiaco sports stadium, WA Museum proposed for East Perth and the Perth foreshore plans may be dumped in favour of smaller projects such as the Northbridge link and a museum redevelopment at its existing site.

Councils in the north, such as Wanneroo, are concerned that the railway extension to Butler may be dropped down the priority list


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