Boral cuts 700 jobs to avert costs 'tragedy'
HARD on the heels of last month's decision to scale back cement production, Boral is to axe as many as one in three back-office jobs as it seeks to "right-size" the company at the bottom of the building cycle.
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 New South Wales 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 over 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 the job losses, with 20 per cent of the reductions coming from Victoria and Queensland and the balance spread across the rest of the country.
The other 300 jobs to go involve either production restructuring 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 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 a planned $200 million to $300 million in asset sales over 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."