Bridgestone Southern Africa (BSAF) has announced the proposed closure of its bias tyre manufacturing plant in Port Elizabeth.
It has initiated a Section 189 notice and a consultative process in compliance with the South African Labour Relations Act. About 252 jobs will be lost.
The planned closure is in line with the recently announced business strategy laid out by the Bridgestone Corporation, which plans to strengthen its core tyre business through focus on premium profitable growth segments.
The strategy follows as BSAF’s financial performance had come under pressure in recent years owing to a variety of economic conditions and industry factors.
In addition, the Port Elizabeth plant is specifically geared towards the production of older bias tyres, which the company says, “are globally in decline and being phased out in South Africa as it is an unprofitable market”.
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 agricultural industry is also shifting to radial tyres, which are longer lasting, and the production of which is modern and high-speed, and in order to produce radial tyres, a multibillion-rand investment will be needed in a completely new plant, which BSAF laments is “not feasible in the current economy”.
“The bias in 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,” says BSAF CE Jacques Fourie.
He laments that the combined technical and economic factors “have created an environment in which the Port Elizabeth factory is unable to continue running, despite all efforts to sustain the operation”.
To preserve the competitiveness of BSAF and a sustainable future for its employees, partners and stakeholders, the proposed closure of the plant is the only viable option, the company has determined.