Engineering and infrastructure company Downer EDI says a downturn in mining demand is significantly affecting its locomotive construction business.
Downer says its orders to build between 55 and 60 locomotives three years ago have "dropped off considerably" to no orders now.
Chief executive Grant Fenn has told the ABC's Inside Business program those "heady days" are in the past.
"There are no orders for locomotives at this point," he said.
He says Downer's rail division is going through significant change and is now focused on helping operators better manage their assets and costs.
"For the last 12 months we've been working with the mining companies, particularly around their cost base," he said.
"We've been working with them pretty pro-actively to reduce their costs but we've noticed this for the last 12 months, in the locomotive business, we provide locomotives for the mining industry, we've seen orders really drop off considerably and demand drop off," Mr Fenn said.
"So we've got a small lull in the market, I think, for a period until that gets soaked up.
At this point certainly over the next 12 months we don't see much changing in that." Meanwhile, he says Downer will not get its money back on the Waratah train project in New South Wales.
Waratah is the largest rolling stock project undertaken in Australia and includes the building and maintenance of 626 train cars for use on the Sydney rail network.
"We've certainly got the trains now, we're producing at a faster rate than trains have ever been produced in this country," Mr Fenn said.
"We expect to deliver the last train by mid next year.
Our customer likes the trains, the travelling public likes the trains and we've got a three-year maintenance contract.
"So we're pretty happy where that is right now and we'll be a pretty core part of where New South Wales rail travel and certainly Sydney rail travel is for the next 30 years, and that's great." But Downer has lost money on the project, and Mr Fenn admits "we're not going to get that back".
Downer confident market will turn around Despite this, Mr Fenn says he expects the market will start to grow.
"Whilst we're seeing constrained spend and our mining customers really looking to improve their own businesses, it's not all that's happening out there," he said.Â "There are lots of green shoots and particularly in the public sector we're seeing really market extension opportunities, so it's not all bad news." Mr Fenn says new contracts in Downer's infrastructure division are being won in the the public sector.
He says state governments have been keen to improve the way they deliver services.
"What's happening right now in road maintenance is I think state governments are being quite smart about it and looking at how they can do that more efficiently," he said.
"Just in the last week we've won quite a considerable road maintenance contract in Sydney and I think we're going to see more of that from state governments as they look to get more efficient in how they deliver their services." Mr Fenn says the general drive to increase efficiency and reduce costs is welcome.
"The business that we're in of course is servicing our customers and if we don't provide value then we're not in the game," he said.
"In the medium-term, this pressure on costs whether in the private sector or the public sector is good for our business because it's all about us being more efficient than the customers can be themselves.
"In the short-term you might see some fluctuation in revenues and earnings but in the medium term it's good for business because it opens up markets and that's what's happening.
"So I'm not unhappy ...
about what's happening to the market.Â The market is going to grow." Fenn awaits results of NBN review He says Downer's tender pipeline is "pretty good".
"It's been interesting, there's certainly less large contracts but we've seen a lot of the recurring work, an increase in that type of work," he said.
"People are still needing to optimise their operations and as they look for value out of their existing assets, they're needing to tweak and move things around and that's where we come in." He says Downer is waiting to see the results of the strategic review of the National Broadband Network (NBN) currently being carried out.
"We've got a little over $500 million worth of contracts in the NBN, you know we're waiting for the review," he said.
"We're sort of indifferent in many ways whether it's fibre to the home or fibre to the node.Â "We'll just work with what comes out.Â We've got a lot of people on deck doing work right now so for us it's an important part of the future and we'll be very keen to see it progress."