In a sign that the resources boom has only partially flowed through to the state’s manufacturing sector, engineering contractor Thiess Pty Ltd has announced plans to close its Kwinana steel fabrication factory, which has been operating since 1979.
Despite being in the middle of what is widely considered to be Western Australia’s biggest resources boom, the workshop will be closed because it has no work.
Steel fabrication had been touted as one sector that would thrive during the boom, but the reality is that most of the workshops in Perth are running below capacity.
The big mining and gas projects currently under way are increasingly buying their plant and equipment from overseas suppliers, often in China.
The trend towards modular construction of process plants, such as on the North West Shelf venture’s phase 5 expansion, has made it easier to get work done overseas.
When local manufacturers are given an opportunity to bid for work, rising labour costs and skills shortages have made it more difficult for them to compete.
Fabrication workshops have also been adversely affected by repeated delays on some of the big projects, such as Chevron’s Gorgon gas project, BHP Billiton’s Worsley alumina refinery expansion, and Alcoa’s Wagerup refinery expansion.
General manager western region Thiess Process, Mick McFie, said the last time its Kwinana workshop was full was about 18 months ago, during an upgrade of the Worsley refinery.
“We’ve carried it over the past 18 months hoping the boom would hit, but it hasn’t,” Mr McFie said. “We have no order book whatsoever.”
Mr McFie denied suggestions Thiess was transferring orders to workshops in China.
However, he did agree that several WA clients were getting equipment fabricated in China, and that Thiess had been managing that process.
Thiess bought the Kwinana workshop in 2000 to provide specialised pipe welding services.
The workshop employed up to 80 people at its peak, but staff numbers have already been run down to about 30 people.
Australian Steel Institute state manager John Brazier said Newmont’s Boddington gold project was keeping some workshops busy but “the other fabrication shops are light”.
“There is a perception the workshops are flat strap, but that is not the case,” Mr Brazier said.
“People mistakenly believe there is not capacity or capability in the sector.”
