Bridgestone plans PE plant closure, issues Section 189 notices

Coastal city faces economic blow and over 250 job losses
Bridgestone Southern Africa’s headquarters in Midrand, Johannesburg. Image: Suren Naidoo, Moneyweb

Tyre manufacturer Bridgestone has proposed the closure of its 84-year-old manufacturing plant in Port Elizabeth and on Thursday issued Section 189 retrenchment notices to around 250 employees at the facility.

In another blow to South Africa’s industrial manufacturing capacity and the coastal city’s economy, the group announced the proposed closure in a statement issued on Thursday. It claimed the move is due to declining demand in “older bias tyres” that are made at the plant.

Bridgestone Southern Africa (BSAF) noted that adapting the plant to radial tyre manufacturing would cost substantial investment in a constrained market.

Bridgestone’s 43 000m2 manufacturing plant in Port Elizabeth, which was established by Firestone in 1936. Image: Via Bridgestone’s website

The group has a radial factory in Brits in the North West and Moneyweb reported last year that around R400 million has been invested in that facility as part of a R700 million investment in SA.

Read: Bridgestone invests R700m in SA tyre plants and signs taxi deal

“BSAF has in recent years seen its financial performance come under pressure due to a variety of economic conditions and industry factors. In addition, Bridgestone’s Port Elizabeth plant is specifically geared towards the production of older bias tyres, which are globally in decline and being phased out in South Africa as it is an unprofitable market,” it said.

“The effects of a shrinking economy and an influx of cheap imports, compounded by rapid changes in the tyre industry, has prompted BSAF to restructure its operations,” the group noted.

“The agricultural industry is shifting to radial tyres, which are longer lasting, and the production of which is modern and high-speed. To produce radial tyres an investment in a completely new multi-billion-rand plant would be needed, which is not feasible in the current economy,” it explained.

Commenting on the move, BSAF CEO Jacques Fourie added: “The bias industrial and off-the-road tyres manufactured at the Port Elizabeth plant, which have since been trumped by a growing trend in the production of radial tyres globally, has meant a steady decline in market demand over the years, eroding profitability for BSAF.”

He said despite all efforts to sustain the operation, it was these “technical and economic factors combined” that have created an environment in which the factory is unable to continue running.

“To preserve the competitiveness of BSAF and a sustainable future for its employees, partners and stakeholders, the proposed closure of the PE plant is the only viable option,” added Fourie.

Meanwhile, BSAF also noted the proposed plant closure is fully in-line with Bridgestone Corporation’s recently announced “mid-long-term business strategy”, which aims to strengthen the group’s core tyre business “through focus on premium profitable growth segments”.

Read: New Toyota hybrid part of R2.5bn Durban investment

“The announcement confirms the company’s dedication to implement this strategic framework. BSAF has as of today [20 August] initiated a Section 189 notice and a consultative process in compliance with the South African Labour Relations Act,” it pointed out.

“The proposal to close the PE plant has been reached following very serious consideration and has not been taken lightly. In recent years the company has considered many other alternatives, including cost containment measures, the sale of the plant to a suitable buyer, export opportunities, public funding and possibly relocating different product lines to PE.

“However, while some of these options have been explored thoroughly, the current market dynamics make it extremely challenging to find a longer-term sustainable solution,” the group added.

BSAF has made assurances that it will exercise due diligence to ensure compliance with all legal requirements and accepted practices, as well as to ensure that all 252 affected employees are treated fairly and supported through the transition.

“We realise the impact the project will have on the personal lives of PE employees and we are committed to mitigate the impact of the proposed closure. Fair severance packages will be provided and where possible, skills will be redeployed,” said Fourie.

BSAF, which employs more than 2000 people, said it remains fully committed to its business in Southern Africa and its Brits manufacturing facility, which continues to produce radial tyres.

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Its starting.

It started 25 years ago mate but the pace is excruciating !!!!

Agreed…the corporate booting is about to progress. Look at company results(but more importantly look at the potential of these beaten up shops to get back to profitability) and section 189 of the LRA will be the most topical discussion.

SA is in very serious economic trouble…CNBC ran an article stating that SA is one of the worst placed economies to recover from the China virus and one of the most susceptible to massive social unrest

Government should have a team(s) dedicated to helping to save companies which employ over a 100 or 200 people .

Teams which have financial knowledge and the power to reduce electricity tariffs or pay less tax as an incentive to keep companies paying tax and create employment.

At this rate we are all going to be at risk of losing our jobs.

Agree but govt do have teams to reduce electricity, its called Eskom they been reducing for years.

A Government thats intent on stealing an entire GDP and Covid funds, leaving the poor in despair, is not in the business to save businesses

The draconian lick down is enough evidence of this

We’re on a landslide, an abyss so deep escaping it with communists impossible

What is possible is for the masses to “pull their votes” so we may see a change of leadership

Sadly though come election day, a T Shirt and food parcel parcel secures a vote

SA was once a Power House economy.. how sad that greed has destroyed a once thriving economy

Tax payers need to punish them

Yet another body blow for a city already reeling. You reap what you sow.

Hopefully it will get to the point where the evil political thieves are stealing from one another because there is no one else left to steal from.

Proudly brought to you by the ANC.

Guess its just the beginning.

At least “spring” will be in the air soon (#$%^& Dawn). The troop needs to be watchful. Carries on like this and who knows what will happen.

The economy is tyred 🙁

Circle of life : goes around comes around; that is where the rubber meets the road

Doesn’t sound like a good year at all for the tyre industry.

ANC – We must establish a task force to look into this.

And an inter-ministerial task force investigate to root causes;
So that we can have a Indaba to save jobs and investment.

Sky high electricity prices. Sky high rates and taxes (with zero services) and unproductive labour unions are the death of these manufacturers. You cannot keep up with rising administered prices.

I’ve always been fascinated by the official reasons given for such drastic moves. How they carefully tip toe not to offend and say like it is…..

It pays to tiptoe. no unions come knocking at your door – easy layoffs

End of comments.

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