Bridgestone Southern Africa (BSAF) has announced plans to close its bias tyre manufacturing plant in Port Elizabeth.
BSAF has initiated a Section 189 notice and a consultative process in compliance with the South African Labour Relations Act, it said in a statement on Friday (21 August).
Approximately 252 employees are expected to be impacted by the closure.
This move is in line with a new mid-long term business strategy which will the group strengthen its core tyre business through a focus on premium profitable growth segments, it said.
BSAF said it 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, the group said.
It added that 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.
Bridgestone said that 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 said.
“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,” said Jacques Fourie, BSAF chief executive.
“All these technical and economic factors combined 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 PE plant is the only viable option,” he said.
BSAF said that it has considered other alternatives to closure, 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 said.
“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,” Fourie said.
He said that BSAF currently employs over 2,000 people and remains committed to its business in Southern Africa.