Jobs on the line as Bridgestone plans to shutter historic PE tyre plant

On Thursday 20 August, Bridgestone Southern Africa (BSAF) has announced the closure its bias tyre manufacturing plant in Port Elizabeth.

According to the Japanese-owned company, the move to cease operations at the 84-year-old plant 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.

The announcement came as BSAF initiated a Section 189 notice and a consultative process in compliance with the South African Labour Relations Act.

Any loss of jobs in Port Elizabeth would come as a blow to the Nelson Mandela Bay Metro and the Eastern Cape province which is already contending with significantly high levels of unemployment and a chellenging economy.

BSAF: Financial pressure and unprofitable bias tyre market

BSAF 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.

Shift to radial tyres and Brits operations

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 multibillion-rand plant would be needed, which is not feasible in the current economy.

The group has a radial manufacturing plant in Brits in the North West which produces tyres for OEMs and replacement customers. In 2019, Moneyweb reported that about R400 million has been invested in that facility as part of a R700 million investment in South Africa.

“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,” chief executive Jacques Fourie said.

Serious consideration of technical and economic factors

“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 said the proposal to close the 43 000m² manufacturing plant in Port Elizabeth which was established by Firestone in 1936, 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 Port Elizabeth.

Market dynamics

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.

BSAF made assurances that it would exercise due diligence to ensure compliance with all legal requirements and accepted practices, as well as to ensure that all 252 affected employees are treated fairly and supported through the transition.

“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 concluded.