Kalgoorlie-Boulder’s buoyant gold sector is flowing through to other parts of the region’s economy, with professional services and trades some of the best performers.
FOR some, business is very good. The number of airline passengers to Kalgoorlie is up by 25,000 this year, Palace Hotel owner Ashok Parekh has bought a 32-room hotel, and metal fabricator Graham Wilmot has increased his staff numbers by 25 per cent.
However, it is a different story for other segments of Kalgoorlie’s business community, with retail and pub trade in particular experiencing a dramatic slump in activity during the past 12 months.
Professional services
Kalgoorlie-Boulder Chamber of Commerce chief executive Hugh Gallagher said the town’s professional services sector, which includes law and accounting firms, continued to flourish.
“We would have more practicing lawyers in the city now than ever before and they aren’t specialising in one particular sector, there is just a general need for them,” Mr Gallagher told WA Business News.
RSM Bird Cameron’s Kalgoorlie office manager Bill Franklyn said the demand for accounting services in the area has increased during the past two years.
He said some of this increased demand was because those benefitting from the current economic climate, such as trades people and those working in accommodation, were now on higher incomes.
However, he said attracting professional people to a regional location such as Kalgoorlie was an ongoing challenge.
“It has been difficult to get staff to come here to start with, because they prefer the city life and there is demand for those kinds of staff in the city anyhow,” Mr Franklyn said.
“The mining industry has had a direct impact … because every mining operation requires accounting staff and they pay higher salaries than we can pay.”
Skills and trade
Meanwhile, many trade- and skills-related businesses in the region are also performing well.
“The trade sector really is a booming sector, where in particular, all kinds of mechanical, metal and electrical trades are the ones that are doing really well,” Mr Gallagher said.
Boulder-based metal fabricator Wilmot Engineering has experienced a flurry of new work relating to gold and nickel projects in the area this year.
Owner Graham Wilmot has had to increase his workforce by 25 per cent to cope with the demand.
“We have seen a definite increase in business in that period … the gold price is buoyant and nickel is on its way back in comparison to where it was before the GFC,” Mr Wilmot said.
“Our industry really fluctuates in relation to those prices, if the miners are doing well and the prices are good, they will spend the money.”
Hospitality
Kalgoorlie’s hospitality sector presents a mixed bag, with accommodation in high demand and restaurants performing steadily; but a majority of the town’s pubs are in strife.
Occupancy levels at hotels, motels and caravan parks in the area have reached unprecedented highs.
“The occupation rate was normally around 65 per cent here, but at the moment it is in excess of 90 per cent,” Mr Gallagher said.
Palace Hotel owner Ashok Parekh said he recently bought The Australia Hotel in Kalgoorlie to take advantage of the booming accommodation sector.
However, Mr Parekh said the same could not be said for the pubs, with 80 per cent of liquor now being bought from bottle shops.
“The pub industry in WA is finding it difficult because the trends of liquor purchases have changed everywhere … and only 20 per cent is sold on premises,” he said.
Mr Parekh said cheap liquor offered by the major supermarkets has resulted in many young people drinking at home.
“There are probably 32 hotel licences here and I could predict that only 10 would be making any money, 22 would be losing money or breaking even,” he said.
Mr Parekh was of the view that some restaurants were in a similar position to many of the pubs in town.
“I think even restaurants are struggling because unless you are an owner/operator, high wage costs make it very difficult to make money out of it,” he said.
Retail
The region’s retail sector has also suffered during the past 12 months.
“The retail sector is really taking a hit and we very rarely get much positive feedback from the retail sector of this city,” Mr Gallagher said.
However, he said supermarkets had been performing well due to the growing number of people living and working in Kalgoorlie.
Echo Clothing owner Eddie Lloyd described the last interest rate rise in November as a killer for retail.
“We all thought in Kalgoorlie we might be a little bit immune to it because if someone has a job in Kal they have a lot of spending power, but the overall malaise that has affected everyone did affect Kalgoorlie,” Mr Lloyd said.
However, he was optimistic that consumer sentiment was beginning to change.
“We are showing a 30 per cent increase on last year for the last two months, which is incredible, and that comes back to the resilience of the Kalgoorlie market,” Mr Lloyd said.
Property
Meanwhile, a less than 1 per cent rental vacancy rate has meant buyers are starting to re-enter Kalgoorlie’s property market.
Andrew Zafer from Professionals Kalgoorlie said there had been strong buyer enquiry from tenants who don’t want to continue to pay high rental rates.
“When leases are expiring tenants are being asked to pay more rent,” he said.
“But at the moment it’s still difficult for buyers to obtain finance from the banks, so we are sort of at a stalemate at the moment, but we are hoping the banking policies become a bit more flexible so people can enter the market.”
Mr Zafer said there had also been a surge in rental activity in the Kambalda area, 30 minutes south of Kalgoorlie.
“About 12 months ago, there was a 25 per cent rental vacancy rate in Kambalda, that is now down to 2 per cent and that’s because some companies are moving away from fly-in, fly-out and it represents a slightly cheaper rental.”
