LONDON—Fenner Dunlop P.L.C.'s ever-evolving conveyor belt plant in Hull, England, likely will once again have to change its focus.
Located on Marfleet Lane, the factory produces conveyor belts primarily for use in underground soft rock mining. Mining operations worldwide have slowed down over the last two years, and mining commodity prices have dropped, according to Nicholas Hobson, CEO of Fenner P.L.C., parent of Fenner Dunlop.
“The current period of lower commodity prices has brought about a recession throughout the global mining industry,” he said.
“As a result, trading conditions have been difficult for most businesses involved in mining. The Marfleet facility has not been immune to those external effects.”
He cited companies such as BHP, Rio Tinto and AngloAmerican, all of which Fenner serves, as among the companies that have seen their earnings slide.
Conflict cuts exports
On top of that, Hobson said, the Marfleet plant specifically has been impacted by the dispute between Russia and Ukraine, where mines are located that the factory serves. Its shift to exporting belts to the region came about years ago following a decline in the United Kingdom coal mining industry, which the belt maker served.
The export-based business prospered until the current mining downturn and the conflict between Ukraine and Russia arose.
Most of the mines in Ukraine are located in the eastern part of the country, which is involved in the dispute, Hobson said. “Our revenue from Ukraine has almost entirely dried up.”
In terms of Russia, he said, because of the current problems, international economic sanctions and the drop in oil prices, the Russian currency “has almost halved over the past two years, which means our products are too expensive for them to import.
“So demand from our customers is substantially lower than say three or four years ago.”
Because of that, Hobson said, a further reinvention of the Marfleet operation could be the solution to the factory's current difficulties, and everyone in the operation is actively involved in finding a remedy.
However, he said it would be premature to speculate on what its next course of action will be. “We are not in a great place right now, but we are very committed to reviving the business.”
Hobson said it's well understood in the business community that mining is a cyclical industry.
“The vast majority of analysts and commentators expect to see some recovery in due course, but there is no consensus about when that might be.”
In January, Fenner said it implemented a cost reduction program at its factories. As a result, a number of measures, including eliminating redundancies, have become a reality at a number of the firm's sites across the world.
The Marfleet facility, which employs about 130, also was the target of strikes by employees in the last year. Those actions dealt with a number of issues, one of which was severance pay, Hobson said.
Currently, “the industrial action has been suspended and the parties are seeking to negotiate a resolution to all issues.”
Fenner announced earlier in 2014 that its Engineered Conveyor Solutions division, the group's largest operation, was being restructured at the top level to respond to continual changes in the market and the global mining industry.
The company wants to put more emphasis on its regional and global presence, company officials said at the time, and it is looking to focus more on the service end of its business.
Fenner's services include belt splicing and installation, conveyor system diagnostics and problem solving, belt condition monitoring and preventive maintenance, engineering and training, and others.
In addition, while the firm will continue to develop its coal mining business, it also will concentrate more on the industrial non-coal side of its operation.
Target markets include aggregate, grain, power plants, ports/bulk material handling facilities, hard rock, ore mining, and wood, pulp and paper.
Shahrzad Pourriahi, European Rubber Journal, contributed to this report.