The long, slow downturn that has plagued the non-mining sectors of the economy for the past few years is now more perceptible in the quarrying industry. Until now, the quarrying and extractive sector has been relatively unharmed, cushioned in part by infrastructure demand from mining projects in the northern and western states and by major capital works projects in other parts of the country. This is despite 31 months of flat residential and commercial construction activity.
However, ardent readers of Quarry?s weekly e-newsletter and the mainstream media will have noticed the upheavals amongst quarry producers and suppliers in the past three months. Indeed, the number of stories we ran from late November through to January was very sobering.
In November, Holcim Australia announced that it would ?mothball? up to 30 facilities, most of them concrete plants, in 2013, resulting in the loss of 150 staff. Holcim told Quarry that these sites were being closed while the market was ?soft? and they would be reopened in the future ?where possible?.
A month later, Boral announced the suspension of clinker production at its Waurn Ponds cement plant in Geelong (resulting in the loss of 90 jobs) and that 25 to 30 per cent of its clinker would be imported. That was just the precursor for the outcome of Boral?s broader review of its business portfolios. Last month, Boral CEO Mike Kane announced that the company would significantly downsize its workforce and restructure its cement and building products divisions to improve its bottom line at the close of the 2012-13 financial year.
Holcim and Boral are not the only companies to scale back their concrete and clinker operations. Adelaide Brighton, through acquiring a 30 per cent stake in Malaysian white cement and clinker producer APM, has announced its intention to increase its cement product imports (two million tonnes by 2016), which will be significantly cheaper than manufacturing the product in Australia.
This is disappointing news for the quarry industry, particularly in South Australia, where the industry is most feeling the brunt of the construction downturn. Indeed, Penrice Soda Holdings ? which at time of writing faced an Extraordinary General Meeting brought about by disaffected shareholders ? has blamed the SA construction downturn for its failure to find a buyer for its Angaston limestone mine.
Suppliers are faring little better. Drilling specialist Boart Longyear announced before Christmas that it would shed 300 jobs and relocate its Perth manufacturing base to Poland and Germany. A year after opening its Hunter Valley manufacturing facility, Sandvik has scaled back the site?s assembly and aftermarket operations. ESCO Corporation closed its Northgate foundry in Brisbane in January, an announcement that was overshadowed by Bluescope Steel?s redundancies that same week.
So what can be done? Australia dodged a bullet at the onset of the GFC but now the chickens have come home to roost. The high Aussie dollar, low shareholder and consumer confidence (felt in the decline of residential and commercial builds), the carbon tax (an additional, indirect cost burden) and our inability to compete with cheaper, imported goods from burgeoning Asian economies have led to a low in business optimism.
The only solution, to quote Winston Churchill, is ?to keep on buggering on?. Working smarter, not harder is a great Aussie clich? these days but there is still leverage. This is a federal election year; quarry industry members have to be more proactive in lobbying politicians of all persuasions. Write to your local federal MP and senators, telling them that business is tough. Demand their parties? visions for the country.
Ask them how they will revive consumer confidence and address the country?s eroding production levels, falling employment and skills shortage. How will they combat the high dollar? How will they reduce red and green tape? It will be tough to get honest answers from them but make your MPs work every inch for your support!
It?s going to be a tough year but the quarry industry?s destiny is still its own to control. An election year is a perfect time for the industry to show that it is made of tough stuff. Stand up, make some noise and make yourself noticed!
DAMIAN CHRISTIE
Editor
.jpg){kind=small}
.png){kind=small}
.JPG)
