THE mining downturn is hammering the engineering and manufacturing sectors, with three-quarters of 100 small and medium businesses surveyed by peak industry group HunterNet saying they have laid off staff to stay afloat.
Releasing the survey yesterday, HunterNet chief executive John Coyle said the mining industry’s ‘‘sudden and dramatic’’ squeeze on capital expenditure, infrastructure investment and production costs had taken a heavy toll on its 200 small and medium enterprise members.
Last month, HunterNet surveyed about 100 of its members in a bid to quantify the impact of the mining slump Mr Coyle said had been fuelled by a ‘‘perfect storm’’ of conditions, including China’s slowdown, the high exchange rate and the coal-price slump.
More than 70per cent of businesses said they derived a percentage of their sales from mining, with three-quarters saying almost 75per cent of their sales came directly from mining.
In addition, 75per cent of respondents said they had cut staff to ‘‘ensure ongoing operations’’.
Mr Coyle said the growth in mining had ‘‘largely underwritten’’ the resurgence in the engineering and manufacturing sector over the past decade but business sentiment was probably now worse than during the 2008 global financial crisis.
Mr Coyle and HunterNet chairman Richard Eveleigh, who is also the managing director of Nepean Mining, said many engineering firms that provided products and services to the mines had moved to a four-day working week or encouraged staff to take rostered days off – but had ultimately shed staff.
Mr Eveleigh said Nepean, which services the state’s underground mines, had laid off some staff and found new projects ‘‘more difficult to come by’’.
While a depressed dollar in previous downturns had allowed businesses to turn to exporting, he said the ‘‘stubbornly high’’ dollar was making it tough for many to stay viable.
Mr Coyle said the economic climate in the Hunter was similar to that 20 years ago, when HunterNet was formed to unite and drive innovation among small and medium enterprises hit by the winding down of steel production.
HunterNet members were being encouraged to target innovation in niche markets including clean technology, infrastructure and defence, and also ‘‘reconnect’’ with exporting, regardless of the high dollar.
‘‘The opportunities that exist in manufacturing in the growing markets of south-east Asia, where there is a big expansion in mining, is a critical area of focus,’’ Mr Coyle said.
‘‘Change brings opportunities and they are there, so it’s not all doom and gloom.’’