Nomad Building Solutions is considering shifting some of its manufacturing operations offshore to China or Thailand in response to the strong dollar and increased import competition.
Nomad Building Solutions is considering shifting some of its manufacturing operations offshore to China or Thailand in response to the strong dollar and increased import competition.
Local suppliers such as Nomad and Fleetwood have battled to win contracts on large mining and resources projects because offshore suppliers of modular accommodation have been able to undercut them on price.
“While further competition is anticipated in some areas, especially from imported camp accommodation with Australia’s strong currency, the company considers it is well placed to respond,” outgoing chairman Rick Blair said at Nomad’s annual general meeting this week.
Speaking after the meeting, managing director Michael Bourke told WA Business News the company had visited China and Thailand to investigate the quality control and logistical aspects of operating in those areas.
He stressed that a move to these locations was merely being evaluated at this stage.
The company has already reduced the number of manufacturing sites and facilities in Western Australia and Queensland as part of a wider restructuring of the business.
Mr Bourke said the company’s fundamental strengths, such as a history of relationships and understanding regional customers, remain in place and provide a platform for improved financial performance.
This followed last year’s operating loss, before impairment charges, of $10.7 million.
He disclosed that one of the company’s key challenges over the past 12 months was its contract to deliver kitchens, dining rooms and other buildings to the Gorgon gas project. The company said that fulfilling Gorgon contract had taken longer than expected, because of poor project management, the custom nature of the project and compliance requirements for projects on Barrow Island.
Since assuming the position in July, Mr Bourke has focused on addressing shortcomings in the company’s internal management and production processes.
He said most of these changes have delivered benefits and the company would enter the New Year on a firm footing.
“Unfortunately, there is one key element of the turn-around projects, the Enterprise Resource Planning (ERP) computer system being installed in Nomad Modular, which has not yet delivered the expected benefits from the first stage of implementation” Mr Bourke said.
Discussions with the supplier Epicor were taking place to deliver the outcomes originally anticipated.
Mr Bourke said he was confident of the company’s future prospects, with expected growth in the WA and Queensland resources industries feeding demand for factory manufactured modular buildings and traditional construction works.
He also anticipated that expected infrastructure projects implemented by the government and private sector in remote regions would benefit Nomad.
