Monadelphous helps big companies such as BHP, Fortescue Metals and Chevron develop oil, gas, iron ore and minerals projects. Valued at $1.25 billion, it is one of the few remaining independent ASX-listed engineering firms after rivals such as UGL, Transfield Services, MACA and Clough were acquired.
Its shares, trading at just over $13 each, are up nearly a quarter in the past year in a market that has barely changed.
Rob Velletri was appointed chairman of Monadelphous in November last year.
Bebic, who succeeded Rob Velletri as managing director in November after joining as an accounts clerk 30 years ago, is not an engineer, but studied finance and accounting.
Like many young WA graduates in the early 1990s, when jobs were scarce during the recession, he went “up north” immediately after leaving university, working as a trades assistant on rail and construction projects in dusty Pilbara towns such as Newman, Dampier and Karratha.
“After about 18 months I made the decision to come back to Perth,” he says. “If I was going to get a job in the finance and accounting profession, I needed to do it now, otherwise I would have left it too late.”
Difficult times
Bebic got his initial job at “Monos” through a contact – a cousin who was married to a Monadelphous employee – but had to get through three or four interviews first.
The company had just come out of receivership, having become insolvent in 1987 due to cash flow problems. “Things were incredibly difficult,” the executive recalls.
But the organisation was small, with about $30 million in annual revenues, giving Bebic the opportunity to work closely with the chairman at the time, Sicilian-born John Rubino, Velletri (who succeeded Rubino as executive chairman last year) and engineering construction boss Dino Foti.
Rubino, who died in January, had teamed up with partners to invest millions of dollars in the engineering group to bring it out of insolvency and pay off creditors, enabling it to resume trading on the ASX in late 1989.
Bebic, who met his wife at Monadelphous, says “company values” have kept him at the group for three decades.
Zoran Bebic on the Monadelphous rooftop in Perth. Trevor Collens
“When we measure individual performance, we don’t just talk about the ‘what’, so the outcomes you delivered, but the ‘how’ in terms of how you delivered them.”
The group, whose name is derived from a Greek word describing the way some flower stamens fuse together, tries to differentiate itself from competitors by sticking with the commitments it makes, Bebic says.
“We work incredibly hard to do that, because that builds trust, that builds confidence, that strengthens your relationship, and that leads to repeat business.”
Community garden
Maintaining relationships and a sense of community is important to Monadelphous in other ways.
During the COVID-19 pandemic in 2021, the company – which evolved out of a small labour hire firm founded in Kalgoorlie 50 years ago – gained approval from the management of its building to get rid of most of the ornamental plants and create a community garden to encourage people to return to the office.
Staff were asked to volunteer and those who did were put in groups that were given garden beds to look after. There are now more than 50 varieties of herbs, fruit trees, vegetables and flowers in the garden.
The beds have recently been replanted with spinach, chard, beans, carrots, beetroots, and fennel, and employees compete to see who can grow the biggest zucchinis, cucumbers and eggplants, bear fruit first, or attract the fewest bugs.
Zoran Bebic says he can’t remember a time when the prices of commodities, including iron ore, were all high at the same time.
Meanwhile, Bebic is keen to see staff back in the office more often. While Monadelphous allows employees to job-share and work some of the time from home, it is reviewing its policies, which will likely require people to be back in the office for “a large portion” of the time.
“It would be hard for anyone to convince me that you can maintain a strong organisational culture when you’re working from home or via Zoom meetings,” Bebic says.
Long service
While Bebic acknowledges Monadelphous still has “issues” – such as the 2015 dispute with Queensland’s Wiggins Island coal export terminal that ended up in court before being settled – he says it still focuses on getting jobs done.
The company encourages employees to speak out early if they encounter problems on projects and puts trust in people who have been with the business a long time, he says.
At least 350 staff have been with the company for more than 10 years and Bebic says Monadelphous’ turnover rate for key staff is running at about 5 per cent, compared to a rate of 25 per cent in the broader contracting industry.
Given Monadelphous is generally “middle of the market” in terms of the salaries it pays, it is the “less tangible” items that keep people with the company, he says.
Like many other companies, Monadelphous is finding it difficult to get workers, with engineers and tradespeople remaining in high demand nationally despite the slowing economy.
“The labour market is very, very, very tight,” Bebic says.
At the same time, demand for new projects remains high.
Monadelphous is competing with road, rail and other infrastructure projects for staff. NSW government
While commodities typically move in cycles, with some strengthening as others weaken, they are currently strong “right across the board” and new markets are emerging for metals such as lithium, which is used to make batteries.
“I can’t remember a time where all commodity prices across the resources and the energy sector are at high levels,” he says.
“Demand looks very strong for at the least the medium term and Australia, in particular Western Australia, is very well-placed in terms of supporting that demand.”
Staff shortages are creating a headache. Projects are being delayed because there are not enough people who can design and plan them, and Bebic predicts more delays in project delivery.
The company competes with civil infrastructure projects for workers, who are in such high demand that even salaries for graduate engineers are rising annually by more than 10 per cent.
Civil infrastructure projects such as roads and railways are typically in cities where people can go home at the end of the day, which is an easier commute than flying in and out of remote mining sites. A lack of childcare in regional towns also makes it difficult to keep staff on remote projects.
While the company has developed relationships with recruitment agencies in several countries, including New Zealand and the Philippines, foreign workers contribute only a small proportion of its total staff and are expensive to bring into the country.
Still, Monadelphous isn’t letting staff shortages hold it back.
Quality earnings
This month it bought Victorian mechanical and electrical services business BMC with the aim of securing more work building east-coast energy transmission networks and energy transition projects.
Despite the strong outlook for mining projects, Monadelphous no longer expects to double the size of its business every five years, as it did during the resources boom, when its shares changed hands at nearly $25 a pop. These days it is about quality earnings.
“We think of ourselves as a quality earnings business and that’s what our shareholders expect: returns to improve.”
Back on a personal note, Bebic says he never contemplated early in his career that he would become the managing director of Monadelphous and believes people should do every job to the best of their ability.
“It doesn’t matter what the task is, there is always something you can learn from whatever you’re asked to do.
“My situation’s a little unique, from accounts clerk to managing director, but I say to graduates when I talk to them that whilst it might be a little unique there’s nothing to say that that opportunity doesn’t exist for anyone else in the organisation.”