Engineering Firms Report Surprise Uptick in Orders

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Tuesday, August 13th, 2013
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John Douglas Coffey
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Engineering and consulting firms servicing the mining industry report a recent upswing in orders, in a sign that the sector may be healthier than expected given long-standing reports of the resource boom’s demise.

Chief executive of engineering and property services firm UGL Richard Leupens told Fairfax that while miners made efforts to reduce discretionary expenses around a year ago, seeking to cut costs in response to increasing adverse market conditions, such spending reductions cannot persist in definitely in key areas such as maintenance.

“One positive sign is Australian coal miners are seeking tenders for maintenance,” Mr. Leupens said. “We’ve not seen that for 12 months.”

Consulting giant Coffey International said it too has seen a glimmer of hope in stabilizing orders.

“The company is currently seeing less indication of potential contract cancellations compared to the level experienced during the second half of FY2013,” said Coffey managing director Mr. John Douglas.

Coffey also expects the weaker Australian dollar, which has until recently beleaguered the operations of local miners, to bolster competitiveness.

“The falling Australian dollar will help the competitiveness of [the geosciences] business,” Mr. Douglas said.

“A falling dollar will improve the competitiveness of our geosciences business, [and] will also be good for international development as we repatriate US dollars and British pounds at more attractive rates.”

Mr. Douglas made the remark just as Coffey released its results for the year to June, indicating that the company endured its second year of losses. Coffey lost $0.9 million in the fiscal year just ended, primarily due to the mining sector downturn, while it lost $34.2 million in the preceding year.

Encouraging data out of China has also recently given a boost to Australia’s mining sector stocks, with strong readings for retail and manufacturing released last week indicating that Australia’s biggest trading partner may yet retain a healthy appetite for its raw materials.

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