Metso looks to close Isithebe foundry

Word has it that the parent company has had enough of the militant unproductive workforce and the power blackouts.

In a recent press release that internationally recognised Metso released it stated:
“As part of a global supply footprint development strategy in its Minerals Consumables business area, Metso is initiating consultations to evaluate the potential closure or other alternatives for its foundry operation in Isithebe, South Africa.”

“Our strategy is to utilise synergies of the most efficient manufacturing and sourcing opportunities globally. We are continuously developing our supply footprint to deliver the best value, availability and quality for our customers,” says Sami Takaluoma, President, Minerals Consumables business area at Metso.

However, it is more than likely that the real reason is that the parent company has had enough of the militant and unproductive workforce and the power blackouts. For some years now Isithebe industrial area has been marred by violent protests that saw factories, trucks and public property being torched.

As recently as June 2019 KwaZulu-Natal Premier Sihle Zikalala warned against the burning of trucks and factories as well as violent labour protests saying these actions scare off investors which ultimately leads to job losses. Zikalala was addressing a two-day Provincial Cabinet Lekgotla in Durban.

Zikalala says such violence is absurd behaviour and casts the province in a negative light.

“The recent incidents that have taken place in the province undermine economic growth. These incidents include burning of trucks, torching of business premises in areas such as Isithebe, stoppages and extortion by business forums, intra-party political violence, violent labour strikes, all of these are affecting stability. As a result, it undermines the potential of economic growth in the province,” said Zikalala.

The Isithebe foundry produces metallic wear part castings for the mining and aggregates industries. The foundry has been part of Metso since 1998 and it has approximately 200 employees. In addition to Isithebe, Metso has five of its own foundries, located in Brazil, China, Czech Republic and India, and an extensive global network of external suppliers.

Over EUR 3.5 million invested in foundry in 2017
In 2017 Metso announced that it was investing in its Isithebe foundry to increase manufacturing capacity for crusher wear parts. Over EUR 3.5 million was to be spent including installation of a second melting furnace.

At the time the company released a statement saying: “Metso is increasing its manufacturing capacity for large crusher wear parts castings used in minerals processing by investing in a second melting furnace at its Isithebe foundry in South Africa. The EUR 3.5 million investment will ensure the availability of Metso’s heavy crusher wear parts globally.”

So the question must be asked: Why would a company that has just invested a sizeable amount of money in South African terms – approximately R56 million at todays exchange rate – in its South African operation and suddenly pull out? As it is rumoured it can only be external forces that have influenced the decision.

The Isithebe industrial area and surrounding Mandeni area have been beset with labour strikes and service delivery protests. It is reliably learnt that in April 2019 the area had a week of power cuts that were followed by a week of strikes and protests. For these ongoing reasons factories and businesses have often been forced to close and it is no surprise that some take a dim view of this, especially if you are an international company and you can move the work to other production facilities around the world.

In a recent IOL news report The iLembe Chamber of Commerce, Industry and Tourism said an estimated R100 million a day contribution to the gross domestic product by businesses in Isithebe, northern KwaZulu-Natal, is lost due to protests.

“Isithebe-based businesses employ around 21 000 people, with an acceptable multiplier effect of 10:1 resulting in 210 000 people directly benefiting from economic activity in the region,” said Ilembe chamber chief executive Cobus Oelofse in the same report.

Metso is a world-leading industrial company offering equipment and services for the sustainable processing and flow of natural resources in the mining, aggregates, recycling and process industries. With our unique knowledge and innovative solutions, we help our customers improve their operational efficiency, reduce risks and increase profitability. Metso is listed on the Nasdaq Helsinki in Finland and had sales of about EUR 3.2 billion in 2018. Metso employs over 14 000 people in more than 50 countries.