PE firm’s closure hits many hard

Staff not paid, contractors owed more than R1m

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The sudden closure of a Port Elizabeth engineering firm has left dozens of workers in the lurch and a Perseverance business still owed more than R1m.SteelBest Manufacturing closed its doors on May 6, with its remaining three employees merely told to go home.The others had been on short-time since January.The business is owned by Johannesburg businessman Reuben Olifant, and its closure stems from the financial collapse of LN Manufacturing.Eventually, Olifant picked up the pieces of LN Manufacturing and rebranded it as SteelBest in April 2016, with more than 42 employees hired.Three years down the line, the business resorted to shorttime in January and closed down four months later.But Olifant said the business was simply no longer sustainable even after he used R16m of his own money to keep it afloat.“The staff are being paid on Friday, which has been communicated to them.“Furthermore, there is a payment arrangement with creditors,” he said.Olifant said SteelBest was unable to get any work in 2019, which made it impossible to keep the doors open and make all the necessary payments.“We are trying to raise money to pay and no funds are coming from the company, but it’s being done in my personal capacity and hence very difficult to raise without a functional business or means to repay.”He said there was no unwillingness on his part to pay.“You can look at the entire manufacturing industry in PE, all companies are battling.”He said the money from all the work the company had managed to attract in 2018 went to salaries.“I am not even going to recoup my own money.“As we did not get work, I had to raise money to pay the creditors. We never acted in bad faith, we just never had the money.”The firm’s closure comes as SA’s economy nosedived in the first quarter of 2019, with a 3.2% quarterly contraction.The worse-than-expected gross domestic product performance was driven by a 13.2% contraction in agriculture, a 10.8% contraction in mining and an 8.8% contraction in manufacturing, the latter two hit by load-shedding.Jaco Els, the director of AE Manufacturing, which operates from Perseverance and supplied tooling for the manufacturing of vehicles to SteelBest, said his company was still owed more than R1m.“We have had massive issues with SteelBest.“We did a lot of work for him [Olifant] for VW,” Els said.“The non-payment has had a huge impact on our business as times are tough and we are struggling to settle with our own creditors.”Els said SteelBest owed his company R1.6m in November for work that had been completed months ago.“He just never paid.“We went to VW and told them we would not be releasing the equipment.“Olifant then agreed to pay in full but only paid us about R400,000 three months ago.”Els said after this payment and signing a payment agreement, they released the tooling to VWSA.“We have now been to lawyers and we will be taking this further,” he said.A SteelBest employee, who declined to be named, said the firm had been paid in full by VW for the work done by AE Manufacturing.“It is true that VW paid us for the work but money was never channelled down to some of the companies, including AE Manufacturing.“The owner just stopped paying people and in May he just closed the doors.“It was very unethical how the business was run and how staff were treated.“I have also not been paid and just hope to get something eventually,” he said.For Kurt Johns, who owns Variable Engineering, the R45,000 he was owed would pay the running costs for the business he operates from his home in Sherwood.“When you are dishonest, I need to tell you that you are dishonest,” he said.Johns said he was initially owed R49,000 but received R4,000 after entering into a payment proposal three months ago.“That R4,000 was the last payment I received despite the proposal,” he said.As his was a small business, he would probably end up writing the money off.“It is a big knock for us.” Johns said most of the work he did for SteelBest Manufacturing was for contracts linked to VWSA.Renttech SA Port Elizabeth branch manager Dean Victor said the company was still owed R46,000 for welding components.“We did receive a small payment of about R5,000 three months ago but nothing has come through since then.”He started to pick up issues with SteelBest in August due to late payments.“We declined the payment agreement and have since reported them to Credit Guarantee [a debt collector] to recoup the money,” Victor said.Another former employee, who declined to be named for fear of not receiving a severance package, said he was still owed R30,000 for his salary and outstanding leave days.“We were promised to be paid every week but nothing ever happened,” he said, adding the latest commitment from Olifant was that they would be paid on Friday.

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