Small workshops need attention: industry

The Australian Steel Institute says the award of a major contract for Chevron's $44 billion Gorgon natural gas project to a Perth-based company is proof local firms can do the work, but small- to medium-sized workshops in the state are still struggling.

Civmec Construction and Engineering announced yesterday evening that it had won a contract to supply around 10,000 tonnes of structural steel for the construction of the gas processing plant on Barrow Island.

The engineering group said the contract would create work for around 60 employees at its Henderson workshop over the next 18 months.

The contract is the first Civmec has announced since opening the first stage of its $30 million workshop at Henderson in April.

The second stage of construction will entail a $10 million, four-level office building scheduled for completion in 2012.

Australian Steel Institute WA state manager James England said the contract vindicated Civmec's commitment to building its facility at the Australian Marine Complex.

"They really have put everything on the line building this facility in Western Australia," Mr England told WA Business News.

"They could have built it anywhere in the world, and if you believe some of the people in the resources companies, they should have built it somewhere else.

"I think they are starting to be proved right that they made the right decision to build it here in WA."

But while he welcomed the contract announcement, Mr England said the institute was concerned about the level of work going to small- to medium-sized workshops.

Mr England said there was an "enormous" group of smaller engineering and fabrication firms struggling to tick things over.

"We're taking care of the tip of the iceberg, we need the rest of the iceberg looked at now," he said.

"Most of them, the majority of the small to medium workshops are just going from month-to-month, struggling to pick up what they can. They are feeling very worried about the future."

Mr England called on the state government to be clear over long-term support for the sector.

"What we've seen from the state government so far has been good in that it's a positive that they're paying attention, but we haven't seen any long-term solutions," he said.

"We haven't seen anything that will give people the confidence to invest for the future.

"The big headline projects and the big attention grabbers are all well and good, but what's paying everyone's mortgages is the day to day work that goes through the little shops."

In other news today, Chevron announced it had allocated a $US2.3 billion contract to a joint venture between the local divisions of international engineering firms Kentz Corporation and New York-based CB&I.

That deal is expected to provide jobs for 1,650 construction workers in WA.

That announcement follows recent speculation that a joint venture between Australian listed companies UGL and Downer EDI had turned down a Gorgon contract of that size and nature due to the risk for them. A spokesman for Downer said that that speculationwas incorrect and the joint venture had been informed by Chevron that it had not won the contract.