Industry feeling miners’ squeeze
A FOCUSED campaign by mining companies to reduce costs is taking its toll on support industries in Mackay, and many are reducing work hours in an effort to ride out the slowdown.
However, they are not ready to accept the pessimistic view expressed by leading economist Ross Garnaut that we are heading towards a mining slump, if not bust, and periods of historically low prices.
Industry leaders acknowledge the adjustment time is tough. No one really knows when it will end, and it may be time to accept that this is our new reality.
REDC chief executive Narelle Pearse stressed we should put this into perspective.
"There are 36 operating mines with a massive investment in the Bowen Basin and they are not going to shut down tomorrow," Ms Pearse said.
"But the big profits of the past, I don't think we will see for a while."
She said there was a drive from mining companies to push down their costs, which was impacting heavily on businesses. "We are seeing job losses and businesses that are struggling, but it's hard to quantify," she said. "At the moment we don't really see an end to this cycle."
Strategic Paget industry group chairman Allan Ruming said the impact in Mackay was severe and businesses needed to look hard at what they do and how they do it.
"There is an active and focused campaign (by mining companies) designed to reduce the input costs to production," Mr Ruming said.
"It is being pushed at both site and head office levels and the standard request is 'reduce your cost to us by 20%'.
"Many of our MAIN and Paget members are facing a squeeze between the customer and the manufacturer/distributor."
Mr Ruming said staff reductions were widespread and ongoing in some cases.
"There are businesses with long-term contracts who have retained the work and their staff, however, they have been squeezed on margins."
He said many businesses were working reduced hours and four-day weeks to cut costs and try to retain staff.