Sappi Limited, the multinational paper-and-pulp company, plans to retrench 200 employees. This latest action follows the retrenchment of 156 Sappi employees at the end of August when the company closed its Adamas Mill in Port Elizabeth due to cost pressures.
Trade union Solidarity said that it expected Sappi to carry out even more retrenchments in 2012.
“South Africa’s forestry, paper and pulp industries are under immense pressure, as the same products can be imported much more cheaply from other countries, especially China,” said spokesperson Ilze Nieuwoudt.
“Employees in these industries must therefore prepare themselves for what may lie ahead next year.”
According to the trade union, Sappi had indicated in the statutory Section 189 notices to the affected employees that the latest planned retrenchments would form part of restructuring to eliminate duplication in the company’s human resources, procurement and communication divisions.
Sappi reportedly wants to centralise these functions. The company’s Southern African operations employ about 7 000 people.
“Employees in posts where functions are duplicated will get the opportunity to apply for posts at Sappi’s head office in Johannesburg if they are prepared to relocate. Employees whose applications are unsuccessful will most likely be retrenched,” said Nieuwoudt.
Forestry SA’s operations director, Roger Godsmark, told Farmer’s Weekly that while he was not prepared to comment in detail on the pulp and paper industry, he believed it was struggling with problems such as high electricity and labour costs.
In its response, Sappi explained that it had faced tough market conditions for three years, culminating in unacceptable results for its financial year ending on 30 September 2011. The company said it had been forced to rid itself of wasteful practices, inefficiencies and duplication.
In its Southern African operations alone, Sappi expects to save about R350 million a year through streamlining.
“Unfortunately, it is impossible to avoid an impact on our people and a number of employees across all our functions may have their positions cut, consolidated or redefined,” said Zelda Schwalbach, Sappi’s regional communications manager.
“The full effect of these impacts cannot be estimated, nor if such actions will continue into the near future.” – Lloyd Phillips
Sappi plans to lay off 200 workers.