why ugl didn't win the 2nd contract

This morning on may way to work i saw the headline on my Iphone that LYC has awarded the contract to build the stage 2 of the LAMP plant. I didnt read into it and assumed UGL would be the winner since after all their workers are over there right now on the site building stage 1 of the project and the synergy of been able to continue the momentum without the need of a new work force having to mobilize and set up camp.

Lo and behold to my surprise LYNAS awarded the job to Toyo Thai Corporation! Toyo Thai is a listed company and have a respectable reputation and have a alot of major construction project under their belt. Link of their site:

http://www.toyo-thai.com

Afterwards i started to think about it why would Nick Curtis go through all that hassle and change to a new construction workforce and then it hit me which was COST OF LABOR.

Why would Lynas award the work to a high cost Australian company when an Asian workforce in Thailand can do the same job but at half the rate that Australian company charges? United Group pays their employees very very well. When an Australian worker is sent overseas to work on site on top of their salary they get a site up lift in pay, anywhere from 30% to 40% pay rise, Lynas also have to pay for them food and accommodation, with some workers staying at nice bungalows and the Managers stay at first class hotels nearby and all this cost alot of money! I remember when i was working in the bush, can anybody guess how much was the cleaner lady get paid on site? 100K.

It's no wonder that Lynas switch construction companies, compared to labor in Asia , Australia just can't compete. This is good new for us shareholders as it means that your hard earned money has been used efficiently while maintaining good quality workmanship.

Also one more point I would like to add, In order for Nick Curtis to go ahead with the construction of Phase 2, it must mean that he must have gotten the nod from the government to quickly proceed. We can't be surprised because no doubt UMNO would want Siemens deal to go ahead as soon as possible as that would mean more investment capital flowing into the country for-filling Najib Razak 2020 dream for Malaysia.

I am off to play some poker, may you guys have a wonderful evening.