Bridgestone Southern Africa has announced a proposal to close its 84-year-old bias tyre manufacturing plant in Port Elizabeth.
The factory opened (under the Firestone banner) as long ago as 1936.
The company says the move is “fully in line with the recently announced mid-long-term business strategy laid out by Bridgestone Corporation which plans to strengthen its core tyre business through focus on premium profitable growth segments”.
On Friday, Bridgestone Southern Africa initiated a Section 189 notice and a consultative process in compliance with the South African Labour Relations Act. Some 252 employees are set to be affected.
The company says 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 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 company said in a statement.
Bridgestone says the agricultural industry is shifting to "longer-lasting" radial tyres. It adds to produce radial tyres, an investment in a “completely new multi-billion-rand plant” would be required, but that this is “not feasible in the current economy”.
“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 PE 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 added.
The company says 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,” Bridgestone said.
“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.”
“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.
Bridgestone says it remains “fully committed” to its business in Southern Africa and its Brits manufacturing facility, which continues to produce radial tyres for OEMs and customers.