WESTERN Australia's engineering services sector is looking to the next 12 months with renewed confidence amid signs the resources sector is on the rebound.
WESTERN Australia's engineering services sector is looking to the next 12 months with renewed confidence amid signs the resources sector is on the rebound.
The imminent go-ahead for the $50 billion Gorgon LNG project at Barrow Island is already proving to be a major catalyst for the revival in confidence, with the Chevron-led project awarding almost $1.3 billion in contracts during the past two months.
Confidence has also been bolstered by a recovering iron ore sector, underpinned by China's domestic stimulus package and new-found Chinese interest in independent iron ore developments as a result of BHP and Rio Tinto's proposed Pilbara joint venture.
Orontide Group managing director Keith Jones said while a number of the engineering maintenance contractors' clients had tightened their belts during the recent downturn, spending on core maintenance was back on the rise as confidence improved.
"Prior to the end of the financial year, people were easing back a bit, but ... people have got new budgets approved and we are now starting to see that flow through," Mr Jones told WA Business News.
He noted a growing tendency to invest in maintenance to get the best out of existing plant and equipment. During the boom, the trend had been toward deferring maintenance to maximise short-term production.
"That's a bit like not servicing your car - you know that when you do take it in, you're going to get a bigger bill," he said.
Mr Jones' comments echo those of other WA-based engineering services groups recently. Last week, Calibre Global managing director Rod Baxter said 2008-09 would be a record year for his firm, which expected to maintain its record of doubling revenue every two years.
Earlier, Decmil managing director Scott Criddle told an engineering roundtable that the Gorgon LNG project would provide a huge long-term boost to the sector and generate "billions of dollars in work" for local contractors. Decmil has already been a major beneficiary of the project, securing a record $170 million contract to build the Gorgon construction village on Barrow Island.
At the same roundtable, VDM Group chief executive Jim van der Meer said the recent uptick in activity meant his firm was once more starting to look for additional engineers, reversing a recent trend among engineering firms to reduce headcounts.
