Cost cutting may be the order of the day across the resources industry, but mining services provider Murray Engineering is marching to the beat of its own drum – hiring at its Pinjarra headquarters and opening a larger Kalgoorlie office.
Cost cutting may be the order of the day across the resources industry, but mining services provider Murray Engineering is marching to the beat of its own drum – hiring at its Pinjarra headquarters and opening a larger Kalgoorlie office.
The privately owned business had its best financial year ending December 2014, with about $50 million in revenue and making an undisclosed profit (understood to be in the millions).
Murray Engineering is named after the shire south of Perth that became the business’s home after it moved from two separate Perth facilities in 2010.
In March, it will open a new custom facility in Kalgoorlie, which at 1,338 square metres is 30 per cent larger than the current facility where about 30 workers provide equipment hire, fabrication, mechanical and electrical services to miners such as Norton Goldfields.
The highly diversified nature of Murray Engineering’s business means it’s hard to draw links with similar sized peers.
However a combination of a plunging iron ore price, concerns over gold royalty rates rising, and general market malaise negatively affected many mining service companies with similar operations last year.
In the equipment hire game, belt tightening of Western Australian operators pushed record volumes of used yellow equipment into auction yards last year.
RCR Tomlinson, which designs and fabricates equipment through its mining division, has only this year begun to trend upward on the market again after falling to $1.57 per share in December following trades of between $2.75 and $3.50 during 2013.
The share price of mining electrical services company Southern Cross Electrical Engineering has fallen from a peak of 90 cents in late February 2014 to around 45 cents so far this year.
Managing director Craig Lindsay-Rae said Murray Engineering, which provides services for mostly underground base metal miners, had less than a 5 per cent exposure to iron ore.
Last year, he said, it attracted new contracts and clients by undertaking a more diverse range of services.
“We’ve got, I suppose, smaller competitors in each division, (but) there’s nobody like us that provides all of those services. It’s a one stop shop,” Mr Lindsay-Rae told Business News.
“People are talking about how the gold mining industry is depressed and shedding jobs ... and there’s a whole swathe of companies closing down; well we’ve actually grown our business revenue wise to the tune of about 25 to 30 per cent this last year in Kalgoorlie, and we anticipate that continuing.”
Key to managing expansion is the financial backing of Steve Coughlan and Claudio Thyssen, majority shareholders in both underground mining contractor Byrnecut and Murray Engineering.
“Being allied to a billion dollar group certainly has its usefulness in terms of treasury functions,” Mr Lindsay-Rae said.
The association between Murray Engineering and Byrnecut allows both companies to share services such as IT, accounting, legal, payroll and occupational health and safety, while maintaining separate operations.
They both can also leverage off Thyssen Group’s global procurement and logistics power.
“We are a standalone company, but even with the associated companies our policy is that we compete for business. So there are times when we tender our business to Byrnecut and lose it,” Mr Lindsay-Rae said.
Work for Byrnecut represents from 35-38 per cent of Murray Engineering’s order book, with the remainder of work coming from Brynecut’s competitors as well as tier one miners, and a few industrial and commercial clients such as Alcoa.
An “extremely lumpy” service base from its four main divisions is mitigated by the scale of the business and having employees with multiple skill sets, many having obtained extra qualifications in house through Murray Engineering’s registered training organisation.
“We look for adaptability when hiring and we have a long-term view of apprentices as well, basically because of that multi-skilling requirement. We haven’t cut back on our apprentices at all, and most companies have,” Mr Lindsay-Rae said.
To that end the business is now hiring 15 heavy plant fitters, boilermakers, high-voltage electricians and auto electricians.
