“All I have to say is that we have work going on in the third region, which is the Americas. We have not yet drawn any conclusion but it is not beyond the realms of possibilities that there would be further announcements to be made,” he said in a July trading update conference call.
He carried on with the same tone in his September trading update, saying: “We are still seeing declines in the North American coal business. We have started to see bankruptcies and insolvencies among some of the smaller mining companies in America in the past few weeks.”
He added that Fenner was “actively engaged” in bringing down manufacturing footprint in its Americas business.
“We continue to restructure and realign our manufacturing and service capabilities and, as part of this process, various resources previously engaged in customer capacity are being refocused on the aftermarket,” said Hobson explaining the recent downsizing in the company’s UK and Chinese belting units.
According to Hobson, what Fenner is currently engaged in is not merely a cost-cutting exercise.
“It is a refinement of our business models,” explained the CEO.
The company, he said, is restructuring parts of its business, particularly in Australia and America, so that its business model will be more tightly focused on “conveyor solutions rather than just selling products and services.”
Fenner restructured its UK conveyor belt manufacturing businesses, as its market was seriously impacted by the ongoing conflicts in Russia and Ukraine.
“We reviewed the business to see if there were other markets. But it became our view that there was no prospect of rapid recovery in any of the markets for Marfleet,” he said.
Similar job cuts were also introduced at Fenner’s Shanghai, conveyor belting business, despite the Chinese coal industry performing well until recently.
China went from the only region where Fenner did satisfactorily in Q1 to being downsized by 50 people.
“The Chinese coal-mining industry has somewhat belatedly come to be in a similar position with the rest of the world,” Hobson explained. The sector, he said, is now in a state of acute price pressure and production volumes are falling.
In addition to that, there’s been an increase of red-tape in China as a result of a government drive to stamp out unethical business practices in the country. This has significantly slowed down the pace of doing business in the country.
“It has become quite difficult in some parts of Chinese industry to get decisions made, so there has been a general slowing of activity levels,” said Hobson, adding that Fenner did not expect to see a rapid return to normal business levels in China.