Australian-based Bradken, a heavy engineering and mining services firm, find themselves under increased pressure as commodity prices plummet and global demand slows. In a bid to improve its position, the company has brought in new leadership and has turned to the Boston Consulting Group to streamline its business.
Bradken is an Australian based company, founded in 1922. The company manufactures products, particularly capital heave ones, for the mining, transport, general industrial and contract manufacturing markets. The company employs around 4,000 people globally, and has 52 manufacturing, sales and service facilities throughout the ten countries in which it has a footprint. The company recently saw a new boss arrive at the top, Paul Zuckerman, who took over the reins at the start of this year.
Changes in commodity prices, following a slowdown in major emerging markets, has seen a range of extraction sectors being hit hard. The commodity metal price index, for instance, fell by 40% between 2011 and 2015. This drop has had the further consequence of laying waste to around 30% of capacity that is unprofitable at current market conditions. While many extraction companies sit on large cash reserves, cost, working capital and CAPEX optimisation programmes have also been implemented to limit dipping into reserves as companies seek to survive in the low price environment.
One of the consequences is that tier-2 suppliers to the mining industry are seeing reduced demand for capital expenditures in large equipment and related products, among others. So too has Bradken, a leading supplier, found itself in a precarious position.
The hire of Zuckerman, in part, reflects the company’s search for a turnaround. To bring in wider expertise to create pathways out of the company’s current predicament, Zuckerman has tapped The Boston Consulting Group to undertake a review of the company. The initial review of the consultants focuses on supply-chain savings and back-end cost rationalisation, although it may also involve a wider strategic review based on market projections.