AusRAIL, Market Sectors

Drought forces job cuts at Freight Australia

<p>Freight Australia will lay-off 134 employees in the face of continuing poor forecasts for drought stricken grain crops.</p> <p>Marinus van Onselen, chief executive of Freight Australia said the company will reduce its Victorian staff by 20%.</p> <p>"This is very bad news and it’s entirely related to the fact there is no rain," Mr van Onselen said.</p> <p>"The practical reality is that 80% of our business is grain-related and we have to adjust our operations accordingly."</p> <p>The Australian Bureau of Agricultural and Resource Economics (Abare) crop report last week forecast summer crop production will plummet by 59% to under 2m tonnes.</p> <p>This follows a winter crop already regarded as one of the worst on record.</p> <p>Mr van Onselen said although Freight Australia’s grain income is likely to drop to $35m this year (from $90m last year), the company remained optimistic.</p> <p> "Having said all that, it will rain again. It’s just a case of batten down the hatches for a year," he said.</p> <p>"You can run a very efficient business, and I believe we do, but one thing you can’t do is make it rain."</p> <p>History showed that a drought year was often followed by a boom year and farmers would "probably plant twice the acreage, Mr van Onselen said ".</p> <p>Freight Australia will be required to have the capacity to handle such a boom.</p> <p>Unfortunately, during a drought, this rolling stock and people were unemployed, something not always recognised by the market place, he said. </p> <p>Freight Australia is already decreasing its dependence on grain crops and its recent success in winning a New South Wales Shell petroleum contract an example of the steps it is taking.</p> <p>"We have broadened our business base both geographically and in terms of other non-grain-related product," Mr van Onselen said.</p> <p>"We have been working on that for three years." </p> <br />