WesTrac, which supplies Caterpillar machinery to the resources industry in Western Australia, New South Wales and the Australian Capital Territory, will shed 630 jobs through a mix of natural attrition, cuts to contractors and redundancies at a cost of $13 million.
The latest job cuts at WesTrac come on top of 375 positions that were axed in the company’s NSW and ACT operations in late June at a cost of $8m. It means WesTrac has now shed more than 1000 positions, or about 23 per cent of its workforce, in little more than four months. After the latest restructuring, the company will have a workforce of about 3350 people across WA, NSW and the ACT.
Unions have alleged WesTrac has reneged on a promise it made to workers just two months ago that it would not slash positions if they took a pay cut. The Australian Manufacturing Workers Union’s Steve McCartney said he was informed more than 400 jobs will be cut in Western Australia while almost 200 will go from operations in New South Wales.
“They made certain commitments to the members on the job about taking a lower wage for job security, only two months later they get sacked,” McCartney said.
?WesTrac has implemented a series of efficiency and productivity initiatives over the past 12 months in an effort to streamline its cost base but these measures alone have not been sufficient in view of continuing challenging market conditions,? WesTrac?s owner Seven Group said in a statement.
Seven now expects overall full year underlying earnings to be at the lower end of its previous guidance of 30 to 40 per cent on the prior year, ?with a more marked reduction in the first half given the record comparative first half?.
Fortunes fall in one year
This time last year it was the WesTrac business in China that was attracting concern. In Australia, WesTrac reported a record result for the 2011-12 financial year. Indeed, Australian sales accounted for more than 66 per cent of the company’s earnings.
In August, Seven Group said it expected WesTrac?s full year earnings to fall by more than a third due to a slowdown in mining investment. The company’s shares fell 1.6 per cent to $7.59. In June, Seven announced it had lowered its earnings forecast and moved to slash 350 jobs as a result of its WesTrac mining and construction equipment business, encountering “challenging market conditions”.
The sale of Seven’s $491 million stake in Consolidated Media Holdings to News Corp last year further skewed the company’s performance towards industrial services, which provide around 80 per cent of its earnings. The company owns one-third of 33 per cent stake in Seven West Media, which owns the Seven network and The West Australian newspaper.
Sources: The Sydney Morning Herald, The Australian, ABC News