Continental Tyre SA starts retrenchment process closing down a PE unit

A total of 170 jobs are on the line at Continental Tyre SA, which is shutting down its underground mining tyres and agricultural tyres production unit in Port Elizabeth and moving production out of SA.

This comes on top of a rash of liquidations – and accompanying job losses – in the Bay since 2017, with an average of three companies a month being forced to apply for liquidation since then.

In what trade union Solidarity described on Tuesday as a crippling blow, Continental issued 170 employees – in both the affected manufacturing unit and its sales organisation – with a Section 189A notice on June 7.

The notice essentially initiates an employee consultative process which could see the company cut 170 jobs.

The closure of the unit was confirmed on Tuesday by the international company’s facility in Port Elizabeth, which said its passenger light truck (PLT) tyre production would continue its operations.

“The decision was made to review the Port Elizabeth manufacturing operations as a result of the restructuring of the global commercial specialty tyre business,” Shaun Uys, the managing director of Continental’s South African operations, said.

“This critical evaluation has resulted in the principal decision to close the underground mining tyres and agricultural tyres production and to relocate this production outside of South Africa.

“An outcome in terms of the affected employees has not yet been made and will be dealt with through the Section 189A consultative process.

“The company will be consulting extensively with all staff and employee representatives.

“The affected employees were informed of the situation and how it could impact them.

“Employees were advised of the reasons, time scales as well as the next steps.”

He said all efforts would be made to minimise the impact and to reduce the number of employees affected.

“During the consultation period and any future rampdown, we will maintain key staff to complete our customer obligations.

“Continental Tyre South Africa has been part of the South African landscape for over 70 years and we are committed to continuing and growing our business through our PLT divisions.”

Uys said the PLT segment was the company’s biggest offering and provided tyres to all car manufacturers in SA, while also servicing the tyre replacement market.

“The PLT segment underpinned by our strong original equipment fitment will continue our growth strategy into Africa.

“As a part of this, we will continue to source locally from the Port Elizabeth plant.

“Having a facility on the African continent strengthens our agility and ability to service our customers.”

The company did not respond to questions forwarded to it on Tuesday, including where it was planning to relocate the affected unit.

Solidarity deputy general secretary Marius Croucamp said: “The [Section 189A] notice has not come as a surprise as the tyre industry is under a lot of pressure.

“This retrenchment process can be attributed to the continued and persistent decrease and uncertainty in South Africa’s mining sector.”

The company employs about 1,300 people in SA.

“This development could be devastating for up to 170 families,” Croucamp said.

“We believe the retrenchments will be across the board and therefore affect everyone from wage earners to monthly salaried employees.

“What is also very concerning is that the country will be losing an important manufacturing capability.”

Croucamp said he was not aware, at this stage, of any action the affected employees might be considering to prevent the closure of the unit and that due process as dictated by the Section 189A notice was now being followed.

He said the union would do everything in its power to ensure that its members who were affected received the proposed severance benefits and necessary support.

“The Section 189A process, as determined by the Labour Relations Act, first has to be initiated and then Solidarity will act in the best interests of its members,” he said.

Numsa general secretary Irvin Jim said the majority of the affected Continental workers were Numsa members.

“The union has to be on top of this process and we will be monitoring it very closely.

“We will be looking very closely at the justifications for these retrenchments and will be doing our best to support our members and ensure that things are done correctly.”

In March, The Herald reported that a total of 72 Bay companies had started liquidation processes between January 2017 and December 2018, while the metro’s share of the provincial economy had decreased from 36.3% in 2007 to 35% in 2017.

Nationally, according to Statistics SA, the total number of liquidations increased 37.6% in January 2019 compared with January 2018.