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Local industry hurt by mine downturn

Saturday, 12th March, 2016

By Andrew Robertson

One of Perilya’s major contractors says it may have to consider cutting the size of its operation at Broken Hill if its workload reduces much more.

Cavpower, which employs about 50 people at its Kanandah Road site, has seen a dramatic decline in business from the miner in recent months, according to branch manager Tony Everuss.

Just six to eight months ago it accounted for about 70 per cent of Cavpower’s total business in Broken Hill but Mr Everuss said today it was more like 40 per cent.

He said Cavpower, which supplies and services mining machinery, had managed to pick up some work elsewhere, including with Essential Energy and the Australian Rail Track Corporation.

But the hole left by Perilya was substantial.

“From our perspective they’re a big customer of ours,” Mr Everuss said.

“In reality if we see much more of a reduction in the workload we’re getting from them at the moment we would struggle to maintain our current business size.”

Cavpower isn’t the only one now bracing for the fallout from Perilya’s plans to cut jobs and production levels at its southern operation.

While the size of the reduction is not yet known, Silver City Steel’s Steve Holmes said the impact would regardless be felt by all suppliers and contractors.

“Everyone’s the same, any contractor you speak to is doing it tough,” Mr Holmes said.

“All those people are severely impacted by the downturn in the industry. We’re all hanging in there waiting for it to pick up.”

Mr Holmes, whose metal fabrication business has been servicing the mines for 35 years, is used to the ups and downs that come with the mining sector.

But the current downturn has been the worst he can remember.

“It’s been a steady decline now for about three years, but in the last six months it’s been very noticeable.

“This downturn has been longer than any I’ve experienced.

“We’ve had them for six months before and then the price has spiked and things have picked up, but this has gone on for quite a while.”

Not that long ago Mr Holmes was employing up to 14 people at his Kanandah Road workshop and putting on a new apprentice each year.

Now he has just five workers and hasn’t hired an apprentice for two years. 

“You even notice it’s impacting on the town itself, in Argent Street.

“Nobody wants to spend for two reasons: no-one has got any money because this has been going on for quite a while without anybody actually noticing it and, secondly, they don’t know if they’re going to have any money.

“There’s very, very few people in Broken Hill that aren’t indirectly employed by the mines.”    

Blackwoods branch manager Peter Johns tells a similar story. He has had to let go one employee in recent months because of a drop-off in the business, which supplies industrial consumables.

“The last 12 months is probably the worst we’ve seen it. I had to lay one bloke off in December last year,” he said.

Now, with the likelihood of job losses at Perilya, he is preparing for the tough times to continue.

“They’re looking at cutting back their expenses; that’s why they’re putting people off, so there’s usually a general downturn right across the board.

“They’re going to need less gear because they’ve got less people.

“It’s probably going to come down to how many they end up laying off ... if it’s only 50 or 60 it’s not going to have as big an impact as if it’s 150 or 200.

“We’ve just got to wait and see.”

But like everyone Mr Johns is hoping the good times will one day return, just as they have in the past.

“The main thing is if the mine’s still viable, well, hopefully things will pick up in the next few years.”

Mr Everuss said it might even be that the changes turn out to be beneficial for some contractors.

“Everybody’s poised to see what this restructure means.

“Does this restructure mean they will endeavour to do even more in-house, or potentially does it mean that they may need to outsource more because they reduce their workforce?”

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