Mining uncertainty flowing into manufacturing sector

The mining industry’s instability has flowed onto engineering and manufacturing sectors causing job losses in small and medium enterprises.

Three-quarters of 100 small and medium businesses surveyed by industry group HunterNet said they had no choice but to lay off employees to ‘‘ensure ongoing operations’’. 

HunterNet chief executive John Coyle said the mining industry’s ‘‘sudden and dramatic’’ squeeze on capital expenditure, infrastructure investment and production costs had impacted heavily on its 200 small and medium enterprise members, the Herald reported.

The survey released yesterday was conducted to determine the impact the mining downturn has had on HunterNet’s members.

Coyle said the mining slump had been fuelled by a ‘‘perfect storm’’ of conditions, including the contraction of China’s growth, the high Aussie dollar and the spiralled coal price.

The survey revealed that more than 70 per cent of businesses said they derived a percentage of their sales from mining, with three-quarters saying almost 75 per cent of their sales came directly from mining.

Coyle attributed the resurgence of the engineering and manufacturing sectors over the last decade to the growth in mining but added business sentiment was probably now worse than during the depths of the 2008 global financial crisis.

Both Coyle and HunterNet chairman Richard Eveleigh, who is also the managing director of Nepean Mining, said many engineering firms that provide goods and services to the mining industry have ultimately shed staff.

They agreed that many of the firms had moved to a four-day working week or encouraged staff to take rostered days off.

Eveleigh said Nepean had already laid off some staff and have also found new projects ‘‘more difficult to come by’’.

The ‘‘stubbornly high’’ Australian dollar isn’t making it any easier for these company’s Eveleigh said.

Previously in tough times companies could turn to exporting, but the high exchange rate is making it even tougher to stay afloat.

Coyle said the economic climate in the Hunter is reminiscent to 20 years ago.

To combat these trying times HunterNet is encouraging its members to target innovation in niche markets including clean technology and also ‘‘reconnect’’ with exporting, regardless of the high dollar.

‘‘The opportunities that exist in manufacturing in the growing markets of south-east Asia, where there is a big expansion in mining, is a critical area of focus,’’ Coyle said.

‘‘Change brings opportunities and they are there, so it’s not all doom and gloom.’’

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