Fenner credits oil, gas, medical for improvement

Hessle, England—Fenner P.L.C. has had its share of difficulties because of the downturn in the global mining sector, which has negatively impacted the firm's core conveyor belt systems business.

But it has held up well despite those woes, a company official said.

Other parts of the firm's operation are now showing some improvement. And moves the company has made to realign Fenner and its primary business, Fenner Dunlop PLC, are starting to pay off for the company.

In Fenner's latest trading update on 13 July, CEO Mark Abrahams said the company's oil and gas business is showing some improvement, and its medical products business has continued to perform well.

He cited in particular small increases in the US rig count, combined with market share gains, as being factors that are expected to benefit Fenner's oil and gas business, which is part of the firm's advanced engineered products operation.

However, Abrahams cautioned, any gains likely will not be realized until the next financial year beginning in September by the manufacturer of industrial conveyor belts, medical components and devices, hose, and polymer-based products.

Although the company's industrial business is seeing some fragility in wider markets, he said, new product initiatives are offsetting some of those effects.

Fenner made numerous cutbacks and consolidations over the last two years—principally in the US, Australia, UK and China—that significantly have helped tighten the business.

In the company's Northern Hemisphere division, headed by Edwin Have, a streamlining program remains in place.

The firm is restructuring its North American operation because of the downsized coal industry, although the company did not say what its future plans include.

It has made numerous cutbacks—including part of a plant, personnel and members of its management team—in the North American operation in the last two years.

The biggest hits came in January when Fenner Dunlop's Engineered Conveyor Solutions Americas unit, which is headquartered in Pittsburgh, began cutting its work force of a little more than 800 by about 20 percent and launched the closure of a large portion of its 285,000-sq.-ft. belt manufacturing plant in Port Clinton, Ohio.

Fenner's Port Clinton factory consists of two sections, one with older, less efficient conveyor belt manufacturing machinery, which has been closed, according to Scott Frenz, vice president of marketing for Fenner Dunlop Americas. The other section—with modern machinery—remains in operation, with appropriate production staffing available to operate the facility effectively, he said.

In its Southern Hemisphere/Asia-Pacific division, headed by David Landgren, ECS operational improvements have mitigated on-going pricing pressures from customers in the mining industry, the company said.

“Our restructuring is essentially complete in the Southern Hemisphere and Asia-Pacific,” Landgren said. “We have not closed any plants. However, we have flexed work forces, reduced overheads sensibly and rationalized shifts in all manufacturing facilities to make the new level of volume demand as efficient as possible.”

He said the mining industry continues to be stable in the region for export volumes from Australia to Asia. Globally, he noted, prices of commodities remain challenging for Fenner's customers in all markets.

“Fenner has adapted well and will continue to be successful, providing value to the mining and industrial markets,” Landgren said. “We remain in a good position to prosper further as the mining, oil and gas markets improve.”