30/08/2013 - 07:14

Contractors shed jobs as slowdown bites

30/08/2013 - 07:14

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Mining services contractors have slashed thousands of jobs as the slowdown in the resources sector piles pressure on companies to cut costs after several years of growth.

Annual reports reveal total staff numbers at some of the nation’s biggest contractors peaked in mid to late 2012 before falling off sharply over the next few months.

NRW Holdings has shed more than 2,500 workers from its August 2012 peak of 4,821 staff. Decmil Group’s workforce has almost halved from its peak of 1,623 staff.

Monadelphous Group, Boart Longyear and Macmahon Holdings are among other mining services contractors whose staff numbers have dropped off from recent peaks.

RCR Tomlinson meanwhile provided rare growth largely thanks to the acquisition of fellow contractor Norfolk Group, with about 6,000 staff across the nation compared to 2,316 at the same time last year.

The lower staff numbers signal a renewed focus on consolidation and efficiency for services firms, as large mining projects enter the operational phase and record investment in the sector softens.

The slowdown in growth has been evident in Western Australia, where the Chamber of Commerce and Industry WA predicts labour market conditions will remain tight, with workers unwilling to seek new jobs.

The annual results of some of the biggest mining services contractors for the 2013 financial year paint a mixed picture for the sector.

Macmahon recorded a $29.5 million net loss for the year following the sale of its construction division but also achieved growth in mining revenue and its order book and a 19 per cent increase in after-tax profit from continuing operations.

Decmil’s net profit for the 2013 financial year reached $64.4 million, up from $39 million the previous year, with revenue down slightly on the corresponding period at $528.7 million.

Decmil chief executive Scott Criddle said the company’s strong performance reflected it was “working smarter” and looking to diversify beyond its traditional markets.

“The past 12 months have produced a number of challenges for Australian mining, resources and oil and gas sectors,” he said.

“Decmil’s response has been to work harder, work smarter and above all to focus on our strategy of diversifying risk and earnings, which is now starting to come to fruition.”

Monadelphous managing director Rob Velletri said the company’s focus in the year ahead would be on consolidation, having racked up a record $156.3 million net profit after tax for the 2013 financial year.

“The last financial year was a period of abnormal growth, which reflected an unprecedented volume of construction contracts from the record level of resources and energy developments in the execution phase,” he said.

Mr Velletri said the company would implement a comprehensive program of cost reductions and efficiency improvements in response to uncertain market conditions.

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