Most of the 700 nationwide jobs Boral is planning to shed in the next two months are part of the company’s massive restructure. The focus is on “managerial and back office support staff” and “generally not operational”, but the Latrobe Valley-based operation is “unique”.
?Around one third of the positions are coming out of Boral’s Construction Materials division, which includes quarries, as well as concrete, asphalt and transport,? said Kylie FitzGerald, Boral?s group communications and investor relations manager.
?However, the restructure has primarily affected employees in managerial, functional and support roles, with the majority based in Boral’s corporate and state divisional head offices. Boral’s employees in operational and frontline sales roles are largely unaffected by the restructure.
“The Yallourn North quarry is a bit unusual in that in December the nine affected workers were advised we had intentions to exit the operation or explore options to sell. However, if we can’t sell, then we will close it.?
The quarry business is for sale and Ms FitzGerald told Quarry that it would be “inappropriate? to say if there had been expressions of interest from potential buyers.
She confirmed that if a buyer was not secured by the end of this month, the business, which had been part of its portfolio for many years, would close.
Boral?s Victorian head office in Port Melbourne, brick plants in Scoresby and Thomastown will be amongst others targeted by the cuts.
The possible closure of Yallourn North comes after Boral slashed 90 jobs at a cement plant in Waurn Ponds in December, with the site to shut down indefinitely in April.
Shoalhaven to also close
Boral has also announced plans to close its Shoalhaven quarry in New South Wales in 2014. The company says the shutdown will leave a supply gap of 127,000 tonnes a year.
In conjunction with the closure of the Shoalhaven River pit, Boral wants to increase production at its Dunmore Quarry, near Kiama, from 1.2 million to 2.5 million tonnes a year.
To cater for the additional output, the company wants to increase the area of its Dunmore operation by two hectares, extend operating hours, and lift road and rail transportation of the output.
If approved the amount of material being transported by road from Dunmore would increase by about half a million tonnes a year.
Sharemarket confidence restored
Boral CEO Mike Kane said last week that the company?s restructure and redundancies were the “low-hanging fruit”, but the decision has momentarily restored market support for the company.
While most of the restructuring gains announced by Boral will come next financial year, the reason the market liked the changes so much is that the savings from the staff cuts and asset sales are valued at $73.5 million after tax, against consensus estimates for 2013 financial year earnings of $110 million and 2014 estimates at $180 million.
Kane expected the rationalisation would produce $90 million in benefits, on top of $15 million in operational improvements, bringing the total to $105 million.
Cement divisional manager Mike Beardsell, who also handled government relations on issues such as the carbon tax, is the most high profile departure.
?In addition to this ‘overhead’ restructure, Boral has undertaken a number of site rationalisation and outsourcing activities which affects a further 300 positions in Australia and the USA,? said FitzGerald.
?This includes previously announced plans to cease manufacturing clinker at Boral’s Waurn Ponds cement works, which will impact around 90 employees, as well as the closure of the Bateman’s Bay timber mill and Nowra windows operations.?
The decision to cut jobs has been welcomed by analysts who have upgraded the stock.
Macquarie and Deutsche Bank lifted their ratings for Boral after it announced that redundancies would extend across the Australian business and include its US arm, in a move to reduce costs by $105 million from the 2014 financial year.
Sources: Boral, The Australian, The Telegraph, The Latrobe Express, Shoalhaven News
CLARIFICATION – 31 january, 2013
- Boral has not requested planning permission to increase production at its Dunmore Quarry, near Kiama, from 1.2 million tonnes a year to 2.5 million tonnes a year. In fact, Boral has already received permission to produce 2.5 million tonnes a year.
- Boral is not seeking to increase its operating hours at Dunmore.
- What Boral has requested is a planning modification to allow the company to transport up to 1.5 million tonnes per annum by road ? compared to one million tonnes per annum at present.
- Boral has also asked to extend the approved extraction area at Dunmore by 2.03 hectares to allow lateral extraction of the lower latite flow.