Boral axes 700 jobs in 'right sizing' effort
Boral said on Wednesday it would cut 700 jobs in Australia. An additional 300 production jobs in Australia and the US are to be cut, including the 90 jobs axed as part of the decision to end clinker production at Waurn Ponds in Victoria, announced last month.
The latest job losses will bite most heavily in NSW and come against the backdrop of a lacklustre local construction sector, but with an ongoing steady pick-up in the US.
Boral shares surged 10 per cent on the news, to a 20-month high of $4.89, before easing to close at $4.80, up 44¢.
Shares in rival James Hardie were also pulled higher amid optimism of the recovery of the US housing sector, rising 8¢ to $9.38, while CSR was up 3.5¢ to $2.01.
Boral chief executive Mike Kane said NSW would bear the brunt of the cuts, accounting for a third of job losses, with 20 per cent coming from Victoria and Queensland and the balance spread across the rest of the country.
The other 300 jobs to go involve either production restructurings or outsourcing across Australia and the US. "These cuts are a function of an overhead structure unacceptable in a cyclical business," Mr Kane said.
He said there had been no improvement in the housing market in Australia, although the impact on Boral had been muted given its spread of operations.
"The US economic recovery is well under way," Mr Kane said. "I expect it to continue until the [northern] spring balance [date]."
The restructuring marks a further downgrading of Boral's role in cement production, with a greater role for imports.
Along with the job cuts, Boral is also quitting its Thai operations and selling off its masonry arm.
A masonry plant at Prospect, in Sydney's west, is being sold to Brickworks, with National Masonry buying the other units in Victoria and Queensland.
These sales form part of $200 million to $300 million in asset sales planned for the next 18 months.
"Doing nothing would be tragic for Boral, tragic for the business," Mr Kane said of the cuts.
"We could not continue to carry this level of overhead.
"The initial numbers I had considered were insufficient to handle the problem."
Boral said the staff cuts would save $90 million annually, resulting in savings of $37 million for fiscal 2013. Further savings totalling $15 million are expected to flow from rationalisation initiatives, while redundancy payments will total $60 million.
AWU national secretary Paul Howes said the retrenchments were an attempt by Mr Kane to impress directors and shareholders.
"We know that Australian manufacturing is being hit for six," Mr Howes said. "With the Australian dollar sitting at US106¢, with record levels of illegal trade dumping ... 2013 will be the making-or-breaking year for Australian manufacturing."
Frequently Asked Questions about this Article…
Boral announced it will cut about 700 back-office jobs in Australia and a further 300 production roles across Australia and the US. That includes the 90 jobs already removed when clinker production at Waurn Ponds in Victoria was ended.
Boral says the moves are part of a 'right‑sizing' program at the bottom of the building cycle. Management described the current overhead structure as unacceptable for a cyclical business and wants to reduce costs, scale back some cement production, increase imports and focus the group for a weaker local construction market.
Boral shares jumped about 10% on the news to a 20‑month high of $4.89 before easing to close at $4.80, a rise of 44 cents on the day.
Boral expects the staff cuts to save about $90 million a year, producing $37 million of savings in fiscal 2013. It also expects a further $15 million from rationalisation initiatives, while redundancy payments are forecast to total around $60 million.
Alongside job reductions, Boral is exiting its Thai operations and selling its masonry business. A masonry plant at Prospect in Sydney’s west is being sold to Brickworks, with National Masonry buying other units in Victoria and Queensland. The company plans $200–$300 million of asset sales over the next 18 months.
Boral’s CEO said New South Wales will bear the largest share — about one third of the cuts — with roughly 20% coming from each of Victoria and Queensland and the remainder spread across other parts of Australia. The production job reductions also affect some US operations.
Rival stocks were also lifted by optimism around a US housing recovery: James Hardie shares rose about 8 cents to $9.38 and CSR was up about 3.5 cents to $2.01 on the same day.
Yes. AWU national secretary Paul Howes criticised the cuts as an attempt by management to impress directors and shareholders and warned Australian manufacturing is under pressure — noting the strong Australian dollar (reported at US106¢) and concerns about illegal trade dumping, making 2013 a pivotal year for local manufacturing.
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