The managing director of mining services SubZero Group insists none of the company’s 500-strong workforce will be offered redundancies despite announcing a $13 million loss for the last financial year.
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Last week SubZero advised the Australian Securities Exchange it had engaged independent consultants to help formulate a cost-saving strategy.
In addition to the $13 million loss, revenue was down 25 per cent to $63.8 million and the company had breached debt agreements with a group of financiers that includes Macquarie Bank.
The results have been brought about by a downturn in the coal industry, with a number of major clients deferring on scheduled work.
Despite the outlook the company’s managing director, Scott Farrell, said jobs would not be lost.
“(The review) will probably affect the status of people’s work but it won’t actually affect their employment,” he said.
“At this point we’re not looking to do a mass redundancy, that’s not part of the proposal and no-one wants to see another ResCo.
“SubZero is about people - other than that we are a whole bunch of sheds like everyone else.”
Mr Farrell said that the cost-saving strategies had been initiated by middle management and that the response had been largely positive.
“This whole proposal has come from the management team - this is not a top-down process, it’s a bottom-up process,” he said.
“When we got information that our revenue would be declining it was middle management that drove a process and we were receptive to that.
“At this stage nothing is off the table-this is about survival, and thus far we’ve enjoyed a very positive response.
“Ultimately we need people to work with us, but we understand people need to do what’s best for them.
“Without their acceptance or co-operation we don’t have a business, so we’re trying to work as closely to how they want to do it as possible.”
Yesterday SubZero presented its cost-cutting strategy to Macquarie Bank and financiers, and the company’s board is scheduled to sign off on the review today.
The Macquarie Bank-led group of financiers had waived the debt agreements for the June 2014 quarter and had agreed to a new set of terms for the 2014-15 financial year.
Established in 1999 as Subzero Services Pty Ltd, the Muswellbrook-based firm employs around 500 workers, has 90 major clients and services 25 coalmines in the Hunter.
These clients include Rio Tinto, BHP Billiton and Glencore.
The company had operated as a privately owned business before being listed on the ASX in April 2013, and has ex-QBE CEO Frank O’Halloran and former Elders boss Malcolm Jackman as shareholders.
