Despite the high unemployment rate and lack of creation of new jobs, some domestic companies continue to trim down their staff in a bid to cut down operational costs, whilst others have decided to completely shut down their factories. SUNDAY STANDARD reporter VICTOR BAATWENG looks at a few domestic companies that sent employees packing in the recent past across different sectors of the domestic economy.
Teemane Manufacturing Company ÔÇô 350
In early February, one of the country’s oldest diamond cutting and polishing entity, Teemane Manufacturing Company, became one of the first companies to signal the casualty of liquidity and profitability pressure that is facing both local and global diamond polishing companies. The company announced the layoff of close to 350 workers in early February this year.
On Friday, Minister responsible for Minerals, Kitso Mokaila could not hide his ‘concerns’ caused by massive job losses recorded thus far in the mining sector particularly in the diamond cutting and polishing.
Teemane Manufacturing, owned by Diarough, has been operating in Botswana for the past 20 years and has been classified as one of the biggest employers in Serowe village where its factories were located. Reports indicate that the company decided to close down due to accumulating losses the factory incurred in its operations. Efforts by area Member of Parliament Kgotla Autlwetse to have Minister Mokaila intervening proved futile and the company has since shut its doors.
Motiganz Botswana ÔÇô 171
Although it has not totally shut down, Motiganz Botswana (PTY) LTD is amongst local firms that have shown some its employees the door. The company which is a subsidiary of Motiganz Diamond Trading Company Sight holder resolved to retrench some of its employees in November 2014.
Of the 211 employees who worked as Diamond Polishers, 171 of them were served with letters of retrenchment. Only 33 Batswana and seven foreigners remained according to a retrenched employee, who did not want to be named.
On Friday Kitso Mokaila explained to parliament that it was a natural effect of commercial dynamics that certain businesses in the diamond cutting and polishing segment would grow while others would contract, in response to a constantly changing external environment.
“While other companies are falling off, some are coming in. We are engaging with industry leaders with regards to challenges they are facing,” Mokaila said.
It is estimated that diamond cutting costs between $60 and $65 per carat in Botswana while in India its costs between $12 and $25 per carat India. In China it is said to be costing $20 to $30 per carat.
At the same time, Botswana is reported to have had a total employment of 3 750 in 2014 in the diamond cutting and polishing industry.
Discovery Metal Limited ÔÇô 400
Last year Discovery Metal Limited retrenched 380 workers at its flagship Boseto mine before suspending mining and processing operations this month due to high mining costs set against softening international copper prices.
DML Country Manager Mokwena Morulane confirmed the unexpected closure of the mine in Toteng near Maun without prior notice. He stated that at least 400 employees were affected by the unexpected shut down. He added that apart from the employees, some contractors were also affected by the latest development.
Riddled by numerous challenges since commissioning in 2012, Boseto has been experiencing financial strain, characterised by high debt coupled with the collapse of a few recapitalisation deals. Low ore grades recovered at Boseto have also exacerbated the company’s difficulties.
In June last year, the company reported that its cash operating costs were averaging $2.86 per pound. It also added that low demand for copper also contributed to its financial troubles.
Cadbury Botswana ÔÇô 150
Away from mining, chewing gum manufacturing company, Cadbury Botswana is amongst companies that recently closed its local doors followed by a subsequent relocation to neighbouring South Africa and Poland respectively. The company which is owned by Mondelez International had hired close to 150 workers in Botswana. The workers were based at its Gaborone factory located in Commerce Park which was shut down on 12 December, 2014.
Mondelez South Africa spokesperson Navisha Bechan-Sewkuran explained late last year that the move to shut down the Botswana factory was motivated by Mondelez International’s decision to focus its resources on scale manufacturing facilities where it can generate greater efficiencies, to reinvest in growth.
According to EuroMonitor International, the retail sales value for gums in Botswana, in 2013, were 1 million US Dollars, up around 1-percent from the previous year.
The company said that demand for pellet gum produced in Botswana has dropped over the last period as there has been a shift in the gum consumer market preference towards slab gum.
“Based on careful consideration of the future viability of Cadbury Botswana, Mondelez International is announcing its intent to cease manufacturing in Botswana,” the company said in statement late last year.
A senior Research Fellow at Botswana Institute of Development Policy Analysis (BIDPA), Professor Roman Grynberg previously indicated that the chewing gum industry had become one of Botswana’s largest manufactured exports in 2011 valued at P157 million.
Bifm ÔÇô Unspecified
Fresh in the retrenchment business is Botswana Insurance Holdings Limited (BIHL) subsidiary, Botswana Insurance Fund Management (Bifm). The company recently sent its Chief Executive Officer Tiny Kgatlwane packing, a few months before the expiry of her contract.
Although it has not specified on how many more employees will follow the Chief Executive, after losing the lucrative Botswana Public Officers Pension Fund (BPOPF) contract, Bifm has admitted it will have to restructure its business to adjust to the drastic reduction of its assets under management.
The pension fund is reported to have terminated its P 9billion worth management contract, effectively shrinking Bifm’s funds under management from a whooping P11 billion to just under P 2billion.
“Following the significant reduction in the assets under management, the business will have to restructure in response to this. We will focus on diversifying the profit sources through acquisitions in financial services,” read a BIHL statement accompanying the results.
More jobs losses
During Minister’s question time on Friday, Kitso Mokaila, minister responsible for minerals confirmed job losses in other diamond companies such Gabane Diamond Company whose number of retrenched employees was not specified.
“I would want to state that I am concerned by the latest trend and we are doing everything we can in collaboration with the industry to try and come up with solutions,” Mokaila told legislatures.
At the same time, Member of Parliament for Selebi Phikwe West Dithapelo Keorapetse said during his presentation of the Friday theme that atleast 100 employees have lost their jobs at a company known as Diesel Power Botswana. Industry sources indicate that more companies, including leading banks and financial institutions will follow suit in laying off staff. In the retail sector, a popular public Bar which operated from Gamecity Mall, O’hagans recently closed its doors.