Engineering services group Engenco Limited has today announced 55 workers will be made redundant as a cost reduction measure, amid project postponements and cancellations.
The redundancies, representing 10 per cent of the 550 strong workforce, will affect Engenco’s Drivetrain, Gemco Rail, and Momentum businesses.
Engenco said a significant proportion of the redundancies will come from senior management roles, which will result in a more appropriate and efficient reporting structure.
Engenco managing director Ross Dunning said the situation was regrettable, but would reduce overheads and strengthen relationships with key clients.
“It is regrettable that the tough economic situation in our key markets, notably the resources and rail sectors, has required us to make these redundancies,” he said.
“A number of possible upcoming projects have been postponed or cancelled, resulting in our having to make these difficult but necessary changes.”
Engenco has said in an ASX announcement that an underlying loss for the second half of the financial year is expected, which will be further impacted by approximately $1.5 million in one-off restructuring costs.
The group expects to return to profit in FY2015, and will deliver updates at the November AGM.
In April Engenco won a $4 million contract for a 300km rail line at the Roy Hill iron ore project, work which was expected to last 18 months.