On the way to the airport this morning I was forced to share a car – much for the boom time rap, Perth simply never has a cab when you need one! Fortunately a couple of mining executives were on the way to the airport and I hopped in with them. The great news is that hot off the press, I can share with you the insiders guide to mining and what’s next for the giant sector.
Fortescue Metals Group Limited (ASX:FMG)
The slowdown from boom to now doesn’t spell the beginning of the end. They both acknowledged that things had to come off the boil a little but that really needed to happen. To give you an idea with weekly rents as high as $2500 a week in Port Hedland, Fortescue (FMG – a stock we are currently trading) built 300 new homes to house it’s staff given the rental price pressures in the town.
Against that background perhaps it is more understandable now as to why deck hands on their tugs were on strike for more money as their current $180k per year was not enough to live on – Perhaps not?
Such high salaries had become run of the mill, ridiculous as they are for most people to relate to. However, the slowdown in the sector has meant that many workers have had renegotiated contracts on less favourable terms, and contracts that need renewing every 2 months.
Cashflow is king
For some, this is a shock to the system (how’s that negatively geared property portfolio looking now?) but for others, this is the restoration of the new normal. At our event last night, there was a very different feel to the room as many have realised that they simply must have a plan B if they want to survive, financially. The bottom line is cashflow is king – it is financial oxygen and nobody can survive without it.
However, while things have undoubtedly slowed down in the sector, there is no bust on the horizon. Demand for raw materials remains robust, and the vast infrastructure projects are coming online, hence why some of the heat has come out of the salary market, reflected through the fall in wage levels.
Times are a changing
That said with flag falls in a taxi of $4.10, off peak, and the punishing cost of a hotel room, not quite all the heat is out of the City as the legacy of the boom times lives on. As per the Bob Dylan classic, there can be no question that “times are a changing” and Perth certainly feels very different from a while back where money was simply no object.
My only wish is that for all those who face or are about to face a dramatic change in their family income, have dug the well before they need the water. With our new App now live in the market, creating your own income has never been as simple. Click here to see how.