Kilburn foundry operator Bradken has announced a reorganisation of its manufacturing, closing Australian operations and moving to lower cost sites.
The company said it will reduce its global workforce by around 530, but remained silent today on any impact on its South Australian foundry.
Bradken only recently removed asbestos roofing and replaced the entire roof structure at its Kilburn site, part of a $3.8 million plant upgrade.
McMahon Services contractors removed more than 1,700m2 of asbestos sheeting, roof purlins, wall girts, glazed window panels and nine roof trusses in preparation for structural upgrades to the roof framing for future ventilation works.
Industry sources said it was unlikely the company would have completed those works if the Adelaide operation has a query over its future.
“Bradken intends to progressively close a number of its highest cost manufacturing facilities and reduce associated costs and by transferring work, enable the more cost effective facilities to achieve improved efficiencies through increased production levels,” the company said in a statement to the stock exchange this morning.
“Management is making a number of changes to the company’s operations to more effectively utilise the lower cost capacity now available in some of its overseas and domestic facilities, which has resulted from earlier low cost capacity expansion initiatives.”
The statement said the reorganisation is projected to reduce the company’s overall operating costs by $27 million per annum before tax.
“It is expected that over 60 per cent of the savings will be achieved in the FY15 financial period.”
The company last week announced the closure of its Henderson foundry in Perth.
Bradken has not responded to InDaily’s questions about thefuture of the Kilburn operation.
There has been concern over the last 12 months that the Australian operations would be downsized.
In 2013 workers at the Bradken foundry at Kilburn went on strike after an offer of a 3.1 per cent wage increase for 2014 fell short of the 6.25 per cent demanded by workers.
That offer sparked concerns among union officials.
“The company’s got a foundry they’ve just opened in China and they’re sending a lot of work over there right now and that’s affecting the Bradken group in Australia,” Australian Workers Union branch president Joe Kane told media at the time.
The company and the workers later settled on an eight per cent increase over two years.
Today the company pulled back its earnings forecasts.
“Management would like to take this opportunity to update the market on FY14. The underlying EBITDA forecast for fiscal 2014, excluding one-off items, is now forecast at around $173 million, compared to around $180 million previously forecast in February 2014,” it said.
“The statutory EBITDA for FY14 will include the restructuring costs as well as one-off costs of around $8 million relating to due diligence undertaken on acquisitions that did not proceed and further unrealised foreign exchange losses in the second half of FY14.”
The company makes products for the mining, rail, steel making, cement and energy sectors.
In its 2013 annual report, it stated that it “employs over 5,800 people globally and operates 59 manufacturing, sales and service facilities throughout Australia, New Zealand, the United States of America, Canada, China, Malaysia, South Africa, Indonesia, South America and the United Kingdom.”
Today’s announcement forecasts that employment numbers will drop to 4,700.
“In the second half of FY14, while Bradken has recorded a slight increase in overall monthly order intake levels, there has been no evidence of a ramp up in the capital products portion of the work,” the company said.
