Another mining canary bites the dust

ScreenHunter_12 May. 01 18.48

By Leith van Onselen

Earlier this month, we noted how falling mining equipment sales could be a harbinger of a sharper than expected reduction in mining capex. Then last week, mining services contractors, Coffey, UGL and Worley Parsons, cut their earnings guidance for 2013 and announced plans to cut jobs amid a raft of project delays and cancellations in the mining industry.

Today, construction and engineering company, Transfield Services, has announced a profit downgrade and confirmed that it will cut 113 jobs due to the slow down in the mining industry and cost cutting across all sectors. From the AFR:

“Ongoing uncertainty in commodity markets is resulting in the delay to, and deferment of, a range of resources and infrastructure projects,” Transfield said in a statement on Tuesday.

“More immediately, scope reductions and cancellations of works across the operations and maintenance sector are impacting earnings in the short term.”

As a result, the company now expects a net profit of between $62 million and $65 million, down from its previous forecast range of $85 million to $90 million, in the year to June 30…

Transfield has brought forward more cost reductions, which includes 113 job cuts.

Transfield cut 270 staff in the four months to December 31 last year.

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Comments

  1. Was waiting for this to be posted, I had a new article and all ready to put in the forums but looks like you came through.

    Interesting to see how sharply they are all cutting estimated forcasts..30-50% seems to me they were a long way from the mark.

    Did they really look past their blindfold of the forever boom to see what was happening outside of Australia…

    Im just hoping this doesnt have too much of an effect on perths housing market..Yet i know it will once they cannot support their multiple investment properties.

    Unfortunately having one life skill of being able to drive a very big yellow truck doesnt convey well into other business areas

    • Mining BoganMEMBER

      The blokes driving the big yellow trucks will still be around, be it on site or run from Perth. Those in the construction and expansion jobs will be the ones who will all be trying to squeeze into the one job on offer back home.

      It’s gonna be like the Three Stooges trying to fit through the door at the same time and getting hopelessly stuck.

      Perth RE is going to get interesting, especially with Joe Hockey spooking the cattle with his NG ideas…

    • reusachtigeMEMBER

      You may be hoping it doesn’t have too much of an effect on Perth’s housing market but I’m very much hoping it does, that being, down, down, down all the way!

  2. This is an extraordinary capitulation from the mining services industry.

    It would be good if the MB team could put this in front of the politicians and ask for comment right now. Because in about 6-12 months they will be all acting surprised and saying no-one could have seen the capex cliff coming.

  3. Time for these highschool dropouts to be brought back to earth once their nosebleed salaries are cut!

      • No, they get paid those huge salaries and other sweet deals because they are OARSUM BEYOND BELIEF!! The very definition of extrordinary talent. The cream of the crop.

        So I’ve heard from quite a few of the ones around here anyway. Of course, there are those among them who understand that the fantastic deals they are often on have more to do with getting their foot in the door of a special, once-in-a-century situation than it does with being unbelievabley clever and talented indivduals.

        It is always bad to see jobs go – but I won’t pretend that I won’t experience some sense of schadenfreude when a few particular indviduals I know suddenly discover that they are in fact not God’s gift to anything in particular.

      • How do 4 and 1 rosters equate to half the year off? Your thinking of marine I take it?

      • Lef-tee, actually a lot of those conditions are negotiated because the nature of the work. It is in remote locations, dangerous, more often than not for the capex projects there is no possibility of relocating the family (either due to wifey’s job, or there being no town to speak of), most of the blokes I have worked with have young families, and are working 10-12 hour days, up to 9 days in a row. It’s not exactly a cakewalk by any means, I would know.

        I wouldn’t be so quick to judge FIFO employment conditions on face value until you’ve actually done it yourself mate.

    • Sorry but I think your generalisation is extremely unfair, possibly tinged with a bit of jealousy. Many of these people are highly skilled tradesmen, managers and engineers who actually BUILD THINGS for a living, you know, actual productive output?

  4. thomickersMEMBER

    I’m surprised with what has been done to Fleetwood today. 20% drop in a day for a company with a solid balance sheet.

    I can see many SMSF directshare investors taking some heat.

  5. They won’t be the last, not by a long shot. Pretty much every single mining services company that I know has, or is in the process of, shed staff.

    In the past 5 years or so, the industry has gone from 0-60, then 60-100 and now it’s 100-0. Cliff is an apt moniker. And it’s not easy to jump from mining to oil&gas work, especially as the western O&G industry is far more globalised and largely run out of Texas.