Nortex hit by weaker Rand, sheds 110 jobs
Chakalisa Dube | Thursday March 24, 2016 12:08
The affected employees are expected to leave at the end of March, managing director (MD) Mukesh Josh revealed the development in an interview with BusinessWeek this week.
Nortex is one of the biggest producers of towels in the SADC region while MPC produces construction cement for the Botswana market. On a normal business day, Nortex produces six tonnes of towels a day.
MPC will retrench 20 of its 57 employees while Nortex will cut down 90 workers. Nortex currently has 490 employees. The downsizing will affect employees in all departments at the two companies. Since it opened operations in the early 1990s, Nortex has been one of the biggest employers here.
“At Nortex, the sales have been very low because of the weaker Rand against the Pula. The weaker Rand against the Pula has resulted in South African (SA) companies selling their products at a relatively low price in Botswana. We cannot drastically reduce prices like them because of operational costs. At MPC, the business has also not enjoyed much stability for some time,” he said.
Josh bemoaned the little protection of local products by the Botswana government against the influx of goods produced in SA.
He added that at Nortex they could not sell their towels in SA, which is their prime market because of low buying prices.
MPC was temporarily closed early this month and only re-opened this week. “We however operate twice a week at MPC in a bid to control operational costs,” Josh said. Late last year, Josh said Nortex has been on a loss making streak since it started operations more than six years ago. He said since the company started operations it had lost P13 million. He said they have kept operations under the impression that the business will stabilise.
On the other hand, since the beginning of March Nortex has also been operating twice in a week in a bid to control operational costs.
“We started noticing that the business was going down at both MPC and Nortex towards the Christmas break. We however continued fully operating until the end of February when we had to close MPC and reduce production at Nortex to less than 50%.
“We continued operating hoping that things will change but they have not which was why we are cutting down the number of employees. It is not an ideal situation to cut down employees but we have no choice,” a visibly worried Josh said.
The MD stated that normal monthly operational costs at Nortex hover around P2.7 million. “I do not have readily available figures for operational costs at MPC, but overall salaries for employees per month is around P150,000.
Josh stated that he remained optimistic that the economic situation in SA will improve in the near future so that the company returns to normalcy.