Layoffs and empty streets as Australia's boom towns go bust

By Reuters

Mar 08, 2015 08:03 AM EDT

When Probo Junio got a visa to work in Australia, he thought he had won a ticket to the good life.

In 2013, the 45-year-old boilermaker left his hometown of Cebu in the Philippines, where he was getting paid about $10 a day, to work in Karratha in Western Australia for $30 an hour. Enough to support his relatives and build a new life Down Under.

What Junio didn't expect was that Australia's booming resources industry would go bust less than two years later, taking his job, and leaving him just 60 days to find work or go home.

"It's very difficult because most of the companies don't want 457 visa holders," he said, referring to temporary permits for skilled workers.

Across the country, people like Junio are falling victim to downsizing. Jobs, once plentiful and well paid, are scarce. Real estate prices in boom towns are sinking and even the notoriously high coffee prices in mining capital Perth have leveled off at under $4.

Prices of iron ore and coal, the country's two biggest export earners, have plunged during the last two years amid falling demand from China, in the wake of its economic slowdown.

Just a few years ago, foreign workers were flooding into Australia, lured by huge pay as the resources industry scrambled to fill positions. Truck driving and cooking jobs offering $100,000 a year made headlines abroad.

But those workers, like Junio, are now hard-pressed to find work, especially if they are on temporary visas. Even permanent residents have to take lower pay.

"There is reality coming into the marketplace about salaries," said John Downing, who runs global resources recruiting firm Downing Teal, adding that salary expectations have fallen 10 percent to 25 percent.


"For Lease" signs are everywhere in West Perth, the headquarters of many mining, oil and gas companies.

"You could shoot a cannon down those streets," said resources analyst Peter Strachan. "There's nobody there."

Commercial vacancy rates in the city are near a 20-year high of 15 percent as resources companies downsize or shut down, said Joe Lenzo, of the Property Council of Australia.

The real estate market has also been hit in the coal country of Queensland, across the continent.

"Owner will throw in a brand new car," read advertisements for houses in the coal-mining town of Moranbah. "Just pick your favorite color."

Such ploys were unheard of two years ago, when investors were snapping up property and shift workers were "hotbedding", or rotating use of beds. But the bottom has fallen out of the Moranbah real estate market after coal prices slumped.

"If you bought a property for $1 million, you'd be lucky to have it valued at $400,000," said John Wood of Moranbah Real Estate. "People are walking away."

And it's not just real estate.

"The impacts are right across the board," said Dawson Wilkie, the director of a civil engineering firm in the coastal city of Townsville.

His firm had been set to make $300,000 to $400,000 on a $40-million upgrade to the Townsville airport, a hub for "fly-in, fly-out" mining workers, but the plan was shelved. Wilkie has just five contractors now, down from 20 in the boom times.

It may be the worst of times, but old hands expect things will improve.

"Just as a lot of people thought the boom would never end, some people might think the bust will never end," said recruiter Downing. "We will go through better times."

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