PLANT HIRE SLUMP FEARED AMID ADANI REVIEW

Written on the 6 August 2015

PLANT HIRE SLUMP FEARED AMID ADANI REVIEW

ENVIRONMENTALISTS may be patting themselves on the back for putting the skids on the Carmichael Coal Project, but the equipment hire sector faces a looming depression if alternative work to the mine isn't found.

One of Australia's biggest online plant hire aggregators, iSeekplant, says many of its members were banking on Carmichael and are now facing a nervous six to eight-week wait as Adani submits evidence to reveal its environmental conservation measures for two endangered species in the mine area.

However, news today that the Commonwealth Bank has terminated its financial advisory role to the project has landed another killer blow to the mine.

According to iSeekplant, plant hire businesses are scrambling for new work in the wake of the uncertainty over the project which had been hoped to fill plant hire workbooks for the next four years.

It says if Adani's appeal is unsuccessful or the project continues to struggle to secure funding, Queensland plant hire companies could be at risk of an industry depression.

More than 70,000 monthly users make 6000 searches for equipment every day on iSeekplant, giving it a first-hand view of what kind of machines project engineers are searching for around the country.

The company says it has noticed a huge upswing in searches for residential construction and agriculture machinery, which iSeekplant says still offers some hope for plant hire operators.

Sally McPherson, spokesman and blogger for iSeekplant, says those businesses that are agile enough to shift their focus from mining to residential, civil and agribusiness are likely to survive thanks to $30 billion worth of projects in the pipeline.

Regions with plenty of projects on the boil include Stanthorpe, Gladstone, Rockhampton, Cairns, Logan, Moreton Bay, Toowoomba and Townsville.

"Between 10 and 30 per cent of a civil, residential or commercial project's budget goes on plant hire, meaning a minimum $3 to 4 billion of work is still up for grabs," says McPherson.

"Since iSeekplant launched in 2012, we have seen a gradual shift away from typical infrastructure and mining machines in Queensland, such as 20 tonne excavators, to the humble bobcat and other smaller equipment associated with residential earthworks.

"We unite a fragmented sector by listing more than 50,000 machines mostly owned by regional owner operators and SMEs, and get daily feedback from our members, some of whom are showing remarkable resilience by shifting their focus away from mining.

"Golding Contractors, for example, used to be the go-to company for mining but has recognised there is a 20-year boom ahead of us in housing, re-tooled accordingly and started to focus on urban projects in Queensland and civil projects interstate.

"Companies that specialise in residential subdivisions, or saw the writing on the wall and shifted their focus to smaller projects, such as BMD and Pensar, are booming.

"Similarly, Ostwald Bros, based out of Toowoomba, were massive in small civil and agriculture, then blew up in the boom for CSG and LNG and coal, have gone back to their roots following the contraction in mining.

"Around a third of our traffic is now focused on the smaller machines. While their hire costs are lower, the sheer number and longevity of projects on the boil, and the fact that smaller jobs are often more profitable than the big civil infrastructure projects, means we do have a sustainable plant hire industry in Queensland if Adani continues to be delayed, or even cancelled.

"Earthmoving companies need to spot the trend ahead and move fast to adapt, as many have millions of dollars' worth of large machines sitting in a graveyard."

Image: iSeekplant directors Matt Peters, Sally McPherson and Drew McPherson.


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