An integrated services company’s decision to sell off its resources division could affect the job security of thousands of employees.
Downer EDI recently revealed it is not planning to continue operating its mining and laundries businesses because they require a high level of financial investment compared to labour costs.
8000 in the firing line
The decision to sell could affect more than 8000 workers across Australia, according to the latest workforce data provided to the Workplace Gender Equality Agency.
“We have identified areas of our business where restructuring is required and are taking the necessary steps to exit less profitable markets and contracts and to right-size the cost structure of these businesses,” Downer chief executive Grant Fenn said in a public statement.
“We are confident that the actions we are taking will make our business more competitive and allow us to drive improved returns going forward.”
The contractor has already saved between $15 million and $20M annually through standing down or retrenching non-essential hospitality staff, significantly scaling down both its engineering and construction business as well as the Spotless infrastructure and construction operation.
Downer’s strategy has so far been to discontinue, exit or convert existing employee contracts. It is also trying to raise $400M on the stock market to help provide a smooth exit for the mining and laundries businesses.
The shock decision came despite Downer EDI’s Asset Services winning power generation, oil and gas, and industrial contracts worth a combined $324M.
These include contracts to deliver:
- four years of major and minor outages and supplementary work for Delta Electricity’s Vales Point Coal Power Station on New South Wales’ Central Coast
- a refurbished Hitachi 500 megawatt (MW) stator for AGL Energy’s Loy Yang B Coal Power Station in Victoria
- inspections and rewinds at six 350MW generator rotors for the Stanwell and Tarong coal power stations in Queensland.
- three years of structural, mechanical, electrical and instrumentation work across Santos’ existing upstream operational sites
- an extra year of maintenance work for Santos’ Darwin Liquified Natural Gas facility
- two years of mechanical, electrical and rail work for BHP’s Western Australian iron ore operations
- electrical maintenance and shutdowns for Wesfarmers’ chemicals, energy and fertilisers group across both WA and the Northern Territory.
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