Bridgestone South Africa

Bridgestone Southern Africa proposes closure of South African Retread factories

Nov 10, 2021
  • Bridgestone Southern Africa (Bridgestone) initiates proposed closure of South African Retread factories
  • Section 189A notice process initiated at all retread factories and Secunda equity store
  • Retread market is fast-changing and necessary significant upgrades are not feasible for Bridgestone

 

October 2021 Bridgestone is proposing to close each of its Retread factories in the country and sell its assets. The company envisages sourcing retreads from a strategic partner locally and has initiated a section 189A process. A consultative engagement is underway with affected employees.   

“Over several years, the Retread market in South Africa has come under significant pressure due to an influx of cheaper tier 3 imported products that offer customers the option to buy a lower cost new tyre, rather than retread the existing tyre. BSAF Retread factories have felt the effect of this increasingly competitive dynamic and has resulted in a decline revenue margins due to the lower volumes.

“In response to the ever-changing economic landscape, Bridgestone is moving to an asset light model, with the mid to long-term business strategy to strengthen our core tyre business through a focus on premium profitable growth segments. Retreading still remains key to our core product positioning, and we will leverage local retreaders to supply us in the market,” says Jacques Rikhotso, BSAF’s Operations Director.

Bridgestone is also proposing closing down an equity store in Secunda that relied heavily on a mining contract that has since ceased, resulting in the store operating at a loss.

In total, 85 employees across the company’s Malmesburg, Nelspruit, Pinetown, Secunda and Wadeville businesses have been affected.

To remain competitive in this fast-changing business environment requires the latest retread technology and innovation which would necessitate an upgrade to BSAF’s Retread factories. At this juncture, the type of investment needed is not feasible. In an attempt to ensure stability for suppliers, Bridgestone has considered all available remedial action that would allow it to continue serving customers and selling the assets to a strategic partner as a natural progression.  

For Bridgestone, the transition will result in a reduction in complexity and operational risk, simplification of the business, a lighter asset base and a reduction of exposure to market fluctuations, thus enabling it to be more agile to changes in demand.

“We realise the impact this will have on the personal lives of our Retread factories employees, and we are deeply committed to mitigating the impact of the proposed closure, and fair severance packages will be provided,” says Rikhotso. 

Bridgestone will exercise due diligence to ensure compliance with all legal requirements and accepted practices, consulting employees, in keeping with requirements of Sections 189A of the Labour Relations Act of South Africa.

The company will communicate in a transparent and timely fashion, ensuring that a clear path is mapped out for all affected stakeholders. During this process, it will ensure that all the necessary support is provided to workers. 

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Bridgestone South Africa

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